HomeMy WebLinkAboutCAO-006-13 Clarington REPORT
CHIEF ADMINISTRATIVE OFFICE
Meeting: GENERAL PURPOSE AND ADMINISTRATION COMMITTEE
Date: June 24, 2013 Resolution #: By-law#:
Report#: CAO-006-13 File #:
Subject: "VALUE ADDED SERVICE" AUDIT
RECOMMENDATIONS:
It is respectfully recommended that the General Purpose and Administration Committee
recommend to Council the following:
1 THAT Report CAO-006-13 be received for information.
Submitted by:
Franklin Wu, M.A.O.M.
Chief Administrative Officer
CC:FW
CORPORATION OF THE MUNICIPALITY OF CLARINGTON
40 TEMPERANCE STREET, BOWMANVILLE, ONTARIO LIC 3A6 T 905-623-3379
REPORT NO.: CAO- 006-13 PAGE 2
1. PURPOSE
1.1 The purpose of this report is to respond to Resolution #GPA-336-13 of May 27th
THAT Staff be directed to prepare a report to the General Purpose and
Administration Committee before summer recess on how a "Value Added
Service" audit can be performed with a view to questioning if certain services
can be subcontracted."
2. BACKGROUND
2.1 Our Understanding of "Value Added Service Audit"
In our research on municipal literature and practice we were unable to find a
clear definition of"value added service audit". However, given the context of the
discussion and the face value of the term, we assume it to mean a service
delivery review.
This term is defined in the municipal sector as "an evaluation process in which a
specific service is systematically reviewed to determine the most appropriate
way to provide it". This is the term and definition used in Making Choices: A
Guide to Service Delivery Review for Municipal Councillors and Senior Staff, a
joint publication of four Ontario municipal organizations: The Ontario Ministry of
Municipal Affairs and Housing, the Association of Municipal Managers, Clerks
and Treasurers of Ontario, the Municipal Finance Officers' Association of
Ontario and the Ontario Municipal Administrators' Association.
2.2 Best Practices for Undertaking Municipal Service Delivery Reviews
The review process set out in the Guide referenced above "draw on best
practices" from processes tested in Ontario and internationally. The basic
framework set out in that Guide is shown in Attachment 1 and it suggests that a
service delivery review answer the following 10 questions:
1. Do we really need to continue to be in this business/service?
2. What do citizens expect of the service and what outcomes does Council want
for the service?
3. How does current performance compare to expected performance?
4. Do the activities logically lead to the expected outcomes?
5. How is demand for the service being managed?
6. What are the full costs and benefits of the service?
7. How can benefits and outputs of the service be increased?
8. How can the number and costs of inputs be decreased?
9. What are the alternative ways of delivering the service?
10.How can a service change best be managed, implemented and
communicated?
REPORT NO.: CAO- 006-13 PAGE 3
2.3 Options for How to Undertake a Review
There are two broad options for how to undertake a review: (a) contract a
consultant to undertake the review or (b) provide the review internally.
The matter posed by the resolution — questioning whether certain services
should be subcontracted - would be a matter that either a consultant or an
internal review could address. This is Question #9 above and "Stage 4 Option
Two" of the attached flow chart.
3.0 KEY CONSIDERATIONS IN CHOOSING HOW TO UNDERTAKE A REVIEW
Experience elsewhere revealed that the key considerations in choosing whether
to contract a consultant to undertake a review or to undertake it internally tend to
be:
1. impartiality
2. cost
3. expertise
4. time
3.1 Level of Impartiality Expected
The level of impartiality expected in carrying out these reviews is a key
consideration in choosing whether to contract a consultant to carry them out or
conduct them internally. Of course, having a party independent of the
Department can bring greater acceptance of the results of the review by some
stakeholders, regardless of whether maintaining the status quo or something
close to it or far from it is suggested by the review. It limits perceptions of a
biased review that may be held if the review is provided internally.
3.2 Cost of the Review
There are few municipalities of Clarington's population size and responsibilities
that have undertaken a service delivery review. Three examples were found:
• Grey County (pop. approx. 85,000) hired a consultant at cost of about
$92,000 to undertake a review of its transportation services that went into
organizational matters, businesses process as well as matters of
contracting out certain components. It is estimated that an equivalent or
greater amount of internal staff time was also devoted to supporting this
work, e.g., information collection, analysis, reporting, project
management over about a two year period. The County has since
decided to allocate $75,000 annually for regular departmental reviews.
• Port Hope (pop. approx 16,500) using its own staff undertook a review of
a wide range of services (using some of the 10 questions) over a 14
month period. They note that the cost of the review is difficult to
ascertain, given it was done in-house and literally almost all of the
REPORT NO.: CAO- 006-13 PAGE 4
Department Heads, managers, supervisors and front line staff were
involved in the review — so a lot of man hours over and above regular
work flows. This review includes suggestions that in turn there be a
review of contracting out in two areas: (1) the marina ("to review
opportunities for privatization or contracting the service or a partnership')
and (2) outsourcing of funeral set up service at non-municipal
cemeteries.
