In my university, we continuously establish cost centers (CCs) for various purposes. Some examples of these cost centers include "Building Inclusive Cities," "Creating Digital Opportunities," "Field Assessments and Feasibility Studies," etc. Two-thirds of the amounts spent on these initiatives are related to compensation. We hire personnel to conduct these studies or initiatives, but so far, our monitoringonlyfocuses on the amounts allocated/spent. My question is: What different types of performance indicators (PIs) and/or benchmarks can be established to evaluate these cost centers? How can we determine whether they are using funds effectively or economically? I am seeking to establish non-financial indicators (NFIs) that will be useful when creating cost centers. Examples of PIs and NFIs are welcome. Thank you very much for your ideas and input, and for your time.

I. Problem Background and Core Challenges

The above situation reflects a common performance management dilemma in public sector or academic institutions: cost centers are named with a mission orientation, but the evaluation system remains at the level of financial compliance. Since two-thirds of expenditures are for personnel compensation, simply monitoring budget execution rates cannot answer the fundamental question of "whether the money is well spent." Therefore, it is necessary to introduce non-financial indicators (NFIs) to capture the quality, efficiency, and impact of activities.

II. Design Framework for Non-Financial Indicators (NFIs)

It is recommended to build NFIs from four dimensions:Input(resource utilization efficiency),Process(quality of activity execution),Output(direct deliverables),Outcome(long-term impact). Each cost center should select corresponding indicators based on its objectives and set benchmark values (such as historical data, peer comparisons, or target values).

2.1 Input Dimension (Efficiency)

  • Average personnel hours per study/initiative (hours/project)
  • Proportion of compensation expenditure to total project cost (data already available, but can be compared across projects)
  • Average cost per completed feasibility study (USD/study)

2.2 Process Dimension (Quality and Timeliness)

  • Project on-time completion rate (%): proportion of projects completed according to planned milestones
  • Stakeholder engagement: e.g., number of workshops, number of consultation feedback responses
  • Report review approval rate (%): proportion passing internal quality review on first attempt

2.3 Output Dimension (Direct Deliverables)

  • Number of reports/white papers published per quarter
  • Number of digital tools or platforms created (e.g., for "Creating Digital Opportunities" project)
  • Number of field assessments completed (e.g., for "Field Assessments and Feasibility Studies")
  • Number of people participating in training or capacity building (for "Building Inclusive Cities" project)

2.4 Outcome Dimension (Impact)

  • Policy adoption rate: number of times research findings are cited by university-level or external policies
  • Community improvement index: e.g., percentage increase in resident satisfaction in areas covered by inclusive city projects
  • Degree of digital divide reduction: e.g., increase in number of new digital service users or network coverage rate
  • Subsequent funding acquisition rate: proportion of projects that successfully obtain external funding based on feasibility studies

III. Methods for Setting Benchmarks

Benchmarks can come from:Internal historical data(e.g., average completion rate over the past three years),best practices of peer universities(obtained through industry networks), ortarget values(determined through negotiation between management and project leaders). For example, set "project on-time completion rate not lower than 80%" or "average cost per feasibility study not higher than X USD."

IV. Specific Examples: For Three Cost Centers

4.1 "Building Inclusive Cities" Cost Center

  • NFIs: Number of residents participating in community planning meetings; adoption rate (%) of inclusive design standards in new projects
  • Benchmarks: Organize at least 4 public consultations per year; increase adoption rate from current 30% to 50%

4.2 "Creating Digital Opportunities" Cost Center

  • NFIs: Number of people completing digital skills training; usage rate of new online services
  • Benchmarks: Train 500 people annually, with a completion rate ≥85%; increase usage rate by 20%

4.3 "Field Assessments and Feasibility Studies" Cost Center

  • NFIs: Proportion of research recommendations adopted; average research cycle (months)
  • Benchmarks: Adoption rate ≥40%; cycle not exceeding 6 months

V. Implementation Recommendations

It is recommended that when creating a cost center, an "indicator card" be developed simultaneously, containing 2-3 financial indicators and 5-8 non-financial indicators, with clear data sources, collection frequency, and responsible persons. Review these indicators regularly (e.g., quarterly) and analyze them in conjunction with budget execution. This allows for monitoring fund usage while also evaluating its effectiveness and economy.

"Effective performance evaluation requires a balance between financial and non-financial indicators; otherwise, you only see costs, not value." — A classic management accounting perspective

I hope the above examples and framework can serve as a reference for you. Please adjust the indicator weights and benchmark values according to your institution's specific context. Further discussion is welcome.