Section C - Delivering Public Services Strategy Flashcards
(176 cards)
1
Q
What business case methodology is recognised as best practice?
A
5 Case Model
2
Q
What business case methodology can be used for small projects?
A
Business Justification Case
3
Q
What 3 ways has the 5 case model improved the business case process?
A
- Reduced costs and timescales and improved efficiency of approval process.
- Raised the quality of spending proposals in terms of scoping, delivery and public value.
- Supports the prioritisation of spending proposals and the management of spending portfolios.
4
Q
Why are business cases important?
A
They allow organisations to:
1. Scope robustly
2. Plan realisticly from the outset
3. Take into account associated risks and costs
5
Q
What are the 5 cases to be made in the “5 case model”?
A
- The strategic case
- The economic case
- The commercial case
- The financial case
- The management case
6
Q
What does the “strategic case” have to demonstrate?
A
That intervention is supported by a compelling case for change that provides holistic fit with other parts of the organisation and public sector.
7
Q
What does the “economic case” have to demonstrate?
A
That the intervention represents the best public value
8
Q
What does the “commercial case” have to demonstrate?
A
that the proposed deal is attractive to the market place, can be procured and is commercially viable.
9
Q
What does the “financial case” have to demonstrate?
A
That the proposed spend is affordable.
10
Q
What does the “management case” have to demonstrate?
A
That what is required from all parties is achievable.
11
Q
What are the 3 key stages of a business case for major spending proposals?
A
- Strategic Outline Case (SOC)
- Outline Business Case (OBC)
- Full Business Case (FBC)
12
Q
What 8 sections will a standard buiness case include?
A
- Executive summary
- Strategic case
- Economic case
- Financial case
- Commercial case
- Management case
- Skills and resources needed
- Risk assessments
13
Q
What 4 things should be included in an executive summary of a business case?
A
- A brief overview of the content of the business case
- The context for why the business case is needed
- What the key outcomes of the project are expected to be.
- Potentially a summary of costs/savings.
14
Q
What are the 2 requirements of of the strategic case?
A
- That the organisation demonstrates how spending proposals fit in relation to national, regional and local policies, strategies and plans.
- That the organisation demonstrates that the proposal has clear and consise spending objectives which are SMART. (Specific, Measurable, Achievable, Relevant, Time-bound)
15
Q
What is the likley content of strategic context in the strategic case?
A
- Organisational overview
- Current business strategies
16
Q
What is the likely content of the case for change in the strategic case?
6 possible things
A
- Spending objectives
- Existing arrangements
- Business needs (current and future)
- Potential scope
- Benefits and risks
- Constrants and dependencies
17
Q
True/False: The economic case must demonstrate that the spending proposals optimise value for money for the individual organisation?
A
False: They must optimise value for money for public services as a whole.
18
Q
How does the economic case demonstrate value for money?
A
By identifying the “long list” of realistic and achievable options and appraising them in terms of how well they meet spending objectives and critical success factors. Then subjecting a reduced number of options (the “short list”) to Cost Benefit Analysis.
19
Q
What baseline option should be included in the economic case “short list”?
A
The do nothing option
20
Q
What cost benefit analysis is used to appraise “short list” options for the economic case?
A
Net Present Value (NPV)
21
Q
When the prefared option of a cost benefit analysis is identified, what is the next step?
A
To subject it to sensitivity analysis.
22
Q
What is the CFO’s role in the development of the economic case?
A
To provide a suitable calculations, including cost benefit analysis.
23
Q
What 7 factors should be included in the commercial case?
A
- Procurement strategy
- Service requirements
- Charging mechanism
- Risk transfer
- Key contractual arrangements
- Personnel implications
- Accountancy treatment
24
Q
What 5 factors should be included in the financial case?
A
- Public capital and revenue requirements
- Net effect on prices
- Impact on balance sheet
- Impact on income and expenditure account
- Overall funding and affordability
25
What are the 3 things the management case must demonstrate?
1. That the spending proposal is being implemented in accordance with recognised Programme and Project Management methodology.
2. That there are robust arrangements in place for change management, contract management, the delivery of benefits and the management of mitigation and risk.
3. To specify the monitoring during implementation, post implementation and gateway reviews.
26
What are 5 potential factors that should be included in the management case?
