$’s saved due to HPGN????
Posted by John B. Kalb - 12/19/08 @ 12:29 am - Filed Under City Council, Local Politics
Councilman Tim Pape at Monday’s City Council meeting, during the public comments section, made the statement that “the employees of the High Performance Government Network are those reponsible for saving the city over $30 million since the year 2000″. Keep in mind that these same persons worked for the city as employees for seven of these eight years, since they joined the HPGN non-profit at the start of 2008, so a large part of these proported savings would have been savings they “earned” for the city as part of their jobs.
The “revised” (September 30, 2008) contract between the HPGN group and the city includes a “receivable” listed as “operating 12 High Performance Exectutive Overview sessions”, one of which is scheduled for this Friday, 12/19/2008, in the IML room on the third floor of the City County Building. These sessions, per the informational brochure are for’ “mayors, county exectutives, division heads, senior leaders, and department heads” and is advertised as a look-see at how High Performance Government can save millions of dollars for your political entity. Of what value are these sessions to the Fort Wayne taxpayer? Why are we hiring a group to run these sessions WHERE THE MAIN BENEFIT will be to get more business for HPGN?? You say, but there is no cost to the city? Guess who are making the presentations - taxpayer paid employees of the city!
To give some indication of what the savings to our city due to the work of these individuals, over the seven years plus the year we are in, the city website has a section with the heading, ” Lean Six Sigma - Project Summaries”. The opening paragraph reads,”Six Sigma has decreased cost, improved customer service and increased productivity throughout city government. Projects have resulted in over @10 million of savings or cost avoidance.” Listed below are the projects listed as well as some comments by me about the significance of each:
Under SIX SIGMA:
1) Reduced cost per foot of water main replacements - Before $61 per foot - After $49 per foot For a total cost savings of $317,000. My comment - $317,000 at a $12 per foot saving would amount to 26,417 feet of water mains or almost exactly 5 miles of them. The period over which this savings was accomplished is not listed. I guess it may have been possible that exactly 5 miles of water mains were replaced in some time period - so this is probably reasonable. I would like an update on the cost per foot this last year.
2) Increasing waste activated sludge processing - Savings of $28,000 per year plus a cost avoidance of $1.7 million. My comments: Sounds very reasonable, how did things go in 2008?
3) Reducing Call Waiting for City Utilities Customers: Savings - Reduced time per call from 2 minutes and 10 seconds to two minutes. My comments: Isn’t this within the normal variation due to chance? What was the average call time in 2008? No dollar saving on this one.
4) Reduce Transportation Project Change Orders: Savings - $217,000 per year This was projected to save this amount based on reducing the number of change orders on city construction projects that exceeded the bid by more than 10 % on the bid. The savings were NOT reported as experienced, but as projected. My comments: Not real numbers reported - just guesses. I can’t believe that Fort Wayne was even close in 2007 &2008, due to the change orders reported by Redevelopment just on Harrison Square!
5) Reducing the cycle time for Personal Data Records: Savings - no dollars listed only reported that employee time spent on PDR’s was down, but no report of any less persons working on them. My comment: No dollar savings.
6) Increasing Catch Basin & Inlet cleaning: Savings: No dollar amount listed. Stated that “standing water” complaints were down and employee production was up. My comments: No dollar savings
7) Increasing average chlorine dioxide generator efficiencies: Savings of $78,000 per year. Efficiency up 28% from 70% to 89.6% My comment: What is efficiency this year, 2008? And, how much did city pay in 2008 for the required sodium chlorite compared with the base year?
8) Decreasing the variability of slakers at water plant: Savings- No dollars saved. The variability was decreased from 15% to 8%, which reduced the adjustments necessary on them. My comments: Since these were brand new pieces of equipment, this was just normal ”debugging” - therefore no $’s saved.
9) Reducing the number of right of way cut permit inspections: Savings: no dollar savings listed. Did list “more efficient use of inspector’s time”. The result was that, “because of the high performance of the City Street Department, City Right of Way no longer inspects any of their work”. My comments: I guess that’s an improvement, if it is verified periodically. Has this been recently verified? (that Street Department is still operating at high performance level?). No listed dollar savings
10) Reduce number of missed trash pickups: Savings $195,000 per year and $977,000 over a five year National Serv-all contract. My comments: How can this be claimed as a City savings when the savings would be to the contractor? Or is the billing on the contract based on the number of man-hours that the contractor expends? This one may be one that can’t be counted as a plus for the city, but I did include it because I don’t know how the city is charged for this work.
