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Business Methods Cut Cost
Planning – 30 January 2009

Planning departments are adopting business methods to identify activities that add real value to their service and sifting out those that are not essential in the quest to make financial savings, Mark Smulian discovers.

How many planning directors could say for certain, hand on heart, what the processes under their control cost? And would the service be better if some work was not carried out, allowing cash to be reinvested in something more productive? With councils under pressure to deliver efficiency savings, one project has set out to answer these questions. Its lengthy name, "Transforming local planning services - using business process improvement techniques", belies its compact scale.

The project was financially supported by the DCLG but run by four participating authorities - East Riding of Yorkshire Council, Hambleton District Council, Leeds City Council and the London Borough of Lewisham. Its findings, project adviser Colin Whitehouse stresses, are by planners for planners and not government-imposed guidance. He has worked in e-government for many years, initially for Staffordshire County Council and now for central government.

The project began before the Killian-Pretty review and was independent of it, although the two exercises shared knowledge where appropriate. For geographical reasons, co-operation between the three Yorkshire councils was closer than with Lewisham. Discussions led this trio to the discovery that councils can benchmark against each other regardless of their size because they all run similar planning processes.

Leeds might be a large city and Hambleton a sparsely populated district, but the proportions of their planning budgets allocated to different stages of the process do not vary greatly. From this, it became possible to see where costs were anomalously high and to work out how to reduce them. Whitehouse explains: "We asked whether efficiency savings and improved service can be delivered at the same time. It is widely thought not to be possible and that one must suffer for the other. But we found that it can be done."

One key finding is that a lot is spent on managing failure rather than on preventing it from occurring in the first place. Whitehouse cites one nameless council where the chief planner personally checked all reports - even those written by officers with 15 years' experience. One officer remarked that if he knew that every report he wrote would be checked by someone else, what onus was there on him to get it right?

Another case involved a chief planner who insisted on dealing with every complaint, regardless of its seriousness. "It was not reasonable to expect him to be involved in that level of detail," says Whitehouse, pointing out that a chief planner is a costly resource.

The project also found that the move in many councils towards single points of contact for members of the public is not always helpful to planners. Applicants who would once have been put in touch with reception staff dedicated to planning must now deal with call centre staff who know little of the intricacies of the process, leading to errors.

Customer satisfaction is no guaranteed guide to a service's performance, Whitehouse explains. "We found a consistent rise in costs where councils put the expertise in somewhere down the line rather than frontloading it. You can see to an application swiftly and accurately, but if you turn customers down they will not be satisfied. Yet this doesn't reflect how well you do your job."

Invalid applications are regarded as one of the main generators of unnecessary costs, a situation worsened by the introduction of the standardised planning application form. Whitehouse estimates that time spent sorting out errors adds between 35 and 65 per cent to the cost of processing an application. There is even evidence of agents using council planners as, in effect, a free resource to rectify errors in applications, which again imposes on scarce planning budgets.

Anticipating the type of accreditation scheme proposed in the Killian-Pretty review, some councils have offered gold, silver and bronze status to agents according to their error rates. This gives them a commercial incentive to improve applications, since they would wish to boast of five-star status to clients. One authority has even tried notifying clients directly about all invalid applications submitted by their agents.

Another substantial, if seldom measured, source of excess cost is the proportion of applications that go for determination by a planning committee. This varied from three to 18 per cent in the four pilot authorities. "It is a cultural issue in some councils. If councillors say the cost is the price of democracy, it is difficult to do anything about that," Whitehouse reflects.

But planning staff may be perfectly capable of wasting money without help from councillors or agents. In one case, planners received applications electronically, printed them out then scanned them back into a database. "That's barmy," Whitehouse concludes succinctly. Meanwhile, other measures examined showed surprising variations. The cost of posting out neighbour notifications varied from 76p to 4.39, depending on the radius around an application site to which letters were sent at each stage.

To pin down the variables, the project team devised a model to put each stage of the process from application to decision into three categories:

- Value-added activities that are of direct benefit to the applicant, the ultimate customer.

- Sustaining non-value-added activities that do not help the applicant but are essential, such as consultation or examination against regulations.

- Non-value-adding processes with which planners could dispense.

Across the project, 45 per cent of costs were identified as falling within the first category and 17 per cent in the second. The remaining 38 per cent look like money down the drain.

Benchmarking between the participating councils found wide variations in costs that could not be explained by their differing sizes or the nature of their work, because the proportions of major, minor and other applications were roughly the same. The cost of taking an application to committee ranged from 283 to 1,204, not including any extras associated with holding the meeting. Evaluation costs varied between 48 and 106.

After pondering data that were in most cases new to them, the four councils appreciated that identifying and eliminating unnecessary stages in the process would provide both superior service levels and financial savings. Councils are under pressure to save money through shared services. But as Whitehouse puts it: "How do you share services if you don't know what you do?"

Business Processes

Each participating council in the project took a slightly different approach. But in essence the process involved determining the situation as it stands and the position they want to reach. Techniques used included:

- Staff workshops with external consultants without managers present to map current processes and establish what really goes on.

- Training planners in activity-based costing, a new concept for most, recording the time taken for an activity and linking it to its actual cost.

- Splitting activities into value-added, sustaining non-value-added and non-value-adding and seeking to eliminate the last through discussion with staff.

- Preparation of an implementation plan in two stages, distinguishing between measures that can be brought in quickly and those such as better information technology that require spend-to-save investment.

Staff involvement proved essential. Managers were at pains to stress that the exercise was not aimed at crude cutting of jobs or costs but was a genuine attempt to root out activities that could be automated or dropped, releasing staff for work that makes better use of their professional skills.

Completing these projects took longer than envisaged and the councils involved emphasise the need for realistic timescales. Project adviser Colin Whitehouse concludes that successful business process improvement needs "good staff engagement, robust project governance, appropriate resources, clear vision and strong leadership".

Business Outcomes

According to Maurice Cann, head of service development at Hambleton District Council, his authority has cut spending by 13 per cent through its business processes review.

Hambleton's project report says the end-to-end analysis of costs "provided detailed financial information we have never previously had", allowing it to seek savings that could be reinvested in its move to development management. East Riding of Yorkshire Council's work revealed that compared with its two neighbours, the unit cost associated with an application going to committee was much higher, as was the proportion of cost committed to pre-application responses.

Leeds City Council's report notes: "For the first time, we actually know what invalid applications are costing us to process and how much time we spend on panel activities. This is essential information when putting together business cases or encouraging staff to get involved in change. The underlying themes of right-first-time and single-touch processing get to the heart of an efficient and effective service that delivers improved customer satisfaction without increasing the stress and pressure on staff."

The London Borough of Lewisham identified a list of areas for improvement, including the relationship between pre-application advice and the cost of rectifying invalid applications, multiple transactions between internal teams that hold up decisions, duplication of checking and amending reports and over-reliance on manual systems.