1. Programme and project management plans
2. Use of specialist advisers
3. Change and contract management arrangements
4. benefits realisation
5. Risk management
27
What 6 details may be included in the skills and resources section of a business case?
1. Skills such as technical or professional expertise required
2. External costs for equipment
3. External service costs eg. consultancy
4. Internal staff costs
5. Running costs
6. Investments costs
28
What are the 3 catagories of risk that should be included in the strategic outline case?
1. Business risks
2. Service risks
3. External environmental risks
29
What are "Business risks"?
Strategic risks that remain 100% with teh public sector organisation regardless of the sourcing method for the proposed spending. Eg. political risks.
30
What are "Service risks"?
Risks associated with the design, build, financing and operational phases of the proposed spending. They can be shared with business partners and service providers.
31
What are "External environmental risks"?
Risks that affect all organisations regardless of whether they are public or privatge sector.
32
What are 2 example of "External environmental risks"?
1. Secondary legislation
2. General inflation
33
In which stage of the Business case will the main risks be considered?
| 20% of the risks that account for 80% of risk value
Strategic ouline case.
34
True/False: There is a tendancy for appraisers to be overly optimistic and overstate benefits and understate timings and costs.
True
35
What is meant by "Risk premium"?
It is an expected value cost added on to the cost of the project to provide a single value for the expected impact of all risks.
36
What are the 4 mains roles of the CFO in producing the business case?
1. Should be involved in all aspects of business case
2. Should ensure skills and resources costs have been appropriately calculated
3. Should ensure that risks have been properly assessed
4. Have a role in challenging opimism bias
37
Production of a business case is an iterative process, what is meant by this?
It means that the process of building the business case is ongoing and revolves around refining and improving it at each of the 3 stages.
38
What are the 6 stages in the development of a business case?
1. Stage 0 - Determining the strategic contect and preparing the Strategic Outline Programme (SOP)
2. Stage 1 - Scoping the proposal and preparing the Strategic Outline Case (SOC)
3. Stage 2 - Planning the scheme and preparing the Ouline Business Case (OBC)
4. Stage 3 - Procuring the solution and preparing the Full Business Case (FBC)
5. Stage 4 - Implementation
6. Stage 5 - Evaluation
39
What is the purpose of a Strategic Outline Programme (SOP)?
To verify that the strategic context for the proposed intervention is current, rational, approved in principal and still accepted.
40
Which government gateway review stage is associated with the strategic outline programme?
Gate 0 - Strategic Fit
41
Which government gateway review stage is associated with the Strategic Outline Case?
Gate 1 - Business justification
42
What is the purpose of the Strategic Outline Case?
To confirm the strategic context of the proposal and to make a robust case for change, providing stakeholders with an early indication of the "prefered was forward".
43
What is meant by the showing the "prefered way forward" during a Strategic Outline Case?
Not to show a preffered option but to show a direction of travel and include a range of options incuding a "do nothing" and "do minimum" option.
44
Which 2 business cases does the Strategic Outline Case mostly focus on?
| Note:all are still included.
1. Strategic Case
2. Economic Case
45
What are the 3 advantages of producing a Strategic Outline Case?
1. They provide an early opportunity for the organisation and key external stakeholders to consider a project and influence its direction.
2. They provide a basis for better decision making through reaching agreement from the outset abbout key issues for the options
3. They prevent too much effort being put into projects which should not proceed.
46
In the Strategic Outline Case, in which 6 steps is the case for change made?
1. Agreeing the strategic context through reference to the organisations visions, goals and service objectives.
2. Determining the objectives
3. Determining the existing arrangements
4. Determining the business needs through identifying the difference between where we are and where we want to be.
5. Determining potential business scope and key service requirements
6. Determining benefits, risks, constraints and dependencies.
47
What are the 4 main purposes of the Outline Business Case (OBC)?
1. Revisit earlier SOC assumptions and analysis in order to identify a perferred option which demonstrates value for money.
2. Demonstrate its affordability
3. Detail the supporting procurement stategy
4. Detail management arrangements for the successful delivery of the proposal
48
What government gateway stage is linked to the Outline Business Case?
