Validus Articles

Transforming Efficiency and Value for Money

The recently published Audit Commission findings confirmed that Local Authorities still have a long way to go in maximising use of resources and delivering efficiency and value for money.

Whilst there is rightly a focus on financial reporting mechanisms, the real challenge lies in understanding and challenging what actually happens on a day-to-day basis 'at the coal face' of service delivery. In the private sector, this is where profits are won or lost. In public services, this is where customer satisfaction, efficiency and value for money are won, or not.

The Audit Commission's Value for Money Profile Tool may provide a useful start point in identifying potential areas of focus, however as priorities differ across Councils, it is necessary to drill down to the detailed level to really understand the current status and improvement potential.

Validus Efficiency And Value For Money Model

Validus has developed an Efficiency and Value for Money model and methodology through working over many years within Local Government, as well as Utilities, Financial Services and Housing Associations. It identifies and prioritises the key areas of concern; coaches key managers and staff in achieving Value for Money; involves staff in generating ownership of improvement solutions and makes Value for Money highly transparent and understandable. It also provides a clear, visible and ongoing methodology for continuous improvement.

The methodology critically examines:

The combined impact of all three determines the real value gained versus the cost of delivery and crucially, the service delivery outcomes resulting. The information enables the transparent and objective evaluation of the current status and the development and evaluation of improved service delivery models. This includes sub-contracted options and partnership working.

The Efficiency and Value for Money model has been specifically designed to enable organisations to understand, in detail where, how and why resources time and effort, at different levels and grades, are consumed. It measures the effect of poor or weak processes, highlighting areas where there is duplication of effort, where poor processes and working practices in one area means more work in another. It enables comparisons of performance and output, in particular across multi-site organisations where processes and working practices are often non-standard. It also provides valuable and detailed base data to assess the impact of re-engineering options and decisions including e-enablement, partnership working and outsourcing.

It has also been specifically designed to identify 'core' workloads, tasks and activities and the real value for money achieved by the current configuration of processes, workloads and skills, and 'non-core' tasks and activities that can often absorb a vastly disproportionate amount of time, resource and effort and contribute little or nothing to required outcomes.

It is specifically constructed to coach managers and staff at all levels to be conscious and aware of time, use of resources, measured outcomes and whether effort is contributing towards 'core' outcomes and objectives or is being consumed by other, non-core activities. It coaches people in what to look for, how to look, how to challenge currently accepted practices and norms, in an open and objective manner. It enables deeper understanding of performance management and supports performance appraisal mechanisms with factual data.

Once the base data has been collated and summarised it enables managers to consider a series of 'what-if' options including: discontinuing certain tasks/activities that are not 'adding-value'; re-locating process, tasks, activities to more appropriate functions, areas, locations or skills groups; what the impact of major IT / e-enablement will be; what are the implications for market-testing/outsourcing (what point in the value chain to outsource); implications of partnership working with others; re-defining roles and responsibilities; skills currently employed and what is needed in the future.

The Validus model itself is designed in excel to be open and transparent, easy to understand and with a clear audit trail so that managers and staff can see where the data originates and how it has been summarised to generate the key findings and conclusions.

Benefits

The following is typical of the benefits the approach has delivered to Local Authorities:

• Significant re-deployment of resources to additional 'value-added' activities
• Re-distribution of tasks/activities from senior officers to administrative grades
• Reconfiguration of organisation structures, increased flexibility and use of resources
• Freezing of recruitment programmes - increased workloads managed using existing resources
• Significant reductions (in some cases elimination) of sub-contractor costs
• Improved process efficiency - between 35% and 50%

These have resulted in cashable savings to the Authorities concerned.

Applications : Where To Use The Model

The Efficiency and Value for Money model is particularly useful where:

• Business processes have been allowed to 'evolve' over time in an unstructured and un-coordinated manner
• Major IT development or e-enablement is being implemented
• Significant processes / tasks / activities are being considered for outsourcing or market testing
• There are no or poorly defined workload allocation, monitoring and reporting processes
• There are no 'standards' for job completion – particularly in 'back-office' based functions
• Similar functions are spread across multi-site locations – often with different process, working practices and 'cultures'
• There are obvious performance variations across teams, locations but no obvious underlying reasons why
• Organisations are merging and processes, working practices and cultures need to be re-aligned, with best practices adopted
• There have been major organisation changes, roles and responsibilities have been re-defined but there is a lack of clarity and residual 'confusion'
• Major efficiency gains are required

Conclusion

The sector is entering 'an unprecedented period of funding famine and drive for efficiency savings'. The year-on-year target of 2.5% will become gradually more challenging. The Validus model provides an essential tool to examine the current status and opportunity for improvement at a detailed level. It will also help to build a visible, ongoing framework and internal capacity and capability to drive and deliver efficiency and Value for Money opportunities.