Introductory Booklet External Service Delivery - Our Public Service 2020

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Introductory Booklet External Service Delivery - Our Public Service 2020
External Service Delivery
  Introductory Booklet
                    Your introductory guide to
               External Service Delivery in the
                           Irish Public Service

                              FIRST EDITION

                                    May 2014
Foreword by Mr Robert
                                   Watt, Secretary General,
                                   DPER
                                   Pragmatically, Government           successful ESD delivery. These
                                   organisations should enlist         key principles include driving
                                   external providers when the         value for money in the public
                                   benefits outweigh the costs of      service and delivering best in
                                   doing so, bearing in mind the       class services for citizens by
                                   quality of service, effectiveness   making the best use of
                                   and the public interest.            resources. We must also aim
                                                                       to foster continuous
                                   There are a wide range of           improvement through
The difficult economic situation   Government activities that are      innovation, develop more
in which Ireland finds itself      being successfully delivered by     responsive systems and to
means we have had to radically     external providers. These           leverage new technologies to
re-think how we manage and         include eFlow and the bovine        successfully delivery services
deliver our public services.       traceability system. Many           externally.
External Service Delivery (ESD)    departments and agencies
is one area of reform that can     across the public service have      I hope that you will find this
potentially deliver a range of     facilities management, IT           introductory booklet a useful
benefits in the provision of       services, inspections, document     aid for increasing your
public services. These include     management, printing and legal      awareness of the potential of
financial savings arising from     services delivered externally.      ESD Projects in your
enhanced management                These initiatives have              organisation. It is my ambition
practices and performance          demonstrated that external          that the links we are building
measurement. There can also        service delivery can deliver        with industry will ultimately
be greater potential for           excellent outcomes for all          lead to a culture of
innovation through access to a     participants, including the state   collaborative partnership
wider set of skills, knowledge     and the citizen.                    between the public and private
and technologies. Delivering                                           sectors in which the best of
services externally also           Successfully managing ESD of        both sectors can come together
provides an opportunity for        any public service is a complex     to deliver the cost effective,
greater focus of scarce            process. We must increase the       high quality, innovative public
resources on core activities.      capacity and capability of public   services the people of our
                                   servants to understand, and         country deserve.
                                   implement the Key Principles of
About this Introductory Booklet
                                       Consultants and Other
Who is this                            External Support by the
                                                                      What are your
Introductory                           Civil Service (and other       first steps?
                                       national guidelines);
Booklet for?                                                          If you are considering an
                                      Relevant EU Public             External Service Delivery
This introductory booklet is for       Procurement Law; and,          project, you could think about
distribution within the Public                                        the following steps:
Service to provide a                  Public Procurement
background and introduction            Guidelines - competitive       Step 1: You should familiarise
to External Service Delivery           process.                       yourself with relevant on-line
(ESD).                                                                information (this can be found
                                                                      on the ESD portal on the
                                   Note to Reader                     Government network and
What is it                                                            Government websites).
                                   This document is issued by the
about?                             Department of Public               Step 2: You should contact the
                                   Expenditure and Reform             ESD unit in the Department of
This Introductory booklet is                                          Public Expenditure and
                                   (DPER) to provide introductory
designed to provide high level                                        Reform. They can provide
                                   information for those
introduction to External                                              expertise around the various
                                   managers considering an ESD
Service Delivery and the                                              types of external service
                                   project. It is an introductory
framework used to identify                                            delivery and explain how to
                                   high level document and is not
and assess potential services                                         start the process.
                                   an exhaustive interpretation in
for ESD.
                                   relation to any legal provisions
                                   governing public procurement       Step 3: Attend the two day
                                   or contracts. Additional advice    training programme ‘An
How you                            may be sought from DPER.           Introduction to External
                                   Legal or other professional        Service Delivery’ that is co-
should use it                      advice should be obtained          ordinated by the Reform and
                                   about the interpretation of        Delivery Office. For further
This is an introduction                                               information on these courses
                                   legal provisions or the correct
document that should be read                                          please click here.
                                   application of such provision.
by ESD Managers prior to
considering any detailed ESD                                          Step 4: Follow the phased ESD
                                   This is a living document and
analysis. For those considering                                       process outlined in the ESD
                                   will be updated regularly as
embarking on an ESD project                                           handbook.
                                   relevant sections of law
the ESD Handbook (a more
                                   change. Please ensure you are
detailed document) should be
                                   working on the most recent
read. The ESD handbook
                                   version by checking on our
should be read in conjunction
                                   portal where the most recent
with;
                                   version will always be saved.

   The Guidelines in the
    Engagement of
Introductory Booklet Contents
About this Introductory Booklet .................................................................................................. i
A. What is External Service Delivery?.......................................................................................... 1
B. Benefits Realisation................................................................................................................. 3
C. The ESD Framework ................................................................................................................ 5
D. ESD Phase Roadmap ............................................................................................................... 7
E. Phase Roadmap Guide ............................................................................................................ 9
F. The Exit Strategy .................................................................................................................... 10
The NRA Case Study .................................................................................................................. 12
The National Roads Authority (NRA)......................................................................................... 13
NRA Case Study – The Assess Phase ......................................................................................... 14
NRA Case Study – The Prepare Phase ....................................................................................... 16
NRA Case Study – The Evaluate Phase ...................................................................................... 18
NRA Case Study – The Commit Phase ....................................................................................... 19
NRA Case Study – The Transition Phase.................................................................................... 20
NRA Case Study – The Optimise Phase ..................................................................................... 21
Irish Public Service ESD Examples ............................................................................................. 22
Conclusion & Reference Sites.................................................................................................... 23
Overview
A. What is External Service Delivery?
ESD is the contracting out of a    of non-government service          ESD provides a framework to
business process or activity,      provision through ESD.             help determine how and by
which an organisation may          ESD has a number of key            whom programmes and
have previously performed          benefits, including cost           services should be delivered.
internally or has a new need       efficiency. Among the other
for, to an independent             benefits of ESD are:               ESD covers many
organisation from which the                                           organisational arrangements
process is purchased back as a      Better services to the end       that span a broad spectrum of
service.                             user,                            delivery arrangements for
                                    Reduced pressure on local        public services.
As governments' experience           management,
and capacity to regulate            The ability to flex in time of   The following table outlines
private sector providers have        increased demand,                some of the ways that ESD can
improved and the private            Improved services; and           be implemented for the public
sector is becoming more             Improved access to new           sector depending on the
willing to supply public             operating models,                context and nature of the
infrastructure and services,         management practices and         service.
governments have become              technologies.
increasingly prepared to
contemplate innovative forms

      ESD is not just about achieving cost efficiency; other benefits include service
        improvement, reduced management overhead and flexible resourcing.

