Developing Resource Management (DRM) update

Report: 8
Date: 5 November 2009
By: the Director of Resources on behalf of the Commissioner

Summary

This report sets out the achievements of the Developing Resource Management (DRM) programme to date as the first phase of delivery draws to a close. This report also sets out the new projects agreed in principle for inclusion in the next stage of the programme.

A. Recommendations

That Members:

1. Note the achievements to date of the DRM programme
2. Note and comment on the next phase of the DRM programme

B. Supporting information

Background

1. The DRM programme was established in July 2008, drawing together a number of key and strategically important workstrands. The aim of DRM is to develop resource management within the Service, improve governance of resources and as a result, achieve cashable savings to reinvest in frontline services. The DRM programme focuses specifically on projects led by Directorate of Resources (DoR) that have a significant corporate impact. The DRM programme has proved to be a robust, well governed; delivery focused and clearly communicated initiative.

2. The programme works to a clear set of programme objectives monitored by key performance indicators, which focuses the cross business DRM steering group in its key decision-making role. Representation from Business Groups has ensured that views and concerns of service users are built into programme decisions at the highest level.

3. Rigorous programme management structures have been embedded in DRM for reporting, management of risk, issues and resources. Clear statements of work for each DRM workstream allow the Programme Office to track progress against formally agreed deliverables and targets.

4. The importance of change management and communication has not underestimated. A dedicated change management stream has worked to ‘land’ the DRM programme in the organisation, using a range of tools and techniques, such as a Change Network, roadshows, a dedicated intranet site, newsletters and focused engagement with key user groups. The success of DRM change management DRM can be seen in the latest programme questionnaire findings, with 91% of people stating they understand the purpose of DRM, 94% understand the benefits of the programme and over 90% agreeing that DRM communications are appropriate to their business needs.

5. The dedicated programme management structures have supported significant achievement in each of the DRM workstreams, ranging from clear improvement against key performance indicators and providing the Service with new business critical products and services.

Achievements of DRM

Procurement - Purchase to Pay (P2P)

6. P2P aimed to improve the overall management and control of the MPS’ purchase to pay process in line with best practices. Performance levels as at August 2009 show that the workstream has been a clear success. The MPS has achieved an 80% level of compliance in terms of using the correct routes to purchase. This compares favourably with the level of compliance in February 2009, which as an average for the organisation was at 51%.

7. P2P has also greatly improved the MPS performance against the Mayor of London’s commitment to pay small and medium enterprises within ten working days. This has increased from 37% in February 2009 to 69% by July 2009.

Contract Compliance and Management (CCM)

8. CCM was set up as a DRM workstream to rectify significant issues in the management of MPS contracts, such as spending on contracts in excess of contract values and inadequate tracking of contract variations. The CCM workstream has now greatly improved the MPS position, by firstly conducting a full review of existing contracts, and capturing the details of these in a newly created contracts database. This has given the Service an accurate baseline of all contracts for the first time and visibility of the compliancy status of each one. Monthly contract compliance reporting is due to commence in the near future to proactively identify and address non-compliant contracts.

Strategic Procurement Plans (SPPs)

9. The PROSPA programme successfully drove significant bottom line benefits of some £35m for the period 2006/07 - 2008/09 and brought a consistent sourcing approach to the acquisition of goods and services by the MPS.

10. Following PROSPA DRM has championed the development of SPPs, as the best mechanism for identifying and recording Category Management and Supply Chain Management savings. The SPP workstream was set up with the aim of agreeing a prioritised set of requirements between the Business Groups and Procurement Services, enabling Procurement to assist them to deliver on future efficiency saving targets. This has been achieved, with targets for related savings built into the budget, to be delivered by 2011/12.

Finance and Resources Modernisation (F&R)

11. The review F&R began in 2006. In 2008, the implementation elements of the review were brought into DRM, so that the modernisation work could benefit from the cross Business Group governance and programmer rigor.

