Western Economic Diversification Canada
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Executive Summary

1.0 Introduction

Business Productivity and Growth is one of three sub-programs supporting Western Economic Diversification’s (WD) Business Development and Innovation Program, which ultimately contributes to the department’s strategic outcome of growing and diversifying the western Canadian economy. Business Productivity and Growth assists western Canadian businesses, business service providers, industry, and research organizations in enhancing business productivity, competitiveness, and growth of western Canadian small and medium-sized enterprises (SMEs). The sub-program’s three activities promote: 1) access to business development services, capital, and leveraged capital; 2) adoption of sound management and business practices and technology; and 3) access to skilled labour.

This document reports the findings, conclusions and recommendations of the evaluation of the Business Productivity and Growth programming delivered by WD over the five fiscal years spanning 2009–10 to 2013–14. In accordance with Treasury Board of Canada Policy on Evaluation, the evaluation methodology was designed to assess the programming’s relevance and performance. It included document/ literature review, file and database review, 74 key informant interviews, 101 survey respondents and three focus groups. A total of 87 Grants and Contributions projects totalling $90 million were approved during the evaluation period. As of December 2015, 63 (79%) of projects were complete. The evaluation findings are presented according to the programming’s relevance and performance.

Although they are part of the Business Productivity and Growth sub-program, the members of the Western Canada Business Service Network (WCBSN) were not included in this evaluation given that their program delivery and performance issues differ substantially from the funded projects. Furthermore, two members of the WCBSN were recently evaluated.1

Since 2014, WD has introduced several significant changes including: implementation of a new streamlined Program Alignment Architecture; introduction of the Western Innovation Initiative (WINN) to assist western businesses to bring innovative technology-based products, processes and services to market; launch of the Western Diversification Program (WDP) call for proposals process; and adoption of new strategic priorities to promote economic growth and the diversification of the western Canadian economy. The introduction of the call for proposals process for both WINN and WDP has enhanced WD’s responsiveness to industry needs by establishing a more regular intake schedule and clarifying the criteria used to assess applications under these programs. In addition, WD has leveraged the call for proposal process to enhance its outreach and engagement with external stakeholders. Consequently, some of the evaluation findings, which covered projects under the continuous intake process have been addressed or resolved as a result of the introduction of the call for proposal process.

2.0 Relevance

2.1 Relevance – Continued Need for Programming

Respondents indicated that the Business Productivity and Growth programming fills an important gap by funding small and medium-sized enterprises (SMEs) to attract and retain skilled labour through improved access to capital, management training, building capacity and strengthening collaboration across stakeholders. There is a continued need for the programming as research shows Canada continues to underperform in terms of productivity, SMEs play an important role in the Canadian economy and could benefit from assistance. Furthermore, focus group participants indicated that WD could do more to promote economic diversification and develop emerging sectors.

Although there are many federal and provincial SME support programs, the department’s Business Productivity and Growth programming is needed and does not overlap or duplicate other similar programs.

  • Out of 51 proponents consulted, 69% of proponents estimated that there was 0 to 25% chance that their project would have proceeded in some form without WD assistance and only 12% indicated that their project would have proceeded in the absence of WD funding.
     
  • Without departmental support, proponents estimated only 5% of projects would have proceeded as planned; most projects would have been cancelled (39%), reduced in scope (31%), or delayed (15%).
     
  • Of the 18 projects that were not approved for departmental funding, two proceeded as originally planned, four (22%) were cancelled, seven (39%) were reduced in scope and five (28%) were delayed.

2.2 Relevance – Alignment with Departmental and Federal Government Priorities

Business Productivity and Growth programming aligns with the federal government’s objectives to stimulate economic growth, job creation and broad-based prosperity and supports the department’s strategic outcome of growing and diversifying the western Canadian economy. Key informants agree that the programming supports Government of Canada and WD priorities particularly with respect to economic growth, job creation, innovation, trade, and economic development for Indigenous Peoples.

2.3 Relevance – Consistency with Federal Roles and Responsibilities

The federal government has a key role to play with respect to promoting economic growth, job creation and broad-based prosperity. Support for business growth and productivity creates new jobs and industries and, therefore, contributes to improving prosperity.

Forty-eight (81%) proponents and 15 (79%) representatives of unfunded projects indicated that the federal government’s support for small and medium-sized enterprises (SMEs) is appropriate and that the federal government can act as a catalyst in business development by helping SMEs address barriers.

In summary, WD’s Business Productivity and Growth sub-program continues to be relevant and is well positioned to support economic growth, increased productivity and job creation in Western Canada. It is also well aligned with departmental and federal government priorities.

