Cities and local governments face multiple challenges

PwC suggests an agenda to ‘make things happen’

KUALA LUMPUR, 19 December 2011 – Cities and local governments facing multiple challenges – intensified by the financial crisis – must urgently implement strategies that will allow them to compete for business investment, retain talent and attract visitors. A new PwC report titled Making it happen: A roadmap for cities and local public services achieving outcomes, focuses on how cities can make things happen by identifying the success factors essential for the execution of a city’s strategy. The report, which surveyed local government leaders around the world - including Penang - also suggests how a city can make progress towards realising its vision.

According to the report, inspirational leadership is critical if cities are to implement their strategies and deliver the outcomes their stakeholders deserve. But leadership on its own is not enough, and local governments are failing to build the capabilities they need to overcome the challenge of execution in several other key areas, such as adequate financing, agility in their organisations, and comprehensive performance and risk management. Also, with public, private and voluntary sector organisations collaborating to deliver public services, all stakeholders need to be aligned in order to maximise the chances of success and being able to do more with less.

“Cities have been working to find solutions that will deliver savings while protecting frontline services. Their approaches have fallen into the familiar brackets of ‘the three Es’ - economy, efficiency and effectiveness,” said Andrew Chan Yik Hong, Executive Director, PwC Advisory Services Sdn Bhd. Andrew leads the Capital Projects and Infrastructure unit within PwC’s Advisory practice.

“Economy and efficiency are straightforward concepts - better purchasing and tighter procurement, squeezing greater value out of existing assets, working smarter, restructuring processes and so on. But there has been less of an emphasis on the third ‘E’, which is effectiveness. This is what cities need to look at now, if they are to meet the continuing challenges,” continued Andrew.

Cities will have to think much more radically, beyond economy and efficiency, in deciding what mechanisms or approaches or partnerships are going to be the most effective ways to achieve the outcomes they need. The report also highlights that the understanding of collaborative partnerships for delivering strategies and service delivery extends beyond public-private partnerships.

“From our survey, we find that local governments fall short in some key internal management capabilities needed to accomplish a city’s vision, namely financing; simplifying, standardising and streamlining; implementation planning; and supporting frameworks and tracking systems,” said Andrew.

So what needs to be done? “We believe that cities and local government organisations must prioritise their activities. They need to develop a roadmap to make sure they have the internal capabilities in place and external relationships needed to deliver efficient and effective strategies. Ultimately, they must focus on outcomes,” he explained.

The ‘agenda for action’ should include:

Investing in their capabilities around financing.
Re-designing their organisations to enable more effective collaboration with primary stakeholders.
Assessing the impact of their size and scale, seeking out ways to standardise, simplify and streamline their operations.
Introducing systems to measure outcomes and value for money.
Developing implementation plans with clear roles, responsibilities and timetables for actions.

‘Making it happen’ builds on the insights from PwC’s Global Cities and Local Government Network’s ground-breaking publication ‘Cities of the Future’, last year’s report ‘Seizing the Day’ on the impact of the global financial crisis, and the experiences gained by PwC professionals working with clients.

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Notes to Editors:

The research was undertaken by PricewaterhouseCoopers LLP and covered the UK, Europe, Middle East, Asia, Australasia, Africa, South and North America. An e-survey was sent to leaders in cities and local governments. The survey ran from March 2011 to the end of July 2011. The findings for the report Making it happen: A roadmap for cities and local public services achieving outcomes are based on 64 completed surveys drawn from the 108 respondents. Quotas of five responses per country were set to avoid any one country biasing the results. A full copy of Making it happen: A roadmap for cities and local public services achieving outcomes can be found at pwc.com/makingithappen.
The latest survey of local government leaders reveals an encouraging 69% have a strategic vision for their city and 48% say this vision is being implemented, is having an impact and is regularly updated.
The survey also indicates local governments are rightly reaching out to their external stakeholders in designing and implementing their strategies. So most local governments report the need to partner collaboratively with private (87%), public (82%) and voluntary (77%) sector organisations to deliver their strategies.
A similar picture emerged when the questions turned to service delivery, with three-quarters of survey respondents saying they currently use public-public and public-private partnerships as well as public-voluntary partnerships (50%).
Leadership is seen as by far the most important factor in enabling strategy implementation, with 78% of respondents emphasising it. In fact, 80% of respondents believe leadership has already had a positive impact on strategy implementation, rising to 88% in developed countries.
The key internal management capabilities local governments fall short in are:
- Financing: seen as the biggest barrier to implementing strategies by 67% of respondents. Only 28% have a strategic plan underpinned by a financial plan, with key risks properly assessed and mitigated.
- Simplifying, standardising and streamlining: it seems that size matters, with larger organisations reporting less agility and being less able to get things done quickly. Organisations with fewer than 3,000 employees seem more likely to involve all levels in a more highly collaborative process (37% compared to 15%), have a less negative impact on strategy implementation arising from the number of decision-making levels (21% compared to 38%), and complexity in their organisations (20% compared to 53%).
- Implementation planning: only 19% of respondents have a comprehensive implementation plan – in fact, 22% had no plan in place at all, rising to 40% in developing countries.
- Supporting frameworks and tracking systems: only 11% of respondents have in place a comprehensive performance management framework, which is fully aligned to the organisation’s strategic objectives and supported by transparent reporting of performance to the public. And only 16% have a comprehensive risk management framework in place.

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