Non-regulatory Activity Prioritisation and approval Recap on current situation What questions are we trying to answer How we are going to answer these questions? What is our timeline and key milestones? What are our immediate next steps? This paper addresses the following…. NB : This paper only relates to the following Directorates : Representation and Law Reform, Commercial Services, Strategic Policy

Non-regulatory Activity Context and Key Questions we need to answer The current situation with regard to budget approval is as follows… To achieve the above, we need to prepare information which clearly answers the following 3 Key Questions… Question 1 - What activities are we planning to spend the money on? Question 2 - Why are these the right activities to be investing in during 2006? Question 3 - What are the top priorities for 2006? Budget submitted to Council Budget has been Noted More clarity is needed on what activities we are investing in and what the top priorities are given what is starting to emerge from NOP research / consultation

Non-regulatory Activity Overall Approach The following steps will be taken to answer the Key Questions… Directors discuss and agree a common approach and criteria Directors then run through the approach with their teams BU Heads prepare their answers to the Key Questions for their areas Directors aggregate and prioritise across their Directorate using data from BU Heads – highlighting their absolute priorities and proposing any adjustments to their overall portfolio of activities (e.g. accelerate, continue, re-focus, stop, etc.) Directors meet to share their results/recommendations. Prioritisation and checking for overlaps takes place across Directorates takes place - and budget contingency (if reqd) is discussed and agreed. The above information is combined into one document for all three Directorates, to be used during the budget approval process.

Non-regulatory Activity Key Milestones Mon 6 th Tue 7 th Wed 8 th Thu 9 th Fri 10 th Sat 11 th Sun 12 th Mon 13 th Tue 14 th Wed 15 th Thu 16 th Cross Directorate Directors BU Heads Directors meet and agree process/criteria and format/structure/content of end deliverable (i.e. the document we will produce) Directors communicate to their teams what to do and how – with facilitation/ support from transition team if required BU Heads develop draft answers for “Question 1” (What activities) and send to Directors Directors provide feedback on the list of activities if required (e.g. gaps, requests for clarity) BU Heads send completed spreadsheet (answering Questions 1, 2 and 3) to their director Director completes prioritisation across their directorate and decides on changes to portfolio of activities (e.g. accelerate, continue, stop, etc.) All Directors meet, share their recommendations/results – and prioritise/check for duplication across Directorates. Budget contingency could also be discussed and agreed at this point. Refine, build in supporting functions analysis (e.g. ICT) and prepare for meeting with Philip Hamer

Process Approach for Answering the Questions Question 1 – What activities are we planning to spend money on? Question 2 – Are these the right activities to invest in for 2006? Question 3 – What are the top priorities for 2006?

Each BU leader will start by populating the attached spreadsheet (columns A to L) with information about their current activities Each activity will be given a reference number in Column A, to uniquely identify the activity in question (for ease of discussion/tracking) The BU leader would then total up columns H, I and J (the budget and revenue columns) to ensure that they add up to the total budget being requested for the BU in question – and its total projected revenue The BU leader would also do a quick sense check on the staffing columns (K & L) to ensure that the total corresponds to the staff they have available or planned for all of their activities The spreadsheet would be sent by the BU Head to their Director at this stage as a draft for review/comment We will start by developing a structured list of all activities planned for 2006 in each BU… Question 1 What activities are we planning to spend money on?

Process Answering the Questions Question 1 – What activities are we planning to spend money on? Question 2 – Are these the right activities to invest in for 2006? Question 3 – What are the top priorities for 2006?

To answer this, we will break the question down into the following parts for each individual activity… Question 2 Are these the right activities to invest in for 2006? Why should this be a priority activity in the 2006 budget? Is it the right thing to do? Do we need to do it? (or will we lose substantial value/ opportunity/revenue if we don’t) Do we need to do it this year? Do we need to do it this way? A. Aligned with NOP results? C. Are we sure it’s aligned with future TLS direction? B. Is it visible to/useful to the outside world? D. Is it a must have? E. What happens if we stop it? (e.g. sunk cost) H. How does it impact other TLS work? I. Are there legal or other commitments? ?. What is driving this to be done this year? Can’t it wait until next year when strategy clearer? F. Are there alternative ways of doing it? G. Are there alternative ways of funding it? (e.g. direct service, charitable, etc.)

