Background

VERTTI is a computerized database which gives information about factors involved in the provision of services by the municipalities. The system covers now 91 municipalities in Finland, which have themselves defined the key criteria for assessing municipal performance.

VERTTI enables a municipality to compare its performance with other municipalities and over time, providing also an opportunity for "benchmarking" assessment.

The system has already resulted in substantial savings in many municipalities. Thus the costs of introducing VERTTI are covered by the savings achieved. While VERTTI initially covered only technical services, it is currently being expanded to include also social services.

Narrative

1. Background and objectives

Finland is politically and administratively a highly decentralized country. The municipalities have a strong revenue base and the right and obligation to plan and implement the technical and social services required by the inhabitants. Over the past few years the municipalities have become increasingly aware of the need to ensure that good management practices are followed in the provision, operation and maintenance of those services. The services provided by municipalities are considered and treated as their "products", and, with diminishing resources, a great deal of attention is paid to the efficiency of the delivery process.

Systematic assessment of the performance is essential for efficient management even in the public sector and interinstitutional comparison is one of the most obvious tools for that. Yet, haphazard and non-systematic data base and the inconsistent definition of the measurement parameters and indicators have presented a critical constraint for comparative studies. VERTTI is a reference database which has been developed to provide a solution for these problems in Finland.

VERTTI aims at providing comparative, continuously updated data on the efficiency of the services provision by municipalities. It is:

• A method which facilitates the assessment of performance and accountability in the provision of municipal services and which provides a framework for improving the performance through benchmarking assessment;
• A management tool for improving cost monitoring and institutional efficiency, as well as for quality assessment and development.

VERTTI is based on uniform definitions of the "products" (i.e. services) and the parameters and formula used in the calculation of performance indicators. All these factors - the definitions, parameters, formula, and indicators have been mutually agreed upon by municipalities, and they are applied in the calculation of municipality-specific performance indicators, yielding comparable reference data e.g. for benchmarking procedures.

Technically VERTTI is a computerized database has been designed for the Access programme and 486 microcomputer. Each organization included in the VERTTI system receives an updated version annually.

The development of VERTTI was initiated in 1991 by the Technical Service Centre of the City of Jyvaskyla, in Central Finland. Other pilot cities involved in the project were Joensuu, Imatra, Kouvola, Hameenlinna, Pietarsaari and Oulu. These cities worked together in order to define the key factors of municipal performance and production of technical services, and developed performance assessment criteria for the "products", i.e. technical services, and for the various product levels of the product hierarchy. An example of a highest level product is the street network. Maintenance, street lighting etc. are then examples of lower level products belonging to the same product hierarchy.

The work involved also extensive data collection and research on the current costs of providing services, for example. The Finnish Association of Local Authorities launched the project. When the project grew in size, Efektia Service Ltd was hired in the beginning of 1993.

Managers of three city technical departments should be mentioned for their particular dedication to the development of the project. They are Mr Olavi Niemi, Managing Director of Jyvaskyla Technical Service Centre (P.O. Box 192, FIN-40351 Jyvaskyla, tel. +358 41 625 030), Mr Kari Ahonen, Head for Infrastructure Unit, Imatra Technical Service Centre (Virastokatu 2, FIN-55100 Imatra, tel. +358 54 681 4444), and Mr Eero K-uos-manen, Director, Technical Department, Joensuu City Council (Niskakatu 1, FIN-80100 Joensuu, tel. +358 73 161 3402).

The development of the VERTTI reference database can be divided into three main phases as follows:
 

Phase 1 (1991-1993)

The performance measurement system was developed and the VERTTI reference database established. This data base provided information on various aspects of the production of services specified by type of service and municipality. Altogether 26 municipalities were involved in this phase.
 

Phase 2 (1994-1995)

The system was further developed to suit for assessing the performance of small and medium-sized municipalities; the system was modified and expanded as well as updated. Altogether 91 municipalities were involved.
 

Phase 3 (1995-1996)

The system was extended to cover new service operations by municipalities. The first versions for the social and health sectors (day care and senior citizens' care) were developed. The decision was also taken to initiate the development of a similar database for the educational sector in the beginning of 1996.
 

2. Use of VERTTI

Supports the management by objectives and results

The Finnish municipalities increasingly set their performance goals and monitor their outputs utilizing the information made available through VERTTI. It has become obvious that VERTTI can contribute to the introduction and adoption of the new management approach - management-by-results - as it facilitates the establishment of tangible goals and objectives, as well as performance parameters for each product level stage separately. In this way the responsibilities of and actions by all levels in the hierarchy of municipal agencies can be made transparent when the performance is assessed.

Also a growing number of municipalities have started introducing benchmarking procedures systematically.

