Qualityworld
Back in vogue
Value management has gone in and out of fashion in the UK's public sector, but now it is here to stay. Many local councils around the country have adopted the challenge to achieve better value and continuous improvement. Peter Garfitt, assistant chief executive of Lincoln City Council and Jon Sutcliffe, human resources adviser for the Employers Organisation, explain the learning curve
Value analysis came to Britain from the US in the late 1950s. The British Productivity Council promoted it, and its 1964 film, Value Analysis, was seminal. Harold Wilson's labour government encouraged several government departments to set up programmes. The then General Post Office and Ministry of Defence set up value analysis and value engineering units, both of which succeeded in saving their costs many times over. The Ministry of Technology also promoted value analysis and in 1966 facilitated the successful establishment of the Institute of Value Management.
In 1972, a new British Productivity film, VA/VE for Profit, while aimed primarily at the private sector, also showed how the Inner London Education Authority was using value analysis to help design school furniture. Unfortunately this was the highpoint. Despite its success, governments lost interest in value management and productivity in general and it waned or went underground as companies saw no point in advertising a source of competitive success in the absence of promotional effort on the part of government.
Value revival
Of course no one told Japan or the rest of the world that value management was not in fashion and it is mainly due to two external initiatives that it is making a comeback in the public sector. These are:
- the 'SPRINT' programme initiated by the Council of Ministers in 1989
- a US policy document of 1993 known as OMB A-131
The strategic programme for innovation and technology transfer (SPRINT) did much to revive awareness in the UK. It also helped to encourage HM Treasury and other government bodies to advocate value management in the public sector. The US document OMB A-131 is a 'presidential directive' issued by the White House's office of management and budget OMB). It required all federal executive agencies to have value programmes. The OMB document became a point of discussion for several years after its implementation. This is a pertinent extract from it: 'For the purpose of this circular, value analysis, value management and value control are considered synonymous with VE (value engineering)... VE is a technique directed towards analyzing the function of an item or process to determine 'best value', or the best relationship between worth and cost.'
This particular section was discussed at a series of seminars and workshops organised by London University at the HQ of the Association of District Councils. Then, in 1996, the 'best value' policy was first announced, with origins attributed to the association. Best value was then enshrined in the local government act of 1999 that required councils and police and fire authorities to review all their services to secure continuous improvement.
Unfortunately, somewhere along the line best value and value management became completely disconnected and no agency was responsible to ensure training in the use of methods and tools. The outline principles of value management can be seen in the best value policy but not in the practices. The best value policy thus encountered difficulties and has had to be reviewed. In particular, reviews lacked 'challenge', were too long, were allowed to drift and yielded poor returns in relation to cost. Table 1 illustrates how value management can ensure challenge.
Table 1: How value management ensures 'challenge' |
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Today, however, the local government Employers Organisation has formed a partnership with the Institute of Value Management and consultants Bone and Robertson to promote value management and encourage training through local government's regional employer network.
That's the way to do it
Wherever local authorities and other public service use value analysis and value management it delivers results. During the 1990s when councils had compulsory competitive tendering and the NHS had market testing, those public services that used value analysis to sharpen their performance found that they won their in-house bid. The paradox here is that without the threat of competition it is unlikely that value analysis and value management would have been tried, yet with value management competition is not often needed.
One of the earliest such instances was the London Borough of Hillingdon's building maintenance section. This service won contracts amounting to £2.25 million following a thorough review of services that resulted in smarter working with no loss of staff. Here shop floor staff joined with supervisors and managers and methodically yet creatively identified improved ways of working - equivalent to a 15 per cent improvement in productivity. In other words, other things being equal, value analysis and value management delivers more than competitive tendering.
Another such example is the Edinburgh Healthcare NHS Trust where the catering, cleaning, grounds maintenance, portering and linen services of four hospitals were facing competition. Over £500,000 of savings were made with no loss of quality to ensure that jobs stayed in-house. The reviews were undertaken through numerous workshops with staff and stakeholders. Southampton University Hospitals NHS Trust also had successes with implementing value management in its engineering and maintenance services, where 100 employees were up against stiff private sector competition. The trust was so pleased with the results, value management extended to pathology, radiology and pharmacy. The underlying precepts of value management continue in the NHS to this day.
Local government successes
Warwick District Council recently earned a three-star best value inspection result for its review of outdoor recreation and amenities using value management. The review covered all aspects of grounds maintenance, sports pitches, play areas, arboriculture and sports development. Value management ensured a structured way of maintaining staff involvement to help them find ways of improving services.
An initial one-day workshop brought Warwick staff together using a range of methods including SWOT analysis, creative analysis to link the service to community plans, and function analysis. It ensured that staff took ownership of the processes and brought together the stakeholder involvement groups to develop a final report and implementation action plan. The results paid off and inspectors gave the service a three-star rating with an excellent prospect of improvement. The inspector's report said: 'During our inspection it was apparent that staff felt involved in the review, and that the process had been well-managed to ensure that all areas were covered.'
