Operational Benchmarking & Efficiency
The UUK led Operational Benchmarking Project emerged out of the Diamond Review, funded by a joint HEFCE/Leadership Foundation Innovation and Transformation programme grant to UUK. HESPA was represented on the steering group by Giles Carden, alongside representatives from BUFDG, UCISA, SCONUL, AHUA and HESA.
The first phase of the project aimed to get a better sense of current practices, data sources and uses of operational cost benchmarking in the sector, the six key findings were:
1) A range of benefits: The stated benefits of operational cost benchmarking are that it supports management decisions, informs the development of process improvement initiatives and shared services, helps target investment decisions and supports institutions in demonstrating value for money to stakeholders.
2) Diversity and varying levels of openness: There is currently a diverse set of data sources and tools within different operational areas that provide some operational benchmarking functions. These have developed largely independently and in professional domains. The degree of open access to these also varies.
3) Good initiatives: Some provide a service covering different operational activities but have limited sector reach. For example, the benchmarking in higher education facility developed by Association of Managers in Higher Education Colleges.
4) Sector-level demand: Although institutions are already using commercial and other tools there is an identifiable demand, and need, for operational cost benchmarking at a sector level.
5) Data sources need development: Existing data sources are not currently well enough developed to support a sector-level operational cost benchmarking tool.
6) A common framework and taxonomy: These would enable data to be integrated from a range of sources, potentially including professional associations.
In the second phase of the project the Steering group has developed, in outline, a proposed common framework and operational cost taxonomy. It has also established a pilot project involving three universities across the range of pre and post ’92 institutions, to test the taxonomy. The Steering Group hopes to share its outputs from this phase in spring 2014. The second and final phase of this work will ask the pilot institutions to test the taxonomy and start using their own and other available data to benchmark across the common areas identified.
A Common Approach to Benchmarking
Given the diverse nature of institutional structures and functions, there is never going to be a completely perfect approach. But this work will allow the sector to take an important step forward and provide the right conditions for developing a common approach to operational cost benchmarking. At the end of this project the aim is to make the taxonomy freely available along with supporting materials developed during the process. This will enable institutions and those with an interest in supporting benchmarking to use them and develop approaches that meet their own needs – all within a common framework.
On the question of competition regulation, UUK has received advice that benchmarking of operational functions should not necessarily be curtailed when thinking about competition law. Indeed, benchmarking operations against competitors may result in institutions offering their services more efficiently, which could benefit students and tax payers. However, care must be taken to ensure that participation in a benchmarking exercise does not result in the exchange of strategically useful information, which is effectively information that could result in a reduction of competition. Ideally, information should also be anonymised and particular care taken when benchmarking between a small number of institutions. UUK will develop this advice further and provide guidance to institutions along with the project outputs.
Finally, many of you (in England) will have noted the Government’s recent grant letter to the Higher Education Funding Council for England (HEFCE) stressed the importance of institutions demonstrating value for money. Subsequently, David Willetts has written to Professor Sir Ian Diamond asking him to give ‘further momentum’ to his previous work and to examine efficiency and effectiveness in relation to:
- Space and infrastructure utlisation, and asset sharing;
- The higher education workforce;
- The sectors ability to record, quantify and analyse efficiency gains, and demonstrate how they are being used;
- Investment strategy and operational plans for institutions;
- Academic practices and processes;
- Exploring the role of open data in helping efficiency.
Further details are likely to emerge from UUK on aforementioned thematic areas in due course.
Colleagues can look at the website http://www.efficiencyexchange.ac.uk/ to keep up-to-date with the latest projects associated with the national HE efficiency agenda.