12. Under DRM, the review objectives have been achieved, with the F&R roles now separated, professionalised and the final ‘go live’ for cluster models of operation due to take place for Territorial Policing (TP) on October 19. The staff reduction resulting from the review (68 posts) has generated budget savings of over £2.5m, £2m of which are in TP. However, it is proposed that further review and reorganisation of F&R could lead to additional cost savings and so under DRM2, a second review of the function is being considered.

Scheme of Delegation (SoD)

13. The MPS Scheme of Delegation came into effect on 1 October 2007. A subsequent review of local Business Group Schemes of Delegation, with respect to financial management, revealed a significant level of inconsistency of application across all authorisation levels and within corporate systems. To address this, a DRM SoD workstream was established.

14. DRM has introduced eight uniform levels of authority for spend approval applying across the corporate financial systems and all Business Groups (up to and including £5000 – over £5,000,000). The spend levels enable the effective delivery of the Purchase to Pay (P2P) processes, compliance and benefits. This will ensure a consistent approach to spend authorisation as well as supporting the delivery of efficiency to the business.

15. Further work is underway in Strategy and Improvement Department (SID), under business as usual, to develop the wider scheme of delegation, due to be in place for the start of the new financial year. While the DRM workstream has established a robust system for financial approval, the wider scheme of delegation will formalise the approval routes for other business decisions, such as entering into contracts or partnership.

Corporate Decision Making (CDM)

16. CDM was set up as part of DRM to rationalise and simplify the efforts and energies in the MPS decision-making process, through implementation of a fit for purpose decision-making framework at an accelerated pace. Between DRM and SID, significant progress has been made in developing the MPS ‘body corporate functions’ and decision-making structures. This has included:

• Developing the Policing London Plan, its three year vision and strengthening the thread between corporate and business group annual planning and monthly reporting.
• Creation of a strategies database
• Completion of a new corporate business case template, guidance and approvals process
• Production of corporate calendar
• Development of a Performance Management Framework, integrating performance and financial information to enable informed decision making

17. In parallel, CDM is developing a proposed operating model for a corporate MPS decision-making structure, designed to allow Management Board (MB) to lead and manage the Service through a single, more holistic forum. Through the revised structure, the model also aims to rationalise the number of corporate decision-making boards and improve the transparency of corporate decision-making processes. Changes to the CDM model have been agreed by Management Board and are being implemented over the remainder if this financial year.

Partnerships

18. The DRM Partnerships workstream was set up after the MPS Partnership Strategy and Implantation Plan was agreed by the MPA in June 2008. Over 2008/09 and 2009/10 the DRM Partnerships workstream has developed a corporate approach to partnership working and has delivered key activities of the Implementation Plan.

19. The workstream has developed a database of all MPS partnerships, recording results obtained from an MPS wide mapping exercise. This work has given the MPS visibility of all partnerships for the first time; of finances, activities and issues. Using the partnerships database as a data source, all partnerships are now included in quarterly financial returns. The database has also enabled targeting of efforts to improve and add consistency to partnership working:

• A web-enabled Partnerships Toolkit has been developed to enable good governance and consistency in management of MPS.
• A Partnership Best Practice Network, with over 200 members has been established to share learning across the MPS in a systematic way, and to assist and facilitate partnerships. This network’s hub, the Partnership Central Steering Group (PCSG), meets quarterly and acts as gatekeeper for the rest of the network.

20. Since August 2009, the MPS Partnership Strategy and policy development has been delivered as business as usual, led by SID. Key activity within SID at present is to finalise protocols for partnership working between the MPS, MPA and GLA.

Developing the Second Phase of DRM

21. With the first phase of DRM coming to a close, new workstreams for inclusion in DRM2 are being developed, using the MPS corporate business case process:

Corporate Landlord (CL)

22. The MPS Accommodation costs of £220m a year in revenue terms are perceived to be high when compared to other police service facilities throughout UK. A CL approach to the planning, delivery, management and use of MPS estate facilities has been proposed as an opportunity to improve utilisation of the estate and deliver significant cost reductions.

