‘Substantial cost reductions while maintaining level of service.’
Rising costs, decreasing income and increasing calls for cutbacks. That is the reality for every town council these days. But Assen is able to make substantial savings while maintaining the level of service provision to its citizens and industries. Thanks to ADC.
We asked ADC Performance Improvement to look at our municipality’s operation and identify potential savings. The reason for this was that we needed to reduce our costs yet again, and more radically. ADC gave us a lot of good advice, and showed us significant opportunities for reducing costs – both immediately and over the longer term’, explains Ida Oostmeijer, municipal secretary of Assen, capital of the Dutch province of Drenthe. Like every other municipality in the Netherlands, Assen is facing a huge challenge. Because cutbacks must be made. The economic downturn means that municipalities are collecting lower tax revenue, while their spending – on benefits payments, for instance – is rising. All of which means that Assen has a savings objective of 20 million euros on an annual budget of around 250 million. But how do you make cutbacks without reducing your service provision to citizens and businesses? A real dilemma. But not for the Municipality of Assen, which decided to have the efficiency of its own business processes examined by ADC, specialists in the field of performance improvement.
Concern controller Jan Willem Dijk now says that his municipality is already saving six million euros on its own operations. ‘Further cutbacks meant we had to see whether we could find even more efficiencies within our organisation. This required an examination of the operation in both breadth and depth. That’s work for professionals with a business eye for processes and organisational divisions’, says Dijk during an interview at the town hall.
ADC examined the entire operational management of the Municipality of Assen. Besides a procurement and contracting analysis, a financial/technical analysis and a financial process analysis, a quick scan was carried out of the whole operation, with a more detailed analysis of the processes of four departments. The survey revealed a total savings potential of 11.9 million euros. And, make no mistake, these are structural, annual savings. This, of course, does not yet include a deduction of the costs incurred in realising the savings.
It appeared that the biggest savings were to be found in procurement: 5.6 million euros annually. The big advantage here is that these savings can be achieved relatively quickly and easily. Among the measures making a difference are: the suspension of recruitment, the bundling of civil engineering and property procurement volumes, and the concluding of framework agreements while subsequently making the maximum use of these. The procurement function at Assen had already been centralized and, in view of the large contribution this can make to cost savings, will be further optimised.
Considerable potential for savings was also apparent in the operations themselves. ‘ADC gave us a good indication of our core activities, of what the minimum task package amounts to, what this involves and what staffing it requires in terms of standard hours’, says concern controller Dijk.
‘By taking a different perspective on operations, we now see our way ahead towards making savings in the coming years.’
When the results of the analysis were set against the present operational methods, numerous points for improvement immediately appeared. For example, the simplification of the organisational structure and efficiency improvements of processes. But also that the work could be done with fewer people. According to ADC, this will deliver annual savings of 4.3 million euros.
The financial process analysis revealed a structural savings opportunity of just under two million euros. By improving the organisation of the financial administration processes and the planning and control cycle, less manpower is required here.
All the above-mentioned tasks were carried out by ADC in just under two months. ‘In that short time, the bureau worked together with us in a very pleasant, positive energy flow’, says concern controller Dijk. ‘By taking a different perspective on operations, we now see our way ahead towards making savings in the coming years.’ The first steps along that route have been taken. Assen has suspended recruitment and the hiring of third parties, deploying its own overcapacity instead.
Municipal secretary Oostmeijer can now look back with satisfaction on the work carried out by ADC. She mentions a ‘constructive cooperation’. ‘ADC held up a mirror to us as regards operational management. They are able to examine it in a businesslike and objective way. The detailing of the findings backed up with, for example, benchmark material and statistical evidence, demonstrated a high level of expertise. And the co-operation was pleasant, with respect shown for mutual roles.’
ADC is known in the market for its readiness not only to advise, but also to implement its recommendations. They normally do that on the basis of no cure no pay, just to underline their effectiveness. At the Municipality of Assen, however, this was not applied, but the analysis and advice based on a fixed fee were perfectly transparent.
The municipality is now putting the measures in place, and they are so satisfied with the quality of the work delivered that recently an ADC team was again present in the provincial capital. Whereas earlier a quick scan was carried out of the entire operation and an in-depth analysis of four departments, other departments have now also been put under the microscope by these performance improvement experts from Amsterdam. This, too, has produced numerous savings opportunities based on efficiency improvement.
‘It’s like this’, says concern controller Dijk, ‘ ten per cent is a big amount to save on your budget, a very big amount. But it’s better to save on your own organisation than on the service provision to citizens and businesses. It comes down to this: Assen has ambition and passion. We want to progress, even in a period of austerity. And if ADC can help us on our way, we will bring them in again.’
‘The detailing of the findings backed up with, for example, benchmark material and statistical evidence, demonstrated a high level of expertise.’
[By Freek Andriesse – economic journalist]