An empirical survey of frontier efficiency measurement techniques in local government

Local government in advanced economies is undergoing a period of rapid reform aimed at enhancing its efficiency and effectiveness. Accordingly, the definition, measurement and improvement of organisational performance is crucial. Despite the importance of efficiency measurement in local government it is only relatively recently that econometric and mathematical frontier techniques have been applied to local public services. This paper attempts to provide a synoptic survey of the comparatively few empirical analyses of efficiency measurement in local government. We examine both the measurement of inefficiency in local public services and the determinants of local public sector efficiency. The implications of efficiency measurement for practitioners in local government are examined by way of conclusion.     

Refining the use of Monte Carlo techniques for risk analysis in project planning

Monte Carlo approaches to risk analysis in project appraisal are re‐examined. Limitations with conventional methods are identified, and refinements suggested that deal with increasing uncertainty about variables throughout the project life, along with correlations and cycles among variables. These are illustrated with an example. Emphasis is placed on a practical approach that minimises demands on the appraiser's prior knowledge. Modelling the objective function of an investment appraisal autoregressively enables complete distributional mapping of project outcome, given specification by the appraiser of ‘likely bounds’ for the value of key parameters in the first and last periods of the project life plus an approximate correlation matrix.