The hamster wheel
Population growth is the silver bullet our leaders have embraced to starve off the recession beast. So, aside from all the social and environmental externalities (don’t mention the anthropocene!), grow we shall, at all costs, to keep Australia’s economic hamster running on its wheel and the business status quo in place.
With domestic fertility rates having been on a downward trend for decades due to cost of living pressures and lifestyle choices, the welcome mat is now certainly down for immigration to pick up the population growth slack. Australia’s population is currently forecast to increase from approximately 24 million presently to 40 million by the middle of the century, resulting in an ever-increasing demand for more houses, more roads, more support services, and most importantly, the creation of economy stimulating challenges for our elected representatives, government agencies and developers to solve.
Growth versus governance
This growth has and continues to be a major boon for property developers and construction companies, who rely on expeditious support from elected representatives and relevant government agencies to execute their growth aspirations. The most recently reported figures to the Australian Electoral Commission (2015-16) illustrate they are the largest donors to the major political parties by industry sector.
An often-tenuous relationship can therefore exist between government agencies and their “red tape” mandates, and those seeking to profit from growth. Regulatory compliance is subsequently a challenging and conflicting governance exercise when compared to the cash flow imperatives of development. A situation that is exacerbated further by the ongoing budget constraint forced upon referral agencies (e.g. water utilities) and Local Government Authorities (LGAs), who are tasked to administer necessary governance processes and who are disproportionately affected by varying national growth rates (refer Tables 1 & 2).
|Table 1 – Top 15 LGAs by Growth Rate (%)||Table 2 – Top 15 LGAs by Population Growth|
Source: Australian Bureau of Statistics (ABS), Regional Population Growth, Australia, 2015-16
In light of these growing pains, MHC has been working with a variety of water utilities in recent years to address what are often common and related challenges, such as:
- Resourcing challenges of managing dynamic staffing requirements across varying and uncertain growth rate projections;
- Addressing inefficiencies within what are typically highly manual business processes across all referral and advice stages and customer delivery tasks;
- Alleviating administrative and other non-technical burdens from the more specialised delivery skill sets of referral agency services;
- Identifying the appropriate end-to-end process and system enhancement initiatives to address required performance enhancements;
- Ensuring adequate and manageable quality assurance and compliance processes and frameworks exist across all required phases of development activity;
- Managing typically high industry expectations for turnaround and response times throughout all phases of the consultation processes;
- Addressing high levels of inconsistency in the assessment approaches of referral agencies delivering the same public service; and
- A lack of clarity in communication of the required standards and processes by referral agencies.
A Case Study of the Victorian Water Industry
MHC recently undertook a review of the Land Development frameworks and processes of all Victorian water business. The purpose of this review was to benchmark their relative performance and expected maturity in managing the consultation and referral processes of the respective housing growth rates in each region.
Three general assessment criteria were included in the MHC review which produced an overall Land Development Maturity Score, as summarised within Table 3.
Table 3 – MHC Land Development Maturity score criteria
|1. The robustness of development stakeholder management frameworks||· Developer Agreement
· Consultant and Contractor accreditation
· Accreditation categories
|2. The clarity and presentation of the Land Development requirements of each business||· Land Development Manual
· Clarity of submission forms
|3. The relative sophistication and customer-oriented operability of Land Development tools||· Online form submission portal
· Online property search and connection
MHC’s Land Development Maturity Score provided a simple way to benchmark via desktop research the relative ‘maturity’ of the Land Development approach of each Victorian water utility. This data was then used to compare a water utility’s relative level of maturity in dealing with growth in comparison to the peer group, to quickly identify the most beneficial performance improvement opportunities for them (refer Figure 1).
Figure 1 – MHC Land Development Maturity versus forecast growth
Source: MHC assessment of Land Development approach. List of service areas in individual utilities’ websites. Population and household growth information from Victoria State Government Report “Victoria in Future 2016: Population and household projections to 2051”
From analysis to action – how MHC created lasting change
Taking this assessment as a starting point, MHC was then able to identify and deliver an industry benchmarked ‘best-fit’ land development governance and process framework to enhance and streamline the development journey. This resulted in a ‘win-win’ solution that ultimately improved the relationship between the water utility and the development community, and which allowed MHC to also improve the overall quality management systems utilised across gifted asset delivery.
What is the approach used for this journey? MHC has typically adopted a five-phase process to conduct process optimisation reviews of businesses, as summarised within the following points:
- Project commencement workshop
- Stakeholders engaged with a clear vision defined for the improved efficiency of the business function.
- ‘As Is’ process review of business function
- Current process flows mapped.
- Required resourcing loads modelled to available workload forecasts by task.
- Required skills by task linked to mapping.
- Process optimisation assessment
- Bottlenecks, inefficiencies, and high resource load activities are identified within an ‘Issues Register’ and presented to stakeholder group.
- Improvement opportunities identified, plus additional industry observed initiatives workshopped to determine process optimisation potential.
- Process redesign
- Redesigned processes modelled to determine resourcing benefits.
- ‘To Be’ process mapping developed, including skills / resource loading.
- RACI (Responsible, Accountable, Consulted, Informed) mapping developed in alignment with new processes.
- Required amendments to supporting documentation identified.
- Final Reporting
- Initial drafts presented for consultation.
- Confirmed material finalised into closure report.
Clients undertaking these studies have typically seen benefits such as:
- A fit for purpose maturity of development approach.
- Streamlined stakeholder interaction and document management processes.
- Alignment and reallocation of best use of technical skills and knowledge across the business.
- Improved quality management systems in line with regulatory requirements.
- Identification of best fit system enhancements to improve efficiencies.
Growth as a partnership
Forecasts indicate that growth will continue until the middle of this century, and that the highest growth rates in Australia will often exist in areas where local authorities do not have the necessary scale to provide an effective and efficient governance process. Referral agencies like water utilities will therefore be forced to address this challenge head on in order to keep the economic hamster running on its wheel: through the enforcement of business optimisation in the face of the “red tape” squeeze.
Fundamentally, developers do recognise the value and are generally supportive of these changes, even if it means more cost to them, because it ultimately assists them in achieving their growth targets. A win-win outcome that improves partnerships, supports growth and assists in keeping all stakeholders happy.
Contact Derek Atkinson (email@example.com) for further information on our Land Development optimisation experiences and how we can help your business.