HomeMy WebLinkAboutFCS-13-061 - Performance Indicators Update
REPORT TO:
Finance and Corporate Services Committee
DATE OF MEETING:
May 27, 2013
SUBMITTED BY:
Ryan Hagey, Director of Financial Planning
519-741-2200 x7353
PREPARED BY:
Ryan Hagey, Director of Financial Planning
519-741-2200 x7353
WARD(S) INVOLVED:
All
DATE OF REPORT:
April 30, 2013
REPORT NO.:
FCS-13-061
SUBJECT:
Performance Indicators Update
RECOMMENDATION:
For discussion.
BACKGROUND:
In conjunction with the April 2012 Variance Report (FCS-12-108), staff proposed a number of
performance indicators that could be prepared on a monthly basis and would provide Council
with some indication as to the financial performance of the organization.At the June 25
meeting, Council passed the following motion:
That staff be directed to provide monthly updates to Council on the indicators listed in
Table 1 of Appendix A to report FCS-12-108; and further,
That staff be directed to review the resource requirements associated with providing
monthly indicators, along with the value to Council of receiving the information, after
twelve (12) months.
Appendix A from report FCS-12-108 has been included as Appendix A of this report. It provides
a listing of the twelve indicators approved by Council and the rationale for each indicator.
The remainder of the report addresses the predictive value of the indicators and the amount of
time required to produce the indicators each month.
REPORT:
Predictive Value of the Performance Indicators
The twelve indicators approved by Council were chosen as they represented areas of historic
operations. The indicators were chosen because they were thought to have some correlation to
financial performance, and therefore some predictive value. For example, if the number of golf
rounds played was above the benchmark, this should indicate that golf revenues would be
better than budgeted.
6 - 1
Appendix B to this report shows the correlation between the twelve performance indicators and
the associated area of budget volatility based on the results reported to Council during the 2012
Year End Variance report (FCS-13-032).
The chart below summarizes the amount of correlation between the indicators and the actual
performance at the end of 2012.The indicators have been placed into one of three categories
based on their ability to predict the actual outcome in the associated area of budget volatility.
The categories are defined as:
Strong Correlation
Indicator correctly predicted a surplus/deficit as well as the relative
size of the surplus/deficit.
Weak Correlation
Indicator correctly predicted a surplus/deficit, but not the relative size of
the surplus/deficit.
No Correlation
Indicator did not correctly predict a surplus/deficit.
Strong CorrelationWeak CorrelationNo Correlation
(Good predictor)(Mediocre predictor)(Poor predictor)
Average Investment BalanceBylaw Tickets IssuedSportsfield Hours Booked
Average Interest RateNumber of Winter StormsHeating Degree Days
Building Permits IssuedGolf Rounds Played
Monthly Parkers
Fuel Price
Fuel Consumption
Cubic Metres of Water Sold
The chart shows that the majority of the twelve indicators have a strong correlation to actual
performance, and are therefore good predictors. Three indicators have a weak correlation to
actual performance, while two indicators had no correlation to actual performance.For the two
indicators that have no correlation to actual performance, there are extenuating circumstances
that caused them to have no predictive value in 2012.
Sportfield hours booked were 4.4% better than the benchmark, which would predict additional
revenues and therefore a modest surplus in this budget. The actual performance was a deficit
of $316,009 or 33.8%, but was due to additional expenses incurred from an earlier start to the
maintenance season and additional taxes for Budd Park.
Heating Degree Days was 11.5% below the benchmark, which would predict a shortfall in Gas
Delivery revenues. The actual performance was a surplus of $3.8M or 10.5%. The surplus was
experienced because the budget assumed a reduction in the transportation portion of the Gas
Delivery rate, but it did not occur in 2012.
