Subject: Conclusion of Managed Competition Pilot for Roadway Markings Services
On March 25, 1997, the City Council adopted a Public-Private Competition Policy and approved a plan for developing and implementing a competition program based on the policy goals and principles. The purpose of the Public-Private Competition Policy is to allow the City to use a public-private competition process, where appropriate, to determine the most competitive service delivery method between using City employees or contracting out the service. On June 10, 1997, the City Council approved two services to participate in the pilot project for the public-private competition process: Roadway Markings Services, and Landscape Maintenance at the Water Pollution Control Plant. The City teams for both of these services were successful in the public-private competition, and thus were selected to provide the service to the City in accordance with requirements in a service resolution for each service.
The Roadway Markings Team has performed successfully as a pilot project for public-private competition. This analysis presents the evaluation of roadway markings services provided in years two and three of the service resolution, since the first year performance was covered earlier. The evaluation covers production levels, quality, cycle time, cost and customer satisfaction as called for in the service resolution. Overall, the team has performed well in all areas, as shown on Attachment A.
In addition to the specific performance results discussed below, an overall result of the Roadway Markings Team efforts under the pilot project is enhanced preventive maintenance activities and reduced corrective maintenance activities. Preventive maintenance (PM) is significantly more cost effective and efficient than corrective maintenance (CM). As the quality of the entire City inventory of markings and striping has improved, the need for corrective work has decreased. In year two, the proportion of PM and CM work completed was 89% and 11% respectively. This ratio of PM to CM work completed further widened in year three, with 97% in PM and only 3% in CM.
Production Levels
In both years two and three, the Team completed more than the amount of PM required by the service resolution (105% both years), as well as 100% of the CM and New Installations work that was requested by customers. The amount of CM work requested, however, was on average 60% less than anticipated. In year three, the required PM and CM production levels were adjusted to reflect the decreased demand for CM. The following table, as well as Attachment B, show the Team’s performance related to production.
|
Year 3 Totals |
Original Quantity |
Modified Quantity |
Completed Quantity |
% of Modified Quantity Completed |
Ratio of PM to CM |
|
Preventive Maintenance |
4,203,851 |
4,312,651 |
4,513,119 |
105% |
97% |
|
Corrective Maintenance |
535,000 |
162,543 |
162,543 |
100% |
3% |
Quality
Over the course of the service resolution, the Roadway Markings Services Team has maintained high quality standards in the striping and marking services provided, and in their documentation of work performed. A City construction inspector has made random checks on the service quality, including verification of the quantity of work completed. On average for years two and three, 91.5% of inspections met quality specifications for thickness of application, line width, reflective bead application and “crispness” of application (Attachment A). Some corrections were required and addressed. Inspector verification of actual quantities performed required no adjustments to quantities recorded by the Team and the inspector found crew safety and traffic control to meet requirements consistently.
Cycle
Time
The corrective maintenance and new installation services provided by the Roadway Markings Services Team were subject to timeliness requirements as specified in the Service Resolution. The Team performed well in this area. Requests with high priority (“A”) require 24 hour completion; moderate priority requests (“B”) are to be completed within 7 days; “C” priorities require 21 day completion. In year two, 97% of the on-demand requests were completed on-time, and in year three the team achieved a 95% on-time completion rate (Attachment A).
Customer
Satisfaction
As a part of routine business, the Roadway Markings Services Team queries its customers to determine their level of satisfaction with services provided. Customer “call-backs” are made to external customers that call in for service requests, and to the team’s internal customers (traffic engineers), who request new installation of roadway markings. Of those contacted, the percentage of customers rating services good or better are 95% and 87% for years two and three respectively (Attachment A). The drop in customer satisfaction ratings in year three are due to some internal communication issues with the team’s internal customers that have since been resolved. The external customer ratings for year three stood at 91% satisfied.
Cost
In year two, actual unit costs for services exceeded the maximum allowable unit costs in the service resolution; however, total service costs were within the amount budgeted for the year because the amount of corrective maintenance requested was less than expected. To cover the additional unit costs, the Team and department implemented efficiencies in other areas. The $175,000 associated with the less than expected corrective maintenance quantities was then returned to the General Fund, as stipulated in the service resolution. Reasons for the additional unit costs include significant downtime for the striper and the bituminous (hot glue) machine. The team modified a regular truck to serve as an interim striper during the six months that the striper was out of service. While the solution was resourceful, production was inefficient and unit costs for striping activities increased by approximately 70%. In addition, while the bituminous machine was out of service, the interim method used to apply hot glue (bituminous material) for adhering raised pavement markers to the street was a slow manual process resulting in an estimated doubling of unit costs for this service.
