Trends in Public Management: a Road Authority Perspective
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1 Trends in Public Management: a Road Authority Perspective Ass. Professor Peter Smidt Deloitte-Nyenrode Public Governance Research Institute Warsaw, Piarc, October
2 Associate Professor Peter Smidt Head of the Deloitte-Nyenrode Public Governance Research Institute of Nyenrode University since 2000 Dutch & International Publications on Management Accounting Practices in the Public Area Advisor on Public Management issues of the Dutch Ministries of Finance, Economic Affairs, Internal Affairs and Health Care, the Dutch Society of Municipalities, the Dutch Society of Supervisors of Health Institutions, the Dutch Society of Supervisors of Education Institutes, etc. etc. Author of the study into the future of Dutch accountancy in the Public Sector for the Public Sector Chapter of the Dutch Institute of Accountants (2003) Member of the Public Sector Chapter of the European Accounting Association and the American Accounting Association Publications on a.o. performance contracts in the public sector, the use of Websites by Ministries, demand and supply of certified non-financial information in the public sector, governance instruments in the Health sector, managing independent entities and subsidies by municipalities, etc. etc. Principal of Deloitte Consultancy, Dutch Competency Manager Public & Corporate Governance, since 2003 mainly consulting the Dutch Road Authority
3 A higher standard: agenda Good governance is key Lessons learned Global developments: a new type of governing Governing by network: Relevance for Road Authorities
4 Good Governance is key
5 Public governance and accountability Government serves the needs of the public Governance ensures those needs are served efficiently, effectively and fairly By providing clear processes and structures for all aspects of executive management: Directing Controlling Supervising Accounting Aiming at >>Transparency, Integrity and Accountability
6 Instruments: Directing Directing Clear Objectives Plans for reaching those objectives Firm commitments on who realises what part of the plan Authority assignment, working procedures and organisational structure that matches the necessities to implement the plan
7 Instruments: Controlling Controlling Making sure that objectives are being reached Planning & control cycle Performance management Risk management Internal Control
8 Public Controlling: New Public Management (1) New Public Management was introduced in the 1980 s as a Public Governance Controlling tool It involves working with measurable public objectives, with public managers who are assigned responsibility to realise these objectives, and who face consequences when the targets are not realised.
9 Public Controlling: New Public Management (2) New Public Management claimed to lead to better public effectiveness and efficiency It was mainly adopted in Anglo Saxon Countries and by international organisations such as World Bank and OECD New Public Management techniques can be valuable tools. However, the last 10 years there is much evidence that these tools are not useful for all types of government services, and that they can be misused as a blunt and destructive instrument for cost cutting.
10 Instruments: Supervision and Accounting Organizing Supervision on the quality of management and task performance of the Road Authority Being transparent about (public) objectives of the organisation: What public task do we perform How do we plan to do that Accounting for actual performance Towards stakeholders Towards Funding entities Towards Government Towards citizens Towards clients / users
11 Overall: Integrity, Transparency and Human Resource Management Integrity and good Human Resource Management are vital for good Public Management: Efficiency, Effectiveness and Trust by Stakeholders will only be realised when Integrity and the quality of Human Resource Management are High
12 Lessons learned
13 Global themes Security and defense Health and welfare Government performance Public governance and accountability! Innovative partnerships!
14 Key issues for Good Governance Setting direction Establishing control Managing risk Maintaining integrity Sharing information Focusing on results IFAC Study nr 13: standards for good governance in the public sector
15 International standards (IFAC, study 13) Globally accepted Does HOW questions Behavioral aspects Self scan Governance theory
16 Global developments: a new type of governing. often advocated for Road Authorities
17 The way we traditionally think of government is not always relevant Agency 1 Agency 2 Agency 3 Citizen
18 What government really looks like Government often bears less resemblance to a traditional organizational chart than it does to a more dynamic web of computer networks that can organize or reorganize, expand or contract, depending on the problem at hand. Contractor Government Contractor Subcontractor Client/ Citizen Non-profit Subcontractor Contractor
19 Harvard Book that tries to answer three central questions: 1 What is government today? When we refer to government what really are we talking about today? 2 How does a government reconcile having more and more responsibility with doing less and less itself? 3 What is the role of government in the networked age? The question is no longer how to manage employees but how to deploy assets.
20 Setting goals: the network governing dilemma Set Goals/Align Values Structure Incentives/ Share Risk Achieving results from networks Manage Change Measure Network Performance
21 Innovative Partnerships: From Procurement to Outsourcing and Concession Tendering for Road Authorities Danger: Highway Robbery: Loosing government control on costs and performance, on efficiency and/or effectiveness
22 Highway Robbery Paper on Design, Build, Finance and Operate contracts on Roads in the UK Strong suspicion of large profits for the private sector Financial benefits for the government less than expected and than published in advance, possibly even non-existent Transfer of risks very tricky business, hard to know and control whether the price is right
23 One example: Share - Don t offload risk Guidelines for Sharing Risk Which network partners are best at managing which risks? Who is bringing the bulk of innovation to the table? How much control does the public sector have over the network and/or over the particular risk involved? Are the contract costs of the risk shifting worth it? Are the risks actually regulatory in nature?
24 Selection of type of governance structure depending on: Institutional and Political Environment of the Road Authority State of Governance environment: integrity, transparency, legal options, organizational culture regarding performance management Capacity and competency for directing a network of the Road Authority: authority, human resources Stage of network development Birth, Growth, Upgrading, Mature. Type of product: Policy, Supervision, Construction, Maintenance, Operation.
25 Quality of Governance: examples Integrity Trust between Government and Road Authority Technical Competency in the Government Transparent distribution of authority and responsibility between Government and Road Authority Quality of internal controls Fit between objectives and performance management
26 Type of accountability model Type of Accountability Financial Fairness/ equity Performance Trust Incentives Traditional Standard Prescriptive Recordkeeping Compliance with program rules Compliance with input and record-keeping Low Cost-plus Hybrid/ Transitional Proof of dollars for contracted services only Priority to access and fairness Activities Medium Fixed price Flexible Network Proof of performance Access Fairness Service Level Agreements Outcomes High Penalties and rewards tied to results
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