11) Improving Pothole Response Time: Saving- no dollar savings listed, although savings in claims against the city were to have decreased and overtime hours worked also decreased. It should be necessary to document these two claimed savings - lower claims for 2008? and compare the overtime hours worked in Street Repair also in 2008. Plus, since one of the fixes was to add second trick pothole repairs, what were the costs of this -lighting equipment and night pay verses day wages?
12) Reduce the cycle time of cut restorations: Savings - 77% of cuts restored within 45 days and improved customer service. No dollar savings reported. My comments: What was the percentage of cuts restored within 45 days in 2008?
13) Reduced sprain and strain injuries at wastewater & water plants: Savings - $31,000 reduction in injury costs and a 54% reduction in incident rate of injuries. Was accomplished by 900 hours of safety training of employees. My comments: If, as we can assume, the saftey training was done during work hours, the listed saving divided by the 900 hours results in a pay scale of $34.40 per hour. Since it is (hopefully) very unlikely that these employees were making that rate per hour, instead of a savings on this project, there was a resultant cost increase which was not listed. I’m not being critical of the safety training - only calling the reduction in injury cost a net savings in dollars. That does not appear to be correct. These reported savings were not included in tyhe totals.
14) Improved Utility Site Plan routing approval process: Savings - no dollar savings listed, but claimed improved department efficiency. My comment: Improved department efficiency with no dollar savings is saying that there was no reducion in personel - they all just did other work.
15) Increased Recycling Participation on Inner City Collection Routes: Savings: none - reported no change in recycling rates. No comment
16) Reduced Contractor Weekly Payroll Logging Time: Savings $329.00 per week and $15,874 per year. No reduction in personnel was listed. My comments: This was an example of “soft cost savings”. All logging was eliminated, but no less employees in the administrative support staff were required, so no real dollar savings.
17) Utilizing excess methane gas at wastewater plant: Savings - No dollar savings listed, but claimed less methane being wasted. My comment: What was the methane being used for?
18) Increased electrical preventative maintenance at water plant: Savings - no dollar savings listed. Time dedicated to P.M. up 15% and service calls down. My comment: another “soft” savings” item
19) Reducing redundancy in the Right of Way permit process: Savings - no dollar savings listed. Reduced backlog and customer service increase were listed. No comment
20) Reducing the turnaround time in the site plan routing review process: Savings - Turnaround time reduced by 300% (sic) - avoided purchase of $150,000 of new software. Average turnaround time reduced from 51 days to 8.7 days (a reduction of 83%) My comment - this is a cost avoidance saving and is probably real. I would like to know what the average turnaround time is at present.
21) Reducing Water Main design costs: Savings - Cost avoidance of $50,000 on design costs and additional savings on internal projects. No documentation on the cost avoidance - just a guess My comment - “With no data it’s just someone’s opinion.”
So the real net yearly savings from this list comes to $640,000 Hard Savings, $1,900,000 in Cost Avoidance, and $15,874 in Soft Savings. A total of $2,555,874 per that year, realizing that the cost avoidance items cannot be repeaters each year unless they are other projects.
Now the second section, titled Lean Six Sigma Projects. I will only list the project titles and the claimed savings plus a short comment. Analysis was done the same way as above:
1) Barrett Monthley Reporting Process Overview. Savings claimed $39,763 per year and all written in future tense - not a report but a projection. Since no reduction in staff was listed, assume this as a “soft” savings.\
2 Wage Review Project Report: Exact same analysis as for 1) above. Is this a duplicate?
3) Encroachment License Routings Project Overview: Savings - Board of Works $5017 per year; $7722 per year in Engineering. Again, all savings info is projected- not measured and reported.
4) Work Order Process Overview: Savings $621 per month and $7500 per year. No reduction in personnel costs so will be soft savings
5) Collection & Litigation Project Overview: Savings $7750 per year in personnel savings and $150 per year in supplies. No listed reduction in personnel costs so assumed as “soft”costs. Comment: Was use of external collection agency totally elliminated? If it was, savings should show on financial report from City Utilities.
6) Credit & Collection Project Overview: Exact same data as 7) below. Duplication??
7) Credit off recheck work order project overview: Savings $2336 per year. Again, “soft” savings - no reduction in personnel.
8) Work order desk Mail Merge: Savings $2164 per year. “Soft” savings again, projected, not measured and reported.
9) IS/TO Read Only Work Order Process Overview: Savings: $3010 annual on supplies; $7556 annual in labor and $34,996 annual in salary as a cost avoidance savings. Comment - data furnished indicates that a fourth clerk is not required so cost avoidance doesn’t apply.
10) Site plan routing review project overview: Savings as stated, “The project will yield considerable soft savings to the community, which is difficult to quantify”. This report makes more sense than most of the others!! AN HONEST ANSWER!
