February 2011
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Current issue: |
February 2011 |
Recent Government announcements have shown a renewed commitment to managing costs in the current economic conditions, with particular focus on reducing the size of the public sector. The aim is to reduce costs and free up resources for improved frontline services. As at 30 June 2010 this had seen a reduction of around 2,100 full time equivalent positions.
The Prime Minister stated “we’ve been moving resources to the front-line but, while we’ve made significant progress, the public service is still a long way from being a lean and efficient organisation. The Government machine still consists of more than 80 Crown Entities each with their own Board, 38 departments, more than 70 portfolios, and more than 60 separate Budget Votes“.
What we are seeing is a move from staff caps, which we have previously criticised as a blunt instrument for improving cost effectiveness, to a focus on structural reform. However, whether working with reduced staff or merged operations there is a need to focus on costs and what is achieved for the investment. But… standard financial systems do not always make this easy as they typically report on organisational lines. As a result, you can’t readily assess which services are most cost-effective, which services require change, or the impact of changes to one service on others.
Achieving best value from services requires the right analysis of strategy, people, process and technology resources. Costing tools help to support sensible cost reduction and front line service improvement decisions – such as:
▪ Have we focused operations on achieving our strategy?
▪ Have we got our resources in the right place?
▪ How can we improve the efficiency of our service delivery?.
Balanced Score Card helps directly link operations with strategy. Activity-based Cost Management identifies the resources soaked up by each service, and identifies the profitability or efficiency achieved by each service. And, this same approach also works when developing business cases for new services.
Lasting improvements to the value for money from services will require more indepth work on where costs lie.
Recent projects
- Recent costing & pricing advice
▪ Ontrack / Toll track access charge adjudication.
▪ Critique of Martime safety charge.
▪ Insourcing of legal services.
▪ Fees & charges scoping reviews for city & regional Councils.
▪ Cost of Building Act functions.
- Revenue and Financing Policy. Review of funding tools for the Bay of Plenty Regional Council such as options for allocation of Lake Rotorua restoration costs.
- Merger of land-fills. Scoping the rationalisation of solid waste management functions between two local authorities.
- Review of the Building Act. Worked with the Department of Building and Housing on the review of the consents process, and how this was going to be delivered. The result was moves toward a streamlined process and an understanding of the realities of the system operating in both small towns and large cities.
