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The public sector has responded positively to the efficiency themes highlighted in Gershon. William Little looks at...
The public sector has responded positively to the efficiency themes highlighted in Gershon. William Little looks at six organisations that have made significant savings

Workforce efficiency

Crown Prosecution Service

Efficiency reviews at the Crown Prosecution Service found there was not enough strategic planning over budgets and resources in the 10 service centres it runs around the country to provide accommodation, training and human resources support. Duplication was common and there were clear areas where waste could be cut.

Angela O'Connor, director of human resources at the CPS, says this came to a head when three different adverts for lawyers from three of the 10 service centres were placed in The Times on the same day. There had been no co-ordination, no shared branding and no sharing of costs.

The first change was cutting the 10 service centres, which all had the same roles. Five were closed and the other five became centres for specific departments. Recruitment was moved to one centre, for example, to reduce duplication and help ensure strategic planning, instead of all 10 centres having a own small HR department each.

It was taking more than 25 weeks from placing an advert to getting a recruit in post. This was reduced to seven weeks, allowing for savings in reducing temporary cover for vacant permanent posts.

This was achieved by recruiting on a constant rather than an ad hoc basis. Potential applicants are now directed to the CPS website. Times are set up for interviews before candidates are called and references are followed up quickly after interviews. Future adverts will focus on marketing the CPS as an employer and interesting place to work, rather than distinct jobs. Adverts will direct people to the website.

Ms O'Connor says the CPS has become more efficient in its training. As the law is constantly changing, a lot of money was spent on sending staff to training centres in Somerset and Newcastle. They had to be put up in hotels, which proved expensive. An online prosecution college has been set up, offering updates and training, which has cut the need for travel. Face-to-face training is still used but only when essential. The training a new lawyer needs has been reduced from five days to three by offering it online. This includes seminars facilitated via webcams.

The CPS has introduced a training scheme for administrative staff that reduces staff turnover and allows it to compete with the private sector for the services of lawyers. Ms O'Connor says the scheme trains any staff member to become a prosecuting lawyer. It is open to people from those with no formal qualifications to those with a degree. More than 70% are women and 42% are from black and ethnic minorities, with ages ranging from school leavers to people in their 40s and 50s. The scheme is an investment in the future workforce and to improve recruitment and retention.

Procurement excellence

Metropolitan Police Force

The Metropolitan Police Force has improvedprocurement throughout the organisation to the extent that within only a year it has achieved a 300% return on its investment.

Anthony Doyle, deputy director of procurement at the Met, says there was a lack of strategy, management information and skills within the procurement team.

Purchasing was fragmented and there was no competition among suppliers.

The first step on the route to change was to secure funding from senior management. A review was undertaken to show where improvements could be made. Once funding was made available, changes were concentrated in three areas: people, processes and management information.

The department undertook a recruitment drive to supplement the skills of the team by employing people from the private sector for their more 'robust procurement capability'. At the same time, they trained the team to be more professional and to improve their skills and knowledge.

Processes were updated, going from

payment by standing order to a more flexible regime so purchases could be made through e-tendering and e-auctions. Contracts were redrafted to ensure more robust terms and conditions with suppliers. An intranet site was set up to help co-ordinate and centralise purchasing - catalogues from suppliers were placed on the site so all departments were buying from the same place.

Management information was improved by introducing a system that allowed people to see how much was being spent and on what across the whole of the Met. Overdue notices and tenders are sent out electronically.

The Met has introduced a category management model of procurement based on cost rather than price to help it buy services and products. Before, says Mr Doyle, the objective was to buy the cheapest product. Now, with more sophisticated systems, they can look at the cost of a service or product across its lifetime - this would include, for instance, the cost of maintenance.

The model also ensures the team meets other departments to discuss needs before they buy supplies to ensure they are getting what they really need. This means a culture change took place where the procurement team had to become more confident to challenge other departments over their spending plans.

Procurement was also improved by creating better competition among suppliers. The Met was sold as a customer to various suppliers centrally, rather than each department approaching suppliers in an ad hoc fashion. This increased competition, as suppliers became aware of the Met as a potential customer.

Meetings with suppliers were centralised, so members of procurement and the various departments could put on a stronger, more professional negotiating front. For example, the Met organised meetings with all the major fuel suppliers to find out what deals they could get for the whole organisation, to save through bulk buying.

