Profiting from P3s

Better services, lower costs, and significantly more satisfied employees…these are just three benefits the province of British Columbia hopes to reap from its recent alliance with TELUS Sourcing Solutions (TSS).

The multimillion-dollar deal between the province and Vancouver-based TSS is being cited as an example of a successful private-public partnership (3P).

Under the 10-year, $133 million contract, the B.C. government will use Vancouver-based TSS to deliver its HR/payroll systems and services.

The project transfers the IT application management for human resource payroll systems and payroll processing services from government to the private sector. Moving these administrative operations to the private sector, says Management Services Minister Joyce Murray “lets government focus on its core business,” while allowing the province to “benefit from the expertise, infrastructure and marketing capabilities of TSS to deliver these internal services better and more cost effectively.”

Just how cost-effectively?

According to preliminary estimates, the B.C. government will realize savings in excess of $30 million over the life of the contract.

And cost reduction is not the only benefit. This 3P deal is also expected to enhance privacy protection in payroll services delivery across government, fairly allocate risk, and enforce service levels.

The contract with TELUS is the latest project in B.C. government’s alternative delivery strategy (ASD) – a strategy aimed at increasing private sector involvement in service delivery.

It’s this strategy that led the province, in 2001, to create the Ministry of Management Services (MMS), and consolidate all IT infrastructure for government operations in the new ministry.

Early last year, the B.C. government reviewed activities in all its ministries, focusing on IT services and those business processes heavily supported by IT to identify potential ASD opportunities.

MMS decided to outsource its payroll operations and information management (POIM) and payroll services.

The direct business benefits of this decision include the transfer of financial and operational risk to the outsourcing partner and the ability to refocus employees’ time and skills on high value tasks.

While the BC-TSS alliance is relatively uncontroversial, P3 continues to remain a hotly debated topic in many Canadian provinces.

However, two recent studies suggest Canadians are becoming increasingly reception to private sector involvement in public services delivery. P3s, the studies conclude, can serve as the antidote to many of the challenges and demands of public services delivery.

A study published this week by Environics Research Group says 60 percent of all Canadians believe it’s time to allow the private sector to deliver a range of services – including technology and infrastructure services – in partnership with government. Environics says support for P3 extends virtually across the board, irrespective of age, gender, income, employment status, political affiliation, region or community size.

An IDC Canada study published last month predicts government agencies will increasingly turn to P3 to deal with social, economic and demographic challenges in the delivery of public services.

In fact IDC estimates federal P3 projects will double in the next four years – growing from Can$1 billion in 2004 to more than $2 billion in 2008. In the same period, the study says, “provincial government projects will nearly double rising to $3 billion,” while municipal government spending will experience the most spectacular growth – from $660 million to nearly $1.8 billion.

The IDC study titled How to make public private partnerships successful in the Canadian government sector describes how government agencies can harness private sector alliances to enhance the level service they provide to the Canadian public.

“Governments will continue buying basic products the traditional way, but as they continue to modernize, agencies will need more compelling tools to carry out long-term strategic transformations,” said Massimiliano Claps, a senior research analyst at IDC.

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