Gate 2 - Delivery strategy
49
What 6 things should be included in the Economic Business case at the end of the Outline Business Case?
1. A revisitied and updated "long list"
2. A revisited and updated "short list"
3. Economic appraisals (NPVs) for the shortlisted options inc risk adjustments and optimism bias
4. Assessments of both the non-financial risks and benefits
5. an assessment of the uncertainties (Sensitivity analysis)
6. A detailed desciption of the preferred option
50
What 5 things should be included in the Commercial Business case at the end of the Outline Business Case?
1. Procurement strategy, including the proposed procurement methodology and use of procurement processes
2. Scope of teh potential deal and required services
3. Implementation timescales for the proposed deal.
4. Supporting payment or charging mechanism
5. The contract being proposed for use and key contractual issues
51
What 4 things should be included in the financial case at the end of the Outline Business Case?
1. The capital and revenue implications of teh preferred option and deal.
2. Impact on the income and expenditure account and the organisations charges for services.
3. Impact on the budget, other sources of available funding and any shortfalls
4. Impact on the balance sheet
52
What are 5 things that should be included in the Management case of the Outline Business Case?
1. The projects structure
2. Management and governance arrangements
3. Key roles and responsibilities
4. Project plan describing deliverables, activities to deliver them , activities to validate the quality of the delivery.
5. Risk managament strategy and risk register.
53
What is the purpose of the Full Business Case?
To revisit and where required rework the OBC analysis and assumptions building in the findings of the formal procurement. This case recommends the most "economically advantageous offer".
54
What government gateway review aligns with stage 3 of the preperation of the business case (FBC)?
Gate 3 - Investment decision
55
What are 5 sections that may be incuded in the Business Justification Case (BJC)?
1. Pupose
2. Strategic context
3. Case for change
4. Preferred option
5. Financing and affordability
56
What should the Business case be used for at the implementation stage?
As a reference point for monitoring implementation and for logging any material changes that are required on the part of the procuring authority or the service supplier in respect of services or products.
57
How should the business case be used in the evaluation stage of a project?
It should be used as the starting point for post implementation evaluation in terms of how well the project was delivered and whether it has delivered its projected benefits as planned.
58
WHat gateway review point is related to Stage 4 of the business case process - implementation?
Gate 4 - readiness for service
59
WHat gateway review point is related to Stage 5 of the business case process - Evaluation?
Gate 5 - benefits realisation
60
What is the Gateway review process?
It is a series of short, focused, independant peer reviews at key stages of a project or programme which highlight risks and issues which if not addressed would threaten successful delivery.
61
What are the 6 stages of the gateway review process?
Gate 0 - Strategic Assessment
Gate 1 - Business justification
Gate 2 - Delivery Strategy
Gate 3 - Investment decision
Gate 4 - Readiness for service
Gate 5 - Operations review and benefits evaluation
62
What costs should be included in the economic appraisal in the business case?
1. Capital costs
2. Revenue costs
3. Opportunity costs
4. Full economic costs
5. Attributable costs
6. Organisational development costs
7. Avoided costs (In the do nothing option)
8. Contingent liabilities
63
What is meant by attributable costs?
The opportunity cost of staff time in relation to the implementation of spending.
64
What are the 4 catagories of benefits relating to a project?
1. Cash releasing benefits
2. Financial but non-cash releasing benefits
3. Quantifiable benefits
4. Non-quantifiable benefits
65
WHat is considered the baseline option for a project?
The do nothing option.
66
What are the 3 main drivers of collaboration?
1. To acheive greater efficiency and effectivness.
2. Political ideology
3. The perception that financial savings can be made
67
What is the aim of service redesign?
To maintain or even enhance service at a reduced cost.
68
What are 4 reasons for the increase in collaboration oin the public sector?
1. Statutory and social responsibilities which the public sector has no choice but to deliver.
2. Increasing public expectations. Eg choice of education providers
3. Limitations in the traditional public sector commercial approach such as a lack of sufficient expertise.
4. The localism adgenda and changes in local/central government relationship.
69
Which 2 public services have a legislative duty to collaborate?
1. Police
2. Local Authority Planning
70
What is the key risk of collaboration?
A lack of common goals or values.
71
What 5 common risks did CIMA find in unsucessful collaborations?
