1. Overview and Introduction

Transcription

1 1. Overview and Introduction EquaTerra completed an Activity Based Analysis of the Broward County Agency on April 24, The Transit Division as well as the Fleet Services Divisions was included in this analysis. To comprehensively assess the business processes within the agency (used to indicate this particular department, agency, or section) along with the potential value associated with an ERP implementation, the following methodology was followed: Analyzed all relevant departmental information Conducted analysis of department activities, documenting costs Surveyed all division employees, detailing their time allocations and perceived issues Discussed and documented key issues with department leaders and employees Developed a Return on Investment (ROI) model that demonstrates the department cost drivers that can be removed. This analysis, and the data presented in this report, was confined to this specific agency. There will be other reports that present combined data for common processes across the county. Agency Mission Statements and Overview (By Section) Transit Administration The purpose of the Transit Administration Section is to provide Administrative leadership and support services to the Department so that its programs meet the transportation needs of Broward County. The Transit Administration Section is responsible for providing leadership, strategic direction and overall management for the agency. This section is responsible for coordinating and communicating with County Administration, the County Commission, other County agencies, as well as local, County, State, and Federal government agencies. Administration is also responsible for the overall management of the agency s capital and operating budgets, purchasing, accounts payable, finance, revenue collection and deposit activities, inventory control, payroll, human resources, labor relations, and processes all personnel actions. The section is also responsible for county, state, and federal contract and grant coordination, administration, and research. Transit Compliance The purpose of the Transit Compliance Section is to ensure compliance with all Federal, State and County guidelines, and to provide for a safe and secure environment for all transit passengers and employees. April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 1 of 29

2 The Transit Compliance Section is responsible for operating provides leadership and support services to the Department in the areas of federal, state, and county contract compliance, and reporting, including the Federal Disadvantaged Business Enterprise (DBE) and the County's Community Disadvantaged Business Enterprise (CDBE) programs; Civil Rights, including Title VI, the Americans with Disabilities Act (ADA), Equal Employment Opportunity/Affirmative Action programs; random drug and alcohol testing for all safetysensitive employees; bus operator occupational medical exam testing; safety and security issues, including emergency preparedness, response plans and procedures; vehicle and passenger accidents/incidents reporting, and workers' compensation notices and injuries; management of all contracted transit security services; archiving records; public records requests; and discovery proceedings. Transit Information Systems The purpose of the Transit Information Systems Section is to provide Information Technology leadership and support services to the Department in order for it to meet the current and future transportation needs of Broward County. The Transit Information Systems Section is responsible for providing technology leadership and support services throughout the Department. This includes, but is not limited to, operations, maintenance, planning, personnel, payroll, finance, purchasing, labor relations, management information systems, contract compliance, equal opportunity/affirmative action programs, safety and security, and fleet services. IT supports all desktop applications and systems and also manages and secures all of the servers, data and the supporting infrastructure and drives all technology related efforts pursued by this Department on the fixed end as well as the mobile side. Transit Maintenance The purpose of the Transit Maintenance Section is to provide efficient maintenance of the bus fleet and facilities to ensure reliable service for the riding public. The Transit Maintenance Section is responsible for providing the following four programs for the day to day maintenance of the mass transit bus fleet: major and minor mechanical repairs; storeroom operation; daily cleaning, fueling and servicing of buses; accident repair and reconditioning of damaged and older buses. Maintenance performs these functions with three daily work shifts which operate seven days a week. Transit Customer Relations & Communication The purpose of the Transit Customer Relations & Communication Section is to effectively inform and educate the public on Broward County Transit services and programs to increase ridership and promote the benefits of public transportation. April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 2 of 29

3 The Transit Customer Relations & Communication Section is responsible for informing and educating the public on the overall benefits of public transit and disseminating information to assist with the utilization of transit services to increase ridership. More than five million printed public and internal marketing and informational materials are produced and disseminated and numerous presentations/public speaking engagements are held to inform the public and receive critical feedback on programs and services. The section also maintains the Broward County Transit website and coordinates media relations, special events programming and is the agency liaison for state/federal legislative/appropriation issues relevant to public transportation. Additional activities include working with other South Florida transit agencies to promote regional transportation and improve coordination for inter county travel. Print and electronic advertising campaigns are created to target audiences based on market analyses and demographics. Outreach efforts include participation at community and business meetings, special events, and schools in an effort to enhance the public s awareness of agency services. The Customer Call Center is responsible for trip planning, lost and found, customer feedback and paratransit inquiries. Transit Service and Capital Planning The purpose of the Transit Service and Capital Planning Section is to propose, develop and implement modifications and improvements to the public transit system to expand access to and usability of public transit as a transportation choice for residents and visitors to Broward County by working with County, municipal, state and federal agencies and representatives to improve integration of public transit services throughout Broward County. The Transit Service and Capital Planning Section is responsible for providing support for Broward County Transit operations and serves as a major interface between the agency and the community, developers and other government agencies. The section is responsible for scheduling bus routes, managing the Community Bus program in partnership with several cities, overseeing construction of accessible bus stops, collecting and analyzing data. The Service and Capital Planning Section also assists the Metropolitan Planning Organization in developing the Transit Development Plan, the Improvement Program, and the Long Range Plan. An additional responsibility for the section is oversight of the Americans with Disabilities Act (ADA) program, including creating a Broward County Transit Design Standards Manual and programming and placing accessibility improvements throughout the County to support transit access. Operations The purpose of the Operations Section is to provide effective and reliable transportation for the riding public to ensure mobility and access. April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 3 of 29

