Local government: true grit

Like the first cuckoo of spring, the first newspaper article about “bungling
bureaucrats caught out by snow chaos” has become as traditional a part of winter
as carol singers and mince pies. This winter the criticisms of local authorities
have been more sustained and widespread due to the exceptional prolonged periods
of severe weather conditions. This has led to enormous challenges for FDs in
local government as they faced the need to divert scarce resources into keeping
roads and pathways clear while maintaining vital frontline services.

By and large most councils were able to put their well-prepared emergency
plans into operation, but in many cases the assumptions of how long any cold
snap could last were woefully inadequate and required new, innovative thinking
to free up adequate capacity to meet the challenge. As a result, the FD has
played a key role in reallocating resources to where it can bring immediate
benefit. In many cases this winter, this has been achieved through hard work and
cross-directorate negotiations – but wouldn’t it be easier if authorities were
better prepared for dealing with the unexpected?

The key to responding to unexpected events is greater and more proactive
management of council resources by FDs and their teams, particularly over the
control of discretionary and project spend. Most finance teams are reactive in
the way they deal with resource management as they are the experts in helping
directorates set budgets and prioritise project allocations. Once the parameters
are set, however, the tracking of whether the organisation is getting the
results it expected from the spend is generally less well controlled and the
reallocation of resources to where it is most needed does not always happen.
Those authorities that monitor resources well can prioritise activities and make
informed judgements on where they can be best used. Flexible resource management
gives the local authority FD a clear line of sight on a day-to-day basis as to
how to optimise scarce supplies, be it people, property or money.

The question that finance teams should be asking their directorates on a
regular basis is whether the resources deployed are achieving the outcomes
expected. One area where, in my experience, local authorities could do better is
on projects. By their nature, most projects are discretionary expenditure, so a
good way of freeing up resources to deal with unexpected events is to scale down
or stop work on projects that don’t add immediate value. In recent years there
have been enormous improvements in the discipline around good project approval
structures, detailed business cases and project management in local government.
However, from experience working with local authorities, there is still a great
deal of work to do to ensure that envisaged benefits from projects are proven,
tracked and delivered. Without adequate tracking of benefits, it becomes much
harder to rank competing projects against each other and the default response
from finance is to do nothing.

The biggest challenge from unexpected events is that you don’t know when they
are going to happen. An FD with strong, proactive resource management in place
will be able to make decisions quickly and from a position of strength. This
will also serve them well as they deal with greater uncertainty over funding.
One thing is clear though, whichever party is in power after the general
election, there will be increasing pressure on public sector funding and the
same agility that FDs have displayed during the recent spell of severe weather
will be required in greater amounts over the coming months and years.

Feeling the benefit

I was recently working with a local government client who was proudly telling
me about a project which had delivered a cash benefit of more than £1m. When I
asked him how he knew this, he told me that the project manager had told him so.
It transpired that there was no clear evidence of whether this supposed benefit
had been realised or not and there was no obvious reduction in spend or
resources freed up that could be seen. Was this a successful project?

A strong benefits tracking tool and supporting methodology is essential if
you are to ensure that benefits achieved by a project are realistic and
sustainable. Organisations should have a clear, common approach in which all
benefits, both financial and non-financial have an owner who is responsible for
delivery. Organisations should also adopt a simple way of capturing benefits and
tracking them on an ongoing basis and, wherever possible, establish an outcome
that can be proved, by reduction in spend, reallocation of resources or evidence
of improved results. Competing projects can then be ranked and, if necessary,
decisions on their continuation taken from an informed standpoint.

Oliver Colling is local government group senior manager at Grant
Thornton