In year three, the team achieved cost savings of $115,000 or 9% of costs specified in the service resolution for the quantities performed. The cost savings is a result of several factors: adjustments to work scheduling methods to achieve greatest efficiencies, improved preventive maintenance on major pieces of equipment, and more frequent review of production data to address any problematic trends. As depicted in Attachment B, the Roadway Markings Services Team’s unit costs are competitive with the private sector operating under contract with the City and with the City of Sunnyvale, one of San Jose’s benchmarking partners.
The City’s Public-Private Competition Policy allows for teams to be rewarded for cost savings according to the formulas in the Group Based Pay for Performance Guidelines that were approved by Council in June, 1998. Under the Guidelines, forty percent (40%) of the total cost savings of approximately $115,000 would be shared with employees. This results in a total employee share of approximately $46,000, with $3,170 distributed to each full-time member and $1,590 to the one part-time member of the Roadway Markings Team.
The pilot program for managed competition has produced positive results. In general, the Roadway Markings Services Team has provided high quality service in a cost-effective manner. Specific results include the following:
· The percentage of citywide markings infrastructure meeting visibility guidelines increased from 57% at the beginning of year one, to 89% at the conclusion of year three.
· The average annual output of the Roadway Markings Team for the three years during the service resolution was approximately 260% greater than the average annual output for the years preceding the service resolution.
· Approximately 97% of work orders were completed on time per service resolution guidelines.
· Approximately 93% of customers rated service as very good or excellent.
· Unit and overall costs are competitive with the private sector and the City of Sunnyvale, a public sector benchmarking partner. Cost savings were achieved in two of the three years.
Due to successful completion of performance requirements during the term of the Service Resolution, the Roadway Markings Services Team has earned a five-year exemption from managed competition, as called for in the Service Resolution.
This memorandum has been coordinated with the Department of Transportation, the Office of Employee Relations, and the Budget Office.
Not Applicable.
Funds for these cost savings awards were provided for in the October, 2001 Annual Report.
PAMELA JACOBS
Assistant to the City Manager
Summary of
Performance of Roadway Markings Services Team
in Managed
Competition Pilot Program
October, 1998
– June, 2001
|
|
Year 1 |
Year 2 |
Year 3 |
|
% Of Scheduled Preventive Maintenance Completed |
100% |
105% |
105% |
|
% Of On-Demand Work* Completed |
100% |
100% |
100% |
|
% Of On-Demand Work Completed Within Time Standard |
98% |
97% |
95% |
|
% of Citywide Roadway Markings Inventory Meeting Visibility Guidelines |
69% |
78% |
89% |
|
% Of Markings Meeting Quality Standards |
90% |
91% |
92% |
|
$ Saved |
$73,000 |
0 |
$115,000 |
|
% Of Customers Rating Services Good Or Better |
96% |
95% |
87% |
·
On-demand
work includes corrective maintenance and new installations.
Public-Private
Competition Pilot
Roadway
Markings
Final
Evaluation
October 1998 – 3-year service resolution, with requirements for production, timeliness, quality, and customer satisfaction
September
1999 – first year evaluation, meeting requirements in all areas and saving
$73,000 (40% shared with Team)
December
2001 – second and third year evaluation (no savings in 2nd year)
Attachment
A – performance summary from 3 years, with cost savings of $115,000 in year 3
(40% or $46,000 to be shared with Team)
Visibility
(57% to 89%), production (260%) and costs all improved significantly from the
start of public-private competition through the completion of year three; costs
are competitive with Sunnyvale and private contract.
City of San
Jose Roadway Markings Services
|
Activity |
|
CSJ 00-01 |
Sunnyvale 00-01 |
2001 Chip Seal/Markings Contract* |
|
Paint Striping |
|
$0.08 |
$0.15 |
N/A |
|
Paint 12"
Lines |
|
$0.93 |
$0.74 |
$2.60 |
|
Paint Legends |
|
$1.01 |
N/A |
$2.85 |
|
Paint Curbs |
|
$0.57 |
$0.83 |
N/A |
|
Install RPM's |
|
$4.87 |
$2.17 |
$3.50 |
* As part of the City’s chip seal contract
with an outside vendor, the vendor also applies roadway markings.
.