Another success story is West Dunbartonshire Council's use of value management for their wide-ranging review of children's services. This was undertaken under the best value policy, but it soon became clear that traditional methods were not engaging the right people in the process of change, so they tried the value management approach. By focusing on the functions of the services from the customer perspective, West Dunbartonshire discovered how they could best cooperate, in partnership, to improve children's services. Value management ensured from the outset that stakeholders pooled ideas and effectively shaped the review.
Working together in a series of workshops was very effective and stimulating for those involved. Value management encouraged elected councillors to be involved, which proved invaluable to council officers to ensure that community priorities were met in the round and that thinking was not limited to traditional service boundaries. It also ensured that clear objectives were set and key review phases identified - ensuring that the crosscutting review worked well. A cross-cutting review is a term used in best value in local government - it means a review that cuts across all services related to a major theme, in this case 'children', as opposed to just 'childrens' homes' or 'domestic care for children'. The idea is to promote what is known as 'joined-up government'. The structured nature of value management invariably ensures shorter and sharper reviews and, in this instance, it saved three months in the review timetable.
The council saw value management's benefits in terms of its speed, the variety of issues and ideas explored, enthusiasm and ownership, project clarity and the substantial prospects of beneficial change. As a result, value management was then used more widely in West Dunbartonshire in the Legal Services review, for example.
Why use value management?
Michael Graham, the consultant who assisted the review, believes that time is key to successful value management. Time is the one resource which is only available once and value management optimises its use. It is the focus on action-oriented effective teamwork which really delivers dividends. Often a value management review is the first time that everyone involved has actually sat down together to address how to work together better.
For larger groups the workshop style of approach means everyone involved can flesh out the issues there and then and agree on the action to move forward. In smaller groups, value management focuses on purpose. Enablers for service functions rapidly draw out the key decision criteria and options. It is interesting that the number of traditional 'meetings' dramatically reduces so people do actually have the time to improve.
Best value policy
The best value policy requires that councils, police and fire authorities follow the 'four C's' (see table 2). Lawrence Miles, the originator of value analysis, said in 1961: 'If, in the pursuit of better value, functions have not been identified and those functions have not been evaluated by comparison, then the process has not been value analysis, but merely cost analysis.'
Table 2: The four Cs of best value that councils must follow |
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The CWOIL group of local authorities - Cambridge, Welwyn-Hatfield, Oxford, Ipswich and Lincoln - was selected in 1997 as one of the 40 best value 'pilots' to see what works best. By chance they came across value management and used function analysis system technique to break down housing and revenue services into their component elements.
This enabled CWOIL to compare 'apples with apples' as part of the service review process that was broadly based on value management. The result was ministerial praise for what was described as 'one of the best benchmarking exercises in local government for many years'.
While value management has been scoring tactical success primarily through value analysis, no public service can be said to have a fully-fledged value management programme. Examples of good practice can be found but this is often due to keen individuals working in isolation. Despite its success, good practice does not spread within authorities let alone between them.
Productivity and the white paper
The Employers Organisation for local government was well aware of the need to develop human resources to improve performance. It undertook a series of research studies that culminated in the book Productivity, Performance and Improvement, published in June 2002. During this work the government published a white paper, 'Strong local leadership - quality public services' that set up a new system of performance assessment and called for the capacity of authorities to embrace and implement change in order to improve.
There are wider lessons here for both public services and policy makers in general. Everyone supports the view that public sector productivity needs to be raised but this calls for skills and methods that are not traditionally found in our public services. This is now recognised in the white paper and the task of raising the capacity of our public services to deliver improved performance has now begun. It won't happen overnight but at least we've made a start. The issue is not strictly just about value management either. Topics like statistical process control also need to be addressed as part of a wider strategy of developing the capacity of people to deliver improved public services.
At a time when taxes are rising, more demands are being made on our public services and more is expected in terms of delivery, value management has much to offer the public sector in terms of delivering better and more cost-effective services.
This means that value management must be available to all and cease being simply the domain of a few. With this in mind, the Employers Organisation has decided on a strategy to raise awareness and skills through its regional employer partners. This is a long-term strategy that is expected to succeed given the support it is now getting from the top.
Biographies
Peter Garfitt is a value management professional and assistant chief executive of Lincoln City Council. His career has been solely in local government, mainly in the area of housing. He is a member of the Institute of Value Management Certification Board. Jon Sutcliffe is human resources adviser for the Employers Organisation for local government. He is involved in a major project to improve the performance of councils through the development of high performance human resources management. The Employers Organisation provides advice and support on a range of people management issues with the express aim of helping local authorities to improve their services.
