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Transcript of How has delivery in Hong Kong? with relevant cases. Has Outsourcing Affected Public... · How has...
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HowhasoutsourcingaffectedpublicservicedeliveryinHongKong?
Illustratewithrelevantcases.
ByBrendaChan,DavidWong,Hooly Leung,OlgaChanandBorisSiu
Outsourcing throughtheeyesof
Tosee
CostQualityofserviceSocialImpact
Government Contractor CivilSociety
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OutsourcinginHongKong OutsourcinginHKGovernment:wheneverpossible Outsourcingnoncoreservicesandroutineexecutionprocesses
Corefunctionsanddefinitiondecisionsremaininhouse:policyformulation,publicfundsbudgeting,regulatoryandcontrolmeasures,licencing andlawenforcement
Examples:publicworks,environmentalhygiene,leisureandculture,transportation,security,propertymanagement,informationandtechnologies
GovernmentOfficialsGovernmentOfficialsViewonCostViewonCost
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CostEffectiveness
Lowerservicecost
Downsizingofcivilservants
Transferalofoperationalrisks
Flexibilitytomeetfluctuatingneeds
Lowerservicecost
Publicservicedeliveredbygovernment:inefficientandineffective
Civilservants:employedintenure;lackincentivetoimproveservice
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Lowerservicecost(2)
Marketcompetition:sameservicelowercost Businesscycletriggeredimprovingqualityofservice:bids,tendering,contractualperformance,assessmentofbidderspastperformanceinfuturebidsandtendering(e.g.FEHDs defaultnotice)
Increasingdemandsofpublicservicemetbylimitedresources
Lowerservicecost(3) EfficiencyUnit2010SurveyonGovernmentOutsourcing:80%contractsgotolowestpricebids
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Lowerservicecost(4) EfficiencyUnit2010SurveyonGovernmentOutsourcing:overallcostsaving26%35%
Downsizingofcivilservants
Containortrimdowntheno.ofcivilservants Saveresourcesonstaffwelfare(e.g.medicalserviceandMPFcontributions)
Staffmanagementisoutsourcedthroughoutsourcingofpublicservicedelivery
Fewersupervisorygradeofcivilservants Stafftrainingtodeliverpublicserviceperformedbycontractors
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TransferalofOperationalRisk
Businessmarketismorereadytocopewithchangingenvironment(e.g.fasttoemploymoreparttime/contractstafftohandleincreasingworkload)
Contractorshaveexpertiseandextensiveexperienceintheirownbusinessfield
Flexibilitytomeetfluctuatingneeds
Avoidunderutilizationofstaffandotherresources
Notallpublicservicerequiredfixedsetofstaff(e.g.cateringserviceandenvironmentalhygiene)
Projectbasedpublicservice
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GovernmentOfficialsGovernmentOfficialsviewonQualityviewonQuality
Governmentsexpectations
To improveexistingservices
Tomeetincreasingdemandsandnewservicerequirements
Togainaccesstonewskills
andtechnology
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Satisfaction Survey
Effective monitoringsystem ServiceLevelAgreement KeyPerformanceIndicators
MarkingSchemeandTwoenvelopesystem(technicalandcost)intenderingexercise
SatisfactionSurvey
Fulfilledthekeyobjectives
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SatisfactionSurvey
Technicalweighing Betterqualitysolution
SatisfactionSurvey
B/Dsinvolvebestpracticesinoutsourcingactivities
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QualityAssuranceestablishedmechanism
Beforeoutsourcing Thedecisionmakingframework Termsandconditions,tenderingprocedures
TenderEvaluation ContractMonitoringandReview FeedbackfromContractors 3rdpartymonitoring
PerformancemonitoringmechanismadoptedbyB/Ds
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ChallengeAhead
Lackofexperience/experts? Diminishedgovernmentcapacity? Downsizingthegovernance?
Accountabilityonservicequality?
FutureDevelopment
Contractmanagement
Concentrationoncorefunction
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OutsourcingITserviceinHousingAuthority
Three main types of IT outsourced project :
1. Application Maintenance
2. Operational Support3. System Integration
Project
OutsourcingCleaningService inFEHD
Ahighqualityservicespecificationhasthreekeycharacteristics:
Primarilybeingoutputbasedandnonprescriptive;Focusingonkeyissuesandobjectivestobeaddressedintheoutsourcinginitiative;
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GovernmentOfficialsGovernmentOfficials ViewsViewsontheSocialandEconomicalontheSocialandEconomicalInfluencesofOutsourcingInfluencesofOutsourcing
Social,EconomicalandPoliticalInfluencesofOutsourcing
TheGovernmentoutsourcingexpenditurevariedfrom$44.1billionto52.0billionfrom2006to2010.
