The Case for Change: Transforming Manitoba Housing

PUBLIC SECTOR

The Case for Change: Transforming Manitoba Housing FINAL REPORT

October 2007

OPERATIONS IMPROVEMENT

Disclaimer

This report is made by KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent firms affiliated with KPMG International, a Swiss cooperative, and is in all respects subject to the negotiation, agreement, and signing of a specific engagement letter or contract. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. © 2007 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. All rights reserved. Printed in Canada. This report was prepared for and is intended solely for the use of the Manitoba Housing Authority and may not be edited, distributed, published, made available or relied upon by any other person without KPMG’s express written permission.

EXECUTIVE SUMMARY ...................................................................................1 1.0 INTRODUCTION: DEFINING THE BUSINESS CASE....................................1

1.1 Introduction to the Operational Review...........................................1 1.2 Objective of the Business Case ........................................................1 1.3 Analytical Framework......................................................................2 1.4 Report Outline..................................................................................4 1.5 Report Limitations............................................................................4

2.0 THE OPERATIONAL REVIEW: A CASE FOR CHANGE...............................4 2.1 MHRC/MHA Background ................................................................4 2.2 Operational Review..........................................................................4 2.3 Current State Performance: A Balanced Scorecard Approach........6 2.4 Current State Risk Assessment .........................................................6 2.5 The Case for Change........................................................................8

3.0 RENEWAL OF THE MANITOBA HOUSING CORPORATE STRATEGY ..........8 3.1 Defining a Renewed Housing Vision, Mission, and Values .............8

4.0 DEFINING THE FUTURE STATE: RECOMMENDED CHANGES FOR MANITOBA HOUSING ...........................................................................................9

4.1 Governance and Organization.........................................................9 4.2 Supply Chain Management ............................................................13 4.3 Capital Asset Management ............................................................14 4.4 Summary Business Case Assessment..............................................15

5.0 MANITOBA HOUSING TRANSITION STRATEGY.....................................16 5.1 Importance of Change Management ..............................................16 5.2 Recommended Change Management Strategy ...............................17 5.3 Implementation Schedule ...............................................................19 5.4 Risk Management Plan ..................................................................20

Table of Contents

The Case for Change: Transforming Manitoba Housing October 2007 TOC-2

1.0 INTRODUCTION: DEFINING THE BUSINESS CASE..................23 1.1 INTRODUCTION TO THE OPERATIONAL REVIEW...................................23 1.2 OBJECTIVE OF THE BUSINESS CASE .....................................................25 1.3 ANALYTICAL FRAMEWORK .................................................................26 1.4 REPORT OUTLINE ................................................................................29 1.5 REPORT LIMITATIONS..........................................................................29

2.0 THE OPERATIONAL REVIEW: A CASE FOR CHANGE............31 2.1 MHRC/MHA BACKGROUND ..............................................................31 2.2 OPERATIONAL REVIEW........................................................................33

2.2.1 Objectives and Approach ...............................................................33 2.2.2 Preliminary Themes for Change ....................................................34

2.3 CURRENT STATE PERFORMANCE: A BALANCED SCORECARD APPROACH .........................................................................................................42 2.4 CURRENT STATE RISK ASSESSMENT....................................................50 2.5 THE CASE FOR CHANGE.......................................................................52

3.0 RENEWAL OF THE MANITOBA HOUSING CORPORATE STRATEGY .........................................................................................................54

3.1 DEFINING A RENEWED HOUSING VISION, MISSION, AND VALUES.......54 3.2 HOUSING OPERATIONAL POLICIES.......................................................56

4.0 DEFINING THE FUTURE STATE: RECOMMENDED CHANGES FOR MANITOBA HOUSING............................................................................60

4.1 GOVERNANCE AND ORGANIZATION.....................................................64 4.1.1 Governance: Current State Assessment .........................................64

4.2 SUPPLY CHAIN MANAGEMENT ............................................................73 4.2.1 Supply Chain Management: Current State Assessment .................73 4.2.2 Supply Chain Management: Future State Recommendation..........80 4.2.2.1 Quick-Wins................................................................................80

4.3 CAPITAL ASSET MANAGEMENT...........................................................86 4.3.1 Modern Asset Management Frameworks.......................................87 4.3.2 Capital Asset Management: Current State Analysis ......................89 4.3.3 Capital Asset Management: Future State Recommendations ......100

4.4 SUMMARY BUSINESS CASE ASSESSMENT..........................................103 5.0 MANITOBA HOUSING TRANSITION STRATEGY....................105

5.1 IMPORTANCE OF CHANGE MANAGEMENT .........................................105 5.2 RECOMMENDED CHANGE MANAGEMENT STRATEGY ........................106 5.3 IMPLEMENTATION SCHEDULE............................................................108 5.4 RISK MANAGEMENT PLAN ................................................................109

APPENDICES....................................................................................................111 A. Interview Guide

B. Ministerial Briefing


C. Comparative Jurisdiction Analysis: Vision, Mission and Values of Housing Organizations

D. Governance Overview

E. Comparative Jurisdictional Analysis: Organizational Structures

F. RACI Charts

G. Proposed Organizational Structure

H. Executive Director Job Descriptions

I. Financial Analysis of the HR Transition

J. Supply Chain Management Research

K. Current State Spend Analysis

L. Procurement Lead Position Description

M. Supply Chain Management Recommendations to Challenges

N. Capital Asset Management Implementation Plan


The Case for Change: Transforming Manitoba Housing October 2007 1

Executive Summary 1.0 Introduction: Defining the Business Case

1.1 Introduction to the Operational Review

The Business Case report provides a comprehensive plan for transformation of provincially managed and funded public housing and associated operations in Manitoba. The Business Case is based on an Operational Review conducted in the period December 2006 to July 2007, representing detailed assessment of opportunities for change in three core areas of operation: governance and organization, supply chain management and capital asset management.

The Operational Review comprised two distinct stages: a current state analysis that assessed opportunities and established priorities for service and organizational improvements for MHRC/MHA, and a future state analysis that developed a set of recommendations for organizational and management renewal of Manitoba Housing. As part of the second stage, KPMG assisted the MHRC/MHA in developing an action plan and in undertaking preliminary steps to implement the Review’s recommendations.

1.2 Objective of the Business Case

The Business Case is offered as a basis for internal and external decision-makers to approve the recommended future state of Manitoba Housing. The Business Case provides justification for changes to three core dimensions of the operational framework of MHRC and MHA: the organizational structure, supply chain management strategy, and capital asset management strategy. In addition, assessment of alternative governance structures is presented. A transition plan for the Business Case is also presented.

The Business Case is framed as a decision-making document. Its primary objective is to facilitate understanding of current overall performance, and to identify and recommend opportunities for change that are appropriate, feasible, and manageable. Recommendations are made on the basis of their likelihood to improve overall performance of Manitoba Housing. The Business Case reflects a strong desire of senior leadership of MHRC/MHA and FSH to enhance public service delivery, efficiency, accountability, and risk management, with the additional strong expectation of improved organizational culture.

It is important to note that while the Business Case recommends changes to the current organizational structure of MHRC/MHA and management of supply chain and capital asset frameworks, considerable attention and effort will need to be paid to implementing recommendations. For this reason a Project Management Office is also recommended to develop the specific details of the implementation, and to manage the transformation over the coming months.


1.3 Analytical Framework

The Business Case rests on an analytical framework comprising a number of dimensions, which when considered together, provide a qualitative and/or quantitative assessment of the expected impact of recommended changes. The analytical framework focuses on helping to ensure that recommendations enhance Service Performance, Organizational Management, and Financial Impact, and is summarized in Table I.


Table I – Business Case Analytical Framework Core

Dimension Sub-Dimension Measurement

Enables Vision, Mission and Values. Vision, mission and values are defined, communicated and understood clearly throughout the organization. Vision, mission and values are translated clearly into priorities and objectives at a working/budget level. All management and staff exhibit the vision, mission and values of the organization through their daily actions.

Documented approval of vision, mission and values; documented communication plans; assessment of management and staff behaviours over time.

Impact on Client Service. Documented approval of vision, mission and values; documented communication plans; assessment of management and staff behaviours over time.

Client outcomes analysis; periodic client satisfaction surveys.

Consistency with Government Policy. Degree to which proposed transformation reflects and supports the delivery of government policy. Application of government policy should be achieved through conscious, demonstrable structures and/or processes, including through policy- and program-specific memoranda of understanding/service level agreements.

Organizational analysis; process analysis; analysis of service level agreements or MOUs; periodic policy/program evaluations.

Service Performance

Impact on Broader Community Participation. Degree to which transformation affects ability of the organization to connect with its community of stakeholders. This connection is facilitated by communication, both outward and inward. Similarly, impact is measured as outward impact (i.e., effect on the community), and inward impact (i.e., community effect on the organization).

Organizational analysis; process analysis; communication planning; periodic policy/program evaluations; periodic stakeholder surveys.

Enhanced Financial Management and Controls. Governance, organization and business processes are designed to enhance the ability to institute appropriate internal controls and comptrollership practices.

Controls are documented and communicated to management and staff. Controls and behaviours satisfy periodic internal and/or external audit procedures.

Time to Realization of Full Benefits. Length of time to achieve the full ‘to be’ organization and its associated benefits. Expected time, as determined through detailed implementation planning.

Impact on Risk Management. Degree to which proposed transformation affects the organization’s ability to identify, measure, and manage risks. Degree to which new risks are introduced or existing risks are mitigated.

Documented enterprise risk management framework.

Ease of Implementation. Measure of the likelihood of achieving transformation objectives – effectively a measure of the ‘probability of success’.

Qualitative assessment of the probability that objectives will be met – based primarily on senior management judgment.

Avoidance of Negative Public Relations. On-going level of public, media and political acceptability achieved by the transformation.

Media analysis; number of ministerial inquiries; periodic stakeholder surveys.

Consistency with HR Policies. Degree to which proposed transformation is consistent with existing HR policies, and/or the degree to which policy change is required.

HR policy analysis.

Impact on Managerial Autonomy. Degree to which Housing controls decisions over all managerial decisions, including administration, budget levels, policy direction, financial management, staffing, reporting, organizational design, and planning.

Assignment of roles and responsibilities; level and autonomy of decision-making authority.

Impact on Staff. Degree to which proposed transformation will affect staff work load, morale, and organizational culture, both during and after the transformation.

HR policy analysis; work load analysis; periodic culture/staff satisfaction surveys; pre- and post-transformation compensation analysis.

Span of Control. Number and level of direct reports, accounting for business and management processes. Span of control is measured at multiple levels of the organization (e.g., all managerial and supervisory levels).

Organizational and business process analysis.

Degree of Change. Level to which the organization must change – level of disruption. Captures all relevant management and staff positions and associated work activities. Degree of change is related to the incremental effort required to affect the change itself, but is not a measure of the activity levels of the ‘to be’ organization.

Time and level-of-effort measures of the change increment; comparison/difference of business practices in the ‘as is’ and ‘to be’ organizations.

Clear Lines of Accountability. Degree to which proposed transformation will facilitate the assignment of clear lines of accountability, with corresponding and requisite levels of control. Lines of accountability are both structural and procedural, and are supported by organizational and individual performance agreements.

Organizational analysis; process analysis; analysis of service level agreements; individual performance management analysis.

Requirement for new Skills/Competencies. Skills/competencies required to achieve expected performance levels for ‘to be’ organization. Relates to training and development requirements.

Work load and organizational analysis; labour market analysis; position descriptions.

Integration with other Departmental Programs. Degree to which transformed organization allows for, or is driven by, other departmental programs (e.g., Integrated Service Delivery). Integration can be identified as a clear objective or priority that is consistent with organizational mission, vision and values. Integration should be on the basis of service level agreements or memoranda of understanding.


Consistency with Modern Management Principles. Organizational analysis; process analysis; analysis of service level agreements or MOUs; periodic policy/program evaluations.

Periodic organizational culture surveys; management reviews; process analysis; communication plans.

Impact on Quality of Housing Stock. Degree to which proposed transformation affects the quality and value of the housing stock on a life-cycle basis. The use-value of the housing stock is important for support to client service.

Technical assessment of the assets (e.g., building condition reports; inspections); financial assessment of the assets; process analysis.

Organizational Management

Impact on Organizational Efficiency. Level of efficiency achieved by the transformation. Efficiency is conceived of in a broad sense as the balance between resources allocated per level of outcome achieved, and can be measured both internally to the organization, and externally through service levels.

Organizational analysis; financial analysis; value-for-money assessment; policy/program evaluation.

Costs/Savings. Financial impact of transformation as measured by one-time, on-going and transition costs/savings. Financial analysis. Financial Impact Impact on Staffing Levels. Staffing levels per organization/business process design. Work load and organizational analysis.


1.4 Report Outline

The Business Case report is presented in five (5) sections: 1.0 Introduction: Defining the Business Case; 2.0 The Operational Review: A Case for Change; 3.0 Renewal of the Manitoba Housing Corporate Strategy; 4.0 Defining the Future State: Recommended Changes for Manitoba Housing; and 5.0 Manitoba Housing Transition Strategy.

1.5 Report Limitations

The Business Case is primarily an assessment of change opportunities for Manitoba Housing. By project mandate, a detailed evaluation of historical organizational performance has not been conducted. However, in order to develop recommendations for change, an analysis and risk assessment of current operational practices was necessary.

The recommendations offered in the Business Case reflect the judgment of those people most significantly involved, including senior MHRC/MHA managers, and KPMG advisors. Judgments reflect a degree of ‘point-in-time’ analysis, and others may have different opinions. And while care and attention has been paid to presenting appropriate, feasible, and manageable recommendations, effort beyond the scope and control of the Business Case project will affect the ultimate outcome of recommendations offered by it.

2.0 The Operational Review: A Case for Change

2.1 MHRC/MHA Background

The Manitoba Housing and Renewal Corporation (MHRC) is a crown corporation created by statute (the Housing and Renewal Corporation Act) in 1967. The MHRC operates pursuant to the Act and is governed by a Board of Directors. The Board of Directors acts under the provisions of the Act and under policy direction as set forth by Cabinet and Treasury Board. A description of the Act’s objectives and the MHRC’s mandate are outlined in the report.

2.2 Operational Review

In June 2006, the Board of Directors of MHRC authorized the Chief Executive Officer (also the Assistant Deputy Minister of Housing) of the MHRC to launch an RFP process to engage the services of an independent professional consulting firm to help conduct the Operational Review of the MHA. The Review was looking to achieve a number of objectives, including assessing existing MHA management practices and systems, and assessing housing operations including vacancy management, physical asset tracking, maintenance and capital improvement programs, and other related policies and processes. KPMG LLP was chosen as the successful proponent of the competitive proposal process.

“The objective of this business case is to facilitate understanding of current overall performance, and to identify and recommend opportunities for change that are appropriate, feasible, and manageable. “

“The objective of this business case is to facilitate understanding of current overall performance, and to identify and recommend opportunities for change that are appropriate, feasible, and manageable. “


The Operational Review was conducted in two stages during the period December 2006 to July 2007. During Stage 1, which was completed in March 2007, KPMG gathered information through interviews, workshops, presentations, and a review of background documents. Site visits were made to offices in Brandon, Portage La Prairie, Dauphin, Thompson, and Leaf Rapids. A confidential virtual suggestions box was open to all MHRC/MHA staff. The results of the first stage of the review revealed eight (8) preliminary themes for change, summarized in Table II.

Table II – Stage 1 Operational Review: Preliminary Themes for Change

Theme Potential Areas for Change and/or Enhancement

Housing Strategy Long-Term Housing Strategy, Inter-Organizational Agreements, Competition with other Housing Programs, Social Housing Agreement Funding Deferral

Capital Asset Management

Preventative Maintenance Program, Asset Management System, Five Year Asset Management Plan, Inspection Process and Policies, Defining ‘Repair’ and ‘Capital’, Overall Funding

Board/

Organizational Structure

Board Structure and Membership, Organizational Structure, Rural/Maintenance Reporting Relationships, Family Services and Housing Relationship, Communication, Organizational Performance Management

HR Strategy Multiple Collective Bargaining Agreements, Vacancies and Acting Positions, Aging Workforce, Assignment of HR Resources

IT Services IT Application Support, Simplification and Automation; TMS/MMS Functionality, Family Services and Housing System Compatibility, e-Services

Client Services Ministerial Inquiries, Tenant Appeals Process, Tenant Intake Application Process, Make-Ready Process

Supply Chain Management

Supply Chain Management, Equipment Standardization

Enterprise Risk Management

Enterprise Risk Management

The eight (8) preliminary themes for change provided a basis for judging the current state performance of Manitoba Housing, while at the same time identifying new directions for exploring organizational renewal. To facilitate subsequent analysis, these eight themes were summarized into three (3) core dimensions:

Governance and Organization – covering dimensions of Housing Strategy, Board/Organizational Structure, HR Strategy, IT Services, Client Services, and Enterprise Risk Management

Supply Chain Management – covering dimensions of Supply Chain Management, and IT Services

Capital Asset Management – covering dimensions of Capital Asset Management, IT Services and Client Services


During Stage 2 of the Operational Review, KPMG developed a set of detailed recommendations for improvements related to the three core dimensions identified in Stage 1. In addition, KPMG assisted MHRC/MHA staff in preparing business case analyses related to many of the recommended changes and in instituting some initial transformation processes to achieve “early wins”.

2.3 Current State Performance: A Balanced Scorecard Approach

A key aspect of the Operational Review was to develop a balanced scorecard approach to performance management, as a means to assist in the on-going assessment of Manitoba Housing performance. A framework was developed in cooperation with senior management that captures five (5) key performance dimensions scored on a weighted five-point scale. The following table outlines each dimension, and its core objective.

Table III – Balanced Scorecard Approach

Dimension Core Objective

Adequacy of Housing Stock

To manage appropriately the value of housing stock assets for taxpayers and clients

Adequacy of Client Service

To provide appropriate housing service to Manitobans in need, and to meet associated client service objectives

Resource Allocation Effective and efficient administrative management and policy/program delivery

Good Governance and Public Accountability

To deliver policies and programs in an accountable manner, governed by publicly acceptable mechanisms that represent shareholder and taxpayer interests

People Achieve status and recognition as an "Employer of Choice"

A workshop was held for senior MHRC/MHA managers to establish a current state assessment of Manitoba Housing against the balanced scorecard. This assessment confirmed the requirement for organizational change.

2.4 Current State Risk Assessment

In addition to assessment by the Balanced Scorecard, a high-level risk assessment was also conducted of the current state. This risk assessment was applied for the three core dimensions of change characterized in the Business Case, and mitigation strategies were outlined. These strategies were approved by senior departmental management, and informed much of the work presented in the Business Case. Table IV summarizes.