23. The objective of the CL workstream is to optimise the use of the MPS Estate including disposal of surplus accommodation where appropriate. The introduction of a CL approach will lead to common standards in key cost areas (office and training accommodation, warehousing, storage, garaging and lockers). The CL workstream envelops the current DoR ‘Estates Utilisation’ Service Improvement Plan (SIP) project, so that this work can benefit from the cross Business Group governance and programme rigor of DRM.

24. The CL approach was discussed in a recent Resources Sub Committee Paper on the ‘Scope of Corporate Landlord and Delivery of Property Services Service Improvement Plan’ (8 October). This paper is attached as Appendix two.

Realising the benefits of SAP

25. At present, the MPS SAP system is not used to its maximum functionality. This is not only an inefficient use of a corporate resource, but also poses a risk to the organisation as SAP was intended to act as the corporate platform for producing data, for use in management reporting. To address the corporate issues that the underperformance of SAP raises, the DRM Steering Group agreed the need to invest significantly in its development as part of DRM2 and proposals for investment from the Service Improvement Plan (SIP) have been made.

26. The SAP workstream will firstly work to establish the required way forward to develop and embed SAP as the corporate platform it was intended to be, and also work on a number of specific developments, based on a prioritised list of organisational requirements. A high level scope of the workstream is shown in Appendix three.

Procurement - continuation of focus on purchase and contract compliance and delivery of SPP Savings

27. There is a need to continue the focus on the Procurement compliance journey during the second phase of DRM. The DRM2 Procurement Services workstream will bring together four key strands of work, with the aim of:

• Moving into effective contract management and improve spend under contract
• Completing work currently underway around Purchase Order compliance and locking in the benefits gained so far
• Further increasing procurement capability across the MPS
• Enabling, delivering and sustaining the saving potential of SPPs

28. For SPPs in particular it is important that this work is delivered through DRM to ensure that required changes are supported by the Programme’s cross-business group governance, acceleration and rigour.

29. The investment required to support this work is being progressed by seeking some resource from the SIP.

Finance and Modernisation (second wave)

30. Learning the lessons of the F&R review and having regard to the increasingly restricted financial landscape, consideration is now being given to moving to a more centralised model for the delivery of F&R functions across the Service. A scoping exercise is now being progressed to identify the best way of this agenda forward.

Risk Management

31. Each DRM workstream is risk assessed, as is the overall programme. Weekly updates and Steering Group meetings discuss risk as a standard item on the agenda. Risk logs are maintained at workstream and programme level. This comprehensive approach will again be applied to the management of DRM2 workstreams.

Environmental and sustainable development implications

32. The raising of professional standards, the implementation of an effective scheme of delegation and the improved management of contracts should all facilitate the delivery of the Service’s environmental and sustainable development objectives. For most workstreams however, it is too early to assess the wider impact of the changes made. However, as is noted in this report, the P2P workstream has had a direct positive impact on the MPS’ performance in terms of paying SME suppliers within ten days, increasing from 37% to 69% over the course of 2009.

33. For DRM2, it is clear at this early stage that the environmental impact of the CL workstream should be positive, as shown in the table below, taken from the Resources Sub Committee Paper on the ‘Scope Of Corporate Landlord And Delivery Of Property Services Service Improvement Plan’ (8 October 2009).

C. Race and equality impact

The outcomes of all but one DRM workstream apply to all members of the MPS, therefore no person, organisation or group is disadvantaged. However, for the F&R workstream, which focused on specific groups, a full equalities impact assessment was carried out.

Each new DRM workstream will be subject to equalities impact assessments. At this early stage, it is evident that the CL workstream and F&R proposals will have implications, given the focus of these is likely to lead to changes to where, when and how staff and officers work.

D. Financial implications

The first phase of DRM received £3.1 million from the SIP fund.

Proposals for DRM2 funding requirements are being considered as part of the 2010-13 budget and business planning process.