1. Underestimating cultural differences between partners
2. Skills gaps and problems transferring skills
3. demotivation of employees
4. Lack of clarity around roles and responsibilities leading to conflict and gaps
5. Loss of key staff
72
What is the role CFO in collaboration?
To identify the financial impact of collaboration and the risks the organisation faces and provide advice on the financial viability of proposed joint working.
73
What 6 factors should be included when considering governance arrangements for a collaboration?
1. Defined roles and responsibilities
2. Reporting lines
3. reporting intervals
4. Decision making powers
5. Funding structure and financial record keeping responsibilities
6. Exit strategy - Clauses should be included in the agreement about how the partnership can be terminated.
74
What are the 6 fundemental elements of Corporate Governance?
1. Shared understanding - on structure, purpose, aims and activities
2. Accountability - Reporting, scrutiny of performance and regulatory compliance
3. Decision making - Clearly allocated roles, responsibilities and accountabilities
4. Value for money
5. Corporate governance processes - effective systems for managing risk, performance, finance and information
6. Standards of conduct and leadership -
75
What are 4 practical implications of collaboration?
1. Geography - sharing across a large area can cause communication and logistical issues?
2. IT systems - Existing systems may nit be compatible or may need to be integrated causing delays.
3. Reporting lines
4. Demographics of customers - Collaborating with organisations that have different customer bases.
76
What are the drivers for private sector collaboration?
Increaed profit through:
1. Increasing productivity
2. Efficient use of resources
3. Elimination of waste
4. Creating new opportunities by combining complementary resources/competencies
5. Creating barriers to makret entry through scale.
77
What are the 7 main types of collaboration?
1. Strategic alliances
2. Shared services
3. Shared management teams
4. Pooled budget arrangements
5. Outsourcing and insourcing
6. Joint ventures
7. Mergers
78
What is a "Strategic alliance"?
Where 2 or more organisations identofy a common goal or activity amd have a desire to work together to achieve that goal.
79
What are the 5 factors vital for the success of a strategic alliance?
1. Must be mutually beneficial
2. Must clearly identify the roles and responsibilities of each partner
3. Must have agreed objectives
4. Be flexible and adapatble
5. Must develop a letter of understanding outlining how the partners will work together including division of resources, costs and benefits.
80
What are 4 advantages of a strategic alliance?
1. Opportunity can be pursued quickly
2. Use of resources and knowledge of other parties without having to buy in expertise
3. Cheaper than working alone
4. Lower barrier to market entry
81
What are 4 disadvantages of a strategic alliance?
1. Partners may have different ways of operating and so conflicts may arise
2. Mistrust can occur if sharing of competitive or sensitive information is required
3. Co-dependency can develop making it dificult to operate seperatly as before teh alliance.
4. Scope for collaboration is usually limited. eg access to strong brands or particular skills/technology.
82
How do strategic alliances usually work in the public sector?
They are usually with a private sector partner to gain access to investment or to skills or other resources that may not normally be available in th epublic sector.
83
What is an example of a strategic alliance?
Cambridgeshire, Bedfordshire and Hertfordshire police agreeded the "Tri-Force Strategic Alliance" in 2012 with the merging of the forensic, armed response and major crime units to save £2m a year.
84
True/False: In a shared services agreement, one organisation is usually the "lead" organisation.
True
85
What are 5 examples of factyors that will be included in a Shared Services Agreement documnet?
1. Roles and responsibilities
2. Reporting lines
3. Decision making arrangements
4. Performance measures
5. Membership of joint board or committee
86
What are 4 advantages of a Shared Services?
1. Better cost efficiency potential
2. Stronger resilience in relation to staff turnover and continued service delivery
3. Sharing of expertise that is not economic to employ individually
4. Able to offer better quality and range of services
87
What are 4 disadvantges of shared services?
1. Partners may have different ways of operating so cultural conflicts may arise
2. Mistrust can occur if sharing of competitive or sensitive information.
3. Short term dip in service quality may arise during adjustment period.
4. Inequitable treatment of partners if lead organisation is too dominant
88
What is an example of shared services in the public sector?