4 The Operation Section is responsible for providing managerial, operational and administrative support to ensure bus service is provided throughout the transit system. Section staff train and re train bus operators, oversee the performance of 642 bus operators and 245 buses during peak service hours along 44 scheduled routes. The Operations Section also provides first level emergency support including evacuation in the event of a natural disaster, such as a hurricane. Paratransit The purpose of the Paratransit Section is to provide public transportation services to elderly, poor and disabled individuals in accordance with the Americans with Disabilities Act of 1990 (ADA) and Chapter 427, Florida Statutes. The Paratransit Section is responsible for administering both the federallymandated Americans with Disabilities Act of 1990 (ADA) and state mandated Disadvantaged paratransit transportation services for Broward County. The section is also charged with the responsibilities of purchasing service and coordinating all contracts providing specialized transportation in Broward County. Additionally, as the designated Community Coordinator for Broward County, the Paratransit Section provides immediate oversight, direction, and liaison with contracted and coordinated entities and consumers. This section manages the program eligibility functions in accordance with federal and state laws and monitors the contract for the provision of in person ADA Paratransit eligibility assessments. Fleet Services Vehicle Management The purpose of the Fleet Services Vehicle Management Section is to manage the County equipment fleet, ensuring adequate fleet size, composition and availability for the use of County agencies. The Fleet Services Vehicle Management Section is responsible for planning, directing, and controlling all administrative work involving acquisition, assignment, utilization, replacement, and disposal of vehicles. In addition to administering the Fleet Management System, the section also manages the Financial System and is responsible for all financial activities of this internal service fund. The section promotes energy efficiency in the general vehicle fleet through the alternative fuel and advanced technology vehicle program including the acquisition and assignment of vehicles, establishing/maintaining refueling/recharging infrastructure, tracking and reporting on performance, training for safe and efficient operations, and participating in outreach efforts to educate/introduce innovations to the community. April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 4 of 29

5 Fleet Services Inventory Control The purpose of the Fleet Services Inventory Control Section is to efficiently procure, stock and issue the repair parts and fuel necessitated by fleet utilization, ensuring adequate and available inventory. The Fleet Services Inventory Control Section is responsible for continuing to develop, implement and expand the capacity of the Fleet Management System, ensuring the efficiency and effectiveness of the overall inventory system. Fleet Services Equipment Maintenance The purpose of the Fleet Services Equipment Maintenance Section is to maintain the County equipment fleet for use by other County agencies at the lowest possible cost, ensuring fleet safety and reliability. The Fleet Services Equipment Maintenance Section is responsible for maintaining an extremely aggressive preventive maintenance program so that scheduled repairs make up 80 percent of the work volume. Maintain tight controls on the top four cost categories: labor, fuel, tires, and batteries. Ensure that the scheduled preventative maintenance of in by 10 AM, out by 5 PM is maintained, along with the unscheduled maintenance performed in less than thirty minutes Operating Budget The Office of Management & Budget (OMB) supplied the current operating budget for the Agency. The current operating budget consists of the funds required for day to day operations, including salaries, benefits, supplies, and common or expected expenses. EquaTerra analyzed the operating budget because this budget funds the activities that produce repeatable services to Broward County employees and constituents. This analysis utilized the best of breed tools to identify the cost distribution of all activities conducted by the Agency. The following Chart A represents a list of budget line items that constitute the sum of the current operating budget: April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 5 of 29

6 Chart A Dollars by Category for the Current Operating Budget Salary and Wages Contract Svc Cofs Ads Gvt Agen Cogs Fuel Workers Comp Veh Maint Cogs Parts $9,682, Con Svc Shut Liab Ins $65,903, Security Svc Purchase Ins $16,277, Con Svc Rec Mtr Pool Rep Util Elect Motor Pool Unemp Comp Ext Print $26,307, Auto Lib Ins Wear Apparel Equip Maint Advertising The total current operating budget, as depicted in Chart A above, was distributed to the activities and/or processes performed by the Agency. The budget allocations were spread as follows: Salary Trace For all personnel expenses, this method of allocation was used to trace the percentage of time spent on an activity by a given employee to the budget costs associated with that employee s personnel costs. April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 6 of 29