  Term                     Definition                                              Example

                                                                                                      1
Toll road
                           Public-Private ventures or partnerships designed to deliver
    Partnerships / Mixed                                                                    management; and
                           infrastructure and/or services which are funded and
    Ventures / Joint                                                                        other public private
                           operated through a partnership of government and one or
    Ventures                                                                                partnership
                           more private sector companies.
                                                                                            schemes.

                           Public entities purchase services under contract from private    Contract catering or
    Contracting Out
                           firms, but retain accountability for the service.                cleaning services.

                           For franchising, the government confers to a private firm the
                           right or privilege to sell a product or service in accordance
    Franchising/           with prescribed terms and conditions. For licensing, the         Mobile operators /
    Licencing              government grants a license to a private firm to sell a          radio licences.
                           product or service that unlicensed firms are not allowed to
                           sell.

                           A public service mutual is an organisation which has left the
                                                                                            A pension’s
                           Public Service (also known as ‘spinning out’) but continues to
                                                                                            administration joint
                           deliver public services. Mutuals are organisations in which
                                                                                            venture partnership
    Mutuals / Employee     employee control plays a significant role in their operation.
                                                                                            between employee
    Takeovers              They are a newer form of contracting out that involves
                                                                                            partners, UK
                           contracting with a former government employee, or
                                                                                            Government and
                           employees, to deliver a service previously delivered directly
                                                                                            Paymaster.
                           by the government.

This Introductory booklet           These are only suggestions and          it can be difficult to secure the
focuses primarily on the            not an exhaustive list.                 necessary co-operation
Contracting Out model as it is                                              between providers or providers
the most common form of ESD.        Areas should only be                    and in-house provision. Where
Examples of activities that may     considered for ESD once they            services have uncertain
provide opportunities for ESD       have a clear strategy for               demand or are characterised by
include catering; facilities        mitigating risk. This is especially     high policy uncertainty,
management; property                important where it is difficult to      departments may find it hard
management; security services;      measure the value added by a            to re-negotiate contracts. If you
debt management; customer           potential supplier. In this             are proceeding to ESD, it is
contact/call centre; ICT            instance it is challenging to           probable that mitigating
infrastructure and ICT support;     price contracts and to monitor          against the above scenarios
payments/grants                     performance. Furthermore in             may involve additional costs
administration; recruitment;        areas where a service outcome           which you should budget for.
licensing; training and             is highly dependent on the
courier/transport services.         performance of other services

2
Overview
B. Benefits Realisation
The following pages look at
                                                     How important were each of these objectives
some of the experiences                              in your most recent ESD initiative?
organisations have had with
implementing ESD initiatives.
These results are from the 2012
Deloitte Global Sourcing
Survey, and while they mainly
reference the private sector the
results are applicable across all
sectors and indicate clearly that
cost reduction while important
as a driver of ESD is not the
only benefit that is sought
after.

Key findings show that reducing
operating costs is a very
important objective of an ESD         and also to improve overall        that the initial scoping and
initiative but that there are         controls.                          assessment phase is critical to
more drivers to ESD than just                                            the overall success of an ESD
cost reduction.                       When asked about customer          initiative.
                                      satisfaction with external
The survey show that                  service delivery the 2012          One key piece of feedback from
improving customer service            Deloitte Global survey revealed    the survey is that ESD is more
and leveraging new                    that most respondents (76%)        than a third-party contractual
technologies ranked nearly as         are either extremely satisfied     arrangement. It is a key
highly as reducing costs in           or satisfied with their most       business relationship.
terms of the important                recent ESD initiatives.            Therefore assessment and
objectives of an ESD initiative.      Underestimating scope is the       preparation to ensure a
The survey also reveals that          most often reported problem        thorough understanding of the
another key objective of ESD          with most recent ESD               supply market is key to success.
initiatives is the ability to allow   initiatives, followed by
a more flexible HR model to           suppliers being unable to meet
flex in times of greater demand       service levels. This illustrates

                                                                                                       3
How satisfied are you with the outcome of your   What factors led you to be less than satisfied with
most recent ESD initiative?                      your most recent ESD initiative?

                                                                     Source: 2012 Deloitte ESD Survey

4
Overview
C. The ESD Framework
There is a detailed and template driven methodology in place to determine activities throughout the
lifecycle of an ESD project.

The ESD lifecycle consists of 6 phases, namely;

                            Assess
                            Prepare
                            Evaluate
                            Commit
                            Transition
                            Optimise

Each phase contains a number of activities across the six functional areas identified in the diagram
below.

                             Value
 External Service Delivery

                                                                                        Assess       Prepare
                             People & Organisation

                             Location & Asset Management
                                                                             Optimise                       Evaluate
                             Information Technology

                             Change Management
                                                                                    Transition       Commit
                             Programme & Risk Management

Phase 1 - Assess                                     understood view of the likely
                                                     benefits, costs and risks of the
It is in the Assess Phase that the                                                        Phase 2 - Prepare
                                                     ESD initiative and of the
early high level unknowns must
                                                     activities required to               The Prepare Phase
be flushed out and confronted.
                                                     respectively maximise,               encompasses a thorough
The activities in this phase are
                                                     minimise and mitigate these. A       examination of the market and
critical to establishing senior
                                                     Business Case (1) analysing a        supplier base and the
stakeholder expectations, both
                                                     range of possible delivery           preparation of detailed
for the ESD initiative as a whole
                                                     options must be produced at          requirements to be included in
and for the amount of time and
                                                     this stage. Financial analysis       the Request for Tender( RFT)
effort required to secure it. By
                                                     metrics (2) must also be             and contract. This analysis will
the end of the Assess Phase
                                                     completed.                           also identify the procurement
there will be a commonly

                                                                                                                        5
procedure most suited to the        activities across the ESD            Transition Phase has been
specific circumstances of the       initiative, supplier                 completed. Within this phase
ESD project. Qualification and      management, people and               public entities need to focus on
award criteria for evaluating       organisation work streams. The       managing the supplier
tenders need to be developed        contract is finalised. Significant   relationship, monitoring
and all key service delivery        internal stakeholder                 contractual obligations as well
elements; costing issues and        management activities are            as tracking the supplier
contractual terms must be           required to secure the buy-in        performance against the
identified. During this phase       and sign-off necessary to            original business case.
the fundamental elements of         complete the ESD initiative. In
the remaining phases of the         parallel, the organisation           By its very nature, the Optimise
lifecycle are also defined and      design will be finalised and         Phase is very much an
agreed. This is often the most      transition roadmap and plans         operational responsibility
resource intensive and              (3) developed. Start thinking        which continues throughout
commercially significant phase      about ESD (see below) now.           the duration of the contract
of the ESD lifecycle.                                                    until the contract renewal or
                                                                         exit.
                                    Phase 5 – Transition
Phase 3 – Evaluate
                                    The Transition Phase of the ESD
                                                                         The Exit Strategy
The activities within this phase    lifecycle focuses on
are broadly aligned to three        transitioning the work and           The Exit Strategy offers
steps that cover: 1.The             resources (infrastructure and        guidelines for preparations to
management of the suppliers         responsibility) to the successful    exit an ESD contract and
whilst they are preparing their     tenderer(s) and effective            making arrangements for
tenders; 2. Evaluation of the       stakeholder management to            handover to a new incoming
tenders and 3 Notification to       ensure effective contract            supplier. It is very important for
unsuccessful tenderers.             management and optimised             the public entity to have
Following completion of the         value. The phase includes            effective exit arrangements in
Evaluate Phase, the public          implementing a robust                place if the ESD contract fails or
entity will be ready to proceed     transition plan with the             the relationship between the
to contract. The sequence of        supplier(s) and establishing a       public entity and the supplier
activities within this phase will   reporting mechanism to track         breaks down. The original ESD
be dependent on the                 value.                               contract should contain an Exit
procurement procedure                                                    provisions that allow for
followed.                                                                limited, legally permitted
                                    Phase 6 – Optimise                   renegotiation or termination of
Phase 4 – Commit                                                         a contract by either party.
                                    The Optimise Phase of the ESD
The Commit Phase includes the       lifecycle focuses on the steady-
final pre-contract stages of        state operation of the ESD
both internal and external          arrangement after the

6
D. ESD Phase Roadmap
The ESD phase framework is a               guidance in respect of three               More information on the Stage
comprehensive tool used to                 critical functional areas                  Gate Process can be found
guide the process of                       namely; Phase Activities,                  overleaf.
transitioning to an ESD model.             Programme Management
The framework provides                     Office Activities and Outcomes.

        1. Assess         2. Prepare           3. Evaluate        4. Commit          5. Transition     6. Optimise

                                                    Phase Activities

  1.1 - Complete     2.1 - Prepare ESD     3.1 - Confirm       4.1 - Reassess      5.1 - Monitor      6.1 - Assess Value
  Initial ESD        Scope & ‘To Be’       Structure           Value Proposition   Value              Leakage & Track
  Assessment         Process               Alignment                               Proposition        Benefits
                                                               4.2 - Select
  1.2 - Develop      2.2 - Determine       3.2 - Manage        Supplier & Sign     5.2 - Develop      6.2 - Manage
  Baseline &         Delivery Structure    Supplier            Contract            Transition Plan    Continuous
  Preliminary                              Interaction                                                Improvement
  Business Case      2.3 - Define                              4.3 - Clarify       5.3 - Develop &
                     Operating Model       3.3 - Develop       Contract Details    Manage Process     6.3 - Prepare
  1.3 - Scope                              Initial Plan for    with Successful     Guide              Future Strategy
  Transition &       2.4 - Develop         ESD Transition      supplier
  Assess ‘As Is’     Pricing Model                                                 5.4 - Monitor      6.4 - Manage
  Process                                  3.4 - Evaluate      4.4 - Manage        Supplier           Commercial
                     2.5 - Prepare for     Proposed            Stakeholders:       Transition         Obligations
  1.4 - Determine    Supplier Selection    Service             Executive Buy-in
  & Agree ESD                              Locations           & Approval to       5.5 - Manage       6.5 - Optimise
  Transition         2.6 - Define                              Sign-off            Workforce          Supplier
  Principles         Services &            3.5 - Manage                            Considerations     Relationship
                     Develop               Evaluation          4.5 - Finalise
  1.5 - Identify,    Specifications        Activities          Retained Org.       5.6 - Shift        6.6 - Manage On-
  Assess &                                                     Structure           Responsibilities   going Demand
  Manage Risks       2.7 - Prepare RFT                                             to Supplier
                                                               4.6 - Manage        Organisations      6.7 - Manage
  1.6 - Assess ESD   2.8 - Prepare                             Security &                             Change
  Options            Stakeholders for                          Control             5.7 - Manage
                     ESD Transition                                                the Transition
  1.7 - Assess                                                 4.7 - Manage
  Location &         2.9 - Define                              Communications
  Estate             Retained & ‘To                            & Align Work
  Considerations     Be’ Org. Structure                        Streams

                                      Programme Management Office Activities

                                  Mobilisation, Project Governance & Risk Management

  Assess Phase       Prepare Phase         Evaluate Phase      Commit Phase        Transition Phase   Optimise Phase
  Stage Gate         Stage Gate            Stage Gate          Stage Gate          Stage Gate         Stage Gate

                                                        Outcomes

  ‘As Is’ Model &    Detailed ‘To Be’       Initial Analysis   ESD Agreement       Implemented        Active Monitoring
  Baseline           Model and ESD          of Proposals &                         Transition Plan
                     Requirements           Audit Trail        Retained Org.       & Retained Org.    End of Term &
  Preliminary                                                  Structure,          Structure          Draft Future
  Business Case,     Agreed RFT             Preferred          Transition Plan &                      Strategy
  ESD Scope &        Criteria and           Supplier           Value Delivery      Relationship
  ESD Options        Documentation          Shortlist          Roadmap             with Supplier

                                                                                                                           7
Stage Gate Process
The Stage Gate Process is used to examine key points during a project’s timeframe. At the end of each
phase of the ESD project, the SRO (Senior Responsible Owner) is equipped with a report on the
project’s progression. The recommendations obtained from the Stage Gate Process should prove
beneficial to the overall delivery of the ESD project.

Stage Gate Process Unit
A team of reviewers (generally this will be the cross functional governance team) will need to be
established to carry out the Stage Gate Process. They will be highly specialised in their respective field
and appointments will be specific to each stage of the Stage Gate Process.

Gate             When                                 Comment

                                                      The first Stage Gate examines whether all possible
                                                      outcomes and ESD option have been duly considered. In
                                                      addition, the Review makes that sure that risks, benefits
Gate One         At end of Assess Phase               and costs have been identified and that resources are in
                                                      place to ensure the ESD project will be successfully
                                                      managed. The strength of the Business Case should also be
                                                      confirmed.
                                                      This Stage Gate ensures that essential preparations in
                                                      relation to market/supplier assessment and key service
Gate Two         At end of Prepare Phase              delivery elements have been undertaken. The review also
                                                      makes sure that the RFT procedure and criteria have been
                                                      appropriately determined.
                                                      The third Stage Gate examines whether an effective
                                                      methodology is in place for evaluating tenders and that a
                                                      successful tenderer has been identified. The review
Gate Three       At end of Evaluate Phase
                                                      confirms that an ESD implementation plan is in place. At the
                                                      conclusion of this review, the public entity should be able to
                                                      confirm the Business Case and move forward to contract.
                                                      This Stage Gate ensures that necessary arrangements are in
                                                      place prior to the contract being finalised. The Review
                                                      checks that contract details with the successful supplier
Gate Four        At end of Commit Phase
                                                      have been clarified, that value delivery has been assessed
                                                      and that a design has been finalised for the Retained
                                                      Organisation Structure.
                                                      The fifth Stage Gate examines whether services and process
                                                      have been successfully transitioned to the supplier. The
Gate Five        At end of Transition Phase           review ensures that all stakeholders are committed to the
                                                      ESD project and that there is ongoing strategic
                                                      communication between the public entity and the supplier.
                                                      This Stage Gate evaluates whether the ESD project has
                                                      successfully implemented and that there is continuous
Gate Six         At end of Optimise Phase             monitoring of all aspects of the ESD project. The Review
                                                      also examines if the benefits forecasted in the Business
                                                      Case have been achieved.
                                                      When the Stage Gate Process ends, the SRO is sent a draft
                                                      report. The SRO then has a specified period of time in which
Final Report                                          to edit any errors before the report is made final. Any
                                                      learnings from the report can be used to provide advice to
                                                      Government departments or agencies.

8
E. Phase Roadmap Guide
                                    activity planning,              end of each phase is
Phase                               stakeholder                     the Stage Gate Process.
Activities                          engagement and                  This activity involves
                                    communication                   assessing the work
The phase activities as             planning activities.            completed as a result of
outlined on the phase                                               the undertakings during
roadmap detail the specific
                                Project Governance                  the respective phase
activities to be completed         At the outset of an ESD         and benchmarking the
during each phase of the            transition is it vital to       outcomes achieved
ESD Framework. Successful           determine and agree             with targets, objectives
completion of each phase            governance                      and industry best
requires careful                    arrangements. These             practice. If the work
consideration of each               arrangements will               completed does not
activity in addition to the         determine how the               meet specific
consideration of                    transition is managed           requirements it should
Programme Management                and must be reassessed          not be signed off by
Office Activities, Outcomes         at the beginning of             senior management
and a number of Transition          each phase and                  and therefore the
Principles.                         throughout the                  transition project will
                                    transition.                     not pass through the
                                                                    Stage Gate to the next
Programme                       Risk Management                     phase.

Management                         Proactive and thorough      For more information
                                    risk identification,        about the Stage Gate
Office                              assessment and
                                                                Process, see the previous
                                    management is crucial
Activities                          for the success of an
                                                                page. For more
                                    ESD transition. Specific
                                                                information on
The Programme                                                   Programme Management
                                    risk management
Management Office (PMO)                                         Activities please click link.
                                    activities have been
Activities as outlined in the
                                    aligned to certain
phase roadmap provide an
overview of the various
                                    phases throughout the       Outcomes
                                    ESD framework.
PMO activities that should
                                    However, it is vital to     The phase roadmap
be considered during an
                                    note that careful           diagram outlines the
ESD transition, namely;
                                    consideration must be       specific outcomes to be
                                    given to risk               achieved as a result of the
Mobilisation                        management                  activities completed in each
   At the outset of each           throughout the              phase. Successful
    phase it is vital to            transition process.         achievement of these
    mobilise the                                                outcomes is a prerequisite
    engagement team. This       Stage Gate Process              for the beginning of the
    process incorporates           The final PMO activity      next phase of the transition.
    the initial resource and        to be undertaken at the

                                                                                          9
F. The Exit Strategy
The Exit Strategy offers           transition smoothly between          The relationship breaks
guidelines for preparations to     suppliers and solutions, reduce       down.
exit an ESD contract and           risks and keep costs to a            Services not delivered as
making arrangements for            minimum. While it is initially        expected.
handover to a new incoming         hoped that the ESD project will      Fraud or criminal
supplier. It is very important     be a success, the ESD contract        behaviour.
for the public entity to have      might not come to a                  Bankruptcy.
effective exit arrangements in     conclusion for various reasons.
place that guarantee the           These may include:
organisation is able to

Key Exit Strategy Points to Remember
Exit Agreement                     Business Case                       Legal routes
The original ESD contract          A Business Case will need to be     You should also be aware of
should contain a stage based       prepared outlining the benefits     and plan for the options
Exit Agreement with clauses        against the risks of ending the     available to you should you
that allow for termination of      ESD relationship.                   wish to go down a legal route.
the contract by either party.
                                   Management of                       Exit procedures
Exit management team               resources                           Correct exit procedures should
 You should establish a team to    You will need to make sure          be established within your
manage the end of the              resources are being managed         organisation and provision for
contractual arrangement and        to ensure the continuance of        this should be placed in the
any new handover process.          service provision during the        original ESD contract.
                                   exit/handover period.

Outline of Exit Strategy Stages in the Exit Agreement
Initial Stage of                   processes or licences from the      incoming supplier. You will
Exit/Transition                    outgoing supplier to your           need to identify what roles and
The initial stage of the           organisation.                       processes the new supplier will
exit/transition will involve                                           have responsibility for. You
preparations to begin finalising                                       may also need to help the
                                   Middle Stage of                     outgoing and incoming
details with the outgoing
                                   Exit/Transition                     suppliers agree on transfer
supplier. Actions may include;
confirming any work the                                                related agreements.
                                   During the middle stage of the
outgoing supplier must             exit/transition you will start to
complete, managing any             plan working and handover
identified risks and planning      arrangement with the new
for the transfer of services,

10
Final Stage of Exit                  supplier concerning which        termination related costs and
Transition                           services are finishing and how   oversee final agreements
                                     all objectives are to be met.    between the outgoing and
The final stage of the               You may have to confirm          incoming suppliers.
exit/transition will involve final   timelines for the termination
arrangements with outgoing           of services; agree any

Service Closure/Exit of Outgoing Supplier
You will need to ensure there        your organisation will need to   place. The outgoing supplier
is no disruption to services as      stop and the transfer of any     should finish providing services
the outgoing supplier exits          required data to the incoming    and vacate your organisation’s
your organisation. Access to         supplier will need to take       premises.

                                                                                                 11
The NRA Case Study
The NRA eFlow Barrier-Free Tolling Project on the M50 Motorway is a very successful example of an
ESD project within the Public Sector. This case study is outlined over the next few pages of this
booklet.

12
Case Study
The National Roads Authority (NRA)
In January 2006 the                 implemented. While the               To procure and oversee a world
Government announced that as        project was on time and              class barrier-free tolling
part of the planned upgrade of      delivered to budget there were       operation on the M50
the M50 Motorway, the               nevertheless a myriad of             Motorway which is
existing toll arrangements on       technical and operational            commercially focussed,
the motorway at the West-Link       issues to be addressed during        financially efficient and results
Toll Bridge would be replaced       the Mobilisation Phase (just         in a positive experience for all
by a barrier-free tolling system    after ‘go-live’) which resulted in   customers using the Motorway.
during 2008.                        significant levels of customer
                                    frustration, a large backlog of
                                                                         The eFlow business has
                                    customer contact to manage
Barrier-free tolling, as the name                                        changed completely from those
                                    and widespread negative media
suggests, enables the collection                                         difficult early days. The
                                    attention.
of tolls solely by electronic                                            business has gone from
means without any barriers or                                            strength to strength in terms of
toll-plaza on the motorway –        About two months after the           customer numbers and
and therefore no need for           launch, the NRA recognised           revenues and is now
motorists using the motorway        that the operation was simply        internationally recognised as an
to stop or slow down to pay the     not performing adequately            excellent customer service
toll charge. While tolling by       across a number of critical          business. So much so that
means of barrier-operated           areas of the business (e.g.          eFlow “swept the boards” at
plazas is a long established        customer management and              the Contact Centre World
practice in many countries, the     collections). As a consequence       Awards 2011 in London for the
M50 system was one of the           the delivery team had to take a      EMEA region by achieving
first fully electronic tolling      step back and reconsider the         seven awards including three
systems to be deployed on a         objectives and approach to the       gold medals in categories such
European motorway and as            new business in order to             as customer service, training,
such there was relatively little    determine and implement a            and IT/innovation. eFlow also
industry experience on which        revised strategy to stabilise the    received a Public Sector
to draw upon when                   business and to create the right     Excellence Award from An
establishing this new business.     platform from which it would         Taoiseach in 2011 and was also
                                    develop and improve going            awarded the Outsource
                                    forward.                             Partnership of the Year for
The new barrier-free system
                                                                         2012 at the Irish Contact Centre
called eFlow (which is a
                                                                         & Shared Services Awards.
registered business name of         One of the first things the team
the NRA) was ‘switched on’          did following this, and perhaps
during August 2008. It is fair to   one of the most critical, was to
say that the delivery of the        work out a simple mission
M50 eFlow project and the           statement for the business,
creation of a new public sector     which was as follows:
tolling business was possibly
one of the most challenging
projects that the NRA has ever

                                                                                                     13
NRA Case Study – The Assess Phase
An Environmental Impact             contract and comply with            Department of Transport as the
Statement (EIS) was prepared        procurement regulations.            NRA’s sponsoring department
for the M50 Upgrade Scheme          Furthermore, it was identified      as well as the Driver Vehicle
identifying the West-Link toll      that it would be difficult to       Computer Services Division
facility as a contributing factor   demonstrate ‘value for money’       (formally the Vehicle
to delays experienced by road       from a negotiated agreement.        Registration Unit) based in
users on the M50. The EIS                                               Shannon as manager of the
presented the case that a                                               National Vehicle Owner
                                    The NRA, with the agreement
barrier-free tolling system                                             Register which is used by the
                                    of the Government, took the
would unlock significant                                                tolling system to identify all
                                    decision to “buy-out” the NTR
additional benefits for users                                           vehicles registered in the State,
                                    West-Link contract and to run a
and the environment than                                                the Data Protection
                                    tender competition to appoint
would otherwise have been the                                           Commissioner with regard to
                                    an entity to design, build and
case with a conventional plaza                                          protection of road users privacy
                                    operate a new barrier-free
tolling. In particular, the EIS                                         across a number of areas and
                                    tolling system.
identified that the proposals                                           the Courts Service with regard
would increase the capacity of                                          to the enforcement process
the Motorway, enabling road         ESD was the optimum solution        and plan for the treatment of
users including buses, taxis,       as this was the first project of    toll evaders / violators. The
commercial vehicles and             this nature in Europe for a         NRA also had to engage with
private cars to benefit from        number of reasons including         private sector industry bodies
significantly reduced traffic       the fact that there was a lack of   including, for example, the Car
congestion and increased            resources, skills, and              Rental Council and the Vehicle
average traffic speeds both on      experience within the NRA to        Leasing Association of Ireland.
the M50 and also on the radial      fully resource such an
routes approaching the M50.         operation. Additionally, the
                                                                        Ascertaining the list of services
The replacement and upgrade         new operation was required to
                                                                        that could be provided by ESD:
of the tolling system was           work “at full steam” from the
                                    first day as there was no ‘ramp        The tolling system and
therefore a critical element of
                                    up’ phase. Furthermore, as the          services were procured
the overall M50 Upgrade
                                    motorists would directly                using a design, build and
Scheme.
                                    interact with the new                   operate contract with an
                                    technology the impact/results           eight year term (and with a
The NRA engaged with the                                                    three year extension
                                    of the project would be highly
incumbent toll operator, NTR                                                option).
                                    visible.
(who had contractual rights to
collect tolls on the “Westlink”
                                    Engaging and managing                  The NRA, in March 2007,
(Junction 6 to Junction 7)
                                    stakeholders:                           appointed BetEire Flow (a
section of the M50 until 2020),
                                                                            French consortium of two
to explore the possibility of       The introduction of barrier-free
                                                                            major French firms - Sanef
varying the West-Link contract      tolling required the support
                                                                            and CS), to design, build
arrangements to change the          and cooperation of a number of
                                                                            and operate the tolling
tolling arrangements to barrier-    key stakeholders and
                                                                            system. Sanef manage the
free tolling. The NRA ultimately    establishment and
                                                                            tolling business along with
concluded that it was not           management of good working
                                                                            their key partners/
feasible to negotiate such          relationships. This included the
                                                                            suppliers:
changes to the West-Link

14
1.   Customer Management –        new type (“first generation”) of    The benefits from barrier-free
     Abtran.                      electronic road pricing on the      tolling on the M50 were
2.   Payments & Billings –        busiest motorway in the State       broadly summarised as follows:
     Payzone.                     presented challenges which
                                  included:
3.   Logistics – Realtime                                                Less congestion - no
     Technologies.                                                        stopping or slowing down
4.   Post – PrintPost.               Concluding an agreement             at a toll plaza.
                                      for the termination of the         Faster journey times –
5.   Enforcement – Pierse &
                                      NTR West-Link toll                  increased average speeds.
     Fitzgibbon Solicitors.
                                      concession.
                                                                         Less land take.
                                     Preparing supporting
This contract is much more                                               Less pollution.
                                      legislation for barrier-free
than providing a service to the                                          Better air quality.
                                      tolling including a new Toll
NRA – it is really about
                                      Scheme and Bye-Laws.
managing the tolling business
                                     Engaging with a broad           The advantages of barrier-free
on the NRA’s behalf.
                                      range of stakeholders.          tolling are offset somewhat by
                                                                      risks related to the potential for
                                     Migrating ‘on the ground’
Challenges, benefits and risks:                                       increased levels of revenue
                                      from the barrier operated
In preparing and planning for                                         leakage with free-flow systems,
                                      toll facility to barrier-free
the introduction of the new                                           additional risks associated with
                                      motorway tolling.
barrier-free tolling system the                                       the introduction of new
                                     Embarking on a nationwide
NRA team were aware that the                                          technology and the uncertainty
                                      public awareness campaign
project entailed certain                                              surrounding operating costs -
                                      on the new tolling
characteristics and risks which                                       as there is very little historical
                                      arrangements including
would make it one of the more                                         cost data available on the new
                                      the launch of the eFlow
challenging projects delivered                                        technology for road operators
                                      tag.
by the NRA in recent times.                                           and infrastructure managers.
Launching the operation of a

                                                                                                  15
NRA Case Study – The Prepare Phase
Market assessment of                free tolling regions specific          Milestone 1 - Approval of
suppliers:                          legislation was required to             Specification and
The NRA hired external              enforce and penalise violators          Implementation Plan.
consultants to carry out a          and also to act as a deterrent.        Milestone 2 - Approval of
Global Best Practice Study to                                               Testing Programme and
identify an initial list of         Identifying Scoring and                 Operations Plan.
potential ESD suppliers,            Evaluation Criteria:                   Milestone 3 - Completion
determine the feasibility of                                                of Construction &
                                    The NRA adhered to Public
implementing a barrier-free                                                 Performance Tests.
                                    Sector Procurement guidelines
tolling system, identify best
                                    throughout the supplier                Milestone 4 - Trial
practices and highlight any
                                    evaluation selection process.           Operation Period.
potential risks and challenges in
                                    Price and quality were                 Milestone 5 - Provisional
the current market place.
                                    identified as the key criteria in       Operating Permit – “Go
The main challenge was to           supplier selection prior to             Live”.
launch the operation of a new       advertising the tender.
                                                                           Milestone 6 - Final
type (“first generation”) of
                                                                            Operating Permit.
electronic road pricing on the
                                    Contract Preparation:
busiest motorway in the State
and successfully collect tolls      The contract to design,             The contract also required the
from up to 100,000 vehicles         construct and supply the new        new Tolling Operator to
from the first day of operations    tolling system was awarded to       operate and maintain the new
and over 1,400,000 individual       BetEire Flow (a French              system for a further 8 years.
vehicles within the first six       consortium of two major
                                                                        In addition to the procurement
months.                             French firms - Sanef and CS) in
                                                                        of the tolling system, there
                                    March 2007 following a
                                                                        were a number of other
                                    competitive procurement
Strengthening Legislation:                                              supporting services which the
                                    competition.
                                                                        NRA procured to assist during
The NRA engaged with the
                                                                        the mobilisation and
Department of Transport in
                                    The initial draft contract was      implementation phase of the
relation to strengthening the
                                    prepared between the Project        eFlow project including for
legislation necessary for
                                    and Legal teams prior to            example, the appointment of
barrier-free tolling. The
                                    advertising the tender as per       an Enforcement Service
enactment of appropriate
                                    Public Sector Procurement           Provider as well as the
supporting legislation which
                                    guidelines. Service Level           appointment of technical
allowed the use of video
                                    Agreements were drafted as          advisers with specific tolling
evidence and action against a
                                    part of the contract at this        technology expertise and
toll evader / violator through
                                    point.                              electronic payment security
the use of the national vehicle
                                    Contract Preparation                expertise, as well as legal
register was / is a critical
                                    (Continued):                        advisers and financial advisers.
element to the operation to
                                                                        There was little change made
address potential leakage of
                                                                        to the terms and conditions of
toll revenue.                       The contract specified a
                                                                        the contract once the tender
The Global Best Practice Study      number of important payment
                                                                        had been advertised to the
commissioned by the NRA             based milestones for the initial
                                                                        market place.
during the assessment stages        delivery of the system as
highlighted that in all barrier-    summarised below:

16
Supplier Management:                 ability to gain more clarity. In   financial capacity to undertake
Once the NRA had agreed the          addition, this procedure also      the work (e.g. to demonstrate
scope of the services to be          allowed the NRA to issue           that they were financially
performed by the supplier and        clarification circulars with       viable).
had drafted the initial terms        additional information if          The evaluation team reviewed
and conditions of the contract,      required including, for            the suppliers who responded to
the Expression of Interest (EOI)     example, clarifying certain        the EOI and then prepared a
was advertised on eTenders           aspects of the scope which may     shortlist of suppliers based on
and in the European Journal.         have been confusingly phrased.     ranking the responses against
There was a procedure for the        Suppliers were asked to            pre-determined criteria. The
suppliers to ask for clarification   provide evidence of their          NRA then issued the RFT to the
on aspects of the tender which       experience, performance and        top five ranked suppliers.
benefited both the supplier and      technical capability and to
the NRA as the supplier had the      demonstrate they had the

                                                                                                   17
NRA Case Study – The Evaluate
Phase
Supplier Management:             Evaluation of Supplier         general market knowledge.
In the Prepare Phase the         Responses:                     The NRA followed set
evaluation team reviewed         As part of the Expression of   procedures in managing the
the suppliers who responded      Interest (discussed in the     supplier applications e.g. in
to the EOI and developed a       Prepare section of the         terms of late applications or
shortlist of suppliers to        Introductory booklet) the      if a supplier declined the
receive the RFT.                 NRA prepared a short-list of   project. All evaluation and
                                 suppliers – all of whom had    selection criteria were
                                 to satisfy minimum             carefully documented for
The NRA managed suppliers                                       audit purposes and all
                                 requirements in terms of
through the proposal
                                 having the necessary           procurement documentation
process. There was a facility
                                 technical capacity (e.g.       was checked by the NRA
for suppliers to ask questions
                                 experience) and financial      legal advisers in advance of
and suppliers could also
                                 capacity to perform the        the procurement
indicate whether they
                                 services required. For the     competition to ensure it was
considered that some of
                                 evaluation of the RFT, the     fully compliant with
their questions were
                                 NRA established an             procurement law.
commercially confidential.
                                 evaluation methodology to      External consultants were
The NRA reviewed all these
                                 assess the responses based     asked to provide assistance
questions and responded to
                                 on a combination of scoring    and opinions in the
all suppliers. Where a
                                 the responses for both price   evaluation and selection
supplier had requested for a
                                 and quality.                   process however the NRA
question to be considered as
                                 Once the responses were        had final judgement in the
commercially confidential
                                 returned to the NRA the        evaluation process.
the NRA team had to take a
view and possibly respond        evaluation team reviewed
directly to the individual       the applications and scored    Supplier Selection:
supplier. Where the NRA          them against these
                                                                The contract to design,
determined that the query        predetermined criteria (and
                                                                construct and supply the new
was not commercially             any sub-criteria). Careful
                                                                tolling system was awarded
confidential the supplier was    consideration was taken to
                                                                to BetEire Flow (a French
given the opportunity to         ensure that submissions
                                                                consortium of two major
withdraw the query rather        were scored and evaluated
                                                                French firms - Sanef and CS)
than have it answered and        based on the written
                                                                in March 2007 following a
issued to all suppliers.         application and evidence /
                                                                competitive procurement
Generally the NRA team           commitment provided as
                                                                competition.
would issue responses to         part of the response rather
queries on a weekly basis.       than being influenced by

18
NRA Case Study – The Commit Phase
Signing the Contract:
                                     Manage their customer           Focus on strategic goals –
In line with Public Sector            base and provide excellent       be aligned to the Irish and
Procurement Guidelines, there         services to their customer       European tolling sectors.
was no scope for renegotiating        base (circa two million
contract terms and conditions         people).
                                                                   The NRA’s Role and
at this point as the terms and
                                     Collect revenues and         Responsibilities:
conditions of the contract
                                      account for over €100
were developed prior to
                                      million tolling revenue.
advertising the Tender. The                                           The NRA need to
                                     Manage their assets              understand the business,
first supplier selected decided
                                      including the eFlow brand        set the vision and
against proceeding with the
                                      and reputation (includes         objectives, direct the
contract as they wished to
                                      marketing and                    business, monitor
renegotiate certain contract
                                      communications).                 performance and manage
terms and conditions at this
point and this was not               Be commercially focused          the relationships (and
allowable. BetEire Flow’s             and deliver continuous           contracts);
tender proposal was evaluated         improvement for the             Contract Management of
as the second best proposal           customers and the                the following four areas:
and they were therefore               financial position (e.g.
                                                                      Efficiency Savings - annual
awarded the contract.                 costs efficiencies).
                                                                       service review.
Supplier Role and                    Be compliant and
                                                                      Gain Sharing - consider
Responsibilities:                     auditable – areas such as
                                                                       making provision to share
                                      financial audits, e-
BetEire Flow (Sanef) was                                               gains.
                                      commerce PCI compliance
required to manage and                                                Financial Model / Open
                                      and Data Protection.
operate all aspects of the                                             Book Accounting.
tolling business on behalf of
                                                                      Benchmarking - service
the NRA, including to:
                                                                       performance and costs.

                                                                                             19
NRA Case Study – The Transition
Phase
Once the contract had been          improvement items. As this            could remain agile in
signed, Sanef began to design       was a first generation project        responding to them.
and build the new electronic        there were a number of key           Ensuring the supplier has
tolling system. This system,        learnings for both partners in        the necessary resources
eFlow, was ‘switched on’            the Transition Phase such as:         and capabilities to deliver
during August 2008. Following          Approaching the project           the project and ensure
the launch of the system,               with consideration for            these remain in line with
Sanef were responsible for              customer needs and                changing project and
managing and operating all              business financial needs as       business goals.
aspects of the tolling business         well as from an                  Keeping communication
on behalf of the NRA.                   engineering and technical         lines open and the
                                        perspective;                      importance of team
Supplier Management:                   Ensuring Sanef understood         building between both
Effective supplier management           the NRA’s strategy and            partners.
was critical at this point of the       requirements so they             Balancing the level of risk
project. The NRA identified             could deliver against it.         between Sanef and the
issues and areas for                   Sharing project and               NRA.
improvement and worked                  business goals with Sanef        The importance of Brand
closely with Sanef to                   and regularly reviewing           Management.
implement and achieve these             these with Sanef so Sanef

20
NRA Case Study – The Optimise
Phase
In the past four years in          emphasise on maintaining a        Key Success Factors:
operation the NRA have             good relationship with Sanef      The NRA has identified the
achieved successful results        through regular informal and      following key success factors
evidenced by satisfied             formal communication              for successful service delivery:
customers, an ever expanding       procedures. Team building
customer base and strong           plays a key role in maintaining      Focus on delivering a
revenue growth during tough        this good relationship.               customer centric service
economic times. The approach                                             efficiently and cost
of partnering and collaboration    Performance Measurement:              effectively.
with their suppliers in the        To assess performance the            Understand all
management of the business         NRA required simple and               stakeholders’ short,
(as opposed to adopting a          relevant performance                  medium and long term
more conservative and              measures. They introduced             goals.
traditional contractual            benchmarking reviews, visits         Ensure delivery is
relationship with little or no     and conferences with Sanef            customer focussed and
innovation encouraged) has         which play a role in assisting        not process or technology
enabled them to introduce and      the development of simple             led but also understand
manage change successfully         performance metrics                   and appreciate the part
across a number of business        The following M50 KPIs were           technology and process
areas and they will continue in    identified:                           plays in success.
this manner to deliver further                                          Ensure relationship is two
improvements across the               KPI 1 – Transactional Toll        way, open and honest.
business.                              Revenues - Revenue               Ensure contractual
                                       banked per ‘tollable’             alignment to desired
They are currently focusing on         vehicle.                          outcomes and openly
growing the business while            KPI 2 – Global Recovery           acknowledge
reducing costs and continuing          Rate - Total percentage of        misalignment even if not
to improve compliance (i.e.            transactions which have           fixable in the short to
tolls paid on time). They also         been paid.                        medium term.
aim to further improve the            KPI 3 – Road Side                Always share with your
customer experience by                 Equipment Revenue                 clients and stakeholders
introducing more simplicity            Leakage - Transactions            what matters to you.
and convenience by, for                captured which could not         Respect and embrace the
example, upgrading the                 be charged due to poor            differences in cultures and
customer website so that it is         Licence plate data.               approach of all and use
fully accessible from all types       KPI 4 – Licence Plate             this to enhance the overall
of devices (e.g. laptop, tablets       (ANPR) Misreads -                 service delivery.
I-phones).                             Misreads impacting
                                       customers.
Supplier Management:                  KPI 5 – Payment Trends -
The NRA realise that Supplier          Payment trend for
Relationship Management is             unregistered domestic
key to the success of project          users.
delivery and so place great

                                                                                                 21
Irish Public Service ESD Examples
                                                                    become aware of the potential
Managed                          Business                           claim.
Services                         Process
                                                                    ICT Services
An Garda Síochána - Go-          Public Injuries
Safe                             Assessment Board                   An Chéim Computer
The GoSafe consortium has        The Personal Injuries
                                                                    Services – Collaborative
been contracted by An Garda      Assessment Board facilitates
                                                                    higher education
Síochána to operate safety       anyone intending to seek           information services
cameras on Irish roads. Go-      compensation for a personal        The An Chéim MIS Programme
Safe will provide 6,000          injury (other than a personal      was created to implement
enforcement hours and 1,475      injury arising out of medical      common management
survey hours per month across    negligence), unless the claim is   information systems for the
the country. The cameras will    settled directly between the       Institute of Technology Sector.
operate from vans which will     parties. Personal injury
be marked with high visibility   claimants will be better placed    The implementations were
reflective material and will     to avoid unnecessary legal fees    carried out on a phased basis
display a safety camera          following a recent move by the     and lessons learned from each
symbol.                          Central Bank to compel             phase were carried through to
                                 insurance companies to             subsequent phases.
                                 forward information about the
                                 Injuries Board to potential
                                 claimants as soon as they

More Examples of Successful ESD Projects

 Department                                         ESD Project

 Revenue                                            Local Property Tax Customer Contact
                                                    Centre

 Private Residential Tenancies Board               Contact Centre and Document
                                                   Management business process
                                                   services.

 Road Safety Authority                              Driving Licences Application
                                                    Processing

 Department of Communications,                      Market Surveillance for 1) Ecodesign
 Energy and Natural Resources                       and Labelling of energy-related
                                                    products, 2) Tyre Labelling

22
Conclusion & Reference Sites
This Introductory booklet has been prepared and issued by the Department of Public Expenditure and
Reform.

The contents are designed for reference only and should not be relied upon for making ESD decisions
without reading the ESD Handbook and having further discussion with the Department or Programme
Leaders.

For more information please contact: esd@per.gov.ie

                             Value
 External Service Delivery

                                                                                  Assess     Prepare
                             People & Organisation

                             Location & Asset Management
                                                                          Optimise                 Evaluate
                             Information Technology

                             Change Management
                                                                                Transition   Commit
                             Programme & Risk Management

Available Templates
No 1.                        Preliminary business case
No 2.                        Preliminary business case: financial analysis metrics
No 3.                        Transition roadmap and plan
No 4.                        Process assessment template
No 5.                        Communications plan
No 6.                        Risk assessment tool
No 7.                        Sample supplier evaluation and scoring template
No 8.                        Value delivery roadmap
No 9.                        Transition performance reporting template
No 10.                       Benefits tracking template
No 11.                       Supplier relationship management and communication template

Reference sites
Office of Government Procurement
The main public procurement guidelines
EU Public Procurement Law

                                                                                                          23
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