The VERTTI database provides a solid and uniform way of assessing operational performance and redirecting activities. This will become even more emphasized in the future, when the performance reports from the various administrative sectors will be based on the uniform criteria established in the reference system.
 

Supports market-orientation

The VERTTI system provides performance indicators on the economic viability and efficiency of the production of municipal services and products. In this way it paves way to the assessment of the competitiveness of service production, as well as to enhanced market awareness. The information yielded by VERTTI can well be of use in considering the distribution of responsibilities between the public and the private sector.
 

Facilitates networking

Through VERTTI, a functional network is created between various agencies. They appreciate the benefits from the reliable comparative data which enables them to improve their actions. VERTTI also includes municipality-specific lists of contact persons for each service, so that the users can easily acquire further information.
 

Enhances partnerships with inhabitants and clients

The VERTTI database clearly demonstrates that attending to the needs and demands of the clients, i.e. the inhabitants of the municipality, is one of the cornerstones of successful service production. VERTTI includes measurement tools for studying the opinions of residents on such questions as street maintenance, quality of parks and management of water supply and their respective costs.

This kind of combination of hard data and client opinions is extremely useful for strengthening user participation and establishing the correct cost/quality relationship for service production.
 

Facilitates the monitoring of the performance over time

The municipal agencies use the VERTTI reference database system not only to compare their performance with other municipalities at a certain point of time, but also to monitor the development of their own performance over several years. This procedure makes it possible to launch benchmarking development with a view to improving one's own performance even further.

In general, the VERTTI benchmarking system has contributed greatly to the economic and other performance of the organizations involved, and many cities have reported considerable savings. For example:

* In Jyvaskyla, the systems of street lighting and snow removal have been renewed, resulting in the annual savings of hundreds of thousands of FIM.

* In Imatra, the costs of infrastructure development have been reduced by 10 per cent over the three-year period thanks to the benchmarking procedures applied.

* In Hameenlinna, the contracting procedures used in construction have been reorganized, which has led to saving appr. 3.5 million FIM only in 1993. In addition, the time required for the civil works projects has been decreased by 20-30 per cent.

The VERTTI system has also been assessed on the basis of the criteria presented for the Habitat II Best Practices. It has led to improvements at least in the following aspects:

Im-pact (i) c) Community-based planning and parti-cipa-ti-on in decision-making and resource allocation, (ii) e) Greening of the city and effective use of public space, g) More efficient energy use and pro-duction, (iii) a) More effective and efficient administrative, management and information systems,

Part-nership ii) Local governments and their associations, vii) Academic and scien-tific community, viii) Human settlements professionals and their associations, ix) Civic leaders, mayors, councilors ,

Sustainability ii) Social policies and/or sectoral strategies at the (sub)national level that have a potential for replication elsewhere, iv) Efficient, transparent and accountable management systems, v) Management systems that make more efficient and effective use of human, technical, financial and natural resources.

Example 1. Economic efficiency of constructing a residential street in various municipalities in 1994

Example 2. Construction of roads, main street in some cities 1991-1994 (FIM/m).

Example 3. Resident assessments of the winter maintenance of streets in some cities in 1995.

Impact

• Provides a benchmarking system for urban management.
• The application of the system has resulted in substantial savings in several municipalities.
• In Jyvaskyla in the provision of street lighting and snow treatment.
• In Imatra the costs of infrastructure development have been decreased by 10%.
• In Hameenlinna the time and costs involved in civil works projects have been decreased by 20-30% and by millions of FIM.

Sustainability

The VERTTI reference database, with its focus on performance, has contributed to more efficient production of technical services by municipalities and thereby increased the competitiveness of the public sector agencies. The reference database can also be used to reorient municipal administration as well as to improve the use of new technology. The costs of introducing VERTTI are thereby covered by the savings achieved through its application.

At present, VERTTI is mainly applied in the sectors responsible for the production of technical services. Yet it is quite possible to apply the results obtained through VERTTI also in other fields. The system has already been expanded to include such social services as children's day care and senior citizens' care.

The VERTTI reference database can be introduced in stages, for instance by adopting one administrative sector or even one of VERTTI's components at a time. Also, it is possible to select just one desired level of a product hierarchy, and calculate the parameters for that. In this case the comparability of the data is retained for that particular level.

Contact

Ritvanen, Mr. Antero/Efectia Service Ltd
Toinen linja 14
Helsinki
Finland
FIN-00530
358-0-41 3722 532
antero.ritvanen@kuntaliitto.fi

Sponsor

Association of Finnish Local Authorities
Alanen, Mr. Jussi Pekka
Toinen linja 14
Helsinki
Finland
FIN-00530
350-0-7712

Partners

Jyvaskyla Technical Service Centre, City of Jyvaskyla
 
Imatra Technical Service Centre, City of Imatra
 
Joensuu Technical Department, City of Joensuu