Project management

Procure 21

Procure 21 delivers publicly funded NHS capital projects below£25m, such as building diagnostic and treatment centres.

Traditionally, project management of construction schemes has been hampered by a lack of skills. The NHS had few if any professional project managers and the competitive tendering process suffered.

Paul Fenlon, construction manager at Procure 21, reveals time was wasted by having to tender for every building project and there was no guarantee the project would come in on time, be of the right quality or at the price agreed.

In fact, he says, the process was often controlled by the construction company or the architect. They could change plans and thus costs during the construction period itself. Often there was no way of knowing what the final cost would be until the very end of the project.

There was also a requirement to choose the cheapest tender, which was not always the best value in the long term.

Following a review four years ago, the contract process was modified, giving project managers in the NHS more control.

Engineering contracts with a built-in guarantee that clearly stipulated a maximum spend were introduced. This gave control back to the NHS project manager and only he or she could make changes to the building process, not the construction firms. This put more emphasis on getting the planning process right at the beginning.

The agency took out advertisements across Europe seeking a selected number of construction companies to work with them. The relationship between Procure 21 and the companies was developed into partnerships.

Mr Fenlon says 11 companies were chosen after a rigorous selection process to ensure they could deliver projects on a national scale, provide the right quality of work and guarantee costs. This immediately made a huge efficiency saving, removing the laborious task of having to tender to upward of 5,000 companies. The selection process has already been completed.

This process change has already saved money. A diagnostic and treatment centre built in Milton Keynes was finished months ahead of schedule, saving money on the wages of construction staff and inflation.

As the new process places full responsibility for decision making with the NHS project managers, training has been developed. A new manual ensures all project managers follow the same processes. This is updated regularly to ensure that practice skills and learning from project managers is shared across the organisation.

Procure 21 has developed a one-year postgraduate project management course at Lancaster, Portsmouth and South Bank universities for its staff. Staff members from the 11 construction companies selected to work with Procure 21 guest lecture on the course, which further helps the spread of best practice, innovation and understanding between the two groups.

The changing nature of the process and relationship has meant there has been continuous improvement. Quality standards for building work have been set, while the 11 construction companies now familiar with working for the NHS are able to target and improve their delivery methods.

Efficiency of transactions

Department for Work & Pensions

The Department for Work & Pensions pays more than 85% of benefits directly into customers' bank accounts, and is on track to deliver savings of£400m a year by 2006 as a result of this.

The DWP has around 20m customers, more than half of whom are pensioners. In 2002-03, it issued more than 840m payments. From April 2003, the payment modernisation programme began to move more than 14m customers paid by paper-based methods of payment to direct payment into bank accounts and the Post Office Card Account.

A transaction, normally paper based, to pay benefits in cash costs on average about£1, while direct payment into a normal bank account costs around 2p per transaction.

Objectives were set not only to ensure people moved to the new system but also to ensure those on benefits understood the advantages of having a bank account. The system was also sold as more modern, secure and an efficient way of paying that helped increase financial inclusion. Communication with the client group was essential.

The department contracted with a private sector supplier to run a customer conversion centre. The centre sent out letters, took account details and did the initial follow-up of non-respondents.

Clear targets were set. For instance, the people who were yet to convert had to have done so by March this year. The remaining conversion was given to civil servants in Jobcentre Plus centres, based where most people on benefits live. Temporary staff were employed to contact all the remaining people on benefits and to explain the process clearly and helpfully. If respondents did not respond or understand - most were old - civil servants would visit their houses.

Order books were phased out as planned by March this year. The DWP met its target for paying 85% of people into an account a year early and new accounts at post offices were ready on time in April 2003.

The main reasons for the scheme's success, say civil servants at the DWP, was that it was phased in over a two-year period, allowing them to give people enough time to set up accounts and respond. Planning was essential. The scheme could not go ahead until the details of customers' new bank accounts had been agreed.

Accusations in the media that the scheme was imposed on people were countered with a strategy for more choice. The department says it gives people more choice about where and when they get their money. Customers can still get their money at the Post Office. There was also resistance from some people without bank accounts who worried about going into debt when they opened one. This was solved by opening accounts which do not have overdraft facilities.