Table IV – Current State Risk Assessment

Core Dimension

Key Risks Mitigation Strategies

Governance and Organization

• Staff indicate current governance structure does not provide desired level of strategic direction

• Two organizations with overlapping mandates and duplication of tasks and efforts, exhibiting managerial tensions, lack of clarity in mission and responsibilities

• Multiple collective agreements resulting in inconsistent salary and classification levels, low staff morale, and direct costs for management

• Absence of clear, long-term housing strategy (where this reflects government-wide housing policy, as opposed to annual business plans or strategies)

• No framework for organizational performance management across housing

• Develop and confirm Manitoba Housing Mission, Vision and Values

• Achieve higher level of performance for MHA and MHRC through organizational re-design

• Establish a new governance structure that strengthens the role of the Board and its membership

• Establish an HR Strategy that harmonizes collective agreements at very little cost

• Establish a 10 year Housing Strategy for Manitoba, including long-range goals.


• Purchasing is de-centralized, and is conducted independently by each Maintenance Coordinator

• A lack of policy for standardization of equipment prevents the development of service agreements

• A lack of service agreements and central procurement result in lost economies

• Major impediment to cost savings and quality service delivery in the short term

• Conduct full spend analysis to identify short-term productivity enhancements and cost savings

• Implement program for standardization of equipment and supplies, and the development of standard service agreements

• Full procurement policy review including benchmarking analysis

• Complete procurement process and technology review and re-design


• Lack of a preventative maintenance program in line with leading practice limits the useful life of capital assets

• 5 year asset management lacks data integrity, and has no method for prioritizing capital budgeting and expenditures

• Lack of capacity (systems and resources) to deliver a robust capital program in line with leading practice

• Poor inspection and maintenance processes contribute to the deterioration of housing stock

• Weakness in capacity to make necessary capital investments

• Complete inventory and analysis of existing housing stock and capital program for coming fiscal year

• Implement renewed procurement model in the coming fiscal year

• Conduct multi-year capital management process re-design to improve asset management

• Implement new programs related to preventative maintenance


2.5 The Case for Change

As a result of the preliminary themes for change identified in Stage 1 of the Operational Review, Stage 2 focused on three core dimensions: Governance and Organization, Supply Chain Management, and Capital Asset Management. These core dimensions form the basis of the Manitoba Housing renewal, proposed in the Business Case.

Focusing on three core dimensions of change allows for consolidation of recommendations stemming from the Review. The overall case for change reflects the historical context from which Manitoba Housing is emerging, and the clear opportunities for enhancement to future performance.

The output of the various streams of analysis is presented in the form of key recommendations for change at Manitoba Housing, which reflect opportunities to improve service performance, organizational management and financial impact of housing operations. They are offered both as a reflection of current challenges faced by the organization and, much more importantly, as the basis for a new future state for Manitoba Housing.

3.0 Renewal of the Manitoba Housing Corporate Strategy

At the time the Operational Review got underway in late 2006 neither MHRC nor MHA had a corporate strategy that could be articulated as a well-defined vision, mission and set of values. In response, and to ensure that all recommended changes to MHRC/MHA are tied to a common framework, a new corporate strategy was developed. This strategy reflects a renewed vision, mission and set of values.

3.1 Defining a Renewed Housing Vision, Mission, and Values

Vision, mission, and values play an important role in defining business decisions for any organization. Not only do they act as guiding principles that drive performance, they have the ability to identify a common goal for a variety of stakeholders, including staff and management. KPMG facilitated a workshop of key MHRC/MHA staff and managers throughout the organization in which participants were asked open ended questions as a basis for defining a new vision, mission and set of values, outlined in Table V. It is hoped that the development and implementation of the vision, mission, and values will provide a strong level of guidance to the staff and management throughout Manitoba Housing.

“The recommendations are offered both as a reflection of current challenges faced by the organization and, much more importantly, as the basis for a new future state for Manitoba Housing. “

“The recommendations are offered both as a reflection of current challenges faced by the organization and, much more importantly, as the basis for a new future state for Manitoba Housing. “


Table V – Renewed Vision, Mission, and Values

Manitoba Housing’s Renewed Vision, Mission, and Values

Vision All Manitobans live in healthy communities.

Mission The Mission of Manitoba Housing is to provide Manitobans access to safe, healthy, and affordable housing by:

Ensuring an adequate supply of housing stock in Manitoba;

Ensuring the affordability of, and accessibility to, adequate housing for Manitobans, particularly those of low and moderate income or those with specialized needs;

Maintaining and improving the condition of existing housing stock;

Stimulating and influencing the activities of the housing market to the benefit of Manitobans as a whole; and

Creating partnerships across governments and communities to provide quality programs and services.

Values Respect, Community, Leadership, Collaboration, Accountability, Responsiveness, and Transparency

4.0 Defining the Future State: Recommended Changes for Manitoba Housing

4.1 Governance and Organization

There are fifteen (15) recommendations related to Governance and Organization. The recommended organizational structure is designed to address challenges of the existing structure, and is based on several workshops held with the management team at both MHA and MHRC to develop a consolidated entity (Figure I).

This structure places emphasis on the development of assets and strategic initiatives and, in concert with design of appropriate business process improvements and management frameworks, will address current issues such as low employee morale stemming from multiple collective agreements, duplication of effort between MHRC and MHA, separation of closely linked activities under different senior executives, and the budget allocation for integral functions. The recommended structure will also facilitate higher levels of performance in supply chain management (e.g., appointment of a Director of Procurement), and establish a new organization for client services based on the principles of modern asset and property management. By helping to design the proposed structure, the senior management team ensured all functions and activities related to client services, such as third party agreements, asset management and property services are closely aligned, while all program design and development activities are also consolidated,

“The recommended organizational structure is designed to address challenges of the existing structure, and is based on several workshops held with the management team at both MHA and MHRC to develop a consolidated entity.”

“The recommended organizational structure is designed to address challenges of the existing structure, and is based on several workshops held with the management team at both MHA and MHRC to develop a consolidated entity.”


allowing for the appropriate stakeholder involvement. The recommendations for Governance and Organization are outlined in Table VII.

The issue of governance structure is addressed through an examination of the strengths and weaknesses of three options:

As-Is – i.e., current structure with Board members comprising the Deputy Minister and Assistant Deputy Ministers of the Department of Family Services and Housing;

Departmental Organization – i.e., direct policy and management accountability within the Department of Family Services and Housing; and

Corporate Board – i.e., Board comprising members appointed from outside the current organization.


Figure I – Recommended Organizational Structure


Table VI – Governance and Organization Recommendations

Recommendation Number

Description

1 Government needs to decide its preferred Governance Structure reflecting all recommendations of the Housing transformation.

2 Four (4) Executive Directors reporting directly to the ADM Housing: Client Services, Business Services, Strategic Initiatives, and Development.

3 Reporting directly to the Executive Director Client Services will be the Directors of Agreement Administration, Asset Management, and Property Services

4 The Director, Agreement Administration will be responsible for all housing agreements with 3rd party providers, homeowner and community program groups, shelters, co-ops, rural and northern housing, etc.

5 The Director, Asset Management will be responsible for the project management of large building projects and technical services. This function is discussed further in the Capital Asset Management section of this report.

6 The Director, Property Services will be responsible for all aspects related to property management, including lease management and maintenance.

7 The creation of Director, Procurement position falling under the ED Business Services, as discussed in the Supply Chain Management recommendations.

8 The Executive Director, Business Services will have responsibilities for Enterprise Risk Management and Quality Assurance, Security and Loss Prevention, and Health and Safety, as well as two direct reports focusing on Controllership, and the aforementioned Procurement.

9 The Executive Director, Business Services will also own the relationship with departmental shared service providers, including legal, HR, and IT.

10 Once a program has been developed, sufficiently tested and is mature, the responsibility for the program will shift from Strategic Initiatives to Client Services for implementation.

11 The future framework for an Aboriginal Directorate in partnership with Aboriginal Affairs would be borne out of Strategic Initiatives.

12 The Executive Director, Development will have the responsibility for land development, as well as special projects such as new builds, land disposal and acquisition.

13 Move all MHA and MHRC staff to a single collective agreement structure, of which the potential net financial benefit of collective agreement harmonization could be as high as $216,000 per year, on a total salary and benefit basis.

14 Create a Transformation/Project Management Office to fulfill project management responsibilities throughout the transformation period, empowered by and reporting directly to the ADM.

15 Creation of an office of Community Liaison to connect with external stakeholders, reporting directly the Assistant Deputy Minister.


4.2 Supply Chain Management

There are ten supply chain management recommendations presented, grouped into six (6) Process and Organization Recommendations, and four (4) Strategic Sourcing Recommendations. Quick-win opportunities have also been identified and listed.

Table VII – Supply Chain Management Recommendations


Description

1 Change the current Maintenance Coordinator financial delegation of authority limit for un-tendered purchases from $700 to $1000.

2 Increase the lifecycle for new standing offers from the current standard of 1 year plus 1 optional to terms of 3 – 5 years.

3 Develop a communication plan to create improved communications and coordination between programs.

4 Reduce change orders on future contracts by conducting site meetings with the contractors to go through the scope of projects.

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5 Establish a standard for tenant suites incorporating guidelines for aesthetics (e.g., use of multi-coloured tiles, make ready painting, etc.).

6 Manitoba Housing should establish a role for a senior procurement officer who can provide professional procurement direction within housing.

7 Manitoba Housing should clarify the roles and responsibilities for key procurement processes by identifying the main steps in the procurement process and clearly determining who is responsible for each task within the processes.

8 Manitoba should develop and deliver a training plan and materials for staff about their role and responsibilities in the procurement process.

9 Manitoba Housing should establish a procurement planning process that combines both capital and maintenance procurement planning.

10 Manitoba Housing should enhance the tendering process by expanding the selection criteria beyond a primary focus on lowest bid. P

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11 Manitoba Housing should develop and implement a measurement process for supplier performance.

12 Manitoba Housing should competitively tender selected commodities in each of the following spend areas; Contractors, Building, Services, Professional Services, Supplies & Appliances.

13 Establish common standards and specifications that apply across the organization for selected commodities

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14 Establish agreements with selected hardware/ building materials suppliers with geographic reach across the province that can provide the broadest range of currently used materials – there may need to have multiple agreements due to geographic coverage.



Description

15 There are a number of existing agreements in place and under development, many with specific regional coverage. There is an opportunity to renegotiate to expand the use of standing agreements to a broader set of commodities.

4.3 Capital Asset Management

There are a total of twenty-two (22) recommendations on Capital Asset Management presented, grouped into the major components of the asset management framework.

Table VIII – Capital Asset Management Recommendations

Recommendation

Number Description

1 Convert data from the 'Housing Project Listing' Excel spreadsheet into Access database for easier query, multi-user read access and for eventual export into a more robust enterprise system.

2 Reconcile building information in the Property Inventory (PI) system against the Project Listing to ensure all MHRC owned housing projects as well as Private Non-Profit (PNP) housing projects are contained in the system so they can be referenced to further Building Condition Assessments.

3 In order to calculate the Facility Condition Index, an indicator of state of repairs of a building, MHRC/MHA should obtain the latest property assessed value and develop a process to maintain this information up to date in a centralized system (e.g., PI).

4 Continue to accumulate gross square footage information on each building within a housing project in order to build up this data for cost benchmarking purposes.

5 As part of the Building Condition Assessment (BCA) process, continue to identify major building equipment, structures and systems to build up the inventory of building assets.

6 Manitoba Housing should develop an Inspection or Building Condition Assessment (BCA) policy describing the set cycles for building review, skills & experience profile, inspection best practices and procedures, checklists and definitions (e.g., capital vs. operating), and quality assurance and peer review procedures.

7 Identify building inspection cycle in the PI database or other similar building information database.

8 Provide a copy of the BCA policy to Sponsor-managed and PNP managed housing projects to encourage adoption of the policy.

9 Issue building level condition assessment scores (excellent, good, fair, and poor) in addition to major equipment class level.

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10 Consolidate BCA inspection activities, practices, templates and skills from MHA's Maintenance Coordinators and MHRC's Capital Planning branch into a broader inspector pool to leverage different area of expertise, area of coverage and cross-training opportunities.


Recommendation

Number Description

11 Employ key indicators such as Facility Condition Index. O

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12 Add building type or other factors (e.g. building system ranking - risk adjusted ranking among various building components in order to differentiate critical items between sidewalk and HVAC) in the project scoring process to help further refine the list of critical projects in order to meet funding requirements.

13 In order to properly match issues identified during BCA with appropriate funding sources, Separate these issues into three categories: capital projects qualified under the Loan Act, major repair & improvement projects under the Planned Repair Program, and operations.

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14 Develop an internal guideline with examples on various items classified under the Loan Act.

15 Manitoba Housing should use RACI (Responsible, Actionable, Consulted and Informed) charts to identify significant stakeholders and their involvement in the project planning, funding and delivery process.

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16 As discussed under Identify Issues/ Needs in the Current State section, MHA's project delivery team has been able to deliver approximately $8 - $12million worth of projects each year based on current staffing levels and complexity level of projects. An alternate strategy is to consider a different resource sourcing strategy, such as partnering with a project management company to handle some of the volume of work

17 Develop BCA database to capture, maintain and report on assessment data by year.

18 Develop an asset management database or acquiring an off-the-shelf software tool to house housing project data, major equipment data and building systems data.

19 Develop project tracking database to assign unique project numbers and to retain critical project information: scope, timing, alternatives, funding source and link projects to records tracked in the BCA database.

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20 Enhance/ replace existing Maintenance Management System (work order and PO system) to incorporate functionalities required for managing large projects (e.g. cross-reference to project number, holdbacks, building level chart of accounts, commitment capturing, etc.).

21 Adopt the peer review procedures at the MHRC Capital Planning branch to ensure consistency and adherence to the BCA policy manual.

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22 Monitor vendor/ contractor compliance during and after the project delivery process.

4.4 Summary Business Case Assessment

The recommendations offered in the Business Case are expected to lead to significant improvements in the managerial and performance outcomes of Manitoba Housing. From an analytical perspective, these improvements are captured in Table IX, and reflect the judgment of KPMG and the senior management of MHRC/MHA.


Table IX – Analytical Framework: Expected Outcomes

Measurement Core Dimension

Sub-Dimension Worse Same Better

Enables Vision, Mission and Values Impact on Client Service Consistency with Government Policy

Service Performance

Impact on Broader Community Participation Enhanced Financial Management and Controls Time to Realization of Full Benefits Impact on Risk Management Ease of Implementation Avoidance of Negative Public Relations Consistency with HR Policies Impact on Managerial Autonomy Impact on Staff Span of Control Clear Lines of Accountability Requirement for new Skills/Competencies Integration with other Departmental Programs Consistency with Modern Management Principles

Impact on Quality of Housing Stock


Impact on Organizational Efficiency Costs/Savings Financial

Impact Impact on Staffing Levels

5.0 Manitoba Housing Transition Strategy

5.1 Importance of Change Management

Establishing a formal change management program, especially during a multi-year, multiple initiative implementation, provides benefits integral to success. Key stakeholders are engaged in the implementation; they are mobilized and aligned with the transformation effort. One of the key pillars of a change management program will be to develop and execute a communication strategy. Managing change is an important integrator and enabler. Together with a rigorous project management discipline, the change management program for Manitoba Housing will channel resources towards successful implementation of the recommended initiatives.

“Manitoba Housing should monitor vendor/ contractor compliance during and after the project delivery process.“

“Manitoba Housing should monitor vendor/ contractor compliance during and after the project delivery process.“


5.2 Recommended Change Management Strategy

The recommended changes represent a high degree of change. Communication and participation are required to generate and operationalize commitment at all levels of Manitoba Housing to the recommended changes. In addition to strong individual leadership, key elements of the change management plan are summarized in Table X.


Table X – Key Elements of the Change Management Plan

Elements Objectives Risks Requirements

Project Management Office

Schedule Milestones

Performance Indicators

Regular monitoring and updates

Issue management

Budget and resource control

Project governance

Implementation

Timing

Budget / Resources

Authority

Resources

Commitment

Communication Plan

Stakeholder identification

Stakeholder engagement strategy

Tools / templates

Feedback

Cultural upheaval

Transparency

Implementation

Resources

Leadership Strategy

Define roles and responsibilities

Coaching sessions

Create Leadership engagement schedule

Tools / templates

Buy-in

Political commitment

Resources

Culture Assessment

Understand current and desired culture

Identify cultural change levers

Buy-in

Manage cultural risks

Unions

Resources

Survey Costs

Implementation Plan for each Work stream

Sequencing of actions

Resource allocations and responsibilities

Timing

Refine focus

Mobilize leaders

Engage people

Define culture

Barriers to implementation

Budget

Timing

Resources

Subject matter experts

Authority

Commitment

Monitoring Post implementation review

Track benefits realization

Revise the change Resources

Strategy

Resources Resources Commitment


5.3 Implementation Schedule

The first step in implementing the Business Case is to establish a Transformation/Project Management Office (PMO) under the direction of a well-qualified Project Manager. The PMO would house all activities related to the detailed development and roll-out of working-level implementation plans. The Project Manager would have executive responsibility for implementing the vision of senior leaders, and would establish all working protocols, KPIs, and project governance structures, and would be responsible for budget and resource control (including time and effort) for activities relating directly to implementing the Business Case.

The Business Case itself is expected to take eighteen-to-twenty-four (18-24) months to fully implement including monitoring (Figure II).

“The recommendations offered in the Business Case are expected to lead to significant improvements in the managerial and performance outcomes of Manitoba Housing.”

“The recommendations offered in the Business Case are expected to lead to significant improvements in the managerial and performance outcomes of Manitoba Housing.”


Figure II. Implementation Schedule

5.4 Risk Management Plan

As part of the transformation process, it is critical to note the importance of identifying potential risks and outcomes in order to proactively address the issues and ensure that the implementation timeline is minimally affected. Early identification and mitigation strategies addressing risks will aid in a successful implementation. As well, it is important to continually monitor and highlight risks as they become apparent during implementation. Table XI outlines the high-levels risks and potential mitigation strategies that need to be considered, if the recommendations offered in the Business Case are to achieve their intended effect.


Table XI – Overall Business Case Risk Management Plan

Risk Possible Mitigation Strategies

Political Commitment needs to be maintained over implementation timeline

Will require DM/ADM planning Communication Plan Strong involvement from the sponsor

Investment Significant resources and time required for successful implementation

Requires commitment over implementation time period through the Treasury Board submission by the Department of Family Services and Housing, and Treasury Board

Schedule Implementation timeline is met

Requires set up of Project Management Office to manage implementation

Requires cooperation between programs to develop timelines and activities

May require specialized skill set in key implementation areas

Communication Plan

HR Management Union and staff will be required to support the implementation

Communication Plan Work closely with unions early in process to gain

support for implementation Involve staff in development of new work

processes and activities Involve Treasury Board / Civil Service

Commission in process early

Labour Market May require new skill sets for executive, management and staff positions

Retain professional services firm to do executive search

Consider open recruitment process

Organizational Requires strong commitment from staff to meet timelines and implementation plans

Develop Workforce Transition Strategy Communication Plan Involve staff in development of new work

processes and activities



1.0 Introduction: Defining the Business Case The Business Case report provides a comprehensive plan for transformation of provincially managed and funded public housing and associated operations in Manitoba. The Business Case is based on an Operational Review conducted in the period December 2006 to July 2007, and detailed assessment of opportunities for change in three core areas of operation: governance and organization, supply chain management and capital asset management. This chapter of the report introduces the Operational Review, and defines its specific objectives and analytical framework.