7 Direct Trace For all expenses that can be directly traced to an activity from a budget line item. Headcount For all expenses that remain and must be spread evenly across all activities, based on total headcount. Using these allocation methods and an analysis of the agency budget, each budgeted position and all operational budget accounts were spread to key activities (see below). 3. Department Processes The assistance provided to Broward County employees and constituents is driven by public expectations and taxes. Typically these services are directed by public need and demand, which is in turn determined by the Broward County Board of Commissioners. The services are provided based on repetitive activities or processes that are performed by the Broward County Divisions and Agencies. The activities, sometimes enabled by technology, are funded by multiple line items in the operating budget. The sum of these component line items determines the cost of the activity. The importance of understanding activity costs is critical because: It provides a means of evaluating annual budget requests from Divisions and Agencies It provides a means of comparison with peer organizations It highlights opportunities to gain efficiencies. During the initial facilitated sessions, the representatives of the Agency identified the following list of key activities performed by the agency: Chart B Process and Sub Processes Processes and Sub Processes General Administration Transit Administration Managing And Supporting Transit Plans, Development Plans and Capital Plans Developing And Supporting Transit Schedules Managing Compliance And Reporting Marketing Transit Operations Supporting Governmental and Regulatory Affairs Transit Operations Managing And Supporting Operations Managing And Supporting Security Operations Paratransit Operations Supporting Paratransit Operations Transit / Fleet Maintenance Maintaining The Mass Transit Bus Fleet Maintaining The County Vehicle Fleet April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 7 of 29

8 Processes and Sub Processes Equipment Maintenance Maintaining Equipment Miscellaneous Systems Support Managing Data & Physical Security and Integrity Monitoring and Controlling Transit Systems Supporting and Maintaining Transit Applications Supporting Technology Hardware Managing Transit Telecommunication Systems Providing Help Desk Assistance Agency Operational Related Support Functions Emergency Planning Agency Customer Service Agency Public Involvement Agency Records / Document Management Agency / User / Tenant / Vendor Training Agency Business Related Support Functions Agency Accounts Payable Agency Cash Collections / Accounts Receivable / Billing Agency Budgeting Agency Purchasing Agency Payroll Agency General Accounting Agency Human Resources Agency Contracts / Grants Administration Employee Expense Reporting Agency Fixed Assets and Property Accounting Agency Facilities Management The following charts, Chart C (Detailed Process Cost Allocations), Chart D (Percentage Dollars Allocation By Process) and Chart E (FTE Allocation By Process), demonstrate how the operating budget and FTEs were distributed to activities. This distribution is pulled from the Employee Surveys, which all agency employees completed, and agency budgets provided by the Office of Management and Budgets. The employees documented the percentage of their time spent on each activity. These documented percentages were applied, along with the corresponding number of dedicated FTEs and associated costs of each activity. These cost allocations was confined to this specific agency. There will be other reports that present combined data for common processes across the country. April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 8 of 29

9 Chart C Detailed Process Cost Allocations Activity Total Costs FTE General Administration $3,135, General Administration $3,135, Managing And Supporting Transit Plans, Development Plans and Capital Plans $1,351, Developing and Supporting Transit Schedules $490, Managing Compliance and Reporting $531, Marketing Transit Operations $1,036, Supporting Governmental and Regulatory Affairs $222, Transit Administration $3,632, Managing and Supporting Operations $93,567, Managing and Supporting Security Operations $253, Transit Operations $93,821, Supporting Paratransit Operations $315, Paratransit Operations $315, Maintaining The Mass Transit Bus Fleet $7,405, Maintaining The County Vehicle Fleet $9,132, Transit / Fleet Maintenance $16,538, Maintaining Equipment $8,843, Equipment Maintenance $8,843, Managing Data & Physical Security and Integrity $75, Monitoring and Controlling Transit Systems $97, Supporting and Maintaining Transit Applications $188, Supporting Technology Hardware $132, Managing Transit Telecommunication Systems $47, Providing Help Desk Assistance $90, April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 9 of 29

10 Miscellaneous Systems Support $633, Supporting Emergency Plans $196, Emergency Planning $196, Agency Customer Service $3,865, Agency Public Involvement $666, Agency Customer Service $4,532, Records Management $804, Agency Records Management $804, Developing or Delivering Training $1,886, Agency / User / Tenant / Vendor Training $1,886, Agency Accounts Payable $613, Agency Accounts Payable $613, Agency Accounts Receivable $737, Agency Accounts Receivable $737, Agency Budgeting $363, Agency Budgeting $363, Agency Purchasing $1,521, Agency Purchasing $1,521, Agency Payroll $608, Agency Payroll $608, Agency General Accounting $314, Agency General Accounting $314, April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 10 of 29

