Return on investment methodology

Return on Investment methodology used for AFP organisational performance measurement

The broad return on investment methodology used for the AFP performance criterion 1.7 (Return on investment for transnational crime) in 2017–18 (previously AFP KPI 7 is described here.  This methodology has been included in the AFP performance framework since 2010–11. See Annual Reports for results published against this KPI.

The formulae are based on work developed over a number of years by the AFP and augmented with research work conducted jointly with the University of Queensland Institute for Social Science Research (UQ ISSR). 

This performance criterion is based on a simple return on investment formula of benefit divided by cost.  The scope of investigations covered by this measure is limited to drug and financial crime investigations since these are the only crime types for which we currently have dollar estimates of the potential community benefits of AFP activity.  Scope is also limited to investigations finalised in the current financial year to fully enumerate costs and reduce potential double counting of cases from one year to the next.

Total benefit is measured by the sum of two separate measures, the AFP Drug Harm Index (DHI) and the AFP Estimated Financial Return (EFR):

  • The DHI represents the dollar value of harm that would have ensued had illicit drugs and precursors seized at the border reached the community. The overall benefit estimate comprises the sum of the DHI value, a deterrence factor (10% of the DHI value) plus any fines associated with the court outcomes for the drug investigations finalised in the reporting period.
  • The EFR represents the potential revenue lost to the economy from fraud and other economic crime that was identified, investigated and successfully prosecuted.

Total cost is estimated from the sum of the following components:

  • staff costs estimated from all hours attributed by AFP staff to relevant cases; plus an additional factor for the border detection contribution.
  • legal costs based on the average cost of court proceedings. This varies according to the plea entered by the offender and any appeal action taken.
  • prison costs based on an average cost per prisoner per year multiplied by the actual sentence lengths in the relevant court outcomes for finalised drug and financial crime investigations.

The development of these performance measures has been published separately in various journals and reports over a period of several years:

  • Measuring the benefits of drug law enforcement: the development of the Australian Federal Police Drug Harm Index. Attewell, RG & McFadden, M. Bulletin on Narcotics Vol LX, 2008 Measurement issues in drug policy analysis p 45-57
  • Review of the Australian Federal Police Estimated Financial Return. P09053. The University of Queensland Institute for Social Science Research, December 2009. Adjunct Professor Michael McFadden.
  • Benefit cost analysis of Australian Federal Police Economic Crime Investigations. P10018. The University of Queensland Institute for Social Science Research, June 2010. Adjunct Professor Michael McFadden.

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