1.1 Introduction to the Operational Review

The Operational Review of the Manitoba Housing Authority (MHA) was initiated in response to continued pressures to improve performance and account for outcomes, both of the internal management of the MHA, and the effectiveness of management in delivering public housing services. A number of factors led to the Review, including a change in senior leadership within the Department of Family Services and Housing (FSH), and changes to the joint leadership of the Manitoba Housing and Renewal Corporation (MHRC) and MHA. An opportunity for revitalization of public housing management in Manitoba was envisioned to capture the spirit of renewed leadership, the results of which are outlined in this Business Case report.

The Operational Review comprised two distinct stages.

Stage 1 – Current State Operational Review. The current state Review assessed opportunities and established priorities for service and organizational improvements for Manitoba Housing.1 The Review was structured on the basis of a formal Project Charter (Stage 1) developed and agreed jointly by the Province and KPMG LLP (KPMG). The current state Review covered the following tasks (detailed findings of which are presented in Chapter 2.2 below):

Review current operational practices of Manitoba public housing by major functions and processes

Review relationship between MHA and MHRC in the context of operational impact

Identify preliminary opportunities for service improvement at MHA and MHRC by major function and process

Identify preliminary opportunities for governance and organizational reform in Manitoba public housing

1 The terms ‘Manitoba Housing’ and ‘MHRC/MHA’ are used interchangeably unless otherwise noted.


Develop Balanced Scorecard factors to assess implications of opportunities on organizational structure, accountability, service delivery, financial performance, and risk management at a high level

Assess preliminary opportunities against Balanced Scorecard

Recommend opportunities for improvement, including high-level implementation plan

At the culmination of Stage 1, recommended opportunities for improvement were presented to the Minister and Deputy Minister. Approval was granted by senior departmental management specifically to develop recommendations along three dimensions: Governance and Organization, Supply Chain Management, and Capital Asset Management.

Stage 2 – Future State Operational Review. The future state Review developed a set of recommendations for organizational and management renewal of Manitoba public housing. The Review was structured on the basis of a formal Project Charter (Stage 2) developed and agreed jointly by the Province and KPMG. The future state Review covered the following tasks (detailed findings of which are presented in Chapters 3-5 below):

Develop transformation plans, business cases and implementation schedules for public housing renewal in three areas:

- Governance and Organization - Capital Asset Management - Supply Chain Management

Facilitate implementation of ‘early wins’ in each area as appropriate

Develop a more detailed Balanced Scorecard as a means to validate transformation strategies, and establish an on-going performance management framework

Prepare business case submissions to facilitate transformation as required

Prepare benefits realization and change management plans to achieve transformation

Final Report and Presentation to Manitoba public housing (i.e., Business Case Report)

As part of the second stage, KPMG assisted the MHRC/MHA in developing an action plan and in undertaking preliminary steps to implement the Review’s recommendations.


1.2 Objective of the Business Case

The Business Case is offered as a basis for internal and external decision-makers to approve the recommended future state of Manitoba Housing as outlined in this Report. The Business Case provides justification for changes to three core dimensions of the operational framework of MHRC and MHA: the organizational structure, supply chain management strategy, and capital asset management strategy. In addition, assessment of alternative governance structures is presented, although no specific recommendation is made in this regard, and a transition plan for the Business Case is presented.

The Business Case is framed as a decision-making document. Its primary objective is to facilitate understanding of current overall Manitoba public housing performance, to identify opportunities for change, and to recommend specific aspects of both organizational and managerial practice which, if changed, are likely to improve overall performance. The Business Case assesses the expected impact of change and identifies necessary investments in time and effort of management to realize the benefits of the future state, along both quantitative and qualitative dimensions.

The Business Case is a directional plan that establishes the case for change and intended future state for three dimensions of Manitoba public housing. It reflects the current capabilities and constraints of MHRC and MHA as judged by current management, looks externally for guides to leading practices in other jurisdictions and in the private sector, and recommends solutions that can be implemented with a high expectation of success. Indeed, the core objective of the Business Case is to offer recommendations that are:

Appropriate – i.e., recommendations respect the unique circumstances within which Manitoba public housing operates. Recommendations are designed to reflect external leading practices, but at the same time to establish ‘made in Manitoba’ choices whereby the current legislative framework, overall policy directions, and core operating mission of Manitoba Housing are maintained.

Feasible – i.e., recommendations can be implemented by Manitoba Housing, within broadly defined operating principles. These principles include no significant reductions or increases to current employment levels, increases in the expected quality of public service delivery, and increases in the efficiency and effectiveness of organizational operations and management.

Manageable – i.e., implementation of recommendations can be managed without significant upheaval, against well-established change management principles, and within acceptable timelines (assumed to be within 18-24 months of Business Case approval).


The Business Case has been developed by senior managers and key staff of the MHRC and MHA, with input and validation from senior departmental management. External facilitation and analysis was supplied by KPMG LLP, and the recommendations offered herein reflect this analysis, and are supported by MHRC/MHA leadership. The Business Case reflects a strong desire of this leadership to enhance public service delivery, efficiency, accountability, and risk management, with the additional strong expectation of improved organizational culture.

It is important to note that while the Business Case recommends changes to the current organizational structure of MHRC/MHA, and management of supply chain and capital asset frameworks, its presentation is necessary, but not sufficient to realize expected benefits. Considerable attention and effort will need to be paid to implementing recommendations, and specific details of the implementation will need to be developed. Change requires time and effort, and it is beyond the scope of the Business Case to offer anything but a preliminary implementation roadmap.

1.3 Analytical Framework

The confidence of MHRC/MHA leadership in the Business Case rests on the application of an analytical framework that conceives and measures the impact of recommendations along three dimensions:

Service Performance – i.e., effect on the outcomes of Manitoba public housing, including public services, relationships with stakeholders, and achievement of policy objectives.

Organizational Management – i.e., effect on operational efficiency and effectiveness, including accountability, implementation factors, and risk management.

Financial Impact – i.e., effect on resource levels, including staff, and operational costs.

The core dimensions of the analytical framework comprise a number of sub-dimensions, which when considered together, provide a qualitative and/or quantitative assessment of the expected impact of recommended changes. The Business Case reports impact as having ‘worse’, the ‘same’, or ‘better’ expected outcomes after implementation of the recommendations. Where possible, the backing analysis is quantified, and in all cases, reflects the professional judgment of senior MHRC/MHA management. Judgment is informed by supporting analysis including comparative jurisdictional analysis. The analytical framework is summarized in Table 1.


Table 1 — Business Case Analytical Framework Core

Dimension Sub-Dimension Measurement

Enables Vision, Mission and Values. Vision, mission and values are defined, communicated and understood clearly throughout the organization. Vision, mission and values are translated clearly into priorities and objectives at a working/budget level. All management and staff exhibit the vision, mission and values of the organization through their daily actions.

Documented approval of vision, mission and values; documented communication plans; assessment of management and staff behaviours over time.

Impact on Client Service. Documented approval of vision, mission and values; documented communication plans; assessment of management and staff behaviours over time.

Client outcomes analysis; periodic client satisfaction surveys.

Consistency with Government Policy. Degree to which proposed transformation reflects and supports the delivery of government policy. Application of government policy should be achieved through conscious, demonstrable structures and/or processes, including through policy- and program-specific memoranda of understanding/service level agreements.


Service Performance

Impact on Broader Community Participation. Degree to which transformation affects ability of the organization to connect with its community of stakeholders. This connection is facilitated by communication, both outward and inward. Similarly, impact is measured as outward impact (i.e., effect on the community), and inward impact (i.e., community effect on the organization).

Organizational analysis; process analysis; communication planning; periodic policy/program evaluations; periodic stakeholder surveys.

Enhanced Financial Management and Controls. Governance, organization and business processes are designed to enhance the ability to institute appropriate internal controls and comptrollership practices.

Controls are documented and communicated to management and staff. Controls and behaviours satisfy periodic internal and/or external audit procedures.

Time to Realization of Full Benefits. Length of time to achieve the full ‘to be’ organization and its associated benefits.

Expected time, as determined through detailed implementation planning.

Impact on Risk Management. Degree to which proposed transformation affects the organization’s ability to identify, measure, and manage risks. Degree to which new risks are introduced or existing risks are mitigated.

Documented enterprise risk management framework.

Ease of Implementation. Measure of the likelihood of achieving transformation objectives – effectively a measure of the ‘probability of success’.

Qualitative assessment of the probability that objectives will be met – based primarily on senior management judgment.

Avoidance of Negative Public Relations. On-going level of public, media and political acceptability achieved by the transformation.

Media analysis; number of ministerial inquiries; periodic stakeholder surveys.

Consistency with HR Policies. Degree to which proposed transformation is consistent with existing HR policies, and/or the degree to which policy change is required.

HR policy analysis.

Impact on Managerial Autonomy. Degree to which Housing controls decisions over all managerial decisions, including administration, budget levels, policy direction, financial management, staffing, reporting, organizational design, and planning.

Assignment of roles and responsibilities; level and autonomy of decision-making authority.

Impact on Staff. Degree to which proposed transformation will affect staff work load, morale, and organizational culture, both during and after the transformation.

HR policy analysis; work load analysis; periodic culture/staff satisfaction surveys; pre- and post-transformation compensation analysis.

Span of Control. Number and level of direct reports, accounting for business and management processes. Span of control is measured at multiple levels of the organization (e.g., all managerial and supervisory levels).

Organizational and business process analysis.


Degree of Change. Level to which the organization must change – level of disruption. Captures all relevant management and staff positions and associated work activities. Degree of

Time and level-of-effort measures of the change increment; comparison/difference of business


Core Dimension

Sub-Dimension Measurement

change is related to the incremental effort required to affect the change itself, but is not a measure of the activity levels of the ‘to be’ organization.

practices in the ‘as is’ and ‘to be’ organizations.

Clear Lines of Accountability. Degree to which proposed transformation will facilitate the assignment of clear lines of accountability, with corresponding and requisite levels of control. Lines of accountability are both structural and procedural, and are supported by organizational and individual performance agreements.

Organizational analysis; process analysis; analysis of service level agreements; individual performance management analysis.

Requirement for new Skills/Competencies. Skills/competencies required to achieve expected performance levels for ‘to be’ organization. Relates to training and development requirements.

Work load and organizational analysis; labour market analysis; position descriptions.

Integration with other Departmental Programs. Degree to which transformed organization allows for, or is driven by, other departmental programs (e.g., Integrated Service Delivery). Integration can be identified as a clear objective or priority that is consistent with organizational mission, vision and values. Integration should be on the basis of service level agreements or memoranda of understanding.


Consistency with Modern Management Principles. Organizational analysis; process analysis; analysis of service level agreements or MOUs; periodic policy/program evaluations.

Periodic organizational culture surveys; management reviews; process analysis; communication plans.

Impact on Quality of Housing Stock. Degree to which proposed transformation affects the quality and value of the housing stock on a life-cycle basis. The use-value of the housing stock is important for support to client service.

Technical assessment of the assets (e.g., building condition reports; inspections); financial assessment of the assets; process analysis.

Impact on Organizational Efficiency. Level of efficiency achieved by the transformation. Efficiency is conceived of in a broad sense as the balance between resources allocated per level of outcome achieved, and can be measured both internally to the organization, and externally through service levels.

Organizational analysis; financial analysis; value-for-money assessment; policy/program evaluation.

Costs/Savings. Financial impact of transformation as measured by one-time, on-going and transition costs/savings.

Financial analysis. Financial Impact

Impact on Staffing Levels. Staffing levels per organization/business process design. Work load and organizational analysis.


1.4 Report Outline

The Business Case report is presented in four (4) additional sections:

2.0 The Operational Review: A Case for Change – provides an overview of MHRC/MHA background, and presents results of the Operational Review and Status Quo Assessment.

3.0 Renewal of the Manitoba Housing Corporate Strategy – outlines the legislative and policy framework for Manitoba public housing, and identifies the Vision, Mission and Values of the organization.

4.0 Defining the Future State: Recommended Changes for Manitoba Housing – outlines the recommended changes to organizational structure, supply chain and capital asset management, including the expected impact of recommendations.

5.0 Manitoba Housing Transition Strategy – outlines a high-level implementation plan, including change management planning, transition schedule, and risk management.

1.5 Report Limitations

The Business Case is primarily an assessment of change opportunities for Manitoba Housing. By project mandate, a detailed evaluation of historical organizational performance has not been conducted. However, in order to develop recommendations for change, an analysis and risk assessment of current operational practices was necessary.

The results of the Review and the recommendations offered in the Business Case reflect the judgment of those people most significantly involved, including senior MHRC/MHA managers, and KPMG advisors. Others may have different opinions, and judgments reflect a degree of ‘point-in-time’ analysis. And while care and attention has been paid to presenting appropriate, feasible, and manageable recommendations, effort beyond the scope and control of the Review and Business Case project will affect the ultimate outcome of recommendations offered herein.



2.0 The Operational Review: A Case for Change This Chapter outlines the historical evolution of Manitoba Housing.2 The Operational Review struck in late 2006 is summarized, identifying key approaches and findings of ‘current state’ organizational performance. The Balanced Scorecard developed as part of the Review is applied, along with a high-level risk assessment, suggesting there is a strong ‘case for change’ within Manitoba Housing.

2.1 MHRC/MHA Background

The Manitoba Housing and Renewal Corporation (MHRC) is a crown corporation created by statute (the Housing and Renewal Corporation Act) in 1967. The MHRC operates pursuant to the Act and is governed by a Board of Directors. The Board of Directors acts under the provisions of the Act and under policy direction as set forth by Cabinet and Treasury Board. The objectives, as stated in the Housing and Renewal Corporation Act, are:

To enhance the affordability of, and accessibility to, adequate housing for Manitobans, particularly those of low to moderate incomes or those with specialized needs;

To maintain and improve the condition of existing housing stock; and

To stimulate and influence the activities of the housing market to the benefit of Manitobans as a whole.

In 1992, the Manitoba Housing Authority (MHA) was created as an agency of the MHRC. The MHA took over the direct management of some 13,000 public housing units, as well as overseeing the administration of 5,700 units managed by non-profit sponsor groups.

In 1993, the federal government discontinued any new funding of social housing, and systematically entered into agreements with the Provinces and Territories transferring responsibility to these jurisdictions for federal housing units that were primarily owned by non-profit organizations. Manitoba signed its Social Housing Agreement (SHA) in 1998 and at that time was subsidizing approximately 36,300 units across Manitoba.

2 Note: The Provincial Auditor General has released a number of reports covering MHRC/MHA over the past several years. MHRC/MHA continues to implement certain changes to its operating and management structure in response; information on this process can be references directly from MHRC/MHA.


Following the federal withdrawal of responsibility, no new social housing was built in Manitoba. By the late 1990s however, housing had again arisen as a critical issue, particularly in Winnipeg’s inner city and in the North. A number of new initiatives were started, and there was significant opportunity with the return of the federal government to the housing arena with the announcement of the Affordable Housing Initiative (AHI) in 2001.

The MHRC:

Operates pursuant to The Housing and Renewal Corporation Act and is governed by a board of directors under the provisions of the Act, with policy direction provided by government;

Operates as the delivery arm for federal/provincial cost-shared social housing programs and other capital programming provided by the province;

As an approved lender under the federal National Housing Act, issues mortgages and loans and holds assets;

Owns all assets but is financially dependent upon government, receiving an annual transfer payment basically equal to the difference between MHRC’s revenues and its expenses less federal recoveries from the Canada Mortgage and Housing Corporation (CMHC). As part of the government’s annual Estimates process, these dollars are voted by the Legislature to the department which, in turn, “transfers” funds to the MHRC as required;

Provides subsidies for approximately 35,500 housing units developed under various federal/provincial housing programs. Approximately 13,100 housing units are managed by the MHA. The remaining housing units are managed by sponsor and non-profit groups;

Provides strategic planning and the development of new housing policy, programs, initiatives and corresponding legislation and regulations, program systems support and development, standards development and quality assurance, program analysis and evaluation, and issue management;

Coordinates planning activities and provides ongoing housing program development and policy analysis related to program support;

Examines new building technologies to assess their feasibility for Manitoba home construction;

Monitors compliance with operating agreement provisions and promotes efficient management of projects in accordance with program objectives, and recommends changes to agreements to enhance operation of programs and projects;

Performs operational audits of non-profit or cooperative housing projects, including tenant selection, building maintenance, financial control, rent calculations, management control and board involvement;

Conducts workshops and training sessions for non-profit and cooperative housing projects;


Delivers and administers the federal/provincial cost-shared Affordable Housing Initiative (AHI) and the renovation and repair programs in Manitoba – Residential Rehabilitation Assistance Program (RRAP), Emergency Repair Program (ERP), Home Adaptations for Seniors’ Independence (HASI) and Shelter Enhancement Program (SEP). Delivers the provincially funded Homeowner Emergency Loan Program (HELP);

Provides financial assistance for benefits under the following shelter assistance programs:

- Manitoba Shelter Benefits (MSB); and - School Tax Assistance for Tenants Aged 55 Plus (STAT 55+).

Plans, organizes and evaluates corporate accounting and financial management activities including financial reporting, expenditure and revenue processing and appropriation control, federal/provincial cost-shared program reporting and claiming.

In the fall of 1999, the Department of Family Services and the Department of Housing were amalgamated to form the Department of Family Services and Housing.

2.2 Operational Review

Throughout the Operational Review process, KPMG’s project team reported on a regular basis to the ADM Housing, and the project steering committee, composed of the senior management teams of both the MHA and the MHRC. The role of the Steering Committee was to be a sounding board for ideas and analysis, as well as venue for KPMG to validate its findings. The issues identified as part of the Review were validated in a full-day session with the steering committee in mid-February 2007 during which they confirmed the existence of these concerns, and as a group, prioritized their level of importance and urgency to the organization.

