Benchmarking is a systematic and sustained monitoring of services using standardized indicators against agreed targets and benchmarks. It is likely to help effect performance improvements in the identified service sectors by (i) helping local decision makers identify gaps, plan and prioritize improvement measures; (ii) enabling the identification and transfer of best practices; (iii) enhancing accountability to customers for service delivery levels; (iv) providing a framework that can underlie contracts/agreements with service providers; and (v) making it possible to link decision making on financial allocations to service outcomes. The basic municipal services included for benchmarking are water supply, sewerage and slum development.

The Framework developed around a set of Key Performance Indicators that helps identify goals for the ULBs, and the corresponding reform actions that need to be carried out. A set of local action indicators are also developed to assist the ULB in keying down the local ULB level actions that need to be undertaken to achieve reforms/ goals.

The Toolkit is a compilation of data questionnaire, definitions, and guidelines that the ULB can use to generate the Key Performance Indicators for each of the sectors.