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Meaningful Metrics for a Smart Society
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Date: 2021-02-27 Page is: DBtxt001.php list0300-Performance-1

Definitions for TrueValueMetrics

Performance Metrics ... Elements of Performance TVM measures progress ... measures performance ... they are related but not the same. The following graphic shows in a simplified way how cost is related to implementation and to results. The goal is for the community value at the end of the period to be more than at the beginning of the period. Resources are consumed to fund implementation activities that produce an impact and value creation.

Costs: How much did it cost? Knowing how much something costs is pretty basic. It is appalling how little data about cost is reported, and how little information about cost is understood and appreciated by people with responsible jobs. Because there is so little understand of cost ... cost gets used to justify bad practice of all sorts. Understanding cost and cost behavior is central to the TVM system of metrics. This ought to be easy to answer ... straight from any good well designed and functioning accounting system. Knowing how much implementation activities cost is a critical first step in knowing anything about performance. In some cases the amount of money mobilized and used may be a proxy for how much money was used for ... the cost of ... implementation activities.

How much was done? This ought to be an easy statistic to obtain ... very easy in any well managed operation! Knowing how much got done is also pretty basic. Without knowing how much got done, there can be no oversight, control or accountability ... no inventory control ... no operational analysis ... in other words, without knowing how much got done, the whole process of management falls apart.

Example: Reducing Mother Child Mortality A first step is to know how much progress was made in moving towards this goal. This must be done using mortality value in the calculation.

TVM does this by assigning a standard value to everything that socio-economic activities are trying to do. The standard value has a unique value in each community reflecting somewhat how different cultures value different things ... and there are also global standards for reference and comparison.

With the standards it is possible to calculate the valuadd associated with an economic activity.

Unit cost ... and standard cost? The unit cost compared to the standard cost gives a measure of efficiency. How much was done compared to what should have been done? How much did an activity cost compared to what it should have cost?

Cost efficiency ... how much should it have cost? Cost efficiency is the simple idea of comparing the actual cost with what the cost should have been. This is a powerful way of getting control of operational performance. How much should it have cost to do what was done? Efficiency is the relationship between what something did cost with what it should have cost. There are many ways in which this can be calculated, for example taking into consideration the local enabling environment, or discounting this and making a comparison without taking this into consideration.

What it should have cost is a technical question. The cost that it should be can be calculated based on what needs to be done and the prevailing costs. The cost in one place can be compared to costs in other places. The cost now can be compared to costs in a prior situation.

How much impact? ... How much valuadd? Did the activities have any impact on the quality of life? ... did the state of the community change? ... did anyone receive any benefit? How much impact? What value did this impact have? What is the valuadd?

Cost effectiveness ... how much valuadd for the cost? Cost effectiveness is the more complex idea of relating cost to the value of the accomplishment. The idea is simple in theory, but becomes more difficult as the problems being addressed are more complex. TVM uses techniques to get an overall idea of cost effectiveness, and then goes into more detail to assess the way different initiatives contribute to progress. This may require multi-variate analysis of the datasets where there are multiple interventions being used.

The core of TVM metrics is the goal of having fund allocations flowing into intervention activities that are the most cost effective and deliver the most of social value. The Tr-Ac-Net/IMMC cooperation using the TVM framework for performance metrics provides the basis for this to become the norm.

How does performance compare to other places? Comparison between places shows where performance is on a par with other places, or not. If the measure is about the same item but in different places, then it is possible to start to draw conclusions about what is happening in different places.

Performance Metrics ... Simplifying the Metrics Progress is all about making change ... so what changes have been achieved from the beginning of the period (BOP) to the end of the period (EOP) . The measure of this can be quite simple ... or quite complex ... but the key is for the metrics to be clear

It is impossible to do management by walking around at the national level ... and even the sophisticated survey techniques and statistics that have been popularized in academia and research institutes provide rather little management information. It is, perhaps, possible to understand something about the “state” of the national economy, but rather little about how and why the economy is in this state.

Progress is measured by how these many different things are getting better. Less crime, less disease, less pollution is better. More sport, more telecenters, more clinics is better. The elements are not limited to the set shown ... any item that is important can be measured in this way.

The community centric perspective produces a very different and much more understandable view of how activities are done, how resources are allocated and what decisions are best. Community is where there can be accountability. The community is, after all, the most important locus of life, so quality of life impact can be monitored and measured. The TVM construct for measuring progress ... the changes in the socio-economic state of the community from the beginning of the period to the end ... applies to every aspect of the community along the following lines.

Performance Metrics ... Trends. Is performance improving?

Comparative data ... trends over time ... identifies if performance is improving or not.

One datapoint is unlikely to be very useful ... but two datapoints have much more value. If the measure of the same item but the time is different, there is the beginning of a time series and change over time is now known.

The text being discussed is available at

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TrueValueMetrics (TVM) is an Open Source / Open Knowledge initiative. It has been funded by family and friends plus donations from well wishers who understand the importance of accountability and getting the management metrics right. TVM is a 'big idea' that has the potential to be a game changer leveling the playing field so the wealth and power is shared on a more reasonable basis between people who work for a living and those that own the economy and the levers of power. In order to be effective, it cannot be funded in the conventional way with a for profit business plan, but absolutely must remain an open access initiative.

The information on this website may only be used for socio-enviro-economic performance analysis, personal information, education and limited low profit purposes
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