2.2.1 Objectives and Approach

In June 2006, the Board of Directors of MHRC authorized the Chief Executive Officer (also the Assistant Deputy Minister of Housing) of the MHRC to launch an RFP process to engage the services of an independent professional consulting firm to help conduct the Operational Review of the MHA. In addition to addressing many of the issues that surfaced as part of both OAG reports, there were a number of goals that the Review was looking to achieve, including:

Assessing existing MHA management practices and making recommendations to ensure assets are properly maintained in order to obtain the highest possible value

Assessing current MHA management systems and making recommendations to ensure optimal resource allocations to meet ongoing and future operational imperatives

Assessing vacancy management, physical asset tracking, maintenance and capital improvement programs, and other related policies and processes.


KPMG LLP was chosen as the successful proponent of the RFP process. KPMG began by immediately developing a project charter outlining the scope of the engagement, key stakeholders, expected outcomes, and the methodology by which the Review would be conducted. The scope of the Review focused on the major themes surrounding not only the typical aspects of well-functioning organizations such as organizational structure, but also touched on those needs identified in the OAG reports such as better management of the housing stock, and a higher level of accountability. More specifically, KPMG was looking to review the current operational practices of, and the relationship between, the MHA and MHRC, to identify opportunities for service improvements and for governance and organizational reform, and to develop a balanced scorecard approach by which to measure organizational performance.

The first step was to conduct research that would allow for better understanding of the current state of public housing in Manitoba. KPMG conducted more than 20 high level interviews with Senior Executives and Management in both MHA and MHRC. The discussions included staff from housing offices throughout the Province, including Winnipeg, Brandon, Portage La Prairie, Dauphin, Thompson, and Leaf Rapids. Interviews were based on a structured interview guide (see Appendix A), and asked questions on a variety of topics from typical responsibilities, time spent on various activities, and suggestions for improvement.

In addition to interviews, KPMG reviewed a number of background documents including the aforementioned reports from the Office of the Auditor General, financial statements, budget documents, operating manuals, policy and procedure documents, and numerous examples of reports that are generated during the course of business. KPMG advisors also took part in a training session to become more familiar with both the Maintenance Management System (MMS) and the Tenant Management System (TMS). Also, in a concerted effort to gain input and feedback from staff at the MHA and MHRC, a virtual suggestion box was set up by KPMG. Staff could email comments to [email protected], and the results were compiled, and contributed to the analysis.

2.2.2 Preliminary Themes for Change

The Operational Review sought to explore and characterize opportunities for enhancements to the organization, operation and management of MHRC and MHA. The Review was informed by historical context, but it was conducted with a decidedly forward-looking focus on identifying change opportunities.


Following in-depth interviews, external analysis, the input and direction of the MHRC/MHA Steering Group, eight (8) preliminary themes for change were identified:

1) Housing Strategy

2) Capital Management

3) Governance and Organization

4) Human Resources Strategy

5) IT Services

6) Client Services

7) Supply Chain Management

8) Enterprise Risk Management

These themes were assessed in terms of whether actual change would significantly benefit MHRC/MHA, and whether management had a sufficient degree of autonomy to affect change. This assessment was completed to identify any ‘non-starters’, and fortunately, none were identified. The ‘benefit versus control’ assessment is illustrated in Figure 1.

Figure 1 — Preliminary Themes for Change: Benefit vs. Management Control

Details of these findings were presented to senior MHRC/MHA management in February, 2007, and subsequently to the Minister on March 8, 2007 (see Appendix B). Summary findings for each change theme as at March 8, 2007, are presented below.

Degree of MHRC/MHA Control

Benefit

1 Housing Strategy 2 Capital

Management 3 Governance and

Organization 4 HR Strategy 5 IT Services 6 Client Services 7 Supply Chain

Management 8 Enterprise Risk

Management

1 2

3

4

5

6 7

8


1. Housing Strategy

Long-Term Housing Strategy – The Province of Manitoba has no long-term housing policy/strategy,. (Note: reference to housing strategy in this sense reflects government-wide housing policy, rather than operational or annual business plans/strategies) It was evident that MHRC and MHA staff are looking for the guidance that a clear housing strategy could provide. It would allow staff to be better aligned on their goals, and provide direction on issues such as the quality of housing stock, size of the stock, programs and services, etc.

Inter-Organizational Agreements - MHA is involved in the delivery of some programs in cooperation with other government departments, such as the congregate meal program. There is some question as to the level of risk that the MHA must bear in the structure of such agreements with respect to MHA’s financial and operational interests.

Competition with Other Housing Programs - Budget dollars allocated to rent subsidies, building grants for seniors and assisted living complexes, and other housing or housing subsidies must be shared with social housing programs provided by the MHRC and MHA. Therefore, in housing projects with higher vacancy rates, the MHA is competing with other social housing programs for tenants. This issue is magnified in rural communities

Social Housing Agreement Funding Deferral Process - When the Social Housing Agreement was signed with the federal government in 1998, funds were provided by the federal government to be used to establish a declining reserve fund. These reserve funds have been drawn down as part of the Departmental budgeting process, and has now been almost fully exhausted, implying the development of a significant financial/funding risk for public housing in the near future.

2. Capital Management

Preventative Maintenance Program – There is currently no preventative maintenance program in place for the department’s capital portfolio, though it is currently under development. An ongoing preventative maintenance program may extend or increase the life of assets, and identify potential issues sooner before they become costly repairs.

Asset Management System – The Province’s public housing stock is rapidly aging, with no plans in place to deal with it. Currently no asset management system in place (other than 5 year asset plans), and there is a need for more detailed information on capital expenditures to be collected and monitored to allow for more effective budgeting, as the current capital budgeting process is more reactive than proactive.


Five Year Asset Management Plan – The current 5 year asset plan is prepared using an excel spreadsheet. It is difficult and time consuming to update and maintain, and data integrity can easily become an issue. The plan is not detailed enough to allow proper prioritization of capital expenditures, as it is more short term focused – reactive rather than proactive. A longer term focus would better match funding requirements with asset needs.

Inspection Process and Policies – The Modernization and Improvement (M&I) Branch of the MHA performs inspections of units every 2 years to aid in developing the 5 year asset plan. The Current policy is for the M&I inspections cover only 10% of the portfolios, with ongoing unit inspections are also performed by the Maintenance Branch. M&I inspections are currently being performed by individuals who may not possess the necessary skills for the task, resulting in sub-par inspections that may not adequately identify issues and address the capital planning needs.

Defining ‘Repair’ and ‘Capital’ – There is uncertainty whether or not enhancements to properties should be classified as capital or maintenance. There is no clear policy to determine whether purchases should fall under M&I or Repairs and Maintenance (R&M) budgets. This inevitably leads to confusion of where and how limited budget dollars are spent, and creates misallocations with respect to accounting rules and conventions.

Overall Funding – Amongst the vast majority of staff at both the MHA and MHRC, there is a perceived lack of adequate funding for the Capital Repair Program as it relates to the MHRC owned public housing stock. There is an overall departmental funding shortfall compared to budgeted requirements, and this has been the case for well over a decade. There is also a perceived inequitable distribution of funds between family services and housing.

3. Board/Organizational Structure

Board Structure and Membership - Currently, the Board comprises the Deputy Minister and Assistant Deputy Ministers in the Departments of Family Services and Housing. With only one ADM representing the ‘housing side’ of the department, there is a predominate thought amongst staff that the Board membership might not reflect the requirements of public housing management in Manitoba. The current Board structure may imply an absence of independence from the Department, with associated challenges to decision-making. In addition, the board meets infrequently, and its specific role is unclear to most staff and management in MHRC/MHA. The overwhelming thought is that a more active board would be seen by management and staff as more effective, and attentive to issues surrounding public housing in the Province.

Organizational Structure - Public housing in the province of Manitoba is currently delivered through two organizations: the Manitoba Housing and Renewal Corporation, and the Manitoba Housing Authority. The review was clear in that some of the services and programs offered by each organization overlap, and


sometimes even end up competing with each other for tenants. A number of processes within both organizations are redundant, resulting in a duplication of effort. As well, there is overwhelming evidence of significant staff morale issues associated with differences in terms of collective agreements across MHRC and MHA.

Rural Maintenance Reporting Relationships – The maintenance staff in rural districts report to District Maintenance Supervisors, who work out of Winnipeg and are not as in touch with rural operations. The lack of local support offered to the maintenance staff outside of Winnipeg has affected their ability to provide adequate and timely service, as the chain of communication is exceptionally long and cumbersome.

Family Services and Housing Relationship - In 1999, the Department of Housing and the Department of Family Services were combined into one department. The vast majority of MHRC and MHA board members are from the Family Services side of the department, leading to a feeling that departmental priorities are more heavily weighted on the side of Family Services, with the implication being that Housing interests are often diminished.

Communication - Evidence of poor communication was a central theme throughout the Review, between urban and rural regions, between the MHRC and MHA, and between Management and Staff. Communication needs to be strengthened across MHRC and MHA, with positive outcomes for performance, staff and management morale, and tenant outcomes. Strong communication and leadership plans are required to support operational advances – both within MHRC/MHA, and externally with other stakeholders

Organizational Performance Management – There is a lack of a clear framework for performance management across the public housing system. The absence of a robust performance management framework implies that management and staff will have difficulty in measuring progress in achieving its mandates. A well established performance management system is a leading practice of modern public sector organizations

4. HR Strategy

Multiple Collective Bargaining Agreements - Between MHRC and MHA there are four collective agreements (MGEU Master Agreement, MGEU Winnipeg, MGEU Rural, and IUOE), resulting in material differences in salaries and benefits by classification levels. The result has been extremely low staff morale, leading to deep divisions between MHA and MHRC employees, and increasing staff turnover rates for MHA, as they look for positions with MHRC or other government departments.

Vacancies and Acting Positions – A number of branches within both MHA and MHRC are experiencing staffing shortages. There are numerous outstanding vacancies, and many are backfilled through acting appointments, as many of these branches/departments are struggling to keep up with duties in a timely manner.


Aging Workforce - The average age of staff at MHA and MHRC is rapidly increasing. All groups are dealing with retirements on a regular basis, and the process to backfill vacant positions is unable to keep pace. The result is reduced capacity available to perform/supply service requirements, and the introduction of significant business risks to continuity, efficiency and effectiveness, and corporate knowledge.

Assignment of HR Resources – With the centralization of HR support as a shared service within the Department of Family Services and Housing, HR support to all the parts of MHA and MHRC have declined significantly. Response time for HR support is lengthy, and has resulted in excess vacant and acting positions throughout both organizations. An increased presence of HR resources could help increase productivity and efficiency.

5. IT Services

IT Application Support - Over the past few years, IT support has been centralized, both within the Department of Family Services and Housing, similar to that of Human Resources, and resulting in a perceived decline in response times and attention to IT support requests. Staff and management are generally unsure about how IT requests are placed in the queue and prioritized, and there has been an overall increased dependency on IT.

Simplification and Automation - A number of manual processes are being performed where there is potential for automation, and simplifying these processes may lead to increased efficiency. Examples of processes which could realize efficiencies include:

- Online banking - interface is not compatible with finance system, resulting in redundancy

- Point system for new applicants must be calculated separately and then entered manually into TMS during application process

- Not all Tenant and Lease documents can be produced from TMS

TMS/MMS Functionality – There is currently no alignment between MHA’s TMS and MMS information systems. A better interface between TMS and MMS would provide for better property management, tenant placement, revenue management, and expenditure management, and provide exceptionally higher levels of data integrity. Interfaces between TMS/MMS and MHRC’s Accounting System (Masterpiece) could be refined to provide better information for management decisions.


Family Services and Housing System Compatibility - Most of the systems used by the family services side of the department and the housing services sides of the department are independent of each other, and incompatible. There are opportunities, however, to reduce time wastage, and take advantage of common tools and applications. For example, currently all EIA payments that are sent to housing from family services have to be entered into the system manually, taking up precious time and resources. As well, Family Services has an electronic application system that it use for child care intake, and may be able to be used for housing application intake as well with limited investment.

E-Services - All processes in which MHA and MHRC interact with the public are in person or manual, with all interactions are either on the phone, through correspondence, or in leasing offices. Aside from the ability to download forms online, there are no electronic services available to the public, and there is a potential for significant increases in efficiency and service delivery should some of these initiatives be explored further.

6. Client Services

Ministerial Inquiries – A disproportionate amount of time was spent by MHRC and MHA management and staff working on public inquiries made directly to the Minister’s office. Due to the broad nature of these inquiries, they often are used to circumvent established protocols. For example, tenants will often call the minister’s office as a form of appeal instead of using the formal appeals process. In addition, responding to these inquiries often interferes with other planned activities. The nature of most inquiries also requires coordination across multiple management and staffing levels and the lack of formal procedures in place limit the department’s ability to respond in a timely manner.

Tenant Appeals Process – As briefly noted above, tenants have the option to appeal decisions made by either tenant intake or property services. The established process calls for appeals to be heard before a board chaired by the ADM, with board decisions based on the application of policy. However, tenants have begun to call the Minister’s office to lodge a complaint instead of going through appeals process, which inevitably lead to time consuming ministerial inquiries. Tenants are experiencing more success by going to Minister’s office instead of appeals board, effectively creating two different appeals avenues, putting the integrity of the established protocol at risk.


Tenant Intake Application Process - The tenant intake process is often long and labour intensive. It is a currently a two-application, two-step process. Applications are filled out manually and physically submitted at an MHA leasing office and entered into the Tenant Management System (TMS) manually. Points are assigned, calculated using an excel spreadsheet, and references are checked. At that point, the second application is filled out and submitted manually, and the applicant is interviewed to provide more information and complete necessary paperwork. Upon application approval, the applicant is placed on waiting list. While the MHA is in the process of removing one of the applications, the process is relatively long and confusing, and is particularly difficult for applicants to make use of the process in rural areas, where geography often makes multiple visits to the housing office unfeasible.

Make Ready Process – When a unit becomes vacant, it takes the Maintenance group approximately one month to make it ready for new occupancy. One day is to scope the maintenance work needed, about two weeks to source suppliers and contractors through a competitive three-bid process, and about two weeks to conduct the work and clean the unit out. Problems in getting quotes can delay this process, as can amount of work needed, although in some cases, the full month is not necessary to make units ready. A one month turnaround guarantees at least one month without revenue from that unit, which will have budget implications.

7. Supply Chain Management

Supply Chain Management – Both MHA and MHRC have very little in the way of formal supply chain management. For all intents and purposes, every staff member acts as their own procurement officer. There are few controls over the competitive tendering process, and there few gains in bulk purchasing/sourcing. As well, there is little standardization of equipment or products used across the portfolio, resulting in increased time and dollars spent in sourcing parts, performing repairs and installations. The increase used of standing service agreements could make the purchasing function a more effective and efficient practice.

8. Enterprise Risk Management

Enterprise Risk Management – Both MHA and MHRC are in need of a robust enterprise risk management framework. Very little is done at either organization with regard to risk profiling and assessment, and thus risk mitigation strategies are non-existent. A strong enterprise risk management framework would be of most benefit to these types of public organizations that regularly deal with sensitive social and political issues, and that have been subject to reviews and investigations, and regular media exposure to minimize the negative effects of such.

The eight (8) preliminary themes for change provide a basis for judging the current state performance of Manitoba Housing, while at the same time identifying new directions for exploring organizational renewal. The current state performance was judged using a balanced scorecard approach,


developed as part of the Review. Even though MHRC/MHA does not currently use detailed and rigorous tools to measure outputs or outcomes, the Scorecard was useful in facilitating Senior Management’s judgment of current performance – a judgment that contributes strongly to the overall case for change.

2.3 Current State Performance: A Balanced Scorecard Approach

A key aspect of the Review was to develop a balanced scorecard approach to performance management so that the organization can have a tool to assist in the on-going assessment of performance of public housing in the Province of Manitoba. The objective was to have a tool that could assess the relative performance of the organization in the current state, versus options that were being developed for the future state. As well, this approach would establish a framework for management decision making, communication, and accountability that can be implemented going forward.

The balanced scorecard approach is a management system that allows for the organization to be evaluated using an approach that balances a number of competing perspectives. A framework was developed in cooperation with senior management that captures five (5) key performance dimensions: Adequacy of Client Service, Resource Allocation, Good Governance and Public Accountability, People, and Adequacy of Housing Stock. These performance dimensions are driven by the requirement to satisfy the Manitoba Housing Vision, Mission, and Values, as illustrated in Figure 2.


Figure 2 — Balanced Scorecard Approach: Key Performance Dimensions

Resource AllocationAdequacy of

Housing Stock

People

Good Governance &

Public Accountability


Manitoba HousingVision, Mission and

Values

Resource AllocationAdequacy of

Housing Stock

People

Good Governance &



Manitoba HousingVision, Mission and

Values

KPMG facilitated a number of meetings and workshops to develop and review the dimensions, the performance objectives trying to be met, the measures by which organizational performance can be evaluated, and possible metrics. These are outlined below. The objective of the Balanced Scorecard is two-fold: 1) to present a high-level judgment of current state organizational performance; and, 2) to act as a basis for future organizational performance management. A detailed design and implementation framework for the Balanced Scored can be developed as part of the overall transformation; a summary view is presented below.


The analysis from the Operational Review, as well as the reports from the Office of the Auditor General outlined a clear concern for the quality of Manitoba’s public housing stock. It is relatively old and its condition has been deteriorating for some time without significant action, and yet there is a required level of physical condition that these units must maintain to satisfy housing policy objectives. For this to happen, a concerted effort must be made to ensure accurate record keeping and proper asset management practices, such as a regular inspections, and a robust preventative maintenance program.


Table 2 — Balanced Scored Dimension: Adequacy of Housing Stock


Core Objective: To manage appropriately the value of housing stock assets for taxpayers and clients

Sub-Objectives Measures Data Framework

Appropriate due diligence is undertaken in making capital investment and delivery decisions

Optimize value for each dollar invested

Fair and competitive capital procurement processes

Maintain property portfolio to lengthen its useful life

Optimal stock level and allocation

Operating and Construction costs per square

Percentage of buildings/units achieving satisfactory inspection rating

Number of housing units per 1,000 households in a region

Masterpiece data analysis

MMS data analysis

External/Internal Inspection Reports

Market analysis


Adequacy of client service is clearly one of the four main objectives of the Housing and Renewal Corporation Act: “To enhance the affordability of, and accessibility to, adequate housing for Manitobans, particularly those of low to moderate incomes or those with specialized needs.” A high level of service delivery is required for the organization to achieve its mandate. Quality Client Service can come in the form of timely and efficient intake procedures and placement, responsiveness to maintenance requests, the availability of special needs programs, and the ability to provide services to those that are most in need.