Each BU leader will start populating columns M to P for each activity they entered into the list/spreadsheet they developed for Question 1 In answering the questions in columns M to P, it will be important to be clear and specific. E.g. giving a reason like “It will increase TLS profit” is too general. We need to be more specific and measurable, for example : “This activity will increase annual revenue [derived from what?] from £x to £y by doing abc – and will cut annual costs [incurred in which areas] from £a to £b by doing xyz”** The following slide may prove a useful framework in helping you be complete in terms of your thinking about the types of benefits available in going through the above process….. The answers to the questions on the previous slide will be captured as follows…. Question 2 Are these the right activities to invest in for 2006? ** - Not all sources of value can be expressed in monetary terms, but even for non-monetary value we need to be specific in order that relative importance can be assessed. (E.g. if we have a reason like “Member Group X is expecting this activity”, we should flesh out and say why they are expecting it, when – and what will happen if they don’t get it.)

Question 2 Structuring our thinking regarding benefits Value EnhancementValue Protection Cost SavingCost Avoidance Must Do Irrespective of value, this activity is mandatory. There will need to be a clear reason why (e.g. a legal requirement) Revenue or other tangible benefits which this activity will bring into TLS. If we didn’t take action on this activity now, our current revenue or other sources of value will be eroded. This activity will reduce our current cost levels If we didn’t take action now on this activity – our future costs would grow higher Remember when making statements about benefits, to be clear and specific – by defining the what, how, where and when? Categories of Benefit

Process Answering the Questions Question 1 – What activities are we planning to spend money on? Question 2 – Are these the right activities to invest in for 2006? Question 3 – What are the top priorities for 2006?

Each BU head will now seek to sequence all of their activities top to bottom in priority order (1 being the top priority, 2 being the next and so on) Except in the case of mandatory requirements, the highest priority activity will be the one which gives the greatest benefit for the lowest cost. Given the qualitative nature of many of the benefits, we cannot always be entirely scientific and arrive at a hard number of Return on Investment (ROI)…. …..However, the chart on the following slide might help you think about the relative cost and relative benefit of your activities – which is what you really need to arrive at their relative priority….. Once you have relative priorities, insert priority number against each activity in the spreadsheet - and send the completed spreadsheet back to your Director. By this stage, all columns in the spreadsheet will be complete, except Column Q to S on “Priority” and “Recommendation”…. Question 3 BU Level - What are the top priorities for 2006?

Question 3 Approach to Gauging Priorities Highest Priority Lowest Priority Increasing Benefit Increasing Cost to Achieve For all activities which pass the “Is it the right thing to do” test, you could plot out your activities (doesn’t have to be too scientific) using post it notes on a chart on the wall to help get a feel for their relative priorities before sequencing them in the spreadsheet…. Activity A Activity D Activity B Activity E Activity C

If it is helpful, use a chart a little like that on the previous slide and begin to plot out all the activities in the Directorate. In a similar way to that described for each BU, develop your view of the relative priorities of all activities for all BUs in the Directorate (checking for overlaps) Based on the prioritisation, define any consequential changes you would recommend to your overall portfolio of activities. This is the “so what” which comes out of prioritisation. The chart on the next slide, may be a useful way of thinking about this. Your recommendations should be entered into columns R & S on the spreadsheet … –Any very high priority activities which you believe deserve/require extra budget in order to accelerate or give them more focus? –Any which should just continue “As Is” –Any which should be decelerated or reduced in scope/focus –Any which should be stopped – perhaps to free up more budget for the higher priorities You would then adjust the information in the spreadsheet table to reflect your decisions on the portfolio (e.g. adjusting budgets, timings, etc.) Having received back priorities from all of your BUs, the following steps should be taken…. Question 3 Directorate Level - What are the top priorities for 2006?

Question 3 Changing the portfolio of activities Accelerate/Increase Focus/Grow Continue “As Is” or start new Decelerate, or reduce scope/focus Stop Re-direction of funds/ resource Activity A Activity D Activity B Activity E Activity C