11 Agency Human Resources $586, Agency Human Resources $586, Agency Contract Administration $787, Agency Grants Administration $239, Agency Capital Funding / Grants Administration $1,027, Employee Expense Reporting (EER) $18, Employee Expense Reporting (EER) $18, Agency Fixed Assets & Property Accounting $55, Agency Fixed Assets & Property Accounting $55, Agency Facilities Management $80, Agency Facilities Management $80, Totals $140,267, , April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 11 of 29

12 Chart D Percentage Dollars Allocation By Process General Administrative Activities Transit Administration Transit Operations Paratransit Operations Transit / Fleet Maintenance Equipment Maintenance $8,843,698 Miscellaneous Systems Support Emergency Planning Agency Customer Service $16,538,094 Agency Records Management Agency / User / Tenant / Vendor Training Agency Accounts Payable Agency Accounts Receivable $93,821,002 Agency Budgeting Agency Purchasing Agency Payroll Agency General Accounting Agency Human Resources Agency Capital Funding / Grants Administration Employee Expense Reporting (EER) Agency Fixed Assets & Property Accounting April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 12 of 29

13 Chart E FTE Allocation by Process General Administrative Activities Transit Administration Transit Operations Paratransit Operations Transit / Fleet Maintenance Equipment Maintenance Miscellaneous Systems Support Emergency Planning Agency Customer Service Agency Records Management Agency / User / Tenant / Vendor Training Agency Accounts Payable Agency Accounts Receivable Agency Budgeting Agency Purchasing Agency Payroll Agency General Accounting Agency Human Resources Agency Capital Funding / Grants Administration Employee Expense Reporting (EER) 4. Process Cost Drivers During facilitated sessions, EquaTerra asked participating employees to identify barriers to success in performing their various activities. These barriers to success, or cost drivers, are typically the issues that prevent maximum efficiency and often cause rework to occur. April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 13 of 29

14 The inefficiency measured in this section represents potential waste in work processes, and as such, provide opportunities to improve the value provided to Broward County constituents. It is important to note that inefficiency is not necessarily all easily addressable waste. Rather, it represents the maximum that could be addressed in time. The investment in an ERP system will be weighed against these inefficiencies by comparing ERP requirements that may remove the inefficiency. The following table provides the cost driver categories used by Agency personnel in the facilitated sessions to identify barriers to process efficiency: Cost Driver Lack of... (typically drives a need for growth of additional capability) Description Funding Resources Training Evaluation Criteria Progression Opportunity Technology Standard Policies and Procedures Leadership Need more budget money to perform activity correctly Need more FTE to perform activity correctly Need more training to perform activity correctly (lack of training within agency leads to errors and inefficiencies in work process) Need the ability to incent employees to perform activity (lack of incentive leads to errors and inefficiencies in work process) Need to know activities performed correctly will lead to better opportunity (no knowledge of activities prior to, and after, employee portion of activity leads to errors and/or inefficiencies) Need to improve or add new software to perform activity (poor or nonexistent technology tools prevent efficiency, leads to errors and manual entry and reconciliation) Need standards to ensure the activity is performed consistently (judgments must be made in work processes, leading to errors and inefficiencies in work process) Need improved and more timely leadership to perform activity correctly Accountability Need to ensure accountability of the activity performed Impacted by... (Typically demonstrates an inefficiency that can be addressed) Fear of Change Strategic Direction Decision Making Authority Micro Management Manual Intensity (paperwork) Fear change or improvement will negatively impact my department The future is uncertain or unclear and requires more detailed definition Politicians and/or staff leaders impact process through use of key decisions Leadership is concurrently performing activities, thereby impacted productivity The activity is manually intense and requires a long duration to complete Agency personnel in the facilitated sessions identified barriers to process efficiency, and then established a relative impact for each of these cost drivers (minimal, moderate, large, huge). April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 14 of 29

15 The cost drivers in Chart F (Total Inefficiency Target Dollars compared to Total Budget Dollars), Chart G (Total Inefficiency Target Dollars by Cost Driver) and Chart H (Total Inefficiency Target Dollars by Major Process) were documented during facilitated sessions. Employees provided feedback on the impact of cost drivers in relation to activities. This feedback and process costing led to an estimate of total work process inefficiency for the Agency. It should be noted that these cost driver results are driven by perceived work process inefficiencies, and are not an indication of efficiency for a particular Agency. Chart F Total Potential Inefficiency Dollars compared to Total Budget Dollars 18% Efficient Budgets 82% Inefficient Budgets April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 15 of 29

