The value for money that a service delivers is a vital message to convey on any project. Local authority councillors, on the frontline of public opinion, need to evidence this value for money from outsourced services. And, as the service head responsible for the communication of accurate, objective, performance data from contractors to your councillors, how you go about gathering that information and validating its accuracy will determine the confidence with which your councillors can use that data to inform their decisions.
How and Why to Evidence and Communicate Value for Money Data
We know that councillors play a critical role in ensuring that public money is spent wisely. As public sector representatives, they have a duty and responsibility to assure that high-cost decisions are made with appropriate due diligence. And, as part of the decision-making process in the selection of strategic suppliers, this role is often under intense scrutiny, hence the need for confidence in performance data. Councillors are themselves often held accountable when the public feels that funds could have been more efficiently and effectively used. They may have even witnessed colleagues that have faced political exile due to project failures on their watch, often this will likely be due to a lack of objective management information that could have accurately evidenced value for money.
Councillors’ Key Concerns
It would, therefore, be unsurprising if councillors had some very specific worries about the management information the contractor may be providing you with. These concerns usually centre around:
- Data reliability: Anxieties about the accuracy or reliability of the data provided by contractors often cause suspicion that the contractor is ‘tweaking’ the data to present a more favourable picture of their performance.
- Lack of transparency: Concerns usually exist that a contractor’s data collection and reporting methods are not transparent enough, making it difficult to verify the validity of the data.
- Conflicts of interest: Questions about a contractor’s vested interest in presenting their performance in an undeservedly positive light, resulting in biased or misleading data.
- Inconsistencies in measurement: Different contractors often use different performance metrics, making it challenging for service heads and councillors to compare performance data across multiple contractors.
- Past negative experiences: Councillors may have experienced poor contractor performance and integrity in the past, leading to scepticism about the accuracy of management data in general.
Addressing these Concerns
To alleviate these issues and build greater trust between contractors and yourself and greater confidence in the data being reported by you to your councillors, you can take the following steps:
- Get Online access to source performance data: Secure direct access to the contractor’s systems or a separate data warehouse that mirrors the source performance data, to assure yourself that the data you see is unfiltered and unchanged.
- Establish clear performance metrics: Collaborate to develop standardised performance metrics, facilitating comparisons and creating a level playing field.
- Implement independent audits: Conduct independent audits of contractor performance data to ensure accuracy, reliability and to eliminate potential biases.
- Enhance transparency: Require contractors to provide detailed explanations of their data collection and reporting methodologies, helping everyone to better understand and assess the data.
- Encourage regular communication: Foster ongoing dialogue between parties, including progress updates and performance reviews, to build trust and address concerns promptly.
- Develop a performance dashboard: Create a performance dashboard that consolidates data from multiple contractors, so performance across different projects and contractors can be more easily monitored and compared.
- Establish a performance-based contracting system: Implement a system that ties contractor compensation to the transparency and accuracy of their performance data, encouraging them to both deliver ‘assured’ accurate data and maintain high performance standards.
Ways to Inspire Confidence
This deals with your confidence in the contractor’s performance data, but there are ways of providing your councillors with greater confidence in the accuracy of the data you are passing to them. These include:
- Transparent methodology: Clearly outline the methods you used to collect, analyse, and validate the contractor’s performance data. This helps to establish that the process is objective and not influenced unduly by bias.
- Independent audits: Regular audits conducted by independent third parties to verify the accuracy and reliability of the data you’re collecting as this further strengthens the credibility of performance reports.
- Open communication: Engage in regular, open communication with your councillors, addressing any concerns or questions they may have about the data and to provide further context. This builds trust and credibility over time.
- Data visualisation: Present the data in clear, easy-to-understand formats such as charts, graphs or infographics, making it easier for councillors to interpret and comprehend the information.
By taking these steps, and making it known to your councillors that you are doing so, you can foster greater trust in contractor performance data and address the concerns of councillors more effectively. This will ultimately help to ensure that they are able to use public funds more responsibly and that strategic suppliers/contractors deliver the best possible value for money.
Example of Why Accurate Value Reporting is so Important
Although we have used highways infrastructure as our example below, the communication principles apply for any strategic service delivery.
In today’s fast-paced world, efficient transport infrastructure is critical for economic growth and societal development. Highways are a key component of this infrastructure, connecting cities, businesses, and communities. With local governments facing increasing demands for public services and limited budgets, it is essential to ensure that investments in highways infrastructure provide clear evidence of value for money.
The Concept of Value for Money
Value for money refers to the optimal use of resources to achieve the desired outcomes. In the context of highways services, this means utilising public funds efficiently to build, maintain, and improve transportation infrastructure to meet the needs of users, businesses and the economy.
Assessing value for money involves examining the costs, benefits and performance of a highways service compared to alternative investments or service delivery methods.
Value for money can be evaluated using three key components:
- Economy: The cost of inputs, such as labour, materials and capital, required for delivering the highways service.
- Efficiency: The ratio of outputs to inputs, i.e. how well the highways service utilises resources to deliver its objectives.
- Effectiveness: The extent to which the highways service achieves its intended outcomes, such as reduced travel time, improved safety and increased connectivity.
To communicate whether your highways service is evidencing value for money, you need to undertake a comprehensive evaluation and gather transparent, accessible information on its performance.
The following steps outline the process of assessing and communicating the value for money of your highways service to councillors:
Step 1: Define Objectives and Scope
Before evaluating the value for money of your highways service, you need to define its objectives and scope. These objectives should be aligned with broader policy goals and often include improving connectivity, reducing congestion, enhancing safety or supporting economic growth. The scope of the evaluation should cover all relevant aspects of the service, such as construction, operation, maintenance and environmental impact.