E. Legal implications

This programme of work is focussed on improving governance arrangements, particularly in respect of decision making, contract compliance and compliance with MPA Standing Orders. As well as improving internal control this will reduce the risk of challenge to Service decisions.

The legal implications of each of the DRM workstreams will be considered in the business case approval process. At this early stage however it is clear that legal support will be required for implementation of the Corporate Landlord workstream, for example if assets are agreed for disposal.

F. Background papers

• None

G. Contact details

Report author: Kate Higham

For more information contact:

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

Abbreviations & Acronyms

• CCM: Contracts Compliance and Management
• CDM: Corporate Decision Making
• CL: Corporate Landlord approach
• DoR: Directorate of Resources
• DRM : Developing Resource Management
• DRM2: The second phase of Developing Resource Management
• F&R: Finance and Resources Modernisation Review
• GLA: Greater London Authority
• MB: Management Board
• MPA: Metropolitan Police Authority
• MPS: Metropolitan Police Service
• MTFP: Medium Term Financial Plan
• P2P: Purchase to Pay
• SID: Strategy and Improvement Department
• SIP: Service Improvement Plan
• SME: Small and Medium Enterprise
• SoD: Scheme of Delegation
• SPPs: Strategic Procurement Plans
• TP: Territorial Policing

Appendix 1: MPA Scrutiny Pack information for DRM2

Description of Project:

The Developing Resource Management programme (DRM) was formed to improve MPS services through effective governance, by minimising the risk of control failures and maximising cashable efficiencies to support our frontline services. The first phase of DRM (funded through SIP) is coming to a close, with several workstreams moving into business as usual.

The DRM Steering Group recently approved new workstreams to be brought into the programme as ‘wave two’ projects. The new workstreams are focused on the continuation of streamlining and re-engineering the Service’s business processes with the aim of increasing compliance and improving productivity and efficiency in the use of resources. This will be achieved through:

• Development of a Corporate Landlord approach and Estate utilisation - (Property)
• Continuation of ‘Purchase to Payment’ (P2P), Contracts Compliance (CCM) and delivering the benefits of Strategic Procurement Plans (SPP) - (Procurement)
• Realisation of the benefits of SAP - (Finance)

Overview:

• DRM1 has delivered significant change and improvement across the MPS, it is important to maintain this momentum, with the DRM2 projects identified as being clear opportunities to do so
• The DRM2 projects will achieve significant cashable savings and improve compliance and good governance over the MPS’ resources
• This proposal aims to fulfil the corporate objective, ‘delivering the right services at the right price’

Key risks of not addressing this issue:

• Failure to address this issue would hinder the achievement of MPS objectives and the Commissioner’s Five Ps
• Would not maintain and achieve further compliance and/or identify and achieve cashable savings

Implementation Risks:

• Full implementation of solutions may take a significant period of time.
• Focus will need to be on maintaining a good relationship with the Solutions Centre for technical delivery
• Support and engagement by other Business Groups may not be forthcoming restricting potential savings and improvements - particularly regarding the Corporate Landlord and Estate utilisation project

Linkages:

• Clear linkages with other key themes such as Training, Olympics Legacy, Shared Services, Transforming HR, Managing Consultancy and Third Generation Outsourcing

Objectives:

• Savings - To make cost savings and better and more efficient use of resources
• Control & Process - Creating sustainable control and due process throughout activities and operations and ensuring current processes are fit for purpose and deliver value
• Compliance - Continuing to build and enforce compliance throughout the MPS - satisfying both Metropolitan Police Authority (MPA) and external scrutiny with confidence
• Capability - Enhancing the directorate’s capability to manage risk and change through its people and processes
• Value for Money - Driving transparency in Value for Money operations, realising benefit throughout the portfolio of projects planned and visibility of spend

Main benefit areas:

• Making Business as Usual processes more efficient
• Using economies of scale to save money
• Streamlining existing processes to make them more efficient and focussed
• Making use of synergies to deliver more than the sum of the parts
• Continuing to improve compliance through P2P and CCM
• Continuing to drive and create cashable savings through SPPs and realisation of SAP

Governance:

Various programme leads through to DRM Steering Group.