16 Chart G Total Potential Inefficiency Dollars by Cost Driver $7,000,000 $6,000,000 $5,000,000 $4,000,000 $3,000,000 $2,000,000 $1,000,000 $0 NOTE: The cost driver analysis focused on perceived work process inefficiencies and used allocated process costs to establish total potential cost opportunities. It should be noted that the scale on these graphs, and the total potential cost opportunities, could be influenced by the total allocated cost for that process or agency, and also by non personnel costs that increase these allocated costs. April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 16 of 29

17 Chart H Total Potential Inefficiency Target Dollars by Major Process $30,000,000 $25,000,000 $20,000,000 $15,000,000 $10,000,000 $5,000,000 $0 NOTE: The cost driver analysis focused on perceived work process inefficiencies and used allocated process costs to establish total potential cost opportunities. It should be noted that the scale on these graphs, and the total potential cost opportunities, could be influenced by the total allocated cost for that process or agency, and also by non personnel costs that increase these allocated costs. Using the facilitated session cost driver discussions in conjunction with FTE and activity allocations, these distributions was derived using averaging within categories and cost drivers to identify the areas where inefficiency targets exist to support potential FTE and financial savings when these inefficiencies can be addressed. This analysis provides a target range which can then be compared with other agency data and process analysis. April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 17 of 29

18 Some of the factors that result in these cost drivers being identified by personnel are listed below under the discussion of work process limitations after Chart J, Benchmark Analysis, and prior to Section 6, Aligning ERP Requirements to Inefficiencies. 5. Benchmark Analysis There was no industry standard benchmark data available where similar processes could be validated and similar data collection processes were utilized (i.e., activity based costing). As a result, benchmark data could not be used to support the cost driver analysis for these specific activities although an enterprise wide assessment was performed for all business support activities. Chart I Metric Analysis Organizational Metric Broward Labor to Budget Ratio 49.72% General and Administrative Ratio 2.24% Operating Metric Broward Operating Cost per FTE $131,214 Labor Cost per FTE $65,238 A desired labor to budget ratio will typically fall in the 75% 85% range indicating a balance between budgeted employee costs and budgeted operational costs. When that is higher, budgeted operational costs may not be sufficient to effectively sustain employees. The second ratio, general and administrative ratio, will fall between 12% and 15% indicating the ability of management to devote time to planning and program management. Being too lean in this metric many indicate insufficient management, while dedicating more than 15% of the operational budget to this metric may indicate too many layer of management. In reviewing these metrics for, it should be noted that the budget includes significant non personnel costs such as parts, fuel and contracted services that impacts all these metrics. In the case of the Labor to Budget Ratio, the General and Administrative Ratio and the Operating Cost per FTE, these non personnel budget costs skew the results however these metrics are still shown to be consistent with other agency reports. The Labor Cost per FTE remains an illustrative metric that would not be impacted by these nonpersonnel budget costs. The data in the tables below were comprised from county level accounting data for all accounts payable, accounts receivable and purchasing transactions. For comparison purposes this data represents the normalized performance metrics categorized as Top Performer, Median and April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 18 of 29

19 Bottom Quartile, as described above. This preliminary benchmark analysis will be followed up with a post implementation analysis to compare actual implementation results to the targets set during the analysis for the Business Case. And there will be an enterprise wide assessment of all common benchmarks after all activity based costing work has been completed. Chart J Benchmark Analysis (FASD Accounting / Purchasing) Benchmarks Status Broward County (FASD Only) Top Performer Median There may be some geographic differences based on local costs, however these benchmarks can simply be compared with other benchmarks or other work process information from facilitated sessions that would not influenced by these factors. For example, a labor cost per FTE benchmark could possibly be influenced by prevailing local employee costs while a comparison with benchmarks would most often validate that status. There will be other reports that present combined data for common metrics and processes across the county based on all resources used to support these work processes. There are business support positions in beyond the primary accounting staff that these benchmarks were derived from. Given that situation, there are resources that perform these functions and should be considered an overlap: Accounts Payable 5.53 FTE Accounts Receivable 7.43 FTE Purchasing FTE Payroll 5.45 FTE General Accounting 2.51 FTE Human Resources 4.66 FTE Capital Funding/Grants Administration 8.24 FTE Fixed Assets & Property Accounting 0.45 FTE Agency Facilities Management 0.53 FTE Therefore the total overlap in these business support systems is FTE (summary of all nine categories). However, some of these business support processes are specific to operations (i.e., accounts receivable, contracts / grants administration, facilities management) and as such the core business support overlap is FTE for the Accounts Payable, Purchasing, Payroll and Human Resources functions. Review of business Bottom Quartile Cost per invoice processed $ $ 3.02 $ 5.65 $ Invoices Processed Per A/P Position (FTE) 5,348 17,295 11,470 6,650 Accounts Receivable Cost per $1,000 of Revenue $ $ 0.90 $ 2.40 $ 3.89 Purchase orders processed per FTE (Full Time Equivalent) ,121 4,830 1,249 Human Resources Staff To Employee Ratio (%) 0.86% 0.3% 0.6% 0.8% April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 19 of 29

