Tuesday, November 21, 2006

Does 'public accountability' rule out win-win negotiations?

How come Arsenal can build a lovely stadium for £357m, have it ready on-time and on-budget (as far as I know) within a fairly short period of time, but the FA can't even guarantee that the 2007 FA Cup Final will be played at the new Wembley Stadium - nearly seven years after the (now) £757m project was commenced?

Is this because....

  1. No-one really beleives the FA when they say that they can't bail a project out - after all, they will never go bust. So suppliers will always take the wee-wee out of clients that have some kind of public status
  2. Businesses are a just lot better at managing projects such as this than public / quasi public bodies. Full. Stop.
  3. Public bodies are subject to a standard of accountability that stops them from negotiating win-win contracts.

Are there any other common explanations that I've missed here? And is no 3 (above) a common explanation?

I ask this, because it strikes me as a very credible one that is rarely discussed. Tim Worstall is usually very entertaining on the subject of public-sector incompetence, but I've not seen him discuss the win-win issue before. Maybe I missed it?


Ivan said...

A bit of all of the above. But basically Arsenal are a business and understand the bottom line whereas the FA is a complex set of overlapping fiefdoms in blazers. I rest my case.

Tim Worstall said...

As far as I'm aware there's only been one public sector infrastructure job that came in on time and under budget. Polaris. Everything else has run late and gone over.

(I'm open to correction of course).

Quite why this is so I'm not sure. I doubt very much that it's something to do with public accountability rules. Companies tend to have more transparent accounts than do Government departments after all.

The usual explanation proffered is that public bodies keep trying to change the contract as it is being executed: this obviously raises costs. They also have a temptation to micromanage.

One reason I'm told that Polaris worked (may father was part of the process) was that they insisted, right at the start, that whatever the plans and designs were, they would be fixed at the start and no change was possible.

Tim Almond said...

It's about how the profit incentive get replaced by the political incentive.

The people running quangos don't have to be good at running things for the public. The public are not their concern. Their masters are politicians. Partly, this means that they have to deliver a service to customers. But it also means that they have to be able to perform well infront of a parliamentary committee, interview well in front of James Naughtie and to tick the boxes of a number of busybody groups. And of course, are constantly subject to the political whims of government driven by the press.

Take the dome. Paid upfront. No profit motive. The content was a mishmash of edutainment and busybody box-ticking. They aimed to achieve certain numbers, but the only way this was achieved was by giving away tickets, so a minister could go on Today and tell Humphries that they were getting good numbers.

If Tussauds had run it, they'd have made it get good numbers. Not by distorting the numbers, but by altering the service to improve the numbers to make it popular with the public. It would have been driven by that. If the guy running it hadn't achieved it, they'd have looked at why. And if they realised it was a really terrible idea, they'd have shut the thing down, sold it off and learnt their lesson.