By Dr Louise Dunne, Lead Housing Advisor, CIPFA Housing Network
Open book accounting has nothing to do with ‘accounting’ as such, and everything to do with smarter procurement and contract management. As a method for procuring and delivering services in the public sector, it can deliver, but not guarantee, considerable cost savings. Why then are so few public sector organisations adopting open book?
Working in the public sector we know that with the scale of cuts to the public purse over the past few years, and with much more cuts to come, pressure is mounting on all of us to find new modes of delivering services with significantly fewer resources. Moreover, recent government announcements around the importance and relevance of Open Book to the sector, coupled with the news of their intention to replace the Government Procurement Service (GPS) with a new ‘Crown Commercial Service’ (CCS) point to a renewed interest by the government in the way they, and the rest of the public sector, procure and manage contracts with external suppliers.
CIPFA and open book
To help the sector understand government changes, CIPFA revised its Open Book Guide, explaining in detail the core principles of open book, describing the methodologies, and practices, with the use of helpful case studies taken from across the public sector.
CIPFA has for many years now led the way in open book training, offering the only accredited course in the UK – nevertheless despite CIPFA’s commitment to raising awareness about the benefits of open book, public sector professionals are still slow to develop the use of this approach within their own organisations. So why are local authorities and others, reluctant to move to open book for the procurement and management of their contracts?
As the CIPFA examiner for the open book systems courses, I have had the privilege of awarding more than 250 public and private sector professionals with their Level III Certification over the past few years – the vast majority of these to housing professionals and those involved in housing procurement.
In doing so, I have been shocked by the sheer number of high performing candidates, who, when faced with what is, by far, the easiest question in the exam – invariably give the wrong answer. What is this elusive, problematic exam question, I hear you ask, and what does it tell us about the slow progress of open book in the UK?
Who owns the costs?
The question that baffles both highly competent private and public sector examinees is very simply this: under an open book system, who owns the costs? Invariably the private sector candidate will state it is the client, and likewise, the public sector candidate will answer: the contractor.
Of course the fundamental premise upon which open book is based, is very simply the pain/gain share – and therefore both the client and the contractor ‘own’ the costs – hence the term ‘open book’. If the costs are well managed, both client and contractor have the opportunity to equally share any savings. If costs escalate, both equally share the risk. This premise lies at the very heart of the entire open book methodology, and while questions about ‘value engineering’ and ‘cost & value reconciliation analysis’ pose absolutely no problem to the majority of candidates, ask ‘who owns the costs?’ and you will hear a resounding chorus of ‘not us’.
How can it be the case, that so many high performing candidates from both sectors, still give such a crass response to probably the easiest question in the exam?
The answer lies in each sector’s understanding and experience of the other, and the very deep rooted cultural mores that appear to be virtually impossible to dismantle.
In all of my years of delivering ‘learning’ and continual professional development, the singularly most difficult thing to teach is not – funnily enough, as you might suspect – componentisation, it is actually: cultural change. You can talk about the importance of change, you can demonstrate a whole series of models and methodologies for doing it, you can coach, mentor, suggest, and cajole; but –irrespective of the evidence or logical content of the argument – the culture, as is, remains embedded. Changing cultural behaviours is akin to herding cats.
My experience to date has further taught me that persuading people to improve their processes and systems, is far, far easier, than persuading them to improve or change their own behaviours. And this applies equally to the private sector as it does to the public sector.
As we teach on the course, open book requires a fundamentally different approach to communication, to trust, and to working practices. Without these huge cultural changes, open book will only ever be a ‘good idea in theory' and not properly put into practice.
How can we tackle this? Well, ‘we’ can’t! Only YOU can. Unless senior managers lead by example, and proactively choose to change their behaviours – unless you all lead by example, I have an awful sneaky feeling that in three to five years’ time, I will still be reading exactly the same answer in those troubled exam papers.
- Dr Louise Dunne is CIPFA’s lead housing advisor, and an Open Book Processes examiner.
- The Open Book publications are available from the CIPFA shop in book or CD-ROM format.