20 processes disclosed no additional business tasks performed beyond the enterprise business processes. Analysis of these FASD benchmarks in relation to the business support processes in disclosed the following: When considering the total number of enterprise wide invoices, purchase orders, and revenues that were used in the benchmarks above, they reflect as either below median or the bottom quartile. So, there is certainly an opportunity to streamline county resources with better technology tools and transformed business processes. The overlap in business resources listed above is based on functional responses to the time allocation surveys and do not correspond to specific positions. As we transition to aligning future process and ERP requirements with these expressed inefficiencies, the cost driver analysis results can be examined in conjunction with the benchmark analysis. The cost driver analysis identified a total maximum potential to remove as much as $33,130,596 of costs, which correlates to ~ FTE. However, this maximum potential is based on all cost driver factors being successfully addressed and any ERP implementation that includes a related business process transformation can only mitigate some of these factors. Therefore, this total potential needs to be further examined by type and function. The cost driver data came from facilitated sessions where Broward County personnel focused on the perceived inefficiencies that impacted the work processes (see Section 4, Process Cost Drivers). As illustrated in these cost driver graphs, the primary areas of perceived inefficiency were as follows: Transit Administration Transit Operations Fleet / Transit Maintenance These functions were impacted by some common cost drivers that included resources (FTE), technology, policies / procedures, leadership, and accountability, however they were also impacted by a lesser degree by progression opportunity and evaluation criteria (refer to cost driver definitions above). Neither of these analyses, either the cost driver or the benchmark analysis, provides a scientific measurement of savings that can be provided through an ERP implementation. However, they can provide target ranges that be compared with other data and an experienced assessment of ERP functionality as it relates to these specific business processes. This methodology has proved itself to be reliable in previous public sector engagements, and can certainly set return on investment (ROI) expectations. However, again these reviews will just provide a good target when similar processes can be compared. This preliminary target data will be followed April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 20 of 29

21 up with a post implementation analysis to confirm these target ranges. These analyses are further validated by work process limitations identified during facilitated sessions: collects and manages transit revenues through counting rooms and bank deposits, and then entered into the financial system of record (AMS) with revenue documentation sent to Revenue Collection. However, any analysis of revenues or receipts is performed in other applications (i.e., Fare Box, Info Dev). Access to some AMS data including inventory and fixed assets is view only. Grants are managed through an external application and not through financial system of record (AMS). Time and attendance data is partially collected in applications (i.e., TMIS, MCMS) however must be interfaced or manually entered into the payroll system of record (Cyborg). Purchasing policies and procedures, including living wage and small business provisions, require administrative and operational management to devote additional time to this process. These policies and procedures were identified as a primary influence on work processes. These work process limitations create manual work, require duplicate data entry and require significant management and supervisory follow up. In addition, the inability to effectively access source data for management reporting impacts the reliability of any financial or operational information. 6. Aligning ERP Requirements to Inefficiencies Once the inefficiencies were documented, the current state process flows were redesigned to become the future state or desired process flows that will be enabled by an ERP solution. A key differentiator for EquaTerra is that we capture the variance between what is possible (100% of all ERP Requirements implemented/100% of all inefficiencies removed) and what is realistic from a change and training perspective. The realism is related to combination of current systems and employee skill sets (employee ability to change) and employee perceptions and politics related to change (employee willingness to change). The measure of employee ability to change and employee willingness to change formulate the view of employee adoption. If the employees don t adopt the new system, then more resources and money will be needed to operate the system and inherently, savings will be lost and the investment may be perceived as a poor one. Once the ERP Requirements are selected that best fit what employees will adopt, then the plan April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 21 of 29

22 to implement the solution is formulated, which is called a deployment strategy. The Deployment Strategy provides a means by which to implement the change without requiring all change be adopted at once. These two steps are depicted in the picture below: Functional requirements for business sub processes such as Accounts Payable, General Ledger, Accounts Receivable, Grants Management, and Purchasing as well as other supported processes including Human Resources and Payroll, have been defined in the appropriate functional area (i.e., Accounting, Human Resources, Purchasing). These functional requirements have been provided to personnel for review and input. 7. Projected Implementation and Related Savings Scenarios There are five possible savings drivers for Broward County related to implementing a new ERP system and reengineering current business processes. The following graphic depicts these savings drivers in relation to a standard business process: April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 22 of 29