Table 3 — Balanced Scored Dimension: Adequacy of Client Service


Core Objective: To provide appropriate housing service to Manitobans in need, and to meet associated client service objectives


Minimize wait times for property repairs, and capital improvements

Efficient processing of rental applications and appropriate placement within accommodations

Accessible and responsive application procedures

Satisfy housing needs

Deliver positive client outcomes

Level of Client Satisfaction

Level of client demand and needs satisfied per region

Number of clients transitioned out of need for housing

Periodic client surveys

TMS data analysis Market analysis Policy/program

evaluations

Resource Allocation

Resource allocation is of vital importance in any public sector organization, and is one that Manitoba Housing has struggled with in the past. For the organization to be successful, it must learn to do more with the same level of resources, and this dimension will help measure its ability to do so. Modern resource allocation means efficient and effective purchasing processes and management systems, a logical organizational structure that is organized based on business processes, and a high level of cost control.


Table 4 — Balanced Scored Dimension: Resource Allocation

Resource Allocation

Core Objective: Effective and efficient administrative management and policy/program delivery


Gain economies of scale by using bulk purchasing power

Lower controllable operating cost of delivering public housing in Manitoba

Ensure a high level of productivity from established processes

Modern asset management processes

Optimal revenue/service balance

Percentage of planned capital and operating repair budget spent

Controllable administrative costs as a percentage of program delivery costs

Ratio of vacancies to available stock

Masterpiece data analysis

MMS data analysis TMS data analysis External/Internal

Inspection Reports Market analysis


A number of the comments that surfaced during the Operational Review related to deficiencies within the governance structure, and the OAG reports are at the heart of ensuring the organization’s proper stewardship. Good Governance and Public Accountability is therefore an important dimension from a government-wide perspective. This can come in the form of an open and active governance structure, engaging the public on policy and program considerations, regular external reporting, and a strong performance management system.


Table 5 — Balanced Scored Dimension: Good Governance and Public Accountability


Core Objective: To deliver policies and programs in an accountable manner, governed by publicly acceptable mechanisms that represent shareholder and taxpayer interests


Use of public consultations in policy development

Ensure that the Board and Senior Management act in the best interests of Manitoba Housing

Well defined accountabilities within and for the organizations

Effective performance management

Effective comptrollership

Percentage of Ministerial Inquiries satisfactorily resolved

Satisfactory external reviews and audits

Clarity and suitability of Manitoba Housing Strategy

Communication tracking system

External surveys

Periodic Operational Reviews

Auditor General reports

Financial Audits

Control/accountability audits

Policy/Program Evaluations

People

Finally, the driving force behind, not only change but all the aforementioned dimensions, are the people at Manitoba Housing. They are the catalysts for organizational performance, and will have a direct influence on the delivery of corporate objectives. This includes equitable hiring practices, a workplace that celebrates diversity, and open and regular communication.


Table 6 — Balanced Scored Dimension: People

People

Core Objective: Achieve status and recognition as an "Employer of Choice"


Develop a supportive and inclusive organizational culture

Ensure diversity, respect and empowerment in all managerial processes

Ensure a high level of productivity from all staff and managers

Provide suitable career opportunities

Encourage entrepreneurialism

High level of employee satisfaction

Staff turnover Appropriate career

planning and opportunities

Periodic surveys Exit interviews Turnover rate

analysis Succession planning Individual

performance management

Once the dimensions and measures were chosen, KPMG facilitated a validation session in which the weight of each of these priorities was determined, and the scale by which they could be scored. A simple five-point scale was developed by which senior management could evaluate their progress on meeting the core and sub-objectives of each of the five dimensions, using the detail provided by the dimension’s measures, along with the accompanying data points. The five-point scale is illustrated in Figure 3.

Figure 3 — Balanced Scorecard: Five-Point Scale

1 Unacceptable Performance – Most desired

objectives are not met

Exceptional Performance –

All desired objectives have

been met

Satisfactory Performance – Most desired

objectives have been met

Fair Performance – Many of the

desired objectives have been met

Poor Performance – Many desired

objectives are not met

5 4 3 2


The weight of each dimension is another essential aspect of the scorecard, as it prioritizes those areas of the business that management has deemed to be important indicators of overall performance, and places emphasis on those areas that they believe to be their core businesses. The Manitoba Housing scorecard places Resource Allocation, Adequacy of Housing Stock, and Adequacy of Client Service at the top equally, with 25% of the overall weight for each dimension, as illustrated in Figure 4.

Figure 4 — Balanced Scorecard: Dimension Weights.

Resource Allocation

Good Governance &



People


10%

25%

25%

25%

15%

Resource Allocation

Good Governance &



People


10%

25%

25%

25%

15%

Particular attention should be drawn to the weight given to People, and Good Governance and Public Accountability. This should be outlined as a major step forward for the organization. Issues regarding communication, leadership, and overall low employee morale came up frequently during the Operational Review, both in interviews with staff and through the virtual suggestion box. Not only did concerns about the board and governance structure surface during the Review, but there were also clear concerns about board membership from the Office of the Auditor General during their investigation in 2004. Including these dimensions as a measure of organizational performance management is a major step forward in not only realizing that this is an issue to be addressed, it also displays a commitment from Manitoba Housing to excel in both of these areas going forward.

Another session with senior management was held to develop a score of Manitoba Housing’s current state. Each dimension was covered in depth, including what each objective and sub-objective means to achieving stated goals. Frank, open discussion was held on where the organization currently sits in its ability to meet the stated objectives, considering existing processes, structures, and policies. The group reached consensus on an overall score of 43%, as illustrated in Figure 5.


Figure 5 — Balanced Scorecard: Current State Assessment

Dimensions

1. Adequacy of Client Services

2. Adequacy of Housing Stock

3. Good Governance & Public Accountability

4. Resource Allocation

5. People

Scores

3

2

1

2

2

Weight

25%

25%

10%

25%

15%

Total Weighted

Score:

2.15 or 43%

Dimensions



3. Good Governance & Public Accountability


5. People

Scores

3

2

1

2

2

Weight

25%

25%

10%

25%

15%

Total Weighted

Score:

2.15 or 43%

A score of 43% is obviously not acceptable to staff, management, government, clients, or the tax paying public. It is clear that in order for Manitoba Housing to be considered a well functioning organization, and one that is capable of meeting its legislated mandates, vision, and mission, it must have a score that is closer to the 75% range. The remainder of the Business Case discusses what Manitoba Housing can do to improve its performance, and how to do it.

The next step in the development of the balanced scorecard approach is its implementation. With the scorecard’s structure in place, Manitoba Housing should now operationalize it, by narrowing down the precise data points that will be collected related to each measurement. The organization should be building the infrastructure to maintain those points, and the measurement of progress. Scoring and accompanying analysis should be completed on a yearly basis, and included in the annual report.

2.4 Current State Risk Assessment

In addition to assessment by the Balanced Scorecard, a high-level risk assessment was also conducted of the current state. This risk assessment was applied for the three core dimensions of change characterized in the Business Case, and mitigation strategies were outlined. These strategies were approved by senior departmental management, and informed much of the work presented in the Business Case. Table 7 summarizes.


Table 7 — Current State Risk Assessment

Core Dimension



Staff indicate current governance structure does not provide desired level of strategic direction

Two organizations with overlapping mandates and duplication of tasks and efforts, exhibiting managerial tensions, lack of clarity in mission and responsibilities

Multiple collective agreements resulting in inconsistent salary and classification levels, low staff morale, and direct costs for management

Absence of clear, long-term housing strategy

No framework for organizational performance management across housing

Develop and confirm Manitoba Housing Mission, Vision and Values

Achieve higher level of performance for MHA and MHRC through organizational re-design

Establish a new governance structure that strengthens the role of the Board and its membership

Establish an HR Strategy that harmonizes collective agreements at very little cost

Develop a 10 year Housing Strategy for Manitoba, including long-range goals.


Purchasing is de-centralized, and is conducted independently by each Maintenance Coordinator

A lack of policy for standardization of equipment prevents the development of service agreements

A lack of service agreements and central procurement result in lost economies

Major impediment to cost savings and quality service delivery in the short term

Conduct full spend analysis to identify short-term productivity enhancements and cost savings

Implement program for standardization of equipment and supplies, and the development of standard service agreements

Full procurement policy review including benchmarking analysis

Complete procurement process and technology review and re-design


Lack of a preventative maintenance program in line with leading practice limits the useful life of capital assets

5 year asset management lacks data integrity, and has no method for prioritizing capital budgeting and expenditures

Lack of capacity (systems and

Complete inventory and analysis of existing housing stock and capital program for coming fiscal year

Implement renewed procurement model in the coming fiscal year


Core Dimension


resources) to deliver a robust capital program in line with leading practice

Poor inspection and maintenance processes contribute to the deterioration of housing stock

Weakness in capacity to make necessary capital investments

Conduct multi-year capital management process re-design to improve asset management

Implement new programs related to preventative maintenance

2.5 The Case for Change

The eight (8) preliminary themes for change identified in Stage 1 of the Operational Review were summarized into three core dimensions for further development in Stage 2 of the Review: Governance and Organization, Supply Chain Management, and Capital Asset Management. These core dimensions form the basis of the Manitoba Housing renewal, proposed in the Business Case, the details of which are presented in Chapters 3-5 below.


Figure 6 — Core Dimensions of MHRC/MHA Renewal

MHRC/MHARenewal

MHRC/MHARenewal

Focusing on three core dimensions of change allows for consolidation of the over thirty issues that were identified in the Review. These streams not only encompass the majority of the issues that surfaced during the Operational Review, but also address many of the concerns that were brought forward during both OAG reports. Issues with internal communications and leadership were prevalent in both reports, and were a common theme with staff, as were concerns with the organization’s governance structure. The Operational Review found clear redundancies that are common with having two organizations, and in some areas a lack of clear processes and accountabilities.

The overall case for change reflects the historical context from which Manitoba Housing is emerging, and the clear opportunities for enhancement to future performance. The core dimensions of change, when considered in combination with the poor judgment of current state performance in each important Scorecard area, and the implications driven by current state risks, provide a clear justification for change.

Details of the opportunities for change were built around three workstreams that assessed and analyzed opportunities during the period March-May 2007 (i.e., Stage 2 of the Review). The output of the various streams of analysis is presented in the form of key recommendations for change at Manitoba Housing. These recommendations reflect opportunities to improve service performance, organizational management and financial impact of housing operations. They are offered both as a reflection of current challenges faced by the organization and, much more importantly, as the basis for a new ‘future state’ for Manitoba Housing.


3.0 Renewal of the Manitoba Housing Corporate Strategy At the time the Operational Review got underway in late 2006, neither MHRC nor MHA had a corporate strategy that could be articulated as a well-defined vision, mission and set of values. The most recent policy-level housing strategy was developed in the late 1990s, just after the amalgamation of the Department of Family Services and the Department of Housing, and while work was progressing on development of a five-year Business Plan for MHRC, the Review found limited evidence of a well-implemented or operationalized corporate strategy.

A well developed strategy has the ability to bring all the stakeholders involved in an organization onto the same page working towards a common goal. It allows an organization like Manitoba Housing to determine how it can position itself to be sustainable in the long term by providing quality service to its clients. A good strategy also has the ability to define what business the organization is in. For Manitoba Housing, this would be a definition of what public housing is in the Province of Manitoba, providing the ability to answer questions like ‘what types of programs should we be providing’, and ‘whether we are responsible for just bricks and mortar housing, or aspects of social housing as well’.

To ensure that all recommended changes to MHRC/MHA are tied to a common framework, a new corporate vision was developed. This strategy reflects a renewed vision, mission and set of values. And while the vision does not explicitly address broader policy issues, it does represent focus on renewed corporate management, which is the core objective of the Business Case.

3.1 Defining a Renewed Housing Vision, Mission, and Values

Vision, mission, and values play an important role in defining business decisions for any organization. Not only do they act as guiding principles that drive performance, they have the ability to bring a variety of stakeholders including staff and management together towards a common goal. Currently, the Department of Family Services and Housing has a department wide vision and mission, as follows;

FSH Vision: The Department of Family Services and Housing is committed to improving the quality of life for Manitobans through furthering the social, economic and labour market inclusion of all citizens. We strive to ensure that diversity is respected, that people feel accepted and valued, and live with dignity and security. We work with the community to support Manitoba children, families and individuals to achieve their fullest potential.


FSH Mission: Family Services and Housing supports citizens in need to achieve fuller participation in society and greater self-sufficiency and independence. We help keep children, families and communities safe and secure and promote healthy citizen development and well-being.

Our Mission is accomplished through:

provision of financial support;

provision of services and supports that assist individuals improve their attachment to the labour market;

provision of supports and services for adults and children with disabilities;

provision of child protection and related services;

assistance to people facing family violence or family disruption;

provision of services and supports to promote the healthy development and well-being of children and families;

assistance to Manitobans to access safe, appropriate and affordable housing;

fostering community capacity and engaging the broader community to participate in and contribute to decision-making; and

respectful and appropriate delivery of programs and services.

While this vision and mission may be appropriate for department as a whole, it has not had the desired effect on Housing specifically. The current state of Manitoba Housing shows that stakeholders look towards different outcomes, with different benefits. A vision, mission, and a set of articulated values have the ability to align the various parts of the organization onto a common path. KPMG facilitated the development of a new vision, mission, and values for Manitoba Housing, validating choices with a comparative analysis of the vision, mission, and values of other public housing organizations within Canada, the United States, and Internationally (see Appendix C).

Corporate vision, mission, and values are most likely to be adopted and accepted by stakeholders within an organization when they are developed by the organization itself. For alignment across the organization to be achieved, stakeholders must be able to contribute to defining what those goals are. For Manitoba Housing, renewal of the vision, mission and values was built on a workshop of senior management and selected senior staff. Three ‘open ended’ questions asked as a basis for defining a new vision, mission and set of values:

1 Vision: Imagine 30 years down the road, there is an article in the paper about Manitoba Housing. What does the article say the organization has accomplished over the years?

2 Mission: Decide ‘what’ Manitoba Housing does, and for ‘whom’. There can be only one ‘whom’, but multiple ‘whats’.

3 Values: Brainstorm the words that you would like stakeholders to think of when they think about Manitoba Housing. Think about words that describe and encompass the organization’s values.


The comparative jurisdictional analysis informed the workshop, the results of which are reflected in a renewed and agreed vision, mission and set of values:

Renewed Manitoba Housing Vision: All Manitobans live in healthy communities.

Renewed Manitoba Housing Mission: The Mission of the Manitoba Housing and Renewal Corporation is to provide Manitobans access to safe, healthy, and affordable housing by:

Ensuring an adequate supply of housing stock in Manitoba;

Ensuring the affordability of, and accessibility to, adequate housing for Manitobans, particularly those of low and moderate income or those with specialized needs;

Maintaining and improving the condition of existing housing stock;

Stimulating and influencing the activities of the housing market to the benefit of Manitobans as a whole; and

Creating partnerships across governments and communities to provide quality programs and services.3

Renewed Manitoba Housing Values:

Respect

Community

Leadership

Collaboration

Accountability

Responsiveness

Transparency

It is hoped that the development and implementation of this vision, mission, and values will have the ability to provide a level of guidance to the staff and management throughout Manitoba Housing that they have been looking for. It was developed with the input of individuals throughout the organization, and provides a reference point that all employees can use in their everyday management, and decision making.

3.2 Housing Operational Policies

Subsequent to Minister Selinger’s release, Reporting to Manitobans on Performance – 2005 Discussion Document, Treasury Board asked that Manitoba Housing prepare a Business Plan to set the context for the work of the Corporation, and to establish priorities, goals, targets and deliverables for ongoing service to Manitobans. To facilitate this, the organization held a number of Strategic Planning sessions during the 2006/07 fiscal year with each branch of the MHRC. The sessions allowed staff to identify common issues and goals through open discussion and have resulted in the

3 Note: The first four of the mission statements are from the Act.


development of work plans for each branch, and are intended to become an annual process.

The five-year Business Plan, in addition to identifying the current state of the organization with respect to operations, legislative responsibilities, political and demographic environments, also identifies seven priorities that it will focus on during the course of the next five years. This Plan is an integral part of the renewed Corporate Strategy.

1 Long-Term Planning - The MHRC is engaged in a long-term planning exercise in order to ensure that its strategic initiatives and housing programs continue to meet the changing needs of the target populations.

Strategic Initiatives:

- Infill Housing Development - Supportive Housing - Visitable Design - MHRC Long-term housing plan for social housing stock - MHA involvement with community groups - MHA Long-range maintenance - MHA Congregate Meal Program - MHA New application intake process - Working group on chronic vacancies in Manitoba - Special Projects

2 Land Development and Management - The MHRC holds land parcels through-out Winnipeg for future suburban development. In addition, there are other large tracts of land which have the potential for development in the future.


- Legislation to direct MHRC land sale profits to housing areas in need - Waverley West - Island Lakes/Inkster Gardens - Innovative Inner City Housing Development Program (IICHDP)

3 Rural and Northern Housing - The rural and northern housing priority is aimed at enhancing local control of housing assets, promoting home ownership options, and generally increasing the supply of safe, accessible, affordable housing in northern and rural Manitoba.


- Grand Rapids Pilot Project - Northern Homeowner/Tenant Training - Housing in Leaf Rapids - Northern Build - Rural and Native Housing (RNH)


4 Manitoba Shelter Benefit – MHRC has implemented the Manitoba Shelter Benefit (MSB) in response to the changing needs of low income Manitobans, and difficulties aligning housing programs with Employment and Income Assistance benefits. The MSB is based on a person’s rental costs and income and is a monthly benefit for low-income families, eligible persons with disabilities and seniors who spend a large portion of their income on rent and who live in the private rental market.


- Manitoba Shelter Benefit - Rent Supplement

5 Inter-governmental Partnerships - Manitoba’s housing policy and program delivery is heavily influenced by the actions of the federal government in support of affordable and social housing. Manitoba continues to lobby the federal government to continue and enhance its support to the provinces and territories in order to improve access to safe, affordable housing for all Canadians.


- Affordable Housing Initiative and the Winnipeg Housing and Homelessness Initiative

- New 3 year housing program - Proposal Develop Funding

6 Energy Efficiency – The Department of Family Services and Housing has adopted a Sustainable Development Action Plan. The MHRC/MHA has been working closely with Energy, Science and Technology’s Energy Development Initiative (EDI) and Manitoba Hydro regarding energy efficiency initiatives.


- Social Housing portfolio energy efficiency Initiative - Greening of Centennial Pilot Project - Installation of Geothermal Heat Pumps - Green Buildings Policy - MHRC Capacity Building

7 Accountability - The MHRC is working toward improved accountability amongst all of its housing delivery partners with regard to the delivery and spending of government funding. Improved accountability also entails ensuring that Manitobans with housing needs are getting the best possible service in the most timely way from housing programs and initiatives



- MHA Operational Review - Manitoba Housing Authority - Portfolio Administration - Corporate Services - Capital Planning Services - Housing Services - Housing Programs - MHRC Information Technology (IT) Requirements

For the newly developed vision, mission, and values to be properly implemented, these priorities and the implementation of their associated initiatives must adhere to the vision, mission, and values. A misalignment between corporate goals and action plans will take away the credibility of vision, mission, and values product, and result in the organization once again operating in silos.


