Benchmarking is a management technique that organizations use for regular monitoring and reporting of various programmes, departments or work units. It is concerned with not only how much is being done, but also how efficiently, of what quality and to what effect. It also serves as a tool for strategic decision making and long range planning.

In context of urban local bodies, benchmarking can be defined as the process of determining how efficiently and effectively the concerned agencies are delivering the services and the effort of the agencies in improving the mobilization of own resources and to measure whether these resources are being utilized in an optimum manner or not. It also provides an assessment of the quality of work the local body is doing and how successful; it has been in satisfying community needs and expectations.

Concept of benchmarking is relatively new; it enables the performance measurement and also helps in understanding the lacunae in existing system.  The relevance of benchmarking in urban local bodies lies in the fact that these organizations provide a wide array of public services to large populations and use large amount of resources.

Benchmarking provides ULBs with a tool for monitoring the inputs and outputs associated with each service, evaluating their performance level and taking corrective actions to improve their performance and hence the service. It also helps ULBs in identifying   resources and how to improve the same. To devise effective policies, the decision makers of urban administration need to rely on set of performance measures that point to specific phenomena such as service levels, access to services (service coverage), efficiency in service provision and financial performance with respect to revenue sources, efficiency in resource mobilization and utilization etc. There was felt need of some performance standards to provide an overall picture of the urban services. Such measures could be in the form of Urban Indicators, Indicators assist in analyzing trends and impacts of policies. Indicators reflect the trend of development and also provide quantitative and qualitative information.  Measuring the performance of local bodies is a complex exercise, but it can be very worthwhile. Performance measurement is needed to address problems relating to both real and perceived performance in an urban local body.

• Rationalize decision making
• Strengthen the accountability
• Provide greater transparency
• Proper resource mobilization and allocation
• Prioritize developmental activities