23 These savings drivers have been evaluated based on the feedback by each department to provide a means to define scenarios ranging from aggressive to conservative, in terms of savings targets. Each scenario consists of the following information: Systems Current Systems Costs Processes Current Process Costs (survey information and process statistics) Outputs Improvements / Savings Policy, Procedure and Controls Improvements / Savings Target FTE and Savings Projections Summary Scenario Comparisons These savings drivers have been evaluated based on the feedback by each department to provide a means to define scenarios ranging from aggressive to conservative, in terms of savings targets. Each scenario takes Current Process Costs, Current Systems Costs, Cost Driver Feedback, Benchmark Comparisons, and the ERP Requirements into account to determine the savings that can result. The savings are based on improvements in automation, throughput and a reduction in the costs associated to manually intensive processes and systems that will be retired upon implementation of the ERP system. Each scenario is described below, providing a range of savings from which to determine the exact savings targets for Broward County. The Aggressive Scenario combines Cost Driver Feedback, Top Performer Benchmark Comparison and ERP Requirements in comparison with the current costs of business processes April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 23 of 29

24 and to costs to subsequently produce outputs associated to business processes. The Aggressive Scenario maximizes the potential savings associated with implementing the ERP system. The savings are based on the five savings drivers and collected based on the deployment plan. The EquaTerra Scenario uses this same approach, however there may be some differences with the Aggressive Scenario based on the specific areas and functions reviewed as part of these analyses. The Conservative Scenario (if presented) identifies any differences with the Aggressive and/or EquaTerra Scenarios based on the expectation that these recommendations can be attained. Systems For the purposes of these scenario presentations, all application systems used by are listed. However if this system is owned (or primary application) by another agency, any proposed retirements and cost savings will be reflected in those reports. Application costs in the scenario tables reflect operating expense only (i.e., annual maintenance costs, upgrade costs, license fees) and not any personnel resources (i.e., dedicated county technology support). They are presented for this agency regardless of where the operating expenses are actually paid (agency or ETS). Aggressive Scenario Application Systems FY2009 Cost Retire System Proposed Retirement Timing AMS Advantage / Financial System $0 N/A >> Accounting << AMS infoadvantage Report Writer $0 N/A >> Accounting << Cyborg / Personnel & Payroll System $0 N/A >> Human Resources << AMS Advantage Performance Budgeting $0 N/A >> OMB << PMIS ** $0 N/A >>Purchasing << Fare Box (Passenger Data) ** $0 No N/A Hastus/Giro (Scheduling) ** $0 No N/A INFO DEV (Passenger Accounting / APC)** $0 No N/A MIDAS (Dispatching) $55,000 No N/A MCMS (Fleet Management) ** $0 Yes Phase 1 TMIS (Work Order System, Time/Attend) $12,000 Yes Phase 1 Stratagen (Paratransit) $85,000 No N/A CAD/AVL $82,000 No N/A Total Potential Application Savings: $12,000 Total Scenario Savings For : $12,000 ** Application costs not determined, may be internally developed with no associated maintenance or renewal fees April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 24 of 29

25 EquaTerra Scenario EquaTerra believes that all these application systems can be retired as presented in the Aggressive Scenario, and therefore recommend the retirement of these applications after confirmation in the design phase that this functionality can be replicated.. In the case of, these recommended applications are being primarily used as maintenance work order systems or as shadow systems to support business processes (time & attendance). Conservative Scenario BROWARD MANAGEMENT INPUT Process Output Improvements / Savings Impacted Output Type of Impact Recommended Result Impact Occurs None Identified Policy, Procedure and Controls Improvements / Savings The implementation of an ERP solution most often address business process improvements that may have direct impacts on current policies, procedures, and controls in an organization. These controls which are often established and executed to ensure certain audit capabilities where a system lacks the automation and internal system controls. An ERP solution could alleviate the need for these types of manual controls by having the system controls built in, resulting in changes to organization policies and procedures. Aggressive Scenario Impacted Policy, Procedure, Control Type of Impact Recommended Result Impact Occurs Organization Re alignment Organization Reporting Lines Augmentation Post Phase 2 EquaTerra Scenario EquaTerra believes that these process output improvements could be put into place as presented in the Aggressive Scenario, which would facilitate a single owner for each business process. The establishment of a single business process owner would include full responsibility for these processes, along with minimum service level expectations. April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 25 of 29