To enhance relevance and increase programming impacts, the literature identifies several best practices for the department to consider including: focusing on high growth businesses; adopting advanced technology; and promoting international trade.

Recommendation 1. The department should continue to identify and adopt best practices to enhance the ongoing relevance of the business productivity and growth programming.

3.0 Performance

3.1 Performance – Achievement of Expected Outcomes

Although some of the projects included in the evaluation were still ongoing, the survey reported that the projects were realizing short term results primarily related to skills training or employment.

Performance information reported to WD indicated that most completed projects met or exceeded their target expectations. Within the period of the evaluation, 3,398 businesses were created, maintained and/or expanded, 5,596 jobs were created or maintained, and business sales increased by close to $154 million. Reasons for completed projects not meeting or only partially meeting targets included unforeseen delays, poor project administration or in the case of one project, inclement weather.

Progress reports from projects that were in progress indicated that these projects were on course to either meet or exceed their target expectations.

  • Client satisfaction with projects that involved participation in and/or delivery of community workshops, seminars, presentations and special events ranged from 76% to 100% exceeding set targets.
     
  • Sixty-two percent of project proponents reported that other individuals, businesses or organizations also benefitted from their project by improving their market share/competitive position, obtaining information for future endeavours and maintaining/creating partnerships.
     
  • There were some positive unintended impacts such as increased awareness of business productivity among SMEs and increased awareness of departmental programming among other potential proponents.

Success factors included collaboration between industry and other project partners, projects that were well timed in terms of demand or general economic conditions, leveraging other sources of funding, alignment with provincial priorities, and programming flexibility in terms of both type and implementation of projects.

Factors limiting success included limited time frames to complete projects, types of costs eligible for WD funding and annual project budgets. Some focus group members commented on WD’s recent narrower focus on skills development to the exclusion of other types of Business Productivity and Growth projects.

In terms of quality and usefulness of performance measurement, results on the 87 projects are primarily reported at the immediate and intermediate outcome levels. In addition, there are 165 unique indicators which cannot be captured systematically.

  • The majority of participants agreed that the performance measures and reporting requirements are appropriate and that WD’s performance measurement system is effective in tracking and reporting on outcomes.
     
  • Most departmental staff perceive that an appropriate risk management strategy exists and that the main risks relate to projects not achieving results or not being implemented as planned. Risk is managed throughout the lifecycle of the project and addressed primarily through the monitoring, reporting and claims payment processes.
     
  • Eighty-five of the 87 projects were classified as low risk (68 projects) or medium risk (17 projects), showing the department tends to fund low risk projects.

In summary, the 87 projects covered in the evaluation are realizing short term objectives, however, it is not possible to determine longer term impacts. Nevertheless, proponents reported many direct project results as well as positive unintended impacts.

Recommendation 2. The department should improve how it measures and reports on longer term outcomes in order to enhance the business productivity and growth programming’s ability to tell its performance story.

3.2 Performance - Demonstration of Efficiency and Economy

  • The department recently adopted an efficiency indicator for Business Productivity and Growth, which is stated as “operating costs per $1,000 in Grants and Contributions (Gs&Cs) expended”. The total Gs&Cs invested by the department in Business Productivity and Growth were $23,390,759 in 2013–14. Operating expenditures for the period were $3,060,317 resulting in an efficiency indicator of $131. Overall, operating costs as a proportion of Gs&Cs expenditures for Business Productivity and Growth activities compare favourably to other departmental Business Development sub-programs.
     
  • The 87 projects leveraged $1.67 per dollar of departmental G&C funding approved. This leverage rate compares favorably with several similar federal programs.
     
  • The projects reporting outcomes during the study period cost $7,953 in G&C funding per business created, maintained, or expanded and $2,206 per job created or maintained. The completed projects also generated $26.00 in increased sales per dollar cost.

The programming is well delivered, however, it could be more flexible and responsive.

  • Although the new call for proposal process improves response times, suggested improvements included more predictability in the intake schedule and exploring ways to reduce the level of effort spent by applicants in preparing initial proposals.
     
  • Other suggested improvements included continuing to strengthen and leverage partnerships in delivering programs and exploring funding for emerging and riskier sectors (e.g., new media, clean energy).

In summary, the efficiency of the Business Productivity and Growth sub-program is comparable to other similar federal programs. The programming is well delivered although it could be more flexible and responsive to client needs.

Recommendation 3. The department should review its business productivity and growth programming to improve flexibility and responsiveness.

 


[1] 1) Evaluation of the Women's Enterprise Initiative: http://www.wd-deo.gc.ca/eng/60.asp; 2) Evaluation of the Canada Business Network: http://www.ic.gc.ca/eic/site/ae-ve.nsf/eng/h_03696.html