Appendix 2: Existing Service Efficiency Review

18/11/2013

Appendix 2: Existing Service Efficiency Review
1. This is on track to deliver £0.9M of the £1.1M of savings targeted from this
project ahead of schedule. Further work is being undertaken to close the gap
and it is anticipated that this will be completed ahead of the target dates in
2014/15 and 2015/16.
2. To support the delivery of this project up to £170K investment will be required
to support one off project costs, in-cab technology and resourcing costs
however this will be funded through in-year savings which have been brought
forward ahead of schedule.
3. Instituting a rolling Fleet replacement programme: This will significantly reduce
down time, management time, missed bins, rework and related customer
complaints. The service currently experiences about 10% of its fleet breaking
down on a daily basis due to the ageing nature of the current fleet which is
beyond the recommended life for the vehicles. Already quantified are £168K
of savings related to this specific measure however we anticipate the actual
benefits being realised from this investment being significantly higher and
helping to close the gap in the £2.5M savings target.
4. Please note while initial purchase will be through capital it will be financed
through the existing revenue budget provision.
5. Risk Implications
Top Risks for the Efficiency Project are Capacity, Ambitious Timescales,
Inability to achieve forecast savings, Public Resistance to Change potentially
undermining long term company viability and delivery of anticipated benefits.
Strenuous efforts are being made to mitigate these while balancing the need
to ensure service continuity as the top priority.
6. Legal Implications
No legal implications currently anticipated other than need to comply with
OJEU procurement regulations in relation to Fleet purchase.
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Appendix 3: Future Service Delivery Model
1. Specific actions relating to the proposed Alternative Delivery Vehicle that were
endorsed at cabinet in June 2013 and subsequent progress is given below:
Action description Progress
B.1 Review the legal advice and define the appropriate legal vehicle for the
Company by 31/7/13 Luan Kane (CEC Interim Company Lawyer)
has advised the set up of the WOC as a Teckal exempt company, limited by shares.
The Project Objective is therefore to create a wholly owned company (WOC), limited by shares, to deliver Environmental Operations and Fleet based services on behalf of theCouncil:
a. That is Teckal exempt,
b. That operates in a performance based
environment (performance framework to be
developed) that delivers high quality
services to the residents of Cheshire East
at market tested rates;
c. That is commercially viable in the longer
term;
d. That contributes to the £2.5M in efficiency
savings required at programme level;
e. With a planned go live date of January
2014.
This option recognises the benefits and disbenefits
set out in the options appraisal
provided in the June cabinet report. (Further
details are available from the report author). It
seeks to mitigate risks to the council of any
state aid allegations while still offering the
option of up to 10% trading capability.
B.2 Define and draw up the
Company objects; set up the
Company as a separate legal
entity and establish its
Memorandum and Articles of
Association by 31/8/13
Company now incorporated.
B.3 Define the HR; Financial
and Legal implications of the
company set up; transfer of
Work has been on-going from mid July
onwards to understand the implications of the
new delivery model.
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staff and the service
contractual agreements; Work stream activities have been identified
and in-year funding is available for this from
existing transformation budgets.
Benefits: Compared to pursuing an outsourced
model, forming a WOC offers better value for
money in both the short term (up to £500K
less cost) and speed of set up is significantly
quicker. In the longer term the benefit of any
on-going efficiency savings and trading
capability would be fed back to the council in
the form of dividends lowering the real cost of
delivering the service and offering value for
money for residents without compromising on
quality. We anticipate being able to make
savings relating to Support Services costs in
the region of 5-15% once the proposed
“incubation period” has expired.
B.4 Develop a three year
business plan for the
company and set objectives
against which its
performance will be
measured
This will be completed with a view to
Shareholder Board approval no later than
December 2013 assuming a planned go live
date of January 2014.
B.5 Define and develop the
arrangements between the
Council and the Company for
all/any support services
required and draw up any
required service
agreement(s).
This will be completed prior to proposed TUPE
transfer, currently forecast as January 2014.
2. In scope for the proposed Environmental Operations Wholly Owned
Company (WOC) are:
a. Waste & Recycling Management Services
b. Fleet Management Services
c. Streetscape (previously part of major change project 6.2) including the
Mechanical Sweepers, Grounds Maintenance and Street Cleansing
d. In addition, we are still defining, with the relevant service areas, where
it would make sense to transfer staff from the Corporate Support
Services and alternatively which services will be provided on a “buy
back” basis in line with the proposed Corporate Core “incubation
period”. HR and Legal advice will be taken on this prior to final
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decisions being made as to which staff are eligible to transfer to the
proposed WOC.
3. Out of Scope:
a. Bereavement (which is the subject of a separate project)
b. Public Rights of Way
c. Countryside
4. Start date: The proposed wholly owned company is expected to start formally
trading from January 2014. The company has now been incorporated. We
anticipate TUPE transfer of staff during January 2014. The proposed WOC
will have responsibility for delivering the forecast efficiency savings that are to
be realised during 2014/15 and 2015/16 with further savings anticipated as
the company becomes less reliant on the Council’s corporate services and
begins to penetrate new market opportunities on a commercial basis
achieving greater utilisation of resources and annual dividend payments back
to the Council.
5. Risk Implications
Top Risks for the WOC are Capacity, Ambitious Timescales, Business Plan
Formulation, Scope and ICT causing delays and potentially undermining long
term company viability and delivery of anticipated benefits. Strenuous efforts
are being made to mitigate these, partly through funding from the
transformation budget which will allow the project to be appropriately
resourced.
6. Legal Implications
Working closely with the Legal Services team to minimise the risk of any State
Aid allegations. In addition, actively monitoring any new business
development proposals to mitigate the risk of not fulfilling the criteria for
Teckal exemption.
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