® Brockville (pop. approx. 20,000) hired a consultant at a $75,000 cost to
conduct a review primarily focussed on three areas: general
administration, fire services and economic development. Contracting-out
was not examined in these reviews. This review took about six months.
3.3 Expertise
Closely related to cost is the availability of in-house expertise if internal review is
the preferred option. Experience elsewhere indicates that expertise is required
in: program evaluation, financial analysis, operational analysis, cost accounting,
service management and labour relations. This type of expertise needs to be
come in tandem with management skills required to assess how best to ensure
efficiency and effectiveness in service delivery.
Clarington does not have any staff with all of the above skill set and experience
to undertake service delivery reviews. However, if using a team approach
drawing on the expertise from various departments, then undertaking an
individual service delivery may be doable depending on the time and timing of
the review and the ability to forego other work.
3.4 Time Required to Undertake the Review
The amount of time required for the review is also an important and interrelated
consideration. The amount of time involved is a function of (1) the scope of the
review (many or just one service), (2) the number and nature of the questions
being asked (the 10 questions from the Guide or something more or less than
that) and (3) the scale and complexity of the particular service(s) under review.
The time required for the three examples are noted in 3.2 above. More
generally, it has been found that for municipalities of any size:
® that contract a consultant to do a comprehensive review, generally
undertake them over the course of one to two years, although the time
required varies based on availability of municipal staff to provide
background information, data requested by consultants, the complexity of
the service under review and availability of comparable data.
REPORT NO.: CAO- 006-13 PAGE 5
• that contract a consultant to review one service can complete it in as little
as 90 days and as long as a year. Of course the cost the municipality is
willing to pay can also determine the amount of time to undertake the
review, with a trade-off to some extent between time and money.
• that choose to do an internally led review focussed on one service have
ranged in time from a few to several months depending on the complexity
of the review. Again, unlike with a consultant, all the municipal staff
expertise is not able to be pulled off exclusively or all at the same time to
focus on the review.
4.0 CONCLUSION
4.1 This report has set out to answer the question about how to undertake service
delivery reviews. There are two broad options: (a) contract a consultant to
undertake the review or (b) provide the review internally provided it is a single
service that is to be reviewed.
4.2 If Council wishes to undertake a review, the next steps will be to identify a
particular service(s) to be reviewed, the questions it would seek to have
answered by the review, whether to undertake the review using a consultant or
internally and the municipal cost/time it is willing to incur to undertake a review.
4.3 Service delivery reviews are time and resource intensive exercises and may
involve sensitive local issues with accountability resting with Council for
determining the service(s) to be reviewed, the desired service levels and
performance standards (against which the service delivery options would be
assessed) and ultimately deciding whether to adopt the review's
recommendations in whole or in part. Before beginning a review, Council must
be committed to seeing it through, provide the necessary resources, give staff
clear direction and wholeheartedly support the process.
CONFORMITY WITH STRATEGIC PLAN — The recommendations contained in this
report conform to the following priorities of the Strategic Plan:
Promoting economic development
X Maintaining financial stability
X Connecting Clarington
Promoting green initiatives
Investing in infrastructure
Showcasing our community
Not in conformity with Strategic Plan
Staff Contact: Curry Clifford, MPA, CMO, Corporate Initiatives Officer
Attachment 1 - Flow Chart For Service Delivery Reviews
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{ 4 I % C k Y t
Understand And Evaluate
M Current Performance
�Aw 3 How does current performance
compare to your performance
targets?
° What is current performance versus targets?
Do outputs logically lead to preferred outcomes?
How is demand being managed?
What are the full costs&benefits?
How efficient is the service?
Develop performance measures
Set performance targets
14Option One
Consider Internal
1mprovements
Could internal improvements be made
in a cost-effective mannerto meetthe
desired service levels and outcomes?
Increase the number of benefits
Increase the number of outputs
Decrease the number of inputs
° Decrease the cost of inputs
If internal improvements are successful in
achieving service targets and performance
outcomes,go to Stage 6.
If they are not,go to Stage 4,Option 2
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Select Provider
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1
Identify range of delivery methods
Direct delivery
Purchase of services(including in-house bids)
Municipal business corporations
Municipal service boards and other local entities
Partnerships
Licensing
Privatization
Identify barriers to changing methods
Assess suitability of feasible methods
Use thefour analytical tools from Stage 3 to analyzethe
suitable methods
Define scope of work
Prepare and circulate bid document
Evaluate bids
Prepare and negotiate the contract
Execute implementation plan for delivery of the service
Implement,Evaluate ° Implement
a and Report ° Evaluate
° Report on any improvements and barriers to
improvements as per section 300 of Municipal Act,2001
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