4.0 Defining the Future State: Recommended Changes for Manitoba Housing The three main dimensions of the recommended changes to Manitoba Housing – Governance and Organization, Supply Chain Management, and Capital Asset Management – are integrated, and reinforce each other. In the case of Supply Chain Management and Capital Asset Management, they deal essentially with the same issues – namely the strategies, processes, procurement, and investment decisions affecting the physical assets of Manitoba Housing. These are tied to the broader issue of re-organization and subsequent transformation of business and management processes. The Business Case assumes that MHRC/MHA will pursue all three dimensions of change, as this strategy optimizes the probability of successful implementation. Once implemented, the recommended changes will establish a ‘future state’ for Manitoba Housing, the value of which is summarized in the following tables, and explained in more detail below.



Summary Governance and Organization at Manitoba Housing refers to the governance structure of the Board of Directors of MHRC and MHA, and the organizational structure that defines reporting authorities, tasks, division of work, and accountabilities. Governance and Organization is important because it is linked to Service Performance, Organizational Management, and Financial Impact in the following ways:

Service Performance Organizational Management Financial Impact Key Objectives An efficient organization will ensure that

quality client service is delivered appropriately

Processes that involve client interaction are seamless

A clear vision of what the organization is trying to accomplish can be institutionalized

Interaction between departments and branches should be seamless

Work should be distributed efficiently and logically across the organization

There should be strong leadership and clear communication

There should be positive employee morale, and consistency in staffing levels

Prudent use of taxpayer dollars High value for investment, with an effective

use of funds Reduce waste and duplication of effort

Current State Two organizations, delivering different programs to various clients

Varying levels of customer service across departments, services, and geography

No clear vision for what the organization is trying to accomplish

Perception of insufficient Board independence Similar functions delivered in different branches for

different clients Relatively low employee morale, and mistrust of

management, with little communication Inefficient organizational processes and distribution of

responsibility

Inefficient processes and structure lead to less value for money

Duplication of effort in various areas within the organization, while deficiencies exist in others

Change Opportunity

More efficient structure leads to better service and accountability

Equalize levels of service throughout geographies, and across services

A clear vision, mission, and values to align all areas of the organization

Board to show independent leadership for the organization

A new organizational structure with logical work distribution, appropriate skills, better communication, and efficient processes

Amalgamation of collective agreements will increase employee morale at low cost

More efficient processes allows the ability to do more with the same investment

Reduce duplication of effort, focusing resources where they are needed most

Relatively low cost of amalgamation of collective agreements

Expected Outcome

Better direct service to all clients A better focus on common goals and

outcomes for the entire organization Enhanced accountability

Clear leadership throughout the organization A more efficient organization providing better value to

clients and taxpayers, with more accountability Improved employee morale

Significant increase in the value-for-money of organizational investments

Change Requirements

Structural and Behavioural Change Structural and Behavioural Change Investment in collective agreement amalgamation

Structural and Behavioural change More efficient use of funds



Summary Supply Chain Management (SCM) at Manitoba Housing refers to all purchasing activities that the organization engages in, including repair materials, equipment, services, utilities, and contracting for major capital projects. SCM is important because it is linked to Service Performance, Organizational Management, and Financial Impact in the following ways:

Service Performance Organizational Management Financial Impact

Key Objectives SCM has a significant impact on quality and the efficiency of client service in areas such as the make ready process, on-going repairs and maintenance, and long-term adequacy of the housing stock

Staff and management should have the proper skills and competencies for the SCM process

Work should be properly distributed across the organization

There should be positive employee morale, and consistency in staffing levels and communications

Policies and Procedures should be effective and efficient


use of funds Reduce waste and duplication of effort, and

spending

Current State Tendering policies are narrowly focused on lowest bid, possibly leading to sub-par quality

Make ready process is at least one month, delaying tenancy

Lengthy tendering processes results in longer repair and maintenance cycles

Everyone in Manitoba Housing is essentially their own procurement officer

Lack of experienced staff High staff turnover Poor communication Lack of performance accountability

No use of purchasing power, and lack of commodity strategies

New guidelines and initiatives are increasing costs as budgets are squeezed

Few service agreements No equipment standardization

Change Opportunity

More efficient procurement processes Shorter make ready process with

streamlined procurement

Establish a procurement lead role Clarifying roles, responsibilities, policies and

procedures A communication plan Change in organizational structure will enhance focus

on SCM

Enhanced tendering Use of purchasing power to develop service

agreements will result in savings

Expected Outcome

Will allow repairs to be completed faster Ability to fill vacancies faster Better quality contractors and suppliers

Will ensure appropriate skills and competencies Proper assignment of accountability will increase

efficiency and effectiveness Fully informed staff with higher morale

Significant increase in the value-for-money Cost savings, resulting in the ability to do

more with same investment

Change Requirements

Behavioural Change

New policies and procedures

Behavioural and Structural change

Investment in training

Investment in hiring of new procurement lead and other related staffing

Behavioural change

Cost savings

New policies and procedures

Summary Implementation risk

LOW RISK Risk is tied to management and staff commitment, i.e. some risk at the SCM level, not the criteria level Some labour market risk, supply of those with SCM skill set Political risk is relatively low, related to possible focus on larger vendors in urban areas



Summary Capital Asset Management at refers to the management of the physical housing stock that is owned by the Government of Manitoba, including the operations and maintenance of each building, capital enhancements or improvements, and the planning and management of all new major capital projects. Capital Asset Management is important because it is linked to Service Performance, Organizational Management, and Financial Impact in the following ways:

Service Performance Organizational Management Financial Impact

Key Objectives Manitoba Housing’s capital assets are essential to its ability to deliver services to meet is organizational mandates

There should be an adequate amount of housing for those Manitoban’s that are in need

There should be strong information management systems, with a high level of data integrity

There should be policies and procedures that allow Manitoba Housing to maximize the value received from, and the life of, each capital asset.

Work should be efficiently distributed across the organization


use of funds Reduce waste and duplication of effort Assets should be managed on a life cycle

basis

Current State Manitoba’s public housing stock is deteriorating, reducing the quality of service to Manitobans

Sponsor-managed property lacks appropriate accountability to MHRC

Lack of value assessment tools limits decision making capability resulting in poor vacancy management

Capital Asset Management decisions are made with limited attention to overall housing/tenancy requirements

Lack of robust information systems and record keeping leading to less informed decisions

Multiple data inputs leading to poor data integrity Irregular building inspection and assessment

processes Duplication of work between MHA and MHRC, and

inefficient policies and procedures

Lack of appropriate planning process and tools limits value from financial investment

Unclear definition of ‘repair’ and ‘capital’ leads to financial management inconsistencies

Lack of systems limit the ability to evaluate value for money in investments

Change Opportunity

Better planning policies and processes to enhance housing/tenancy value

Better information to make decisions for acquisitions and disposals

Better information for making repairs and modernization decisions

Improve information systems, with centralized data input

New operational processes, including inspections Organizational change will eliminate existing silos, and

respond better to housing needs Clarifying roles, responsibilities, policies and

procedures using RACI charts

Prioritization processes for capital spending Use of traditional accounting definitions for

‘repair’ and ‘capital’

Expected Outcome

Higher quality of housing stock Better housing supply management to deal

with shifting demand and vacancies

Better information to make better decisions Proper distribution of accountability will increase

efficiency and effectiveness More efficient processes for better value

Significant increase in the value-for-money Modernization of investment management

Change Requirements

Behavioural Change New policies and procedures

Behavioural change Minor investment in improving systems

Behavioural change More efficient use of funds

Summary Implementation Risk

LOW RISK Standard, related to management commitment Re-allocation of resources through organizational change


4.1 Governance and Organization

4.1.1 Governance: Current State Assessment

Currently, Directors of the Board are the Assistant Deputy Ministers from the Department of Family Services and Housing. The Boards of MHA and MHRC are combined and meet contiguously. The advantages of this model include a strong (but not total) alignment between leadership direction for the Department and for Manitoba Housing. There is relatively efficient use of staff resources, as there is no need to support two different groups of senior leaders between the Department and Manitoba Housing. As well, the organization receives some of the advantages of incorporation including carrying funds over the year end and holding mortgages.

There are, however, a number of weaknesses. The governance structure as it currently stands is perceived to not be able to best represent the organization. There is an apparent conflict of interest, real or perceived, with the role of the ADMs between the Department and the Board. There is a perception that Board members are in a difficult position, with multiple roles that they play and the inherent connection between their day-to-day roles within the other divisions of the Department, and that some decisions favour the interests of the other divisions within the Department. In addition, this type of governance structure does not allow the organization to take advantage of the full range of possible Board member skills available from a broader pool of candidates.

Renewal of the Governance structure is needed. On the advice of senior departmental management a specific recommendation for a new governance structure has been deferred, and is therefore not addressed by the Business Case. A discussion of Governance principles, some comparative jurisdictional analysis, and a comparison of alternative options for Manitoba Housing is presented in Appendix D.

4.1.2 Organization: Current State Assessment

The most significant recommendation in the Business Case is for fundamental change to the organizational structure of Manitoba Housing. A single organization is recommended with clear lines of authority and accountability, a more integrated service delivery objective, and a reallocation of resources to better align with the organizational mandate.

The Operational Review identified a number of issues related to organization design and management. The following is a listing of the key observations that were made during the course of the Review. These observations are based on document review, interviews with key management and staff throughout the organization, participation in workshops and focus groups, and responses received from the virtual suggestion box made available to staff throughout Manitoba Housing.


Separate Organizations – With two organizations (the Manitoba Housing Authority and the Manitoba Housing and Renewal Corporation) currently delivering public housing in the province of Manitoba, there is a concern about duplication of effort, and an overlap of responsibility. This is viewed to lead to inefficiency in the delivery of the province’s housing program, and sometimes the two organizations find themselves competing with each other for tenants.

Inefficient Processes - A number of processes, within and between, both organizations tend to be inefficient, and fairly redundant. This is a result of unclear lines of accountability that are the result of having two organizations delivering different parts of the same program. The current delivery of the modernization and improvement (M&I) program provides an example. For self-managed properties, there is an M&I group within MHA. However, for the sponsor managed properties, there is an M&I group within the MHRC. And while this group should be working with the Portfolio Administration group to deliver this program to those properties, this group is usually shut out of the planning, as the M&I group works directly with the sponsor. This is an example of not only duplication of effort, but unclear accountabilities resulting in ad-hoc reporting lines. In the current organization, this is common place.

Rural Operations – There is a marked difference in the operations of MHA in the Winnipeg offices and the rural offices. Application intake is integrated in rural offices, while it is its own functional group in Winnipeg. There are inefficiencies associated with the operations of the maintenance branch in rural areas, where Maintenance Coordinators (MCs) report to their supervisors about proposed repairs, instead of communicating with their property management colleagues. As well, policies are geared towards operations in Winnipeg, rather than rural areas. The two step application process is an example, in that a return visit from the applicant for an interview is required. While this is relatively easy for applicants living in Winnipeg to get to one of four offices in the city, it can be more difficult in rural areas, where visits to the closest housing office can take hours. There is a need for more convergence of policy making to meet the needs of both rural Manitoba and urban Winnipeg.

Lack of Organizational Design Strategy - At first glace, there appears to be little in the way of a strategy to explain the design of the organization. For example, Manitoba Housing has a number of client categories: citizens that they directly provide public housing to, citizens that they provide funding to through the Affordable Housing Initiative, funding to shelter operators, and funding to sponsors groups and not-for-profits for third-party delivery. However, a glance at the organizational charts will show that the MHA provides for the first group, while all the rest are with MHRC, when there are clear synergies to be gained through a re-organization. As well, the current design does not lend itself to strategic growth, and the ability to adjust to the changing needs of Manitobans. Whenever a new program or initiative is developed, a seemingly arbitrary decision is made regarding where it belongs in the organization, creating confusion and apprehension. An example is the Strategic Planning and Policy group within MHA. Not only does the MHRC already have a more formalized policy group, but the MHA group appears to


be a ‘catch-all’ for new initiatives, as it currently manages the application intake group, and the housing call centre, two completely unrelated functions. A clearer structure is necessary to ensure efficient processes and better service delivery.

Staffing issues – Manitoba Housing is facing a number of issues related to staffing, specifically the existence of many acting positions, and a growing number of vacancies due to an aging workforce. Most of the groups within Manitoba Housing are dealing with retirements on a regular basis. The process to backfill vacant positions is unable to keep pace, resulting in a growing number of acting positions, particularly in senior positions. The result is reduced capacity available to perform/supply service requirements, the introduction of significant business risks to continuity, efficiency and effectiveness, and corporate knowledge, and unclear leadership for staff.

Low Employee Morale – There are consistent signals that the organizational culture at Manitoba Housing reflects low employee morale. It is clear there is an alarming disconnect between staff and management, where staff generally feel as though they are unsupported, and in many instances feel as though they are forced to do more work than they have the capacity to complete. At the root of much of this dissent is perceived lack of communication throughout the organization. Changes to policy, processes, and other major operational and political issues that deeply affect staff are poorly communicated, if at all. Many staff feel intimidated by their managers, and are increasingly becoming marginalized. The origins of this atmosphere are found in the reactive nature of the organization, with a lack of clear accountability and ownership that has filtered its way down to MHRC/MHA front line staff.

Four Different Collective Agreements – Another major contributor to the poor level of employee morale, specifically with the MHA, is that between MHRC and MHA there are four collective agreements (MGEU Master Agreement, MGEU Winnipeg, MGEU Rural, and IUOE), resulting in material differences in salaries and benefits by classification levels. MHRC staff are classified as public servants, allowing for generally higher salary and benefit levels for the same type and amount of work as many of their MHA colleagues. These differences also exist in the rural areas of the province, as staff in Winnipeg are often at higher levels then their counterparts in rural areas within the same classification. This has created deep divisions between MHA and MHRC employees, and increasing staff turnover rates for MHA, as they look for positions with MHRC or other government departments in order to be on par with their colleagues, inevitably having a negative effect on client service.


The lack of consistency throughout the organization related to the factors listed above, has severely hindered Manitoba Housing’s ability to deliver quality customer service to clients. Unclear lines of accountability and responsibility constrain appropriate levels of efficiency, and have reduced its ability to achieve its mandate. This much is clear through increased waiting times in many areas, lower quality services in sponsor managed housing, a deteriorating housing inventory, and inefficient procurement procedures; transformation of the organizational structure is required.

4.1.3 Organization: Future State Recommendation

The recommended organizational structure is based on several workshops held with the management team at both MHA and MHRC to develop a consolidated entity (informed in part by comparative jurisdictional analysis – see Appendix E). During the first workshop, small teams developed structures with the sole restriction that the Assistant Deputy Minister had only three direct reports. Most groups amalgamated the property services and capital management and brought together competing areas of the current organization. Many also structured the business services functions, such as finance and communications, under one of the direct reports. Under the third direct report, many placed strategic program initiatives and land development. The structures were captured and reviewed by senior management at a subsequent workshop.

During the second workshop with the senior management team, functions and roles were placed under each of the three direct reports. At this time, it became apparent that there would be a need for a fourth direct report based on the number of functions and activities required (Figure 7). The direct reports include Client Services, Business Services, Strategic Initiatives and Development. This particular structure, as outlined in the diagram below, consolidates all operations related to clients under the same Executive Director (ED), while keeping the business services functions separate. In addition, this structure places emphasis on both the development of assets, such as land, and strategic initiatives where new programs and policies can be incubated and developed prior to being implemented through other parts of the structure e.g., new service delivery programs would eventually find a home with ED, Client Services.


Figure 7 — Recommended Executive Team Structure

At the workshop with the senior team, current functions and activities were accounted for and aligned under the new structure. The senior management team used the existing organizational structures to ensure all functions were represented. In addition, new functions and business process considerations were also discussed.

The structures that were developed at the workshop attempted to address current issues faced by MHRC/MHA, such as duplication of effort, separation of closely linked activities under different senior executives, and the budget allocation for integral functions. By designing the structure below (Figure 8), the senior management team ensured all functions and activities related to client services, such as third party agreements, asset management and property services are closely aligned. It is thought the perceived competition for resources and duplication of effort will be significantly reduced as a result. Business processes will need to be developed so that the required communication and collaboration between distinct work areas is established.

A key dimension of business process and management responsibility design will be the development of RACI charts, which define who has responsibility, who must take action, who should be consulted, and who needs to be informed about major organizational processes. It is beyond the scope of the Business Case to construct RACI charts for Manitoba Housing, although working examples are provided in Appendix F.

Following this workshop, a structure including directors and managers was developed. Under the Executive Director for Client Services, three direct reports were discussed.

Director, Agreement Administration – i.e., responsible for all housing agreements with 3rd party providers, homeowner and community program groups, shelters, co-ops, rural and northern housing, etc.

Director, Asset Management – i.e., responsible for the project management of large building projects and technical services. This function is discussed further in the Capital Asset Management section of this report.


Director, Property Services – i.e., responsible for all aspects related to property management, including lease management and maintenance.

A detailed structure of the functions, activities and roles is highlighted in Figure 8 below. An overall structure for the organization can be found in Appendix F.

Figure 8 — Recommended Structure: Client Services Directorate

The Executive Director, Business Services has responsibilities for Enterprise Risk Management and Quality Assurance, Security and Loss Prevention, and Health and Safety, as well as two direct reports focusing on Procurement and Controllership functions. The role for Health and Safety could fall under Client Services, Asset Management but would require guidance from centralized services. The detailed structure, highlighting the roles and functions can be seen in Figure 9 below.


Figure 9 — Recommended Structure: Business Services Directorate

The Executive Director, Strategic Initiatives focuses on the importance of having a single place for programs to be designed, developed, incubated and evaluated prior to implementation, while allowing for the appropriate stakeholder involvement. Once a program has been sufficiently tested and is mature, the responsibility for the program will shift to the Director, Property Services under the ED, Client Services. In addition, this area will be responsible for developing housing policy. In order for these activities to properly encompass all functions of client services and business services, a separation in reporting structure is required. In the future, a role for an Aboriginal Directorate in partnership with Aboriginal Affairs could potentially be part of this function.

The Executive Director, Development places more emphasis on the uniqueness and increasing importance of this particular aspect. This area will have the responsibility for land development, as well as special projects such as new builds, land disposal and acquisition, and developments like Waverly West and Leaf Rapids. This particular focus requires a specialized skill set and expertise, which is separate from current functions of managing the current property, tenants and administrative activities.

Detailed structures of the Strategic Initiatives and Development Directorates are outlined in Figure 10.


Figure 10 — Recommended Structure: Strategic Initiatives Directorate and Development Directorate

It should be emphasized, that all structures discussed above assume the need for detailed business processes to link closely aligned activities and functions. In addition, new positions will need to be created at the Executive Director level; preliminary job descriptions for these positions are presented in Appendix G.