Current Status:

Workstreams in DRM Phase 1 aim to fall into Business As Usual by end of November 2009. The scope for DRM Phase 2 was agreed at Resources Board on 4 September 2009 and individual workstreams are currently being developed.

Proposed SIP Funding:

• SAP Development - £5m
• P2P Contract Compliance continuation - £0.7m

Impact on 2010-13 Business Plan:

SAP and Contract Compliance are enabling projects and specific savings have not been built into the budget in respect of these Phase 2 projects. Savings from Phase 1 projects are reflected in budgets where appropriate. Investment and savings in respect of the Corporate Landlord SIP project is shown separately.

Appendix 2: Resources Sub Committee Paper on the ‘Scope of Corporate Landlord and Delivery of Property Services Service Improvement Plan’ (8 October)

Property Services is responsible for the management of the MPS estate, at a cost in excess of £220m a year in revenue terms which is perceived to be high when compared to other police facilities throughout the UK. In addition there is a maintenance backlog in excess of £200m and investment within the estate has been sporadic or reactive in addressing maintenance/compliancy matters.

The majority of real estate costs are fixed through contractual obligations, such as PFI, rent, rates and maintenance contracts and these account for in the region of 76% of the total annual revenue budget.

Property Services have identified a number of opportunities which will assist in avoiding further increases in costs and will reduce future revenue spend. Management Board have considered and are supportive of these proposals; namely the introduction of the Corporate Landlord approach and a change in the Delivery of Property Services. These projects have been incorporated in the Service Improvement Plan, the purpose of which is to drive greater efficiency and reduce expenditure across the Service.

Corporate Landlord Approach

The proposed move to a Corporate Landlord approach is informed by the principles of an Asset Management led approach to the management of the MPA’s real estate assets, as set out in the Royal Institute of Chartered Surveyors (RICS) Public Sector Asset Management guidelines. In essence the approach adopted seeks to maximise the effectiveness of real estate facilities whilst minimising operational costs by taking a standardised approach to the provision of facilities. This enables a reduction in the costs of delivery, the promotion of flexible working arrangements to reflect corporate policies, and by standardising facilities provided, a reduction in on going operational costs. Promoting and maintaining corporate accommodation standards and the shared use of facilities, for example in areas of storage or training as well as office accommodation, will enable utilisation levels to increase.

A draft Estates Framework has been developed and tabled for review by the MPA Estates Panel. It is intended that this will become the basis for a revised Estates Strategy. The draft document is attached at Exempt Appendix A. At the same time PSD will commence a review of the office, training and storage elements of the portfolio. Of necessity there are significant dependencies between this project and other SIP projects, e.g. Training, Uniform Services, Forensics and Fleet Management.

Appendix 3: Realising the benefits of SAP DRM2 workstream - high level scope

During August 2009 the Finance Services SMT received the findings of a comprehensive review, which identified how the SAP system should be developed to meet the governance requirements of the MPS and to fully realise the benefits of the system. The review identified two streams of work:

• Workstream 1: Improvements which would have a corporate impact and which are closely aligned with the DRM Programme Objectives
• Workstream 2: Other improvements which are either not directly related to SAP or are specific to Finance Services and therefore seen more as ‘business as usual’.

It is proposed the initiatives in the first work stream are progressed as a DRM2, shown in the table below. The main objective of DRM2 SAP developments will be to improve overall governance. However, some of the initiatives will result in non cashable savings. Initiatives resulting in expected cashable savings are shown with an asterisk *.

Appendix 4: Procurement DRM2 workstream - high level scope

Procurement initiatives delivered through the current phase of the DRM have delivered significant improvements to Purchase-to-Pay and Contract Compliance. In addition, a significant saving potential has been identified through Strategic Procurement Plans (SPPs). Following on from this work, there is a need to continue the focus on the Procurement compliance journey during DRM2, including:

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