Westminster City Council spends over £600m a year with third party suppliers, from services that keep the city’s streets clean to providing care for some of London’s most vulnerable residents. Add to this one of the most ambitious regeneration programmes the city has ever seen, with a capital investment programme of £2bn over 5 years, and it is clear that getting value from every pound it spends is vital for the council’s sustainability and future ambitions.
The council recognised that its procurement and commercial capability as an organisation was not delivering the full value it could. For an organisation that spends around 70% of its budget with third party suppliers, this represented a significant lost opportunity.
One the main drivers for this project was to transform the capability of the central commercial service to better support stakeholders, while enhancing the skills, capabilities, tools and resources of staff in commercial and contract management roles across the organisation.
Our team led a first review to identify opportunities to improve capability and performance. This identified significant weaknesses that had developed over a number of years, including:
Significant gaps in capability, leading to an over-reliance on high cost interim workers to fill not just specialist positions but undertake routine activity that a well-functioning central commercial team should be able to deliver itself.
A focus on procurement activity in the narrowest sense (i.e. quotations and tendering) with huge amounts of value lost through a lack of ongoing robust contract management once a contract had been awarded.
Lack of organisational capability around contract management; there had been a legacy programme intended to enhance skills, processes and performance but this had experienced several ‘false starts’ and not been successfully embedded.
Major weaknesses in the quality and completeness of data; less than 50% of the organisation’s third party spend was represented on the contracts register, dropping to 4% for discrete blocks of spend below £100k.
Technology infrastructure that was not supporting high performance – with existing functionality being under-utilised and key elements of the required functionality missing.
Employee engagement in a critical condition – with only 7% of staff reporting that they feel valued for the work they do as part of the corporate staff survey.
Crucially, a lack of stakeholder understanding of what a well skilled, commercially minded service should be able to do for them – and no confidence in the existing team to deliver.
Having presented these findings back to the Executive Leadership Team and Elected Members, we were able to galvanise broad organisational support to implement radical change. We then worked with the central procurement team to develop a programme of change that would transform every aspect of the organisation’s commercial capability.
The programme was made up of five workstreams:
1. Strategy and Performance – including the harmonisation of processes (thresholds, gateways and approvals) to standardise working, simplify processes and create productivity efficiencies.
2. Policy and Governance – including development of clearer and more meaningful performance measures, moving from a compliance focus to adding measurable commercial value to the organisation.
3. Systems and Processes – including the development of a new Contract Management Framework to secure ongoing value from the full commercial lifecycle and the development of a new system to support this; development of an online resource hub to improve access to information, training, tools and templates across the organisation.
4. Structure and Skills – including detailed workload analysis and resource modelling, the design of a new organisational structure to support services across both organisations, creation of new job descriptions and development of new skills (see below)
5. Culture and Engagement – working with all stakeholders to improve relationships and develop more collaborative working, moving to a more customer-focused culture to strike a better balance between ensuring compliance and enabling the organisation to act quickly and take calculated risks.
A new operating model with a clearer service offer between the central team and rest of the organisation
Clear roles and accountabilities for commissioning, procurement and contract management in the organisation
A new organisational structure with a full suite of new role profiles and job descriptions, followed by a large recruitment campaign to fill vacant posts.
Data quality improved significantly. At the start of the project, only 47% of the council’s spend was reflected on the contracts register; this is now at 76% and climbing.
The service is significantly more attuned to organisational priorities – and pace, productivity and collaboration have increased as a result. As an example, although the council is far from the first to achieve Living Wage accreditation, it is now the organisation that moved from application to accreditation in the shortest time.
Stakeholder feedback and customer satisfaction drastically improved. Stakeholders who were previously critics of the service are now advocates, and we are implementing formal measures of this as part of a new performance framework.
Employee engagement has more than doubled – from 38% to 77% overall, and from 37% to 80% of staff saying their role gives them a sense of personal achievement.
Improved quality and a clear service offer so compelling that services are ‘opting in’ to it – other business areas are now choosing to pay to have the central commercial team manage contracts on their behalf.
Human Engine is a Financial Times top-ranked management consultancy with specialisms in strategy, people and performance.
It was founded by a group of former local government officers who think the public sector deserves better than it gets from traditional consulting firms – more human, more personal and more knowledgeable of the reality of delivering modern public services.
We have worked with dozens of public sector organisations to help transform their strategies, operations and cultures to be more agile, commercial and entrepreneurial in order to achieve financial sustainability and improved outcomes for local people and communities.
We are currently writing our latest report, The Commercial Edge, in partnership with leading think tank Localis, making the case for entrepreneurialism in public services and local investment as a catalyst for economic recovery and growth.