Tamworth and Lichfield council joint together in 2010 to deliver a shared waste and recycling service. Lichfield needed to cut costs while Tamworth was about to retender outsourcing for this so there was an opportunity to save money and offer a better service. Lichfield save £250k and Tamworth save £450k
89
True/False: In the create of a "Shared Management Team" a new legal entity is created.
False
90
What are 2 advantages of a shared management team?
1. Cost savings
2. Can lead to further sharing of services
91
What are 2 disadvantages of shared management teams?
1. Partners may have different ways of operating so cultural conflicts may arise
2. Time between organisations may not be split fairly
92
What is the Better Care Fund (BCF)?
It is a single local pooled budget to incentivise the NHS and local government to work more closely around people, placing their wellbeing as the focus ofd health and care services and shifting resources into social care and community resources for the benefit of people.
93
What are the 6 advantages of the Better Care Fund pooled budget?
1. Can help deveop an outcome-led approach by encouraging innvovation around working methods
2. Reduces the number of seperate funding streams that users need to access
3. Provides opportunity for integrated decision making to meet desired outcomes
4. Strengthening the bond of partnership working
5. Challenging partners to identify any duplication of effort to ensure efficiency
6. Economies of scale through enhanced bargaining power
94
What are 2 disadvantages of the Better Care Fund pooled budget?
1. Accountability may be more difficult to demonstrate as smaller budget are subsumed into larger pots
2. Resources between organisations may not be split fairly, which may lead to resentment and dispute.
95
What is meant by insourcing?
Providing a service in-house by staff emplooyed by the organisation.
96
What are 4 advantages of insourcing?
1. Organisation is in control of its own staff and service standards
2. Potentially lower costs and less likely to unpredictable or additional costs
3. Less likely to have cultural compatability issues over common goals
4. Improved staff moral and ownership of service
97
What are 3 disadvantages of insourcing?
1. Limited access to expertise that is not already in the team.
2. Resources between departments may not be split fairly which may lead to resentment and dispute.
3. The organisation is laible for any increases in staff costsand any HR related problems such as sickness and staff turnover.
98
What is a Joint Venture?
When 2 organisationsinvest funds into creating a third jointly owned organisation.
99
What are 5 of the key considerations set out in the joint venture agreement?
1. Agreed strategy and business plan
2. Relative shareholdings and capital contributions
3. Policies on reinvestment of profits versus distribution
4. decisions on whicj unanimity is required vs decisions taken by majority
5. Exit provisions
100
What is an example of issues regarding the ending of a joint venture agreement?
Liverpool councils joint venture with BT was ended after reports that BT would not cut the £70m annual cost by more than £5m a year.
101
What are 3 advantages of a joint venture?
1. Access to more resources
2. Increased knowledge and expertise
3. Sharing of costs and risks
102
What are 3 disadvantages of a joint venture?
1. Reduced flexibility
2. Potential for culture and goal clashes
3. Inequality in joint venture if one party becomes too dominant
103
What is a merger?
It is the coming together of 2 or more organisations to form a new one with the old organisations ceasing to exist.
104
What 2 ways is it anticipated that a merger will reduce costs and improve benefits?
1. Elimination of duplication
2. Rationalisation of activities
105
What are the 5 advantages of mergers?
1. Greater economies of scale and purchasing power drives down costs
2. Improved customer experience as less organisations to deal with to obtain a range of related services.
3. Elimination of duplication
4. Rationalisation of activities
5. Additional revenues and better more responsive services
106
What are 3 disadvantages of mergers?
1. Can import the failures on one organisation into another by merging and failing to address problems
2. Cultural differences may be difficult to overcome
3. Merger activities can take over and impact front line service provision
107
What is a "Mutuals" organisation?
An organisation that has left the public sector to provide public services under contract and in which employee control plays a significant role in its operation.
108
Where may a "Mutuals" organisation be suitable?
When delivering community-led services where potential for profit is limited or existing arrangements have proven ineffective.
109
What are social enterprises?
Businesses that have a community purpose and aims and objectives that support community based goals. They exist not to make profit but to serve a social or environmental purpose.
110
WHat are the 3 advantages of a Social Enterprise/Mutuals organisation?
1. Freedom and opportunity to innovate outside of constraints of the public sector
2. Access to funding not available in the public sector
3. Employee ownership leads to higher levels of productivity
111
What are the 3 disadvantages of Social Enterprises/Mutuals?