OutsourcingisaveryimportantmodeoftheGovernmentspending.
HongKongsocial,economicalandpoliticalactivitiesareunderhugeinfluencebytheGovernmentsoutsourcingactivities.
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Social,EconomicalandPoliticalInfluencesofOutsourcing
ExecutionoffiscalpolicybytheGovernment
Pursuingpolicygoalsasamarketforce
Promotinglawabidingbehaviorinthebusinesssectorasamarketforce
OutsourcingExecutionofFiscalPolicy
TheBasicLawArticle107impliesthatevenintheadverseeconomicsituation,theGovernmentislegallyobligednottorunalongtermbudgetdeficit.
TheGovernmentisusuallynotwillingtoincreaseitsrecurrentspending,soithastoturntooneoffexpenditureitems.Outsourcingseemstobethebestoption.
Duringtheadverseeconomicsituation,theGovernmentcaninitiatenewprojectsorspeeduptheongoingone.Thisactionmightleadtobudgetdeficit.
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OutsourcingExecutionofFiscalPolicy
Morepeoplecanbeemployedintheseprojects,alleviatingtheunemploymentproblem.
Increasingoutsourcingscalecanimprovetheeconomicsituationofthesociety.
Whenthelocaleconomygetsimproved,theGovernmentcanreprioritise theongoingprojectsorevenstoptorunadeficitbudget,meetingthebalancedbudgetrequirementintheBasicLaw.
OutsourcingExecutionofFiscalPolicy
PossibleProblems
Buildingwhiteelephantswithlittlesocialoreconomicvalues.
WorkersofoutsourcedpublicserviceswouldbefirediftheGovernmentterminatedtheoutsourcedservices.
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OutsourcingPursuingPolicyGoals
2011/12PolicyAddress,Para.159:
TheGovernmentwillencouragethelocalindustrytodevelopadvancedcloudcomputingtechnologiesandapplications. Inthenextfewyears,wewilldevelopagovernmentcloudplatformandprocurepubliccloudservices.
OGCIOWebsite:
TheprimaryobjectivesoftheGovernmentIToutsourcingpolicyaretoenlargethedeliverycapacityforITservices,toacceleratethe deliveryofITsolutions,andtocreateamarketofsufficientsizetoencouragethefurtherdevelopmentoftheITindustrylocally.
OutsourcingPursuingPolicyGoals
OGCIOhastwomainestablishedoutsourcingarrangementsforBureaux andDepartmentstoprocureICTservices:
StandingOfferAgreementforQualityProfessionalServices2(SOAQPS2)
T22Contracts
OutsourcingforICTservicesisconsideredasoneoftheGovernmenttacticstoencouragethegrowthoftheHongKongICTsector.
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OutsourcingPursuingPolicyGoals
Asannouncedandwitheffectfrom1September2009inCEDDs NoticeforGrabmountedDumpTruck,allthegrabmountedtrucksworkingforpublicworkscontractspublicworkscontractsshouldbeinstalledwithsuitablecoverwhichcanbeoperatedsafelyandpreventthereleaseofdustduringtransportationofconstructionwastes.
OutsourcingPursuingPolicyGoals
Theaimsofthispolicy:
Tominimise thedustduringthetransportationofconstructionwaste.
Topreventthetruckfromoverloading.
Toprovideasaferworkingenvironmenttothedumptruckdrivers.
Thedumptruckdriversarediscouragedtoarguewiththeirclient(theGovernment)todetertheimplementationofthescheme.
Thisenvironmentalandpublicsafetyfriendlymeasurecanbeimplementedwithminimumopposition.
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OutsourcingPromotionofLawAbidingBehavior
FromContractorManagementHandbook RevisionB issuedbyDevB,poorsitesafetyrecords,poorenvironmentalperformance,courtconvictions(e.g.contraventionofsitesafetylegislation,EmploymentOrdinanceandemploymentofillegalworkers),violationoflawsrelatedtopublicsafetyandpublichealthmayleadtothetakingofregulatingactionsbytheGovernmentagainsttheContractors.
AntiPollutionLegislation
OccupationalSafetyandHealthOrdinance(Cap.509)
Section17Ior38AofImmigrationOrdinance(Cap.115)
EmploymentOrdinance
OutsourcingPromotionofLawAbidingBehavior
Possibleregulatingactions:
SuspensionforbiddingGovernmentscontracts.
Downgradingthevendortoprobationarystatus.
DemotionthecompanytoalowergroupofApprovedSupplierListwhichcanonlybidforlowervaluecontracts.