26 Conservative Scenario BROWARD MANAGEMENT INPUT Target FTE Savings For the purposes of these scenario presentations, targeted FTE savings from cost driver and benchmark analyses based on a review as to whether these target savings could be addressed by ERP functionality were used. It is very important to recognize that any FTE savings can only be secured after ERP functionality and business process modifications have been made. So for business processes modified during the first phases, FTE reductions could be made in the second phase after confirmation that these changes effected staffing as targeted. Aggressive Scenario # of Work Process FTE # of System Support FTE Phase 1 Phase 2 Phase 3 Phase 4 Total 1, /0 37/0 10/0 0/0 47 #/# indicates first the number of business process FTE, then System Support FTE (i.e., X/Y indicates X number of business support positions, while Y indicates the number of system support (technology) positions The Aggressive Scenario is based on the number of core business support overlap FTE that support common business county processes, which would be addressed specifically by an ERP implementation. Some of these targeted FTE savings would occur after accounting and purchasing implementation (Phase 1), with the remainder after payroll and human resources implementation (Phase 2). EquaTerra Scenario # of Work Process FTE # of System Support FTE Phase 1 Phase 2 Phase 3 Phase 4 Total 1, /0 18/0 10/0 0/0 28 #/# indicates first the number of business process FTE, then System Support FTE (i.e., X/Y indicates X number of business support positions, while Y indicates the number of system support (technology) positions There has been singular business processes identified that can be used throughout the County, and has established the resources to support these processes based on current transaction volumes. Given that there are overlapping resources in agencies external to FASD where these processes are completed, there should be FTE reductions that will be needed throughout the County to support these future processes. The exact number of resources and where those future resources might reside will not be determined until the system can be designed and April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 26 of 29

27 process, internal control and policy/procedure issues addressed. EquaTerra believes that the core business process overlap in should be identified in this manner, with other business process overlap not included even though there certainly should be some efficiencies gained in those processes too. There were FTE included in core business support for, attributable to Accounts Payable, Accounts Receivable, Payroll, Purchasing, General Accounting and Human Resources functions. Given the on going need to provide business support for generated revenues, EquaTerra believes that the target FTE overlap should be identified as 28 FTE with the accounts receivable and general accounting functions excluded to allow for these specific continued resources. Some of these targeted FTE savings would occur after accounting and purchasing implementation (Phase 1), with the remainder after payroll and human resources implementation (Phase 2). Other areas of inefficiency and areas where ERP functionality would improve operations, such as technology and work order systems, were not included in this target FTE savings. While EquaTerra believes there could certainly be target FTE savings in these areas, only the core business support areas have been used in this scenario as the full target FTE savings target was used for core business support FTE. Conservative Scenario # of Work Process FTE # of System Support FTE Phase 1 Phase 2 Phase 3 Phase 4 Total 1, /0 0/0 0/0 0/0 0 #/# indicates first the number of business process FTE, then System Support FTE (i.e., X/Y indicates X number of business support positions, while Y indicates the number of system support (technology) positions BROWARD MANAGEMENT INPUT Savings Projections In some instances an average salary for the agency may be used to calculate FTE savings, and in this case the average administration, purchased transportation and technical support salary was used to estimate based on areas where business process efficiencies could be gained. April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 27 of 29

28 Aggressive Scenario Department Budget Savings Phase Systems Retirement Process Improvement Output Improvement Policy, Procedure, Controls FTE Savings $140,267,275 Phase 1 $0 $0 $0 $0 $0 $140,267,275 Phase 2 $12,000 $0 $0 $0 $2,693,184 $137,562,091 Phase 3 $0 $0 $0 $0 $727,888 $136,834,203 Phase 4 $0 $0 $0 $0 $0 Total Savings by Area: $12,000 $0 $0 $0 $3,421,072 EquaTerra Scenario Department Budget Savings Phase Systems Retirement Process Improvement Output Improvement Policy, Procedure, Controls FTE Savings $140,267,275 Phase 1 $0 $0 $0 $0 $0 $140,267,275 Phase 2 $12,000 $0 $0 $0 $1,310,198 $138,945,077 Phase 3 $0 $0 $0 $0 $727,887 $138,217,190 Phase 4 $0 $0 $0 $0 $0 Total Savings by Area: $12,000 $0 $0 $0 $2,038,085 It should be noted that the total cost for the core business processes (Accounts Payable, Purchasing, Payroll and Human Resources) identified through activity based costing was $3,329,654 (see Chart C Detailed Process Cost Allocations). Using average salaries to establish an estimate for target FTE savings provides some cushion against costs that will need to remain in budgets to continue to support these core business processes within agency offices. Conservative Scenario Department Budget Savings Phase Systems Retirement Process Improvement Output Improvement Policy, Procedure, Controls FTE Savings $140,267,275 Phase 1 $0 $0 $0 $0 $0 $140,267,275 Phase 2 $0 $0 $0 $0 $0 $140,267,275 Phase 3 $0 $0 $0 $0 $0 $140,267,275 Phase 4 $0 $0 $0 $0 $0 Total Savings by Area: $0 $0 $0 $0 $0 BROWARD MANAGEMENT INPUT April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 28 of 29

29 Scenario Comparisons AREA AGGRESSIVE EQUATERRA CONSERVATIVE Systems Retirement $12,000 $12,000 Process Improvement $0 $0 Output Improvement $0 $0 Policy, Procedure, Controls $0 $0 FTE Savings $3,421,072 $2,038,085 TOTALS $3,433,072 $2,050,085 April 2009 Copyright 2009, EquaTerra, All Rights Reserved Page 29 of 29