1. Loss of control by public sector body might lead to unexpected changes in service level
2.Business expertise may be lacking if staff have previously only been in the public sector
3.Unfamailiar regulations (Company or charity accounts requirements)
112
What are 7 example of public sector stakeholders?
1. Non-executive roles (Board members & councillors ect)
2. Senior managers and directors
3. Taxpayers and voters
4. People who recieve services
5. External regulators
6. Government or other legislative bodies
7. The public
113
True/False: Measures of performance are specific.
True
114
Performance measures should be SMART. What is this an acronymn for?
Specific
Measurable
Achievable
Relevant
Time-bound
115
What are the 4 additional requirements on top of being SMART for a performance measure?
1. Understandable
2. Defendable - Quality of data and its sources must be assured
3. Traceable - need to show where data comes from
4. Reported
116
What is a performance measure?
Measures of performance that are specific such as exact cost of a service or the number of workshop sessions delivered.
117
How are performance indicators different from performance measures?
1. They do not have to be exact
2. They look at performance in context.
118
For what 3 reasons are performance indicators usually favored over performance measures in the public sector?
1. They can be easily understood by their stakeholders (as they provide context)
2. They can be more eaily reported (less need for exact values and are usually an average over a set time)
3. Have a better shelf life and can relate to a longer time scale or trend.
119
What is an issue with using KPI's?
They do not always fully explain the context of an organisations performance and they tend to focus on inputs and outputs rather than outcomes.
120
What are 4 example of KPI's for a hospital?
1. Accident & emergency waiting times
2. Cancer treatment timescales
3. Freinds and family issues (whether people would recommend the Trusts services)
4. Infection incidences
121
What are the 2 types of performance indicators?
1. Leading
2. Lagging
122
What is a lagging indicator?
A lagging indicator is an indicator that focuses on outputs and is linked to strategic objectives.
123
What are the charactaristics of a lagging indicator?
1. Easy to measure
2. Hard to influence
3. Hard to improve
124
What is a leading indicator?
A leading inicator is one that focuses on inputs.
125
What are the charactaristics of a leading indicator?
1. Harder to measure the impact
2. Easier to influence
126
Why can leading indicators influence outcomes better than lagging indiucators?
Leading indicators come before a trend and are a precursor to the directon something is going.
127
What is the disadvantage to each of lagging and leading indicators?
Lagging indiactors are historical in natire and do not reflect current activities or predictive power
Leading indicators are often new measures with no history within the organisation and an indirect relationship to outcomes
128
What are the 3 elements of Value For Money? (3 E's)
1. Economy - Minimising the cost of resources used or required (inputs) (Spening less)
2. Efficiency - The relationship between the output from goods or services and the resources (inputs) to produce them. (Spending well)
3. Effectivness - The relationship between the intended and actual results of public spending (outcomes) (Spending wisely)
129
What 2 questions (Considerations) should be asked when financial planning against the 3 E's and Equity?
1. Economy - Are we paying the best price for our resources? Is our spending within budget?
2. Efficiency - Have we looked at what others do and learnt from best practice? Are we getting the outputs we want from the inputs we are putting in?
3. Effectivness - Are our objectives being met? Will outcomes improve from our plans?
4. Equity - What are the impacts on stakeholders? Are they all affected the same?
130
What is cost benefit analysis in simple terms?
Measuring the expected benefits and subtracting the costs of achieving those benefits.
131
What are the 8 typical steps of a cost benefit analysis?
1. List aternative options
2. List stakeholders
3. Select measurements and measure all costs and benefit elements
4. Predict the outcome of costs and benefits in a common currency
5. Apply the discount rate
6. Calculate the NPV of the options
7. Perform sensitivity analysis
8. Adopt reccomended choice.
132
What is the purpose of activity based costing?
To provide information for strategic decisions and provide information on the cost of providing services.
133
Why are public service organisation ideal for the use of activity based costing?
They are overhead intensive
134
How does activity based costing work?
It traces and assignes overhead costs based on caused and effect relationships.
135
What are the 5 aspects of activity based costsing?