Thebusinesssectorisdiscouragedtopollutetheenvironment,ignorethehealthandsafetyoftheiremployees,employillegalworkersortreattheirworkersunfairly.
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ContractorsContractors ViewsViews
Contractors ViewforOutsourcing
As at 1 July 2010, there were 5 111 government outsourcing service contracts each costing over $150,000, comprising 1 136 works contracts (22%) and 3 975 non-works contracts (78%).
Extract from Report on 2010 Survey on Government Outsourcing (May 2010)
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Contractors ViewforOutsourcing The number of outsourcing contracts increase has continued to rise
from 3 984 in 2006 to 4 339 in 2008 and further to 5 111 in 2010 Welcome Outsourcing as Business Opportunity
Extract from Report on 2010 Survey on Government Outsourcing (May 2010
OutsourcingTopThreeAttractionsofGovernmentContract
Securepayments(90%,3%);
Buildupcompanyimage(65%,3%)
Open,transparentandfairprocurementprocess(50%)
NGOs&InterestGroupsOpportunityforInvolvementinPublicManagement
Extract from Report on 2010 Survey on Government Outsourcing (May 2010
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OutsourcingImpactoncostofPublicServicesDelivery
Bestmethodtosavethecost&
lowertheoverallexpenditure
No Bureaucraticprocurementprocedure
Purchasegoodsmorequickly
Negotiatebetterprices Maintain lowerinventories
Flexible position tohire, dismiss andpromoteemployees
Profitoriented
OutsourcingImpactoncostofPublicServicesDelivery
LowestBidder Practice
Extract from Report on 2010 Survey on Government Outsourcing (May 2010
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OutsourcingImpactoncostofPublicServicesDelivery
Cutcost Exploitationofworkers,Bidrigging(Collusion).
SavingFinancialCostofContractor PassingPoliticalCosttoGovernment
Case ContractCAinBD&EMSD 8
1,2001,50088,000
OutsourcingImpactsonPublicServiceQuality
In2007,theAuditCommissionhadconductedareviewofgovernemnt outsourcing,whichcoversthreedepartmentshavehadsubstantialoutsourcingactivities,theyareFEHD,LCSDandHD
Attainmentofcostsavingsthroughoutsourcingservies. Littleinformationonperformanceinformationontheservice
qualityimprovments achievedthroughoutsourcing. Inadequatemonitoringoftheperformanceofoutsourcing
contractorsbythedepartments
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OutsourcingImpactsonPublicServiceQuality
Nocontractterminationduetounsatisfactoryperformanceofthecontractorduringtheperiodof1July2009to30June2010
Finalresponsibilityofprovidinggoodoutsourcedpublicservicesremainswiththedepartment,whichdrawsuptheoutsourcingcontractandexerciseeffectivemonitoringrole
OutsourcingSocial&EconomicImpacts
EconomicDevelopment Developmentofaknowledgebasedeconomy
Oligopolyofparticularservice
BidRigging&Collusion IncreaseinvolvementofSocialEnterprise&InterestGroups
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CivilSocietyCivilSocietysViewssViews
CivilSocietyexpectation Cost&Quality Similarorevenbetterservicequalityfromprivatesector
Lowertaxwithmorepublicservices
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CustomeropinionsurveyLSCDsportsfacilities
Target:Usersoffacilities ComparetheserviceoftheSportsCentreandSwimmingpool(Outsourcedvs Selfmanaged)
ThescoreforoutsourcedandLCSDmanagedcentreare7.5and7.65pointsrespectively(010pointsscale)
CustomeropinionsurveyLSCDsportsfacilities
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CustomeropinionsurveyBuildingmanagement
LeiChengUk EstateandTaiHangTung Estate
ManyresidentsagreedthattheservicesofprivatecompanyisbetterthanHousingDepartment(around40 50%)(e.g.Patrolfrequency,Visitorregistration,servicehour,accessibilityetc)
Theotherservicesqualityareroughlythesame(e.g.Cleanliness,buildingrepairworks,buildingmaintenanceetc)
CustomeropinionsurveyBuildingmanagement
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Negativeview Cost&Quality
Smallprofitmarginofthecontractmayleadtopoorservice
Poorequipmentandlackingcontingencyplan
AffectGovernmentimage Civilservantneedtoshoulderresponsibilityforpoorqualityofoutsourcedservices
Negativeview Cost&Quality
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SocialimpactLabour exploitation
Underpay Nosalaryincrease Nocareerprospect
Socialimpact
Labour exploitation
Nojobsecurity Lowstaffmorale Insufficientpenaltytocontractor
Statutoryminimumwage
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Conclusion
Cost ServiceQuality
Socialimpact
Government
Contractor
CivilSociety