THE DILEMMA facing one London borough highlights the conundrum for the entire industry. When to re-let your contract? Should we act as quickly as possible, to seize the lower tender prices on offer before demand picks up again? Or should we not be too hasty and lock ourselves into something for another five to ten years, but wait to give all the many exciting new models full consideration?
Harrow council wanted to extend its existing highways contract to give it time to consider the various radical models floating round. There are mooted joint pan-London contracts that could offer big savings. There are alternatives such as the 'thin client' model that strips council overheads right back. These ideas could offer huge benefits, but are still new and relatively untested, and involve huge change.
Harrow has bought itself a bit of time by extending its current contract by nine months, which still gives it a rollercoaster ride of a timetable - the re-procurement starts now, and there's less than a year to go.
Some authorities have already started on the road to a major transformation. They are trying to balance the competing imperatives of devoting time and thought to an open-minded approach to solutions being given by providers offered by the competitive dialogue process with a need to swiftly implementing a change that will see efficiency savings starting to flow in the next financial year or two. Cheshire East, for instance, has only had from December until next week to assess the detailed proposals from three providers under a competitive dialogue.
It's a difficult balancing act. Councils stand to be accused of undue haste or unnecessary delay. They may play safe and make some savings, but not nearly enough to protect the frontline - missing opportunities to join other contracts. They may risk a hastily-pursued procurement that does not deliver against expectations. There are no simple answers.
But councils must look to the long-term, and try to resist the temptation to simply think about the costs and benefits in the next couple of years. That probably makes waiting and giving greater thought to the new contract models the more sensible option in the long-run. But this advice is easy for me to give - I don't have overwhelming pressure from local politicians to deliver savings, right now!
The Efficiency Network is the next step in Local Transport Today's campaign to bring our extensive network of professionals the essential business intelligence required to deliver more with less.
Thursday 31 March 2011
Tuesday 15 March 2011
Why complete visibility over costs is needed
Councils are under greater pressure than ever to critically examine whether they could do things more efficiently, and to root out any unnecessary processes or duplication.
But while they are able to streamline their own management structures and internal procedures, they are stymied by not knowing very much about what is behind contractors' costs. That is why the SE7 Alliance's work on highways costs, led by Surrey County Council, is seeking "complete visibility" over why it costs what it costs to say, put down a square metre of road resurfacing.
How much of this cost is down to the materials, the labour, the vehicles and other, more specialist supplies like road markings? How much of these costs are necessary, and how much of them could be driven down by critically examining business processes? And what scope might there be to jointly purchase some materials?
Transparency of council spending means we know how much a county council is paying its roads contractor every month when it pays its invoice. But we have no idea, as taxpayers, the extent to which that invoice represents good value for money compared to the outcomes achieved and compared to what contractors are providing elsewhere.
Some of these avoidable costs will be down to the local authorities themselves - their ordering processes, their specifications. And contracts when first let are by their very nature good value for money, because they have been won competitively.
But several years into contracts there is no reason why contractors should not be kept on their toes and tasked with overhauling processes and doing things as efficiently as they can.
But while they are able to streamline their own management structures and internal procedures, they are stymied by not knowing very much about what is behind contractors' costs. That is why the SE7 Alliance's work on highways costs, led by Surrey County Council, is seeking "complete visibility" over why it costs what it costs to say, put down a square metre of road resurfacing.
How much of this cost is down to the materials, the labour, the vehicles and other, more specialist supplies like road markings? How much of these costs are necessary, and how much of them could be driven down by critically examining business processes? And what scope might there be to jointly purchase some materials?
Transparency of council spending means we know how much a county council is paying its roads contractor every month when it pays its invoice. But we have no idea, as taxpayers, the extent to which that invoice represents good value for money compared to the outcomes achieved and compared to what contractors are providing elsewhere.
Some of these avoidable costs will be down to the local authorities themselves - their ordering processes, their specifications. And contracts when first let are by their very nature good value for money, because they have been won competitively.
But several years into contracts there is no reason why contractors should not be kept on their toes and tasked with overhauling processes and doing things as efficiently as they can.
Monday 7 March 2011
Where's the information to show the value-for-money councils are giving us?
Road condition got worse in Scotland even during a period of increasing public spending. This was in part because roads did not get enough and actually in real terms saw funding reduce; but also, it suggests, because the available money was not spent as wisely as it could have been.
This is one of the key findings of an Audit Scotland report. Part of the problem is that there is not any information available that would allow councils to put together a business case for radical moves such as joint procurement. Indeed, councils seldom even compare the costs of their own, individual delivery arrangements with other authorities, Audit Scotland found, because different indicators are used by different councils.
This is a problem that was acknowledged south of the border by the Association of Directors for Environment, economy, Planning and Transport last summer at our Future of Local Transport Delivery conference. There is not enough information available allowing councils to benchmark the extent to which they are making the money they've got go as far as it possibly could.
Given the sharp reduction in funds from next month, this paucity of evidence on the value for money different councils offer is increasingly difficult to justify.
This is one of the key findings of an Audit Scotland report. Part of the problem is that there is not any information available that would allow councils to put together a business case for radical moves such as joint procurement. Indeed, councils seldom even compare the costs of their own, individual delivery arrangements with other authorities, Audit Scotland found, because different indicators are used by different councils.
This is a problem that was acknowledged south of the border by the Association of Directors for Environment, economy, Planning and Transport last summer at our Future of Local Transport Delivery conference. There is not enough information available allowing councils to benchmark the extent to which they are making the money they've got go as far as it possibly could.
Given the sharp reduction in funds from next month, this paucity of evidence on the value for money different councils offer is increasingly difficult to justify.
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