Many friends in the industry & corporate circles are wondering about these questions. It seems contrary to every idea we have had regarding government projects, planning & operations. What then is the magic formula?
The formula friends is simple yet sharp business planning and application of optimization principles that all businesses use to government their affairs. The BJP govt may shout from rooftops and claim masterstrokes where none exists, the AAP government has been delivering amazing results without even bothering to talk about it.
Here are some key components of the magic
- Work top-down
Most successful businessmen work Top-down. Ideas & projects start from the top and the organisation executes & delivers. The top layer stays close to the project monitoring costs, schedules, value proposition.
In the govt things work bottom up. Government files start from the bottom with each managerial layer adding only review or approval comments. The political layer — Ministers, take no interest in details (maybe they don’t even have the skills to do so). The result? While the promise is of X, the final delivery ends up being Z.
Satyendra Jain, the AAP Health Minister (an architect by training) has turned the system topsy turvy and is driving government projects too-down like any other businessman. He is himself writing detailed project notes rather than rely on the lower officers to send him files. The result? Faster movement of files and better, more targeted projects. Also keeps the team on their toes.
- Eliminate Waste
All businesses know that wasteful expenditure inflates costs and drives a business into losses.
In government projects no one is looking for profitable (self sustaining) models and therefore there is no thought on wasteful expenditure.
Satyendra Jain gives a classical case study. A 350 bed new hospital approved by the Congress govt was inherited by AAP government. During his review, Jain found that the space allotted to the MS office was lavish beyond reasonable limits. Even CMDs of large public companies would not give themselves such lavish space he says. By re-negotiating with the team and making them understand the cost of space and the opportunity to release excess space to the main purpose — patient beds, he was able to turn the 350 bed project into 550 bed project at no additional cost!
- Optimise for performance
The government thinks of large projects in terms of big CapEx with low OpEx. As a result gleaming new infrastructure soon decays with little or no maintenance and govt continues to maintain fixed operating expenses with no / low service delivery levels towards the public. Performance of the utility is never a consideration.
Businesses on the other hand, try to limit CapEx ( capital has interest costs) and drive optimum value through performance so that the margins can fund growth and regular maintenance.
While designing the Mohalla Clinics, Satyendra Jain used three tactics commonly used by businesses to architect a long term, low cost, self sustaining model:
A. Low CapEx & Low OpEx
Porta Cabins instead of fixed structures; rental / leased accommodation instead of new buildings have lowered initial cost of mohalla clinics to lowest in its class.
Bulk negotiation for rates with diagnostics providers using minimum guarantee & low cost per transaction has lowered costs for tests to nearly 1/6th of what they used to be.
B. Work & Earn for Doctor
All doctors employed by mohalla clinics are on contract. There is no fixed salary. Doctors get Rs 30 per patient and a minimum guarantee by the government. The more patients the doctor sees, the more money he/she makes. The goverment benefits by delivering better services to patients.
C. Use of Technology
Using digital diagnostics tools, software and processes mohalla clinic has been able to reduce time to service a patient significantly. Also, all data is saved to cloud so that for repeat visits, the time taken is further lowered. Result, high degree of customer service & satisfaction and higher productivity for doctor (the most expensive resource).
What is the impact of this ?
The biggest impact is that the average senior citizen who was reluctant to visit government hospitals and clinics is now happy to visit the Mohalla clinic twice a week to get his vitals tested. The same would have cost nearly Rs 1000 in a private clinic. Regular checkups means better health for the senior citizens. The impact is long term and deeply satisfying.
- Set time bound projects & eliminate cost over-runs
On most govt projects the expectation is that 10–15% cost over-runs are normal, to be expected and standard operating process. Also, the project deadlines are flexible and negotiable. The project team therefore looses focus and project over runs both cost & time.
One tactics used by Satyendra Jain was to ask for any expenses over the sanctioned amount to be sent for approval with full details, reasons and justification. Surprisingly, this small decision eliminated the 10–15% bloat and purchase of needless items just to inflate the expenses.
The other tactics used was to make the deadline sacrosanct and setup project monitoring & review with a view to meet the deadline rather than slip it.
Result? Delhi govt became the first government to complete public works project in lower than approved budget and time!! What did they do with the saving? Fund free medicines, medical tests and create infrastructure in health care field.
Summary: Honest intent, skilled leadership and ability to take responsibility and thinking like a responsible logical business person can deliver significantly higher results both on cost savings and service delivery.