The other significant change that is integral to the reorganization is a recommendation to move to a single collective agreement structure. Common themes identified from MHRC/MHA staff interviewees, OAG reports, and previous consulting reports, are the issues and challenges relating to the numerous collective agreements currently used by the MHA and MHRC. The existing union environment has created a number of challenges for the MHRC/MHA:

Low morale of employees due to inequitable pay between agreements for similar job classifications. Low morale can result in high turnover of employees, increased training costs, and poorer service delivery to clients.

Increased complexity for management and staff to understand benefits and entitlements of the multiple agreements.

Significant time and resources spent by senior management and HR negotiating the numerous agreements.

Significant resources required for HR and management to develop and maintain multiple sets of job classifications and job descriptions.


The potential net financial benefit of collective agreement harmonization could be as high as $216,000 per year (see Appendix I). This impact is a measure of higher expected salaries, but lower total benefit costs. Arguably of more importance, would be increased employee morale and lower turnover, reduced time spent in agreement negotiations to allow for focus on core business, and less complexity managing the agreements.

The most significant drawback would be upfront commitment and availability of HR resources to be able to effect this change. However, given that the new vision of the organization includes realigning MHA and MHRC under one common organization, the opportunity to transition employees to the master agreement, with its associated benefits, is regarded as a positive HR investment.

Table 8 — Benefits and Drawbacks of the HR Transition

Benefit Drawback

Increase in employee morale due to wage parity

Lower employee turnover resulting better service to clients/tenants and lower training costs

More transparency and understanding by management and staff on eligibility/application of agreement (one versus 4)

Potential for reduced net costs assuming benefits realized from lower cost of delivering benefits

Significantly reduced negotiation time involved with managing agreements. Estimated at 80 to 112 days of senior management and HR time spent per negotiation (16 days x 5-7 people)

Opportunity to update any out of date job classifications

Maintenance of multiple sets of job classifications and job descriptions could be eliminated with only one agreement for all positions

No change in government reportable FTE’s Given proposed changes to organizational

structure, job classifications a significant number of job classifications would have to be done regardless of collective agreement.

Increased annual salary cost Could be lengthy negotiations in the short

tem to get staff and unions on side May be difficulties/challenges in getting

local unions to release members Some employees may result in lower pay

if moved to similar classification on Master agreement – would their wage be frozen?

Significant HR requirement. Estimated at 280 days worth of effort (70 staff positions x 4 days each to reclassify). Would require additional temporary resources.

Time to implement could span a number of years


4.2 Supply Chain Management

Supply Chain Management is the second major area of change recommended by the Business Case. There is both a financial and operational opportunity to establish new practices at Manitoba Housing, as is outlined below. The recommendations offered in the Business Case reflect, in part, comparative jurisdictional and leading-practices analysis conducted by KPMG; this research is presented in Appendix J.

4.2.1 Supply Chain Management: Current State Assessment

This section of the report summarizes observations of the current state of procurement within Manitoba Housing. The observations are organized in terms of the key strengths of the current organization and operations and the challenges that the organization faces in attaining the greatest value for money from procurement activities.

As the majority of procurement is conducted by the operational staff of MHRC/MHA, and there is no specific procurement department, these observations apply to the procurement activities that are part of the overall maintenance and capital operations and processes.

A number of interviews and meetings were conducted with people directly involved in procurement processes within MHA as well as other stakeholders from MHRC. These interviewees often provided process or policy documentation that was used to formulate a picture of the current state. In many cases follow up discussions were held and further documentation was collected. The observations were then revised and validated with the project working group in the “Current State” workshop.

KPMG identified the following key strengths with respect to Manitoba Housing’s procurement processes and practices.

Table 9 — Current State Strengths of Procurement Processes

Strength Description

Experience of Staff

Many of the senior Manitoba Housing staff have several years of experience within the organization and/or have an extensive background in the industry. They understand the challenges, issues and concerns in the current procurement process for capital and maintenance, and are knowledgeable about the organization and its future requirements. As well, training programs are available for MCs, inside trades people and Building Supervisors.

Funds for Capital Improvements

Manitoba Housing has access to significant funds for capital improvements, including up to $24 Million available for capital expenditures in the current fiscal year under the 2007 Loan Act authority. In addition, other funds will be made available for capital improvements in future years.


Strength Description

Capital Planning Process

Manitoba Housing is developing a capital plan process that will assist in prioritizing capital procurements most beneficial to improving and maintaining the existing housing stock and reducing future maintenance expenditures. Annual plan priorities have been identified and action can be taken, and expertise is available in-house to deliver on the plan.

Broader Priorities

Maintenance and capital staff of MHA aware of broader priorities including service to the community and tenants, reducing the vacancy rate, and preventative maintenance. Reducing turn over time to allow for mid-month occupancy, reduce vacancy, and reduce vandalism associated with vacant units is important. Improvement and maintenance priorities include maintaining building envelopes, tenant safety issues, and negative grading as failures will lead to other expensive repairs or liability related expenditures.

Spending Arrangements

Manitoba Housing has a significant opportunity to leverage bulk and specialized spending arrangements with various vendors and suppliers (see spend analysis).

Policies Manitoba Housing has policies to ensure suppliers are competitively quoting and tendering for the goods and services they provide, including the following:

- Obtaining three verbal quotes for purchases in excess of $700 - Obtaining three written quotes for purchases in excess of $2000 - Requiring short form contracts for purchases in excess of $5000 - Invitational tenders for purchases in excess of $5,000 - Invitational tenders registered with exchanges for purchases in under

$50,000 and advertised $50,000 to $100,000 - Public tenders for purchases in excess of $100,000

Compliance A supervisory and auditing model is in place to monitor compliance to procurement policies. This model includes requiring District Maintenance Supervisors to review MC POs over $2000 for compliance, regular meetings between supervisors and MCs to review procedures, policies and processes of procurement, and disciplinary action may be taken where necessary.

Standing Agreements

Manitoba Housing has developed a number of initial standing agreements with selected suppliers. The existing agreements are in early stages of development with limited service scope and geographic coverage. An opportunity exists to organize and expand these types of agreements across more geographies, and across more products and services.

MMS Manitoba Housing has an electronic PO system (MMS) since April 2000, which provides tracking of all Manitoba Housing maintenance expenditures and streamlines many aspects of the procurement process in this area. MMS is continuously updated and refined for requests, purchase orders and detailed information on purchases, and has the ability to run detailed reports to the building and unit level on maintenance related issues and expenditures.

KPMG also identified the following key challenges with respect to Manitoba Housing’s procurement processes and practices.


Table 10 — Current State Challenges of Procurement Processes

Challenge Description

Housing Stock Manitoba Housing is facing an aging housing stock, leading to rising service and maintenance costs. Many buildings are in the 35 year age group and are now starting to require significant improvements and repairs. Historical underinvestment in preventative maintenance and capital improvement has left the housing stock in significant need of investment, and changes to building codes may prevent adding facilities without extensive renovation (e.g. kitchen facilities for meal program). In addition, people’s expectations are changing in terms of space, as well as demographics.

Life Cycle Plan There is no long term life cycle plan for existing housing stock. Although there is a capital plan, annual budgetary constraints affect the ability to execute the plan, and cutbacks in capital budgets and planned maintenance has often resulted in costly unplanned maintenance. Budget and financial categories also do not show maintenance costs at the building or unit level.

Capacity There is a concern that there is not enough resources and capacity in MHA to deliver on the current capital plan. That could effectively reduce the current year’s capital expenditures. The final capital budget is not yet approved, creating seasonal delivery issues and only a limited number of project managers.

Budget Cycle The timing of the budget cycle negatively affects the procurement of seasonal delivery of capital projects. Capital budgets not communicated until summer months, leaving a short window to procure for services required prior to the winter months (exterior painting, roofing, etc). MHA staff often will need to pay a premium for work to be completed prior to winter.

Maintenance Costs

There is a concern that maintenance costs are rising and budgets are being squeezed in delivery of important services required to attract and maintain the tenant client base. A significant increase in security costs in the last 5 years has impacted budgets, and the cost of make ups are rising, particularly in the rougher portfolio areas. Addressing the new Clean and Safe guidelines has provided less room for other important maintenance. Increased costs in pest control and security are creating cut backs to other important budgeted maintenance expenditures. Cut backs allow for less customization on make readies which makes available units less desirable.

New Requirements

New requirements in housing (for example: security, liability & safety issues) have added complexity and workload to the procurement process with no additional internal resources and budget relief. Standards for Suites need to be established and is a prerequisite for procurement agreements.

Procurement Officer

There is no singular recognized or designated procurement office or officer within Manitoba Housing, resulting in no ‘center of excellence’ or professional purchasing authority with experience from outside MHA.

Purchasing Power

Manitoba Housing is not taking advantage of its purchasing power to attain the best prices and value it can. There is a lack of commodity strategies for majority of spend categories (see spend analysis), and there are opportunities to aggregate spend with a smaller number of vendors.



Policies Government procurement policies drive high cost of procurement and constraints in contracting capacity. These policies limit the time commitment for standing offers to a maximum of 1 year plus 1 year option to renew (except for safety requirements), and they drive a high number of re-tenders for the standing offers, without providing significant incentive for vendors to price aggressively. As well, there is a requirement to post on MERX. However, these limitations can be managed if the contracts allow for cancellation of contracts, and are contingent on the approval of budgets.

Government Guidelines

Government “guidelines” and encouragement to spend locally may affect the ability to aggregate spend. Lowest cost however is policy.

Maintenance Coordinators

Maintenance Coordinators (MCs) manage a significant amount of total spend. The role of the MC has changed significantly over the last few years – while they require trade skills, they are less and less involved in conducting maintenance themselves, and now have to complete automated processes and manage the procurement of contractors to conduct the maintenance activities. MCs don’t have the time to make effective purchasing decisions, as they are typically dealing with a high number of maintenance requests, and may not have the training and experience to run the most effective procurement processes. As well, MCs operate independently from each other. There is limited sharing of information on market prices, procurement and contracting techniques, and vendor quality and reputation.

Suppliers There are minimal supplier measurement and management programs in place, or experience with such programs within Manitoba Housing. There is no formal supplier score carding, or performance tracking, no centralized record of complaints or supplier problems, and no approved vendor list based upon supplier quality or capability for specified services.

Contracts Contracts are being awarded with a narrow focus to the lowest cost bidder. Important factors such as vendor reputation, quality of inputs, turnkey solution alternatives, service levels, warranty levels and capacity to perform contracts are secondarily factored into the tendering process, but can have significant impact on costs after the contract is awarded. This ‘low bid’ culture is reinforced by public perception and the need for transparency. Contracts are traditionally awarded to those would have the lowest price plus “have all the forms filled out.” Additional down the road costs for sub-standard goods and services not always easy to quantify. All in all, a culture of selecting the lowest qualifying bid is very deeply entrenched.

Purchase Orders A significant number of after the fact purchase orders are being created, impacting the financial reporting and budget tracking processes.

Urban and Rural There is difficulty in getting rural and urban contractors to provide three (3) quotes due to a shortage of trades, overabundance of work, and timing of demand in peak periods. Adding to the problem is the fact that trades are leaving rural areas in favour of urban centres, or other provinces. Also, vendors who bid on tender need to have WCB, and minimum $2M of liability.

Vender Competition

Requirements for three bids often pit rural and urban vendors against each other in the same tender, with the lowest bid requirement often favouring urban contractors. However lower up front costs may be offset by higher ongoing costs. Rural maintenance and support issues arise if install contracts are given to non-local suppliers, and in some cases, vendors are often competing for trades with other areas of Manitoba Housing.



Maintenance Supervisors

Maintenance Supervisors are not spending enough time auditing compliance of procurements. They either need additional time, or Manitoba Housing should consider an internal audit type function. This may be offset by random sample audits or 3rd party reviews.

Change Orders There is not a clear understanding of the impact of change orders for capital projects. There is concern of excessive change orders in the contract procurement process as a line by line reasonability of bids not always being done before awarding of contracts. Change orders are not an issue for maintenance, but may be for Capital projects, and the issue could be mitigated by: Clear specifications, Q+A/Vendor conference prior to quote response, Internal Q+A role, Consultation with MCs, etc.

Make Ready Process

There are a number of challenges with the ‘make ready’ process, including: - Some areas have a high turnover rate and a very high volume of

‘make ready’s’ per month – hard to manage the volume - Commitment of having units ready within one month. Pushing for

reduced cycle time to reduce vacancy rates and reduce vandalism associated with unoccupied units.

- Impractical to begin ‘make ready’ process until after tenants vacate. No security deposits to deter damage upon exit.

- Charge back process should be used in order to document tenant history and flag if they want to rent another unit

IT System There is no unified IT system for the procurement of capital, maintenance and other expenditures related to existing housing stocks. The granularity of data is not detailed enough, and information is at the project level, not the building level, which is at a level to make useful cost comparisons or analysis. Manitoba Housing is missing an IT system to adequately track and link capital, operational and preventative maintenance on a unit by unit basis. Currently, detailed maintenance expenditures are tracked in the MMS PO system, which does not house data on capital expenditures. Capital expenditures are in the MasterPiece system but are not detailed enough to be directly associated with imported MMS data. MMS will not “un-commit” funds for the entire PO until all line items are paid, which drives people to issue only 1 line POs and driving up number of POs processed.

Communication There is a perception of poor communication within the organization and between different groups. This has been improvement as of late, but more effort is required. Between capital planning staff and front line workers, between district supervisors, Maintenance Coordinators and Building Supervisors, and between Property Managers and Maintenance Coordinators.

Staff Morale There is concern with morale issues and a lack of experienced staff in certain areas, leading to high turnover in certain staff positions. There are several new staff in certain management positions and in roles with acting status, but a lack of qualified staff in certain areas, particularly a lack of a rural northern presence.

Performance There are a number of performance management challenges, including: - Organizational culture and policies does not hold people accountable

for their performance. High degree of frustration with managers. - No ability to hold back “top of scale” individuals. - Opportunity to improve the coaching and development of individuals



to improve performance.

Open Purchase Orders

In some cases, POs are closed but the work is not completed, and details are not included in the notes.

A Spend Review was also conducted, and was reviewed within the Current State and Future State workshops. Approximately $34 million worth of spend on Goods and Services has been analyzed. The review is intended to provide insights into the procurement dynamics including – commodity spend, number of suppliers, density of spend by region / district and by supplier, number of transactions (and value profile). The top seven spend areas (Contractors, Utilities, Building, Services, Professional Services, Supplies, and Appliances) represent approximately $32 Million (94%) of annual procurement spend.

The Spend Review was based on a spend database for MMS (purchase orders) and Masterpiece (Accounts Payable) data from February 1, 2006 to January 31, 2007 provided from Finance. The data has been organized into approximately 90 commodity categories based on natural account associations. Full details of the spend analysis approach are in Appendix K.

The analysis identified the high priority category opportunities for Manitoba Housing:

Appliances, Supplies, and Services represent Short Term opportunities due to the lower degree of complexity of these categories vs. professional services or building.

Contractors represents a longer term opportunity due to degree of complexity, however, it remains an attractive opportunity due to the magnitude of spend associated with the commodity.

Figure 11 illustrates the key opportunities for Manitoba Housing. The position of the bubble reflects the implementation difficulty (X-axis) and the size of the potential savings opportunity (Y-axis). The size of the bubble reflects the overall spend within the category.


Figure 11 — Prioritization of Commodity Opportunities

SuppliesServices

Contractors

Professional Services

Building Appliances

(200)

-

200

400

600

800

2.00 3.00 4.00 5.00

Ease of Implementation

Savi

ngs

Pote

ntia

lSupplies

Services

Contractors


Building

Appliances

HighLow

High

Quick-win / Immediate Opportunities

Longer Term Opportunities

Hold / Defer Short Term Opportunities

SuppliesServices

Contractors


Building Appliances

(200)

-

200

400

600

800

2.00 3.00 4.00 5.00


Savi

ngs

Pote

ntia

lSupplies

Services

Contractors


Building

Appliances

HighLow

High

Quick-win / Immediate Opportunities

Longer Term Opportunities

Hold / Defer Short Term Opportunities

Based on input from the workshop, interviews, and KPMG’s knowledge of the commodities, each commodity was evaluated for both the size of potential savings opportunity as well as the degree of implementation difficulty. The key results are that:

Manitoba Housing can potential save $1.1M to $2.2M on a baseline spend of $34M (see also Table 11).

The 17 individual commodity opportunities range from zero to $844K; each commodity will require 2 to 4 months to tender with the appropriate project team and resources dedicated to implement from bid development to contract award.


Table 11 — Supply Chain Savings Opportunities

Category Spend

($K)

Savings - Low ($K)

Sum of Savings - Mid ($K)

Savings - High ($K)

Savings - Low (%)

Savings - High (%)


Score (1 - 5)

Contractors $ 12,061 $ 362 $ 603 $ 844 3% 7% 3.3 Services $ 4,941 $ 395 $ 494 $ 593 8% 12% 3.5 Building $ 4,501 $ 135 $ 180 $ 225 3% 5% 3.1 Appliances $ 1,269 $ 127 $ 159 $ 190 10% 15% 4.7 Supplies $ 1,300 $ 104 $ 130 $ 156 8% 12% 3.9 Office & Admin $ 311 $ 15 $ 26 $ 37 5% 12% 4.3

Professional Services $ 1,514 $ 15 $ 23 $ 30 1% 2% 2.7 Utilities $ 6,524 $ - $ 20 $ 40 0% 1% 2.8 Misc. $ 812 $ 8 $ 12 $ 16 1% 2% 2.4

Furniture & Equipment $ 271 $ 5 $ 8 $ 11 2% 4% 2.9 Grand Total $ 34,077 $ 1,173 $ 1,665 $ 2,156 3% 6% 3.2

In order for the savings targets to be achieved and sustained the associated process, organization, and strategic sourcing recommendations that are outlined in this report must be addressed. Failure to implement these recommendations will result in the savings ranges achieved to be at the low end of the range and will have a high probability of eroding significantly in the subsequent 1 to 3 years.

4.2.2 Supply Chain Management: Future State Recommendation

There are ten supply chain management recommendations presented, grouped into six (6) Process and Organization Recommendations, and four (4) Strategic Sourcing Recommendations. For each recommendation, design details have been developed as well as implementation guidelines that are intended to provide a starting point for further discussion and definition. These details and guidelines can be seen in the compendium document entitled Manitoba Housing: Procurement Process Review. Quick-win opportunities have also been identified and listed.

4.2.2.1 Quick-Wins

A quick win is often executed to gain momentum for a broader initiative, to demonstrate progress, and to establish a benefit stream early. Quick wins typically have one or more of the following characteristics: they can be implemented relatively quickly (2 – 4 weeks), they are not dependent upon other initiatives to complete, they can be implemented with current resources, or they are relatively inexpensive to implement with no major outlay of funds.

