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A New Model for Municipal Services Delivery

 2 June 2017
 4.00pm – 5.30pm. Registration from 3.30pm, seated by 4.00pm 
 MND Function Room

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Resources

Lecture Poster (PDF: 238KB)
Lecture Report (PDF: 822KB)
Lecture Transcript (PDF: 984KB)

Lecture Video & Photos

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Synopsis

Several city councils in the UK are experimenting with a new model for municipal services delivery. They are forming comprehensive partnerships with private players such as ENGIE, with much longer contracts, more services bundled together, and output-based over input-based targets. What are the pros and cons of this new model? Mark Harris and Amit Pathare from ENGIE will be in Singapore for this CLC Lecture, to explain this novel way that cities can think about outsourcing their services.

Lecture Report

At a CLC lecture in June 2017, Mark Harris and Amit Pathare from ENGIE discussed evolving trends in municipal services outsourcing, as well as the case for private sector participation and potential drawbacks.

 

Harris noted the drivers for services outsourcing, including reductions in local government budgets, a key driver in the United Kingdom, the different challenges of ageing and diverse populations, environmental issues as well as potential advantages offered by technology and economic growth.

 

“First and foremost, [any outsourcing deal] has to provide value for money for citizens of the council area. It has to be structured to meet the aims of the council. Every council has objectives, and those may change over time, but at the point of time of doing it you need to think about the structure, what are the aims and your deal needs to reflect that.

 

“Quite clearly, you’re handing over an awful lot of responsibility to somebody else to handle those services on your behalf, so you’ve got to have a means of making them accountable, a means of measuring them against specific service standards and you’ve got to be happy that those are accurate,” he added.

 

Outsourcing services may also allow local government councils to focus on strategic goals, as well as bring in investment and innovations that may be beyond their traditional resources.

 

“Councils often have people that are capable of doing far more than what they’re doing, but they’re actually tied down managing pretty basic services that could quite easily be outsourced,” said Harris.

 

“Quite often in outsourcing deals in the UK, the requirement to find innovation and continued improvement is a measure. it’s not just a few token words in the bid, it’s required that they deliver that.”

 

For all of the advantages offered, there are also a number of drawbacks and potential challenges to making these deals work, including the cost of negotiating the deal (negotiations may run up to two years), the council’s legal, commercial and technical resources to ensure a beneficial deal, and a long-term commitment to hand over control of services.

 

“I think an important thing for a council to consider is, how does it feel culturally? Does the contract meet the politics of the council? The structure of the deal has to be something that fits the council.

 

“When a council looks at the service providers who bid, do they have the resources and commitment to invest? Can they deliver service enhancements? Does the service provider have the critical mass and a proven track record, and do you think they’re going to show flexibility and collaboration? That’s a bit of a leap of faith, but it’s really important – there needs to be trust between the two parties to make this work.”

 

Harris also spoke of his experiences with the North East Lincolnshire Regeneration Project, where ENGIE took on a number of responsibilities in a contract measured against real outcomes, rather than a traditional outsourcing contract where service duties are prescribed.

 

“We have economic regeneration and investment responsibility, so we are measured by the number of new jobs we created in the area. If we don’t create jobs, then we pay a financial penalty,” he said. “Another part is about reduction in serious road traffic accidents. So we have a responsibility in that contract for not only managing the highways, but also the highway design, safety, and one of the outcomes is that we do that properly, we will reduce the amount of serious road traffic accidents.”

 

Pathare, ENGIE’s Group Director of New Solutions, provided an overview of the multinational company’s municipal services businesses and solutions to various urban challenges.

 

“A city may have different kinds of challenges, energy challenges, mobility, security, public lighting. You can’t see these challenges as isolated domains, what you want to do is see these challenges collectively, in an integrated fashion,” he said. “To manage these challenges in an integrated fashion requires the levers of connectivity and smart governance.”

 

ENGIE’s businesses include infrastructure such as power plants and networks, district cooling, public lighting and security systems, services including energy, building management and green mobility, as well as digital solutions as a means of ensuring efficient delivery of services.

 

The company utilises data to model cities at a high level of granularity, to pinpoint key challenges such as energy efficiency, various forms of pollution and network connectivity, and also simulate the impact of solutions.

 

“We capture all sorts of information on criminality, traffic congestion and so on, and when we engage with a city, it helps us design outcome-based contracts. For example, we can help you manage traffic congestion by x per cent, improve air quality by y per cent and so on. This paves the way towards a more intelligent management of a city and towards outcome-based contracts,” said Pathare.

 

Written by Alvin Chua. This report first appeared in the Jun 2017 Better Cities newsletter.

 

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