Performance management for economic development.

• Author: Mucha, Michael J.
• Position: [PM.sup.2] Connections: PERFORMANCE MEASUREMENT & MANAGEMENT - Statistical data

Using performance measures in the budget process has become a best practice for promoting transparency and accountability, and they can have the same impact when applied to economic development. Rather than thinking of collecting performance measures as just another step in assembling the budget document (the GFOA's Distinguished Budget Presentation Award requires that an organization's budget document include data related to performance and accomplishing goals and objectives), governments need to see performance management as a way to improve organization-wide accountability and decision making. Economic development agreements provide an excellent opportunity for governments to apply the concepts of performance measurement and performance management throughout the year.

Used this way, performance measures help protect governments from risk in dealings with private developers. Economic development incentives are investments to help create a public benefit that would not have come about otherwise. And as with any investment, results are not guaranteed. However, proper analysis, including use of performance measures, can help jurisdictions set initial targets that are realistic. Governments can also include performances measures in an agreement as a way to limit risk and enforce accountability.

USING BENCHMARKING

One common way of using performance measures is benchmarking. When private developers are attempting to sell governments on the latest economic development deal, they often include data showing that the project is desirable and beneficial to the government and community. To properly evaluate realistic benefits and risks, however, a government should conduct its own review to test both the data and the underlying assumptions. To do this, governments often use performance measures taken from past projects or compare projected results to established standards--that is, benchmarking. Exhibit 1, which is taken from a GFOA best practice, Evaluating Data and Financial Assumptions in Development Proposals, lists sources of data that are commonly used to help benchmark assumptions for development projects.

Many governments benchmark their services against those of comparable governments, and a similar process will help make sure the comparisons used to analyze economic development deals are applicable. For example, a retail development proposal might include data on sales figures per square foot, which can be easily verified from reliable...