1. Activities
2. Resources
3. Cost drivers
4. Cost objects
5. Performance measures
136
In Activity based costing, what is a cost driver?
These are the root causes of costs and identifying cost drivers can help an organisation improve its processes and reduce costs.
137
What are cost objects in Activity based costing?
Cost objects are the reason organisations perform activities. eg. Products services and service users. Cost object cause activities.
138
What are 5 advantages to activity based costsing?
1. People tend to understand activities and processes and how activities consume resources - so information is understandable
2. It reduces the need for arbitrary allocations of overhead costs
3. it identifies any activities that highlight interdependencies
4. Budgeting is improved as budgets are tied to the actual work being done.
5. It provides cost driver information for managers and staff to remove costs on current services and avoid costs on new services.
139
What are 4 disadvantages of activity based costing?
1. It is not a one off activity and will need to be undertaken regualrly to be effective.
2. It can be resource intensive and costly exercise
3. It tends to address cost only.
4. It doesnt necessarily lead to improvements in service or cost savings. People need to make ise of the data to actually make improvements.
140
Define sustainability
Meeting the needs of the present without compromising the ability of future generations to meet their own needs.
141
What costing method can be used to take into consideration the impacts on sustainability?
Whole life costing
142
What is whole life costing?
A way of looking at the costs of a project for the entire duration of the projects life cycle.
143
What 8 factors are considered in whole life costing?
1. Initial capital costs
2. Operating costs
3. Major maintenance costs
4. Disposal costs
5. Any revenue that the asset will generate
6. Social impcats (and associated costs and benefits)
7. Environmental impcats
8. Economic impacts
144
What are 5 benefits of using a Whole life costing approach?
1. Improved efficiency as it balances initial capital and running costs
2. Recording acxtual performance and operation data and comparing this with predicted performance which can be used in future planning and decision making
3. encourages discussion and review
4. Improved analysis of business needs and the communication of this to decision makers
5. Assists in managing potential risks and cost arising from poor performance due to failure or inappropriate maintenance.
145
What are 5 challenges with using a Whole life costing approach?
1. Ensuing collaboration across departments such as those responsible for initial purchasing decisions and those responsible for operation and maintenance
2. Having access to reliable data, particularly cost data
3. Gaining a long term committment to developing WLC skills and building up knowledge
4. maintaining continued committment to evaluation and feedback
146
Define benchmarking
The measurement (of the quality / efficiency / effectiveness) of an organisations policies, performance, strategies, costs ect and their comparison with standard measurements or similar measurements of its peers.
147
What are the 3 objectives of benchmarking?
1. To determine what and where improvements are called for
2. To analyse how other organisations achieve high performance levels
3. to use this information to improve performance
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What are the 7 main steps in a benchmarking process?
1. Identify what you are trying to achieve
2. Decide who to benchmark with
3. Collect data
4. Analyse data
5. Compare processes, identify gaps and develop recommendations
6. Implement the recommendations
7. Monitor progress and repeat as required
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WHat factors should be considered when choosing benchaming "familiy groups"?
1. Organisation type/sector
2. Organisation size
3. Size and nature of the area covered by the organisation
4. Demographics
5. Geographical location
6. Strategy / policy approach
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What is teh advantage of choosing a benchamarking "familiy group" based on organisation type or sector?
There maay already be contacts across that sector and there will be information readily available to be shared.
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What is teh disadvantage of choosing a benchmarking family group based on organisation type or sector?
If the sector as a whole is performing badly then the value of benchmarking is limited.
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Why may it be advantageous to use organisation size when choosing a famaily group for benchmarking?
Factors such as economies of scale, purchasing power and influence mean that comparisons between a smaller organisation and a larger one are not valid
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Why should an organisation consider the size and nature of an area covered when considering options for their family group of benchmarking?
As the needs of teh service users/clients would be very different between a large urban area and a sparsly populated rural area.
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What are the issues with benchmarking?
1. Different organisations will account for costs, services and activities in differet ways, so there can be major variences between organisations that appear very similar.
2. choosing the wrong "family group" can have greater negatives than positives.
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What is the balanced scorecard approach to performance management?
It is a way of linking non-financial measures of success with the more commonly used financial measures (Sales, profits, dividends ect).
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What are the 4 areas of the balanced scorecard?
