Review of Outcome Frameworks in other Regulated Sectors

This page contains details of the Office of Rail and Road’s (ORR’s) work in informing its input into the second Road Investment Strategy (RIS2) 2020/21-2024/25.

A key aspect of ORR’s role as Highways Monitor is to provide advice to the Secretary of State for Transport in relation to draft Road Investment Strategies – and in particular, whether the Strategies set for Highways England are both challenging and deliverable. This includes advising on the appropriateness of the outcomes contained in the Performance Specification element of the Strategy – and the related Key Performance Indicators and Performance Measures, which are used to measure performance in the outcome areas.

The first Road Investment Strategy was set in March 2015, covering the period 2015/16 to 2019/20. To inform early work in relation to RIS2, the ORR commissioned Economic Insight to undertake a cross-sector review of existing outcomes frameworks pdf icon PDF, 6,037 Kb in other regulated industries. In total some 15 outcomes frameworks were reviewed across healthcare, water, transport, energy, post, and education. The overarching aim of the study is to see what learnings can be drawn from these frameworks both in relation to the design and features of outcomes frameworks themselves; and the process by which they are determined.

The key conclusions of the study were:

  • there is considerable variation in the design of outcome frameworks – reflecting differences in their aims and goals. Some bodies have adopted a longer-term approach to assessing outcomes, and a less prescriptive approach over time - typically where there is a direct link between funding and outcomes
  • benchmarking has an important role when setting outcomes and balancing outcomes against funding. Find out more details of our benchmarking plans
  • there are also considerable differences in how detailed and prescriptive frameworks are.  The current approach for highways used in RIS1 is not overly prescriptive
  • prescriptiveness is shaped by the link between outcomes and company incentives (eg funding), number of delivery companies, and the degree of controllability
  • stakeholder and customer engagement tend to be an important part of the process for developing outcomes