Resource allocation formula - process for review

Report: 6
Date: 20 February 2001
By: Commissioner

Summary

This paper sets out the arrangements for the joint MPA/MPS review of the Resource Allocation Formula (RAF) including the engagement of external consultants who will recommend a preferred solution to the joint project board.

A. Recommendations

1. Members are asked to note the terms of reference for the joint project board and the scope of the review.
2. Members are also asked to note the engagement of PA Consulting and the revised timetable for the delivery of a new allocation model.

B. Supporting information

Outline Plan

1. Since the last meeting the MPS approached a number of external consultancies to tender for the project to review RAF using the attached specification of requirement at Appendix 1.

2. A joint project board was set up to consider the terms of reference for the review, attached at Appendix 2, and to examine proposals from the consultancies approached. The MPA is represented by Lord Tope, Nicholas Long and Peter Martin.

3. At its first meeting on 23 January the project board agreed that PA Consulting Group should be asked to carry out the work. The board agreed that the project should report by mid-March with a recommended solution for a revised formula.

4. The project board confirmed the importance of consultation during the course of the review and stated that this should include all MPA members, local authorities and MPS borough commanders. A questionnaire was therefore devised by PA Consulting and forwarded to these groups on 9 February to ensure maximum participation in the review. It would be particularly helpful if all MPA members could be encouraged to complete the questionnaire.

5. In addition, each project board member, together with the MPS Director of Budgets, took part in one to one discussions with PA Consulting staff so that their views on the key issues could be incorporated into the review.

6. PA Consulting has been requested to include among its options the use of the national funding formula, socio-economic data e.g. deprivation and alternative allocation models used in the public and private sectors.

7. The project board agreed that the scope of the allocation formula should include all budgets controlled by local managers, not merely confined to the apportionment of police officer posts to boroughs. The project would not, however, cover the issue of the proportion of MPS resources dedicated to boroughs in relation to the overall size of the budget.

8. The board has decided to shorten significantly the original timetable for the project. This decision reflects the fact that allocation of resources to boroughs is a high profile and sensitive issue, and that the theoretical work to review the formula can be done relatively quickly. However, it was agreed that effective consultation is essential to secure acceptance, if not agreement.

9. Emerging findings will be presented to the project board on 28 February with the consultants' final report being delivered in mid-March. The project board will then review the timetable for introducing the revised formula, taking into account the need for any further consideration, validation of data and the timescale for budget allocation.

10. The project board will present progress reports and a recommended implementation plan to future meetings of the Finance, Planning and Best Value Committee.

C. Financial implications

The consultancy study will involve additional external costs for 2000/01 and 2001/02. The cost of engaging PA Consulting to carry out the review will be £79,910.

As noted previously, this allocation process is aimed at effective distribution of resources to boroughs, rather than determining overall resource levels. There should, therefore, be no long-term financial implications in principle, although the review of the formula may lead to a re-definition of its scope.

D. Background papers

None.

E. Contact details

The author of this report is Michael Debens, MPS Corporate Development Group.

For information contact:

MPA general: 020 7202 0202
Media enquiries: 020 7202 0217/18

Appendix 1: Consultancy review of MPS resource allocation

Specification of requirements - December 2000

Introduction

Since 1995 the MPS has used its Resource Allocation Formula (RAF) to support the allocation of its overall resource budget to its component Areas (and more recently to Boroughs). RAF was developed within the MPS and its structure reflects the policing responsibilities of the Borough Operational Command Units (BOCUs).

The review

The MPS now wishes to review RAF and consider its approach to resource allocation for the future. It is seeking consultants to undertake the following components of the review:

• a desktop review comparing RAF with 'state of the art' resource allocation in similar organisations;
• proposing viable alternatives to RAF;
• assessing the impact these alternatives will have on the distribution of resources between Boroughs;
• supporting the selection of a preferred alternative;
• supporting the handover and establishment of the preferred alternative as an in-house MPS system.

Timescales

The project should start during January 2001 and be completed no later than the beginning of March 2001. The preferred timetable is

Issue of outline specification

Mid-December 2000

Briefings for consultancies

Early January 2000

Responses from consultancies

12 January 2001

Contract awarded

w/c 22 January

Work starts

w/c 29 January

Review completed

End February

Handover to MPS

Early March

Consultancies are invited to comment on this timetable and asked to explain how they would meet it.

Project organisation and MPS resources

The project sponsor is Deputy Commissioner Ian Blair.

The project liaison is Michael Debens, Corporate Development Group, who will be responsible for arranging other MPS contacts.

A Project Board chaired by the Deputy Commissioner and comprising MPS and MPA stakeholders will oversee the project.

Office space will be provided for up to 2 consultants at New Scotland Yard for the duration of the project.

Required skills and experience

The consultant(s) must be able to demonstrate experience of resource allocation in large organisations and an appreciation of the issues surrounding resource allocation in the public sector.

Deliverables

Initially the consultants will provide:

• a fixed price quotation for undertaking the project
• an initial plan outlining their approach

During the project they will provide:

• periodic progress reports to the Project Manager
• documentation of emerging alternatives to RAF
• a final report detailing options for future resource allocation support in the MPS, and the implications of those options.
• a presentation of findings to the Project Board
• copies of all computer programmes, data files and supporting documentation required to establish the chosen alternative as an in-house MPS model.

Financial arrangements

Invoices will be forwarded to the Project Liaison, monthly, in arrears.

The price for the contract should be inclusive of expenses, telephone calls and other incidental costs.

Appendix 2: Proposed terms of reference for the Resource Allocation Formula (RAF) Review Project Board

To review the principles underlying the Resource Allocation Formula (RAF) and make recommendations for amending RAF or developing an alternative apportionment process.

The review will:

• agree the project scope and definition;
• arrange resources for the project, including the engagement of external consultants;
• agree project plans;
• ensure the allocation of resources to boroughs is transparent and addresses the current challenges to RAF;
• demonstrate that alternative options, e.g, using different socio-economic criteria and comparison with the National Funding Formula, have been considered;
• provide the Authority with the opportunity to influence and agree the use of the formula.

The Project Board will:

• review the project and consider options if plans are not met;
• approve key products and recommendations resulting from the project;
• oversee the process of gaining agreement to key products and recommendations by the Metropolitan Police Authority and MPS Management Board.

The review should be completed by March 2001.

Project Board is asked to agree the Terms of Reference.

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