1. Financial measures
2. Customer perspective
3. Internal persepctive (Porcesses)
4. Learning & growth perspective
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In the public sector, what does the financial measures of a balanced scorecard refer to?
Budget and other financial measure such as unit costs ect.
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In the public sector, what does the customer perspective of a balanced scorecard refer to?
This can be a range of stakeholders such as citizens, service users, regulators and government
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In the public sector, what does the Internal perspective section of a balanced scorecard refer to?
These would be the key processes for improving effective service delivery as well as some inward looking strategic objectives which the organisation has set itself
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In the public sector, what does the learning and growth section of a balanced scorecard refer to?
This usually refers to the development of the organisations workforce and how the organisation itself learns as it delivers services
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What are the 3 main advantages to using a balanced scorecard?
1. It gives a balanced view - there is not excessive focus on just one aspect such as financial measures
2. This appraoch can give a longer term perspective rather than the short term focus of many financal measures as looking at customer experiances and process improvement can indicate future performance.
3. In using a balanced scorecard, an organisation can be sure that any strategic action implemented matches desired outcomes.
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What are the 3 main disadvantages of using a balanced scorecard for public service organisations?
1. It requires a significant amount of thought and preparation and if poorly prepared and implemented it may mis-inform and lead to focus on the wrong areas and cause more harm than good.
2. Athough it covers 4 areas, these can be quite limited and not show the full picture. eg financial measure cans be limited and should not replace proper accounting and monitoring.
3. If an organisation uses a balanced scorecard without adapting it for its own situation then it will never be effective and there will be no sense of ownership.
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What is an example of a balanced scorecard in use?
Barking & Dagenham adoped a strategic scorecard with an extra section to focus on community and the councils role in the community. It has helped to link external community priorities to stategic objectives.
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Define benefits realisation
Benefits realisation is the process of managing and ensuring that all the anticipated and expected benefits do actually arise. "Measurable improvement resulting from an outcome which is percieved as an advantage by a stakeholder".
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What is the purpose of benefits realisation?
To show stakeholders why the organisation has gone through a change and that the project or change has succeeded in meeting its aims.
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What is the advantage of benefits realisation?
1. It aids business decisions as we know where to look for benefits and can show that the organisation has achieved what it wanted.
2. It can show that the benefits were down to our actions
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What are the 8 elements of a typical benefits realisation process?
1. Identification of benefits
2. Challenge of identified benefits
3. Outlining the benefits
4. Developing measures
5. Collecting baseline data
6. Regular reporting of benefits
7. Project / change closeure
8. Sustainability of benefits realisation
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What are the 4 stages to benefits realisation?
1. Identify
2. Validate
3. Enable
4. Realise
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How can we identify benefits in the Identify stage of benefits realisation?
1. Look at what other organisation have done or are doing
2. Run workshops to look at potential benefits
3. Undertake a future histoy exercise and imagine the future and the benefits will reaslise
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What 5 ways can we validate benefits for benefits realisation?
1. Discuss/challenge with peers
2. Seek challenge/approval from senior managers
3. Ensure that finance professionals perform a reality check on any figures
4. Ensure there is good evidence and rationale for any savings identified
5. Collect baseline performance data.
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What 4 ways can we enable benefits for benefits realisation?
1. Identify potential barriers
2. Work with the team and project sponsor to overcome these
3. Identify and consider any interdependencies
4. Implement strong communication and regular reporting
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WHat 4 ways can we ensure benefits are realised in benefits realisation?
1. Measuring against baseline
2. Regular monitoring of progress
3. Reporting success
4. Getting the benefits embedded
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True/False: For benefits realisation to be sucessful, benefits must be measurable?
True
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What is an "Outcome" in public service delivery?
An outcome is the result or effect that a particular servicve, programme or activity has on those it is intended to have an effect on.
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What are 5 benefits of an outcomes based approach to performance measuring?
1. Better understanding of the effect of services/programmes on peoples lives
2. Improved service design
3. Evidence to support improvementg in services
4. Improved accountability
5. A more complete picture of benefits of services and programmes
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What is outcomes based commissioning?
Where a service is defined on the basis of a set of agreed outcomes. It involves considering what is achieved alongside what is delivered.