Suggested Improvement
If Council chooses to continue receiving the performance indicators on a monthly basis, staff
suggest adding a summary dashboard as part of the performance indicators package to
improve understandability. An example is included as Appendix C to this report and includes a
summary of:
a) how the indicator is performing versus the benchmark
b) how the indicator is performing versus the prior period
c) whether the indicators are predicting a surplus or deficit
6 - 2
Summary
The majority of performance indicators correctly predicted a surplus/deficit in the associated
area of budget volatility. Only two of the twelve indicators provided an incorrect prediction and
they were both due to extenuating circumstances. Therefore, the set of indicators used for the
twelve month trial has value in predicting variances in the associated are of budget volatility at
the end of the year.
Time Required to Prepare Performance Indicators
The estimated total amount of staff time to prepare the performance indicators is approximately
20 hours each month. This includes collecting all of the necessary data, updating the graphs,
updating written comments, preparing the final product to be sent to Council and posting it on
the City website.
In addition to the time to prepare the monthly update, once per year the benchmark figures are
updated. This takes approximately 30 hours of staff time to complete.
ALIGNMENT WITH CITY OF KITCHENER STRATEGIC PLAN:
This reporting falls within the Efficient and Effective Government plan foundation area of the
Strategic Plan. It helps support the financial goal of ensuring openness and transparency of city
finances.
FINANCIAL IMPLICATIONS:
None. Performance indicators are prepared by staff
COMMUNITY ENGAGEMENT:
Inform This report has been posted publicly as part of the agenda to inform the public.
ACKNOWLEDGED BY:
Dan Chapman, DeputyCAO, Finance & Corporate Services
6 - 3
Appendix A Performance Indicators
Table 1 Areas of Budget Volatility and Proposed Performance Indicators
(Items specifically requested by Council have been noted with a
Area of Budget Volatility Proposed Indicator Rationale
Indicator
Tax Supported
Investment Income Average Interest Investment income is determined by
Rate & Balance investment rates and balances.
By-law Fines # of Tickets Issued The # of tickets issued directly correlates
to fine revenue.
* Winter Control # of Snow Events The # of snow events directly correlates
to the costs of winter control.
Fuel Fuel Price & Fuel price correlates with fuel costs and is
Fuel Consumption the most variable component of this
budget area.
* Sportsfields, Parks & Trails # of Hours Booked The # of hours booked on sportsfields
on Sportsfields has a correlation with revenues, which
have been the most variable component
of this budget area.
Site Plan Revenues # of Building The # of building permits has some
Permits correlation with site plan revenues as
both are related to new development.
Enterprises
Building # of Building The # of building permits has a
Permits correlation with revenues, which have
been the most variable component of this
budget area.
* Golf # of Rounds Played The # of rounds played has a correlation
with revenues, which have been the most
variable component of this budget area.
* Parking # of Monthly The # of monthly parkers has a
Parkers correlation with revenues, which have
been the most variable component of this
budget area.
Water & Sanitary Water Sales to The amount of water sales to customers
Customers (in m3) has a correlation with both revenues and
expenses in these budget areas.
Storm Water None None proposed as revenues and
expenses are generally stable.
* Gas Heating Degree Heating Degree Days has a correlation
Days with both revenues and expenses in
these budget areas.
6 - 4
6 - 5
Appendix C
Performance Indicator Dashboard
Comparison to
Trend from
Indicator
Prior Period*
Benchmark
Average Investment BalancesGreen
Average Interest RateGreen
By-law Tickets IssuedRed
Building Permits IssuedRed
Monthly ParkersRed
Number of WinterStormsGreen
Sportfield Hours BookedGreen
Golf Rounds PlayedGreen
Fuel PriceYellow
Fuel ConsumptionGreen
Heating Degree DaysRed
Cubic Metres of Water SoldYellow
* Trend arrows are determined by comparing indicator value for this period versus the prior period.
Comparison to Benchmark Summary:
ColourCountMeaning
Green6Indicator is better than the benchmark
Yellow2Indicator is between 0% to -10% worse than the benchmark
Red4Indicator is more than -10% worse than the benchmark
Dashboard Summary:
The indicators are split evenly between being better or worse than the benchmark. This trend does not
suggest either a surplus or deficit for City operations.
6 - 6