The essential step involved in any organizational- level analysis of government sector productivity is to allow for the costs of different kinds of activities and services that a department or agency delivers. We use variations to ensure that the relative importance and the difficulties of producing different services can be taken account of when constructing a single output measure for the government organization for a given time period. The same approach also applies in comparing multiple providers across a larger services sub- sector (discussed in Part II). The process is called costweighting, and it forms the focus of our first section here. A debate has also taken place about whether effective analysis also requires us to measure the quality of public services, either over time or when looking across different comparable agencies in an overall public services network. Section 2.2 considers this thorny issue. Finally there are three very different ways in which we might approach the analysis of government organizations’ productivity, depending on the level of data that is available. We review how these techniques (index- based, parametric and non- parametric approaches) might be applied to analysing national agencies’ productivity in section 2.3.
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