Before starting, clearly identify:
- Why the council is considering outsourcing?
- What services does the council need to outsource, and to what extent?
Knowing the 'why' and 'what' will provide a clear basis for selecting a contractor.
Take a long-term strategic view of what is wanted from outsourcing by completing a strategic assessment. Consider these issues in a strategic assessment:
- Does the council still want to be outsourcing in 12 months time?
- What are the future workload predictions? Consider historic trends, economic outlooks, and projected growth. Is it necessary to outsource the entire consent service or would partial outsourcing be sufficient to manage peaks in resource consents? Consent volumes are also related to the plan provisions. Consider whether the plan provisions are likely to change in the near future (through either plan changes or the review process).
- What outsourcing options are there? Will outsourcing to one or more local suppliers create unworkable conflicts of interest, or remove necessary consultant options for the community?
- Does the council need particular technical skills or an increase in general resources? Would it be better to increase in-house resources, rather than outsourcing? Will 'in-house' skills be lost or can 'in-house' skills be enhanced?
- Will the use of an external contractor create tension within the planning department, or with other departments of the council? What type of work do the existing staff want to retain? Staff may wish to retain the more challenging and complex applications to enhance their professional development and maintain job satisfaction.
- What are the views and expectations of the council's managers and politicians?
- Does the council need to consult internally and/or externally? Does the community want the council to retain services in-house?
- What management structure and systems will be implemented to ensure a smooth transition of processing consents between council and contractors?
While a range of approaches to outsourcing exist, a common approach taken is to contract out lower-level applications. These are typically non-notified, controlled and discretionary activity applications, with few complex issues. If the council has been outsourcing for some time without a proper decision-making process, take time to reflect on the experience.
Outsourcing the whole consent processing function
Some council’s have contracted out the full resource consent processing function, usually in conjunction with a wider range of regulatory functions, such as building control, dog control, planning enforcement and noise control. This has been achieved through either a transfer of functions to another local authority or by delegation to a contractor.
A robust decision-making approach is required if you are considering outsourcing the entire processing function. Consider:
- undertaking a full strategic assessment and risk appraisal, including clarifying the significant management requirements
- reading the Auditor General report and NZS9213:2003 (see below) and following the 'good practice' advice
- consulting with councils that have tried this option, and the contractors in those locations to establish what worked and what did not
- obtaining legal advice to ensure correct RMA and LGA processes are followed, particularly for consultative procedures and delegations
- clarifying legal liabilities and insurance requirements.
Time frame and cost issues
Many outsourcing decisions are made with a view to achieving better service through shortened time frames and reduced costs. However, these improvements can only be achieved if the council actively manages a number of issues including:
- Time frame commitments are essential when outsourcing contracts to ensure compliance with the council's needs. The addition of extra resources can also help a council meet or improve time frames on the full range of 'current' applications. This usually occurs through outsourcing a number of less complex applications, allowing staff to concentrate on the more difficult applications.
- The use of contractors for short-term assistance can result in additional costs because of the time spent by both council and contractor to come up to speed on council processes.
- Many aspects of the consent processing administration will still need to be carried out by council staff. Tasks that will almost always be retained by a council will include dealing with initial applicant enquiries, receipt of applications, initial checking and entry into the council's systems, peer review, decision making, receipting deposits and/or invoicing applicants, maintaining the council's file system, and ss35 and 35A monitoring and record-keeping requirements.
- Ensuring internal and external costs for the same services are comparable. As planning departments provide a range of services, council time recording systems can fail to capture every activity associated with a particular consent. In addition, the treatment of disbursements such as travel costs, photographs and postage can differ, as can calculations of what is 'overhead' including what is an appropriate cost share of building costs and administrative management. If in doubt, consider getting cost comparisons undertaken by independent financial experts.
It is important to have realistic expectations as to the relationship between quality, time frames and cost. Is it realistic to expect an outsourced service to be faster, cheaper, and of higher quality?
Options for outsourced assistance
Consider the following options:
- Consultants - this is probably the most common source of overload and technical assistance.
- One council providing services to another council - the transfer of limited functions between councils, particularly regional and district councils, is not unusual.
- Part-time/lifestyle/retired planners - these planners may accept short-term contract work. However, these contractors may have limited availability and capacity.
- Two or more councils sharing an extra staff member.