Step 2: Collect Data and Establish Benchmarks
You then need to collect data on its performance, costs and outcomes. This data could include traffic volumes, travel times, accident rates and maintenance costs. It is important to establish benchmarks by comparing the performance of your highways service with other similar services or industry standards. This often involves looking at the performance of highways in other regions, countries, or those managed by different service providers.
Step 3: Assess Economy, Efficiency, and Effectiveness
Using the collected data and established benchmarks, you can assess the service’s economy, efficiency and effectiveness. To evaluate the economy, you can compare the costs of inputs, such as labour and materials, with industry averages or best practices. For efficiency, you can analyse the relationship between inputs and outputs, such as the cost per mile of highways maintained or the number of vehicles using the highways per pound invested on improvements. To assess effectiveness, you can examine the extent to which your highways service meets its objectives, such as reducing travel times, improving safety, or supporting economic growth.
Step 4: Identify Opportunities for Improvement
Next, you should identify areas where performance can be improved. This could involve adopting new technologies, optimising maintenance practices or implementing innovative financing mechanisms. By identifying opportunities for improvement, you can enhance the value for money and better meet the needs of users and stakeholders.
Step 5: Communicate Findings and Recommendations
To communicate the degree to which you are evidencing value for money, you need to present your findings and recommendations in a clear, accessible and transparent manner. This can be done through various channels, such as reports, presentations or online platforms. The information provided should include the objectives and scope of the evaluation, the data collected and benchmarks used, the assessment of economy, efficiency and effectiveness, and any opportunities for improvement identified.
But what should you report?
In the context of any complex service, in particular, highways services, the communication of value for money requires a comprehensive approach that goes beyond merely comparing costs and benefits.
A Value for Money (VfM) Balanced Scorecard offers a holistic framework for evaluating the performance of contractors, addressing key aspects such as cost-effectiveness, quality of work, timeliness, health and safety, environmental sustainability, innovation and technology adoption, customer satisfaction, and social value.
By having objective evidence for each of these categories, you can be provided with a thorough understanding of the contractor’s performance, enabling your councillors to make informed decisions and ensure that public funds are used efficiently and effectively to deliver the desired outcomes for communities.
Typical areas for evidence include, but are not restricted to:
- Why: Evaluates how well the contractor’s services are delivered relative to the costs incurred.
- Evidence: Comparing the contractor’s pricing against industry benchmarks, presenting a breakdown of unit costs for specific maintenance activities and showcasing cost savings achieved through innovative practices or continuous improvement initiatives.
- Quality of work:
- Why: A well-maintained highways contributes to better user experience, safety and long-term cost savings.
- Evidence: Sharing results from quality control inspections, providing examples of adherence to industry standards and showcasing positive feedback from clients or third-party inspectors.
- Why: Prompt maintenance services minimise disruptions to road users and reduce the risk of further deterioration.
- Evidence: Demonstrating the contractor’s ability to meet project deadlines, showcasing a track record of on-time delivery, and providing data on average response times to maintenance requests.
- Health and safety:
- Why: Safe working practices reduce the risk of accidents, injuries, and potential liability for the contractor and client.
- Evidence: Presenting safety statistics (e.g. accident rates, lost-time injuries), evidence of staff training in safety protocols and any relevant safety certifications or awards.
- Environmental sustainability:
- Why: Responsible environmental practices contribute to long-term sustainability and are increasingly important to clients and stakeholders.
- Evidence: Detailing the contractor’s efforts to minimise waste, use eco-friendly materials and practices, and comply with environmental regulations. This can include showcasing any relevant certifications (e.g. ISO 14001) or environmental awards.
- Innovation and technology adoption:
- Why: Embracing new technologies and practices can lead to more efficient service delivery and cost savings.
- Evidence: Sharing examples of innovative solutions implemented (e.g. using drones for inspections, employing digital asset management systems), and any technology-driven improvements in productivity or cost savings.
- Customer satisfaction:
- Why: High levels of customer satisfaction indicate that the contractor’s services are meeting or exceeding client expectations.
- Evidence: Providing customer testimonials, case studies or survey results that highlight positive experiences and successful outcomes.
- Social value:
- Why: Contractors delivering public services are increasingly expected to contribute to the social well-being of the communities they serve.
- Evidence: Detailing the contractor’s efforts to support local employment, engage with local suppliers, or participate in community initiatives, and providing data on the socio-economic benefits generated by their services.
To ensure that this information is well understood and well received by councillors, it is important that contractors provide you with information that:
- Uses clear and concise language: The use of jargon and language that is not easily understood by a wide range of stakeholders, including the general public, government officials and industry professionals, should be discouraged.
- Visualises data effectively: Charts, graphs and other visuals should be used to present data in a way that is easy to comprehend and allows for comparisons and analysis.
- Highlights key findings: The most important results and recommendations should be highlighted to ensure they are easy to identify and understand.
- Addresses stakeholder concerns: The concerns and questions of stakeholders need to be acknowledged and evidence-based responses provided to demonstrate the value for money of the highways service.
Ensuring that your contractor is evidencing that they provide value for money is critical for justifying investments in those services and projects and that they are meeting the needs of users and stakeholders. By following the steps outlined in this article – defining objectives and scope, collecting data and establishing benchmarks, assessing economy, efficiency and effectiveness, identifying opportunities for improvement, and communicating findings and recommendations – you can effectively evaluate and communicate the value for money of any service or project to your councillors.
By demonstrating this, they can build public trust, secure support for necessary investments, and contribute to the development of a better and more prosperous society for all.