The quick-wins identified as potential activities to achieve the above objectives are presented in Table 12, the Process and Organization Recommendations in Table 13, and the Strategic Sourcing Recommendations in Table 14.


Table 12 — Supply Chain Management: Quick-Wins

Recommendation Description

Change Delegation of Authority Limit

Change the current Maintenance Coordinator Financial delegation of authority limit for un-tendered purchases from $700 to $1000. This will be more consistent with other public and private sector organizations. Though the spend data shows that this will not have a major impact on spend, it will help to build momentum and improve morale with the Maintenance Coordinators.

Increase Lifecycle for New Standing Offers

Increase the lifecycle for new standing offers from the current standard of 1 year +1 optional to terms of 3 – 5 years. The contract start times should be staggered throughout the annual calendar. This approach should be documented in an operating procedure for MHRC/MHA. Bid documentation and contracts will clearly indicate that contracts will be contingent upon budget approval on an annual basis, and that the contract can be terminated with appropriate notice. The lifecycle for each tender will depend upon the commodity, the vendor base, the potential to save, and the risk of contracting for longer periods of time. Finding the appropriate contract term may be a matter of asking for quotes for multiple contract terms and identifying the optimal time frame, allowing vendors to be able to bid more aggressively due to the longer time period. The longer terms, and staggered contract dates will allow for greater resource involvement in each standing offer or contract development, and ultimately improve the quality of the outcomes.

Communication Plan

Develop a communication plan to create improved communications and coordination between groups. This should be incorporated as part of the broader change and communication strategy for organizational renewal. Target communications should be between: capital planning staff and front line staff (MCs, Bldg Supervisors, and Property Managers); District Supervisors, Maintenance Coordinators and Building Supervisors; and Property Managers and Maintenance Coordinators.

Reduce Change Orders

Reduce change orders on future contracts by conducting site meetings with the contractors to go through the scope of projects. The current practice is inconsistently applied by Maintenance Coordinators and Project Managers. Guidelines should be established for when site visits are appropriate, and should be enforced. Contractors should be held more accountable for change orders, and Manitoba Housing should use historical records of change orders to drive change in contractor behaviour. This will be supported by supplier management processes in the future.

Establish Standard for Tenant Suites

Establish a standard for tenant suites incorporating guidelines for aesthetics (e.g., use of multi-coloured tiles, make ready painting, etc.). Manitoba Housing should ensure appropriate stakeholders are involved in the setting of these standards (Maintenance, Capital, Property Services, MHRC, etc.), communicate outcomes, and clearly describe how they will impact the maintenance processes.


Table 13 — Supply Chain Management: Process and Organization Recommendations

Recommendation Description Benefit

Establish a Procurement Lead Role

Manitoba Housing should establish a role for a senior procurement officer who can provide professional procurement direction to the group. This role/ group would: - Develop procurement processes and

frameworks, tools, and templates - Define Manitoba Housing’s procurement

strategy - Assist in ensuring compliance with policy,

practices and processes - Assist in establishing the approaches to

standing agreements - Develop commodity strategies with experts

within MHRC/MHA – execution of the strategies would be distributed through the organization as required

- Manage the relationship with key suppliers - Help to drive value for money in all

procurements

Manitoba Housing would benefit through a housing-wide planning and overview of procurement, clear accountability within housing, and it provides much needed procurement process and policy expertise and support. A full role description is provided in Appendix L.

Clarify Procurement Roles and Responsibilities

Manitoba Housing should clarify the roles and responsibilities for key procurement processes by identifying the main steps in the procurement process and clearly determining who is responsible for each task within the processes. This task is dependent on a common understanding of the Procurement Lead’s role within Manitoba Housing, and an endorsement of the underlying engagement model. This solution will help establish core procurement activities of Planning, Workload Scheduling, Contract Management and Supplier Relationship Management, provide clear ownership of procurement activities to avoid duplication of effort, and ensure procurement activities are supported by procurement specialists.

Manitoba Housing would benefit by having clarity of roles and responsibilities, with defined hand-offs, and it will create more process efficiency and effectiveness. The recommendation will reduce time areas spend on procurement, allowing them to focus more on service delivery. It provides clear expectations of the stakeholders involved in the procurement process, and provides a mechanism to provide the benefit of deep procurement expertise to multiple procurements across the organization.

Develop a Procurement Training Plan

Manitoba should develop and deliver a training plan and materials for staff about their role and responsibilities in the procurement process. The training program should be established and delivered by the procurement lead and directed at all staff involved in procurement. This program is to cover all procurement training needs, including basic introduction courses as well as specific niche skill sets.

This solution will provide the Manitoba Housing staff with the right skills and knowledge to do their jobs effectively and on time, and will bring all trained staff to a similar foundational knowledge level on procurement. Along with other recommendations, this program can assist in



addressing lack of clarity on roles and responsibilities. A better understanding of procurement strategy, approaches, and stakeholder roles is a solid foundation for quicker procurement reviews.

Establish a Procurement Planning Process

Manitoba Housing should establish a procurement planning process that combines both capital and maintenance procurement planning. The planning process should be championed by the Procurement Lead, with joint governance on capital and maintenance priorities between Maintenance/ Capital groups and the Property Management group. The contract periods for standing agreements should be spread through the year where possible to reduce and smooth the peak contracting periods, and the new procurement group should identify contracts with a seasonal nature that need to be put in place early, in order to schedule those in the appropriate period (e.g., snow removal, exterior painting, etc.). Finally, the long term capital plan should be published externally to make suppliers more aware of anticipated requirements.

The solution will allow for housing-wide planning which will yield improved visibility into annual procurement requirements and budget management. It will ensure coordination of capital budgets and maintenance budgets to minimize the occurrence of when “things fall off of capital, they end up in maintenance,” and it will improve procurement workload management.

Enhance the Tendering Process

Manitoba Housing should enhance the tendering process by expanding the selection criteria beyond a primary focus on lowest bid. They should incorporate broader selection criteria into tender packages for quotes, and standing agreements (such as quality, reputation, approach and experience, history and reputation, long term costs, warrantee, delivery cost and timing, turn around time for service, etc.). Manitoba Housing should address the “Not low bid” restrictions of the government procurement policies, and gain acceptance that further criteria will be accepted, and that this will be the norm and not an exception. There should be formal vendor negotiations for strategic and large procurements; opportunities to negotiate with vendors beyond the request for 3+ bids should be incorporated. Finally, Manitoba Housing should standardize RFx bid documents and templates (RFI, RFQ, RFT, RFP, etc).

The establishment of a tendering process will increase emphasis on quality, performance, and “total cost of ownership,” and will mitigate supplier attempts to “buy” the business with the risk of multiple downstream “change requests”.



Establish a Supplier Management Process

Manitoba Housing should develop and implement a measurement process for supplier performance. The process would entail three core elements:

A communication process established with the vendors to manage the relationship, and incorporate feedback (in both directions)

A supplier “scorecard”. The scorecard would include dimensions such as quality, reliability, on time completion, adherence to estimates, cost relative to peer group, etc.

A set of tools and templates including representative scorecards for different types or sizes of vendors, tracking tools, reporting tools, training and reference materials, etc.

Key elements of the process would include:

Establish plan for discussing performance against scorecard dimensions with supplier – and building action plans to improve in key areas

Scorecards should be initiated with larger vendors, and those with standing agreements or recurring business – eventually, simpler versions should be used with smaller vendors

Incorporate into tender process an evaluation criteria that incorporates historical vendor performance based upon scorecard data that is tracked and kept up to date

This solution will allow Manitoba Housing to build strategic supplier relationships. It will drive improved quality and value of delivered goods and services, and vendors with chronic performance issues will be unable to win new tenders on low bid alone.


Table 14 — Supply Chain Management: Strategic Sourcing Recommendations


Competitively Tender Selected Commodities

Manitoba Housing should competitively tender selected commodities in each of the following spend areas; an evaluation of the spend opportunity has been undertaken: Contractors, Building, Services, Professional Services, Supplies & Appliances Based on the spend analysis and input from the workshops; a prioritized list of target commodities, estimated potential savings, and an overall implementation roadmap has been developed.

This solution will help leverage Manitoba Housing purchasing power by consolidating spend for selected commodities with a smaller number of suppliers resulting in cost reduction savings opportunities

Establish Standards and Specifications

Establish common standards and specifications that apply across the organization for selected commodities

This solution will allow for increased standardization of products and services, with improved consistency and reliability of products and materials. Standardization of products will result in increased efficiencies in maintenance and repair of the products. There will be improved procurement efficiency once specifications and standards have been established in areas including selection hardware and materials, and developing bid packages requirements. Robust standards and specifications will improve the quality of procurements in the following ways: Evaluation of responses against well articulated requirements will result in more consistent supplier responses/bids allowing easier evaluation Procurement agreements tied to performance based specifications providing a foundation for vendor service level agreements (SLAs) and performance metrics

Establish Preferred Suppliers for Parts/Materials/Supplies

Establish agreements with selected hardware/ building materials suppliers with geographic reach across the province that can provide the broadest range of currently used materials – there may need to have multiple agreements due to geographic coverage.

This solution will allow Manitoba Housing to improve purchasing power by consolidating spend with a smaller number of suppliers. It will improve consistency of the products by maintaining a common source, by using suppliers to establish standard product lists and approved alternate products for key hardware and supplies, and reducing time in selecting hardware and materials.



There will also be a more consistent and reliable level of quality in products and materials.

Expand use of standing agreements

There are a number of existing agreements in place and under development, many with specific regional coverage. There is an opportunity to expand the use of standing agreements to a broader set of commodities.

The benefits of this solution include the increased standardization of products and services, as using the same produces/services will build consistency in the level of services provided to clients/tenants, and will result in increased efficiencies in servicing the products. Currently a significant amount of time and resources is spent on tendering a large number of small dollar transactions. Increased use of SSAs will reduce the amount of tendering required. Purchasers will be able to make purchases from predefined catalogues with pricing already established/negotiated thereby saving time to focus more closely on the needs of the clients/tenants. As well the use of more SSAs will increase the quality of procurement negotiations as procurement contracts would be negotiated by individuals with more experience and with the assistance of the procurement lead. An early win could be an SSA for the procurement of appliances.

4.3 Capital Asset Management

Manitoba Housing directly or indirectly manages an extensive housing portfolio. Delivering almost every aspect of the Housing mandate is related, in one way or another, to the asset value of the housing stock. Value in this regard includes not only technical/engineering quality and financial/investment performance, but also the use-value of the portfolio in facilitating the delivery of broadly defined social policy objectives.

As identified in the Operational Review and historically by the OAG, a number of challenges currently exist with the MHRC/MHA approach to Capital Asset Management. These include absence of an integrated preventative maintenance program, a questionable 5-year Capital Plan, poorly defined inspection processes and policies, and the lack of a modern asset management framework. And while work is currently being completed with favourable expectations for addressing a number of these issues, opportunities do exist for Capital Asset Management renewal at MHRC/MHA. These opportunities are outlined below, and can be characterized as necessary


components of establishing a modern asset management framework and Manitoba Housing.

4.3.1 Modern Asset Management Frameworks

Asset management practices can be divided into two distinct but interrelated areas: tactical asset management and strategic asset management. Tactical asset management focuses on the day-to-day operational activities and maintenance and services required to maintain the assets to provide service at a consistent level. Strategic asset management, on the other hand, focuses on the use, fit, and contribution of these assets in the overall context of the organization’s business strategies and goals. Strategic asset management focus on investment activities that will protect, extend and enhance the overall asset portfolio for optimal service delivery. Organizations use Asset Management Framework to document their intended approach to strategic asset management.

What is an Asset Management Framework (“AMF”)?

In leading practice, an Asset Management Framework provides guidance to an organization in managing and investing its limited resources for the purpose of extending, enhancing, and protecting its strategic and operational assets. These assets are essential in the provision of services to allow the organization to meet its corporate mandates.

The output of the asset management process and the outcome from the framework is typically a set of management plans:

i) Capital Plan to enhance the value of assets,

ii) Preventive Maintenance Plan and Planned Repairs and Improvements to protect and extend the value of assets, and

iii) Acquisition and Disposal Plan to improve overall performance and value of assets within the portfolio. In order to generate these management action plans, the Framework requires several supporting and interlocking components and processes.

An Asset Management Framework for Manitoba Housing would consist of the following major themes (Figure 12).


Figure 12 -- Modern Asset Management Framework

No

n-asset

So

lutio

n

(No

t Ow

ned

/ No

t Man

aged

)

Capital Plan

Needs Analysis

Service Delivery Strategy

Investment Prioritization & Funding Strategies

Investments & Project Management

BusinessPlan

Government Priorities

Public Housing Demands

Integrated Optional Analysis & Trade-off Processes

Preventive Maintenance Plan

Acquisition /Disposal Plan

Oversight, Performance Measurement, Reporting

To

ols &

System

s

Business Strategies

Integrated Process

Technical Tools

Investments

Oversight

The key factors of the AMF are as follows.

Business strategies - Asset management activities must be designed to address one thing, and that is, the organization’s overall business strategies. In the case of Manitoba Housing, to formulate appropriate business strategies requires understanding of the broader governmental priorities as well as public demands and expectation on housing requirements and translating these requirements into policies and mandates. Once the demand and requirements are understood, service delivery strategies can be formulated.

Integrated processes - An Asset Management Framework, by necessity, integrates a number of business processes, including needs assessment, project prioritization and planning and project execution. Resource allocation decisions should be policy and performance-driven, consider a range of alternatives, investigate the most cost-effective solutions, cognize of limited funding sources, and methodically prioritized to increase transparency of the decision-making process. Effective communication of outcomes from each business processes and mindful of critical linkages between and among processes are important in the successful execution of the Framework.

System and tools - The activities of asset management requires an appropriate set of management and information systems to ensure that the organization has up-to-date information on the existing housing stock, condition of these properties and investment demands of these assets. These systems should be well integrated into the organization’s financial and performance management systems in order to maximize efficiency. In addition, decision support tools and other templates are also important in supporting the management process.


Investments and project management - This is the execution component of the Framework. It is equally critical to have a comprehensive plan as well as well integrated investment funding, project delivery and project management processes. The purpose of these processes is to translate various capital, preventive maintenance and improvement, and acquisition and disposal plans in achieving the overall business strategies.

Oversight - The Asset Management Framework ‘closes the loop’ by monitoring performance outcomes against planned investments and project objectives. This not only provides an audit trail of program expectations, but continually improves the ability of the business to develop future performance-optimized programs.

4.3.2 Capital Asset Management: Current State Analysis

Manitoba Housing has ultimate accountability and responsibility of over 800 housing projects which it owns. They include approximately 270 housing projects under the Rural and Native Housing portfolio. These housing projects consist of a mixture of high-rise, low rise, and wood frame properties. Each housing project may have more than one building structure. In total, Manitoba Housing has over 17,000 housing units available to meet social housing needs of Manitoba citizens.

From an asset management perspective, property management and facility management services on Manitoba Housing owned housing projects are provided by:

i) the Manitoba Housing Authority,

ii) an arms-length property management entity CHMM specifically for the Rural and Native Housing stock and

iii) arms-length sponsor groups.

Capital planning services to these housing portfolios are provided by MHRC’s capital planning branch and MHA’s capital delivery branch.

In addition to Manitoba Housing’s owned housing stock, the organization also provides financial assistance and asset management advice to another 600 housing projects with an additional 17,000 housing units through various Private Non-profit operators (“PNP”).

Figure 13 provides a pictorial view of Manitoba Housing’s owned housing stock and geographic distribution of this stock within the MHA-managed and Sponsor-managed portfolio:


Figure 13 — Current State Housing Stock Geographical Distribution

North Central Portage 71 / 7

Parkland East Dauphin

40 / 4

Northern The Pas 25 / 2

Churchill 10 / 0

Eastman Selkirk 75 / 2

Total Provincial Portfolio consists of 541 owner managed (MHA) and 45 sponsored managed housing projects. RNH housing projects are not included in this summary. Data is derived from RRA report as of March 31, 2006

Distribution of Provincial Housing Projects Portfolio Owner Sponsor Managed Managed Churchill Northern The Pas Parkland West Roblin Parkland East Dauphin Eastman Selkirk Southwest Brandon North Central Portage Winnipeg Totals

10 25 47 40 75 79 71 194 ------ 541 ====

0 2 2 4 2 7 7 21 ------- 45 ====

Winnipeg Owner Sponsored Projects Managed Managed Downtown South 12 4 Central Park 10 8 St. James 10 6 Lord Selkirk 25 3 North End 21 0 Brooklands 12 0 Fort Garry 14 0 Fort Rouge 17 0 North East 22 0 St. Vital 51 0 ------ ------ Total Winnipeg 194 21 ==== ====

Parkland West Roblin 47 / 2

Southwest Brandon

79 / 7

Manitoba Housing’s portfolios are summarized into housing projects and housing units, as presented in Table 15.4

4 Note: Information prepared by MHRC/MHA staff, as at February, 2006.


Table 15 — Manitoba Housing Portfolio – Projects and Units

Housing Portfolio Total Projects Total Units

MHA – managed * 541 12,958

Rural and Native Housing 268 1,625

Sponsor Managed * 45 2,543

Private Non-Profit 84 1815

Private Non-Profit Others:

Rent Supplement

Former Federal Portfolio

Former Federal Portfolio – Beds Only

Winnipeg Child & Family

MHRC Others

127

271

-

59

24

1,769

8,595

5,033

-

166

Grand Total 1,419 34,504

* Data is compiled using the latest available RRA reports as of fiscal year ended March 31, 2006 from MHRC Corporate Services

Table 16 identifies Manitoba Housing’s current rights and responsibilities over management of the various portfolios of housing projects under current agreements and arrangements.


Table 16 — Current State Portfolio Management Allocation

1 MHRC collects rent directly from MHA managed tenants in order to fund operation activity. MHRC is responsible for covering

any shortfall from operations. RNH property manager (CHMM) collects and keeps rent to fund daily operations, similar to

sponsors and PNP.

2 PNP housing projects are divided into pre-1986 and post-1985 projects. Operating results of Post-1985 housing projects are

consolidated into the final results of MHRC while Pre-1986 are shown as a one-line item.

3 Monitoring and operations review on sponsor managed and PNP housing projects are done by Portfolio Administration.

Activity

Direct Managed –

MHA

Rural and Native

Housing Sponsor Managed

Private Non-profit 2

Asset Ownership & Rights

MHRC/MHA has complete ownership/ landlord responsibilities

Tactical Asset Management (Day to Day)

MHRC/MHA has direct responsibilities over day-to-day facility and property management responsibilities

MHRC/MHA is financially responsible for DIRECT funding of day-to-day operation activities 1

MHRC/MHA is financially responsible for DIRECT funding/ subsