1. www.esd-toolkit.org supported by a local government initiative sharing nationally to improve services locally Cost Architecture – Using it in an Authority Presentation to the Business Improvement Working Group

2. supported by sharing nationally to improve services locally a local government initiative Why do it? Delivering Value for Money in Local Government: meeting the Challenge of CSR07 (Value for Money Plan): ‘….promote basic principles for consistent identification costing and analysis of processes…..so enabling robust benchmarking to take place. John Healey MP Minister for Local Government in the forward to the CLG Delivering Efficiency: Understanding the Cost of Local government Services: ‘The outputs presented here include a common cost allocation framework for calculating the cost of business processes and a standard definition of what constitutes a local government transaction’ ‘Making clear connections between costs and service outputs reveals the true potential for ‘value for money’ savings, particularly in relation to back office process improvement and in recognising the cost of delivering service transactions thorough different access channels.’

3. supported by sharing nationally to improve services locally a local government initiative Journey This project picks up on: 2006 - CLG ‘Validated Cost to Serve’ 2008 - CLG ‘Delivering Efficiency: Understanding the Cost of Local Government Services’

4. supported by sharing nationally to improve services locally a local government initiative 2006 2006 report, found it difficult to compare ‘like for like’ costs across channels Made two major recommendations: Evolve a consistent approach to cost measurement, based on agreed principles and common guidance. Liaise with the ESD toolkit to evolve an approach to transaction analysis and definition that supports measurement of volumes and costs, from service request to fulfilment

5. supported by sharing nationally to improve services locally a local government initiative March 2008 Addressed the consistency and comparison issues with : Transaction Life Cycle oDemocracy - what the organisation does to engage with its customers including the cost of democracy oPre-transaction - things that take place prior to the real transaction commencing oRequest – A request from a citizen or body for a need to be met oFulfilment – what the organisation does to meet the customer need i.e. the business as usual process oPost fulfilment – things that may take place outside of fulfilment e.g. complaints appeals or recovery of debts oSupport – enabling activities such as recruitment, procurement and business planning Recommendations for ‘common standards’ to produce consistency: oLocal Government Functions list (Powers and Duties) mapped to LGSL oLocal Government Process – Standard process for use by all Local authorities oActivities – Common Activities used in Local government

6. supported by sharing nationally to improve services locally a local government initiative Examples of Functions LGSL MappingPrincipal LegislationPower or DutyType Education Grants – Free School Meals Education Act 1996 (s512) Power (duty for those eligible for free school meals) County Elections – Electoral Register Representation of the peoples act 1973 DutyAll Licences - Food businesses Regulation 9 of the Food Premises (Registration) regulations 1991 DutyDistrict Death – Funerals – buying a grave L/G Act 1972, s.214PowerDistrict (concurrent power with parish Council)

7. supported by sharing nationally to improve services locally a local government initiative Common Processes (51) Common processNon-preferred term Scope Providing informationWeb content, leaflet, A to Z, brochure, (blank) application form The fulfillment of a request for information AuthenticationThe process of registering and verifying a customers identity Debt recoveryDebt CollectionThe process associated with enforcing the recovery of a debt of money owed to the organisation. Includes all steps short of court action - see also Enforcement which may follow this process InspectionSite visit, inspection of documents. The act of carefully examining or looking over property (including plant and other fixed assets), accounts people or documents This may (but need not always) include a visit in an official or professional capacity

8. supported by sharing nationally to improve services locally a local government initiative Activities May be a ‘discretionary’ list with preferred terms Some examples of the 117 identified: Authorising payments Case Monitoring Cash Receipts – Issuing Direct Debits / Standing Orders Processing Identifying risks Invoices processing Printing Scanning / Photocopying Site visit Travelling

9. supported by sharing nationally to improve services locally a local government initiative Common Processes and the transactional life cycle

10. supported by sharing nationally to improve services locally a local government initiative Transaction Life Cycle & Process Life CycleExample Process 1DemocracyEngagement ; Citizen Needs ; Policy Development ; Neighbourhood and Place needs; Strategic Planning ; 2Pre- transaction Providing Information ; Request for Information ; Authentication ; Entitlement 3RequestService Request ; Status Update 4FulfilmentPayments in ; Payments out ; Providing Advice ; Inspection ; Room/facility booking 5Post- Fulfilment Compliment/Complaint (about quality) ; Debt recovery ; Appeal against a decision 6SupportRecruitment and selection ; Business Planning ; Grievance ; Resource Planning

11. supported by sharing nationally to improve services locally a local government initiative Cost Calculation Overview Democratic Pre- transaction Request Process Fulfilment Post - Fulfilment Support The Calculation LGSL Staff Third Party General Ledger Depreciation Transport Support Services Premises Supplies and services Web Phone F2F A = Cost C = What is being measured LGChL Confidence Rating B = Volumes

12. supported by sharing nationally to improve services locally a local government initiative Life Cycle, Process and Activities

13. supported by sharing nationally to improve services locally a local government initiative Outline Project Plan DatesActivities June 08Cost Architecture spreadsheet – hand over to esd-toolkit and identify up to 6 pilots Mid-July 08Cost Architecture Spreadsheet is re-branded and modified prior to being issued as a ‘Prototype’ Late July 071 st Workshop with IPF August to December 08Pilots underway – 3 further workshops with feedback January / Mid-February 09Draft Guides to managers and practitioners Specification of changes to cost spreadsheet and esd- toolkit functionality Case Studies Mar 09Development of Production calculator with esd-toolkit upload/download capability June 09Phase 2 pilots commence

14. supported by sharing nationally to improve services locally a local government initiative Approaches The approach adopted must be manageable, not overly complicated and fit for purpose. Option 1 – ‘Top Down’ allocates costs to the delivery of individual services by the breakdown of the general ledger Option 2 – ABC based on staffing costs Option 3 – ABC with additional cost of overheads Option 4 – ABC with more full apportionment of costs Progress between the 4 approaches may be thought of as a maturity model, reflecting the general development of cost accounting and process mapping within the organisation ABC= Activity Base Costing

15. supported by sharing nationally to improve services locally a local government initiative Fit within esd-programme Ii will not be ‘another’ calculator because it applies the ‘candidate standards’ which allow comparisons between services – will feed into esd-toolkit Part of the ‘Transformation Theme’

16. supported by sharing nationally to improve services locally a local government initiative Part of Local Government Business Model Corporate Management Resources Mosaic Acorn Other Segmentation Customer Insight Surveys Colleagues Feedback Colleagues Members Ethnography Journey Maps Demand Customer Needs Functions PowersDuties Local Government / Public Service List Processes Transactions Interactions Activities Activity Based Costing Customer Satisfaction Corporate Strategy Customer Satisfaction Circle of Need

17. supported by sharing nationally to improve services locally a local government initiative Thank You For further information, please Contact: Peter Wrigley peter.wrigley@esd.org.uk Lead Facilitator Cost Architecture Project and Transition to NI 179