The main savings are from the ending of the order book contract with the Post Office (£400m) and reduced fraud (£50m). There have been smaller savings in printing, postage and stationery costs, but these need to be offset against new costs, such as Post Office card account charges.

Benchmarking and performance management

University Hospital Birmingham

Five years ago, when the Department of Health published NHS trust mortality rates, University Hospital Birmingham found its mortality rates were higher than expected.

Irene Dalston, head of health informatics, says the figures looked only at the age and sex of the patients. Also, she says, the hospital takes in mainly very ill patients in its cancer and transplant wards. Low-risk maternity mortality information was not included because another hospital nearby specialises in it, distorting mortality rates further.

Ms Dalston says the hospital set about gaining accurate information about performance by making sure the coding of patients was more detailed to reflect diagnosis and the complexity of medical procedures.

The first step was to get clinical ownership of the coding by ensuring doctors' initial diagnoses and contributing factors to a patient's health were included. The coding system was changed to reflect this. Administrative staff took information from patients' notes and ticked pre-determined boxes on spreadsheets.

However, a lay administrator could not always work out what a doctor was diagnosing. This required a fuller engagement from clinicians, who had to check performance statistics for their work each month to see if it accurately reflected what they were doing. There was some initial resistance, says Ms Dalston, but doctors soon saw the benefits. In terms of accountability and to assess how they and the hospital were performing, doctors were happy to get fully involved.

This has now been developed with a new coding structure in four areas: mortality, the hospital-acquired infection MRSA, emergency admissions and discharge. A team of coders work closely on each area with doctors to solve problems. The information is now so detailed more effective checks on doctors' work can be made. For instance, if there are three deaths within one speciality in a month, case notes of patients are examined.

The new data is also being used to work out payments by results in a clear and effective way. Presentation of data has moved to a traffic light system. If a department meets national targets it is shown in green; those likely to miss them or falling behind are in red. This helps staff interpret complex information easily. It also signals to senior management where they have to concentrate resources.

Rationalisation/sharing back office functions

Al Sigl Center and others

Nine disability charities in Rochester, New York, have launched a shared services scheme. The managed services organisation for the partnerships is the Al Sigl Center, which was already providing facilities management services to the eight others.

The decision to share services has led to major savings and service improvements. At one charity, staff turnover fell from 48% to 22% as a result of more professional human resources support. Three of the charities reviewed cost savings and found that for every dollar spent by the organisation, it is saving the partner agencies $3.

However, concerns between the charities had to be dealt with. There was a reluctance to give up control of back-office functions as well as difficulty in persuading directors to co-operate in areas where they had had autonomy. There was also a fear services were to be provided by staff working at one of the member charities. Smaller organisations worried they would not have the same access to services as the bigger members.

An outside facilitator worked through these concerns with the charities. Steve Russell, vice-president for business services at the Al Sigl Center, says it was extremely useful. 'Someone from outside brings expertise and can help drive the process through,' he says.

The problem of who was to provide services was overcome by appointing an outside agency to provide support. Service level agreements were established to specify the responsibilities of the provider, ensuring all charities' needs were met equally. As agencies saw the benefits, they offered to share back office functions too. With more members, it became easier to show advantages.

The charities' first step was to bulk buy insurance and centralise claims management. As a result, the partnership has kept insurance costs flat over the past two years.

A main issue was redundancies. Voluntary redundancies were planned, with some departing workers offered jobs at the Al Sigl Center, which needed more staff.

Chief executives' roles have had to change - they have more time to spend on fundraising and delivering services, where before they spent time managing back-office functions. Now they have to think how strategic objectives are going to be met.

Extra training has been given to make the most of the extra time staff have and senior executives are making

performance management more rigorous to ensure the extra money on front-line services is used effectively. Outside facilitation is now being employed to develop performance objectives.

Gershon summary

>> The Gershon Report is a government initiative to look at ways in which councils can make the best use of the resources available for the provision of public services.

>> Among the areas it tackles are information and communications technology services, staff reform and the sharing of best practice.

>> The aim of the reforms are to reduce administration and other costs and place more investment into frontline services.

>> The treasury estimate that current guidelines will save councils the equivalent to£20bn a year by 2007-08 or 2.5% savings for every council department per year.

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