On the Use of Data Envelopment Analysis to Improve Performance Efficiency of Governmental Management in Big Cities

Abstract

In this work, a specific performance measurement method known as Data Envelopment Analysis (DEA) is discussed for application in governmental management and improves the efficiency. DEA is a great model that is applied in many operating environments of the modern economy. According to Business Performance Improvement Resource (BPIR) definition, performance refers to current outputs and outcomes obtained from operating processes that permit evaluation and comparison of information. Performance can be expressed in non-financial and financial terms. Measurement refers to numerical information that quantifies input, output, and performance dimensions of processes, products, services, and the overall organization. In business, performance measurement helps managers improve their decision making and organization performance because it provides essential and quality feedback that the operations may be guided accordingly by allowing managers to achieve the best solution. It is a great way to understand, manage, and improve the overall functioning of the organization, especially to improve business success. If the measurement result is wrong or inaccurate, the users of data will be misled and can make a bad decision. First time introduced in 1970, DEA was quickly recognized as an excellent methodology for performance measurement. Being a “data oriented” approach for evaluating the performance of a set of peer entities called Decision Making Units (DMUs) which convert multiple inputs into multiple outputs, it is ideal for measuring the relative efficiencies of units with similar services or product and gives a big advantage of being able to deal with multidimensional nature of input/output variables.