How much is your city spending on basic city services?

How much is your city spending on basic city services?

New KPMG benchmarking report compares city service efficiency and effectiveness, and how capturing the right data makes all the difference.

City governments are spending strikingly different amounts to deliver basic city services, even within the same region, according to Finding the courage to improve: Benchmarking city services, a new report from KPMG International.


The KPMG report summarizes the findings of an in-depth benchmarking survey involving 35 cities around the world. Twelve basic city services were reviewed, including road access, transit, park access, garbage collection, and drinking water supply, among others.


The report reveals that some cities might be inefficient and spending too much for the services they deliver. For example, one city reported that 65% of its drinking water is lost from the time it enters the treatment facility, to the time it is supplied. Some cities report spending two to three times the average for the same services, while others are not collecting reliable data to make relevant service-related comparisons.


“We were surprised to see such variation in the reported costs across cities in our survey. Within the EU alone, some cities spend 5 times as much as others for basic services such as drinking water,” noted Alan Mitchell, author of the study and Executive Director of KPMG International’s Cities Global Center of Excellence. “There are numerous factors we observed to be contributing to such variation. For starters, each city sets its own service levels and those can differ substantially. Further, there isn’t a global standard for collecting and disseminating service costs so comparisons may include expensive processes in one city but not in another.”

Moreover, the benchmarking report also found that cities are challenged in having a clear understanding of the actual efficiency and effectiveness of the services they deliver. The study could have included many other cities but the authors note that numerous cities dropped out when they discovered they were unable to generate basic data critical to measuring service outputs. One city reported that 100% of their roads were in “good condition” – virtually impossible to achieve. However, such a finding further points to the need for a common framework for measuring services.


“What we found was a real lack of information at the decision-making level. And that means that city leaders are left making budget and investment decisions based on little more than a few historic trends and gut feel,” added Steve Beatty, KPMG’s Global Head of Cities. “In today’s fiscal environment, that’s just not good enough.”


”In recent years in particular, the modernization and transformation of Romanian local administrative structures has been made more dynamic by the incorporation of all the existing data at the administrative system level, as part of a more holistic approach, and also through the adoption of IoT (Internet of Things) technologies within the projects comprising conversion of cities into SMART Cities,” notes Ciprian Negura, Director, Management Consulting, KPMG in Romania.


“Cities have the potential to become significantly more friendly with their citizens and their development can be made more lasting and sustainable through the implementation of transformation strategies across smart cities. Smart cities are more efficient and can create more jobs and city development opportunities, while encouraging social inclusion and public involvement in the active management of community issues,” declares Richard Perrin, Partner, Head of Advisory, KPMG in Romania.


Unlike other city benchmarking exercises, the KPMG report focused on comparing tangible efficiency and effectiveness measures such as cost, quality and service value for specific city services. Within the report, the authors compare the participating cities’ results to help city leaders identify ‘average’ costs for basic city services around the world.


“Cities are complex service delivery organizations – each with different priorities, climates and other challenges. They require a wide range of differing skills in order to deliver the range of services they offer” said Beatty.


“Knowing how you rank against comparable cities may be important in some respects, but this was not the intent of the study. City leaders also want to find solutions and ideas that can help them improve the way they plan, deliver and measure city services. The cities showcased in our report demonstrate that innovation is alive and well at the municipal levels of government.”


The study also explores new approaches, innovations and models now being tested and applied in cities around the world – practical lessons that can be shared with other cities. Leveraging specific examples from Europe, Asia and the Americas, the report aims to help city leaders think differently about the way they manage city service delivery.