11) Land acquistion Right of Way Engineering Overview: Same exact info as listed under 10) above. Duplication or what?
12) Land acquistion Right of Way services process overview: Savings $880 per year based on 40 projects per year. Comment - again no measured and reported data - just projections.
13) Requisition process for construction contracts overview: Savings $880 per year. Comment - also, no measured and reported -just projected.
14) Backflow prevention overview: Savings $5200 per year. Comment: only projection - no measurement and report.
15) Water Meter Work Order process overview: Savings $5275 per year. Comment: projection only.
16) Operator Utilization Overview: Savings- $28,000 to 37,000 annual soft savings. Hours freed up will be use on other operator responsibilities. Comment - again only a projection not a measured savings.
17) OEE -TMP process project overview: Savings: none reported
18) Make tapes process overview: Savings $20,160 annual; $2400 per year in overtime; and $515 in supplies. “soft” savings - no reduction in payroll hours. Comment: Did they really not spend any overtime dollars in this year? What about 2008 - any overtime in this department for this process?
19) Civil Accounting CIP Tracking Overview: Savings $4440 per year and saves potential negative findings by State Board of Accounts( in 2004 SBOA reported 6 lapses). Also “soft” savings - no documented reduction in labor hours. Comment: I should check to see if 2005, 2006 and 2007 SBOA reports showed that they did not have any “lapses”, but I haven’t.
20) Hiring Process project overview: Savings $4062 annual savings. Comment - Again all “soft” savings
21) Tort Claim Process Project Overview: Savings $4726 per year. Comment: Projected, not reported.
So, this part of the list shows: Annual savings in cost avoidance of $74,753, hard savings of $665, and soft savings of between $52,378 and $61, 378.
So, between the two lists we get totals of $640,665 in hard savings per year, between $68,252 to $77,252 in soft savings and, for the time period, $1,974,753 in cost avoidance savings. This gives an overall total of $2,683,670 to $2,692,670. Assuming this is a good average number for the years involved, this would result in a total savings of just over $20 million for the 7 years LESS the salary and benefits of the 5 persons who worked for the city on the Six Sigma Team. Or quite a bit short of Mr. Pape’s number he through out last Monday night.
I don’t see how the Common Council can annalize the effectiveness of HPGN with out an update for the savings in the 2008 calendar year to compare with the above numbers. How does the $95,000 per year compare with the salaries of these people when they worked for the city.
PS: for Scott G. “This is a Judy - Approved Post”
Comments
5 Responses to “$’s saved due to HPGN????”
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John,
Thanks for the thorough analysis. Your comments reinforce my own thoughts about 6 sigma and not just as it relates to government.
In my experience once 6 sigma principles are applied to areas outside of mass production they begin to lose their significance.
Cost savings become “soft” or projected and can rarely be accurately quantified. Furthermore, the process improvements are usually common sense and are things that should be implemented by any competent manager or employee.
But overpaid consultants and black belts wrap this common sense up in a layer of marginally-applied statistics and other management-speak to justify the program and their own salaries.
In a nutshell - it’s all bullshit…
John,
Regarding the six sigma projects that had “projected savings”, within the control plan produced by the six sigma team, they should have come up with the methodology for assessment including frequency to report. If I were in charge :) I would be asking for at the very least - a yearly update on items like these. Otherwise, it’s just a point in time statistic that allows people to check boxes and pat themselves on the back.
* Reducing Call Waiting for City Utilities Customers: Savings - Reduced time per call from 2 minutes and 10 seconds to two minutes. My comments: Isn’t this within the normal variation due to chance? What was the average call time in 2008? No dollar saving on this one.
I have experience with telephony six sigma projects so I am extremely interested in seeing more details on this one. Normally, you reduce wait times by either adding more personnel, streamlining the options a consumer can select (which means tweaking the telephony system), or providing more self-serve options which totally minimizes interaction with a live person.
I would *think* that their control plan would include gauging customer satisfaction of changes in call wait times ongoing…if you just go by system metrics, you could have a very tilted (and negative) view on this six sigma being a ‘good thing’.
Problem :Excssive call waiting time?
Solution: Provide incentive to call takers! (stay busy or get replaced)
Problem: Excessive costs in city/county government?
Solution: (or part of it) Put light switches in the city/ county building so they can turn out the flipping lights when they leave. Check it out. There are NO LIGHT SWITCHES in offices.
Now, do we really need to pay for another study?
John,
But this is savings due to Six Sigma, not HPGN, isn’t it? I don’t think I’ve ever seen a list to back up the $30 million HPGN saved claim.
Stephen
Stephen,
I think the $30 Million figure is Six Sigma- and that is what HPGN teached city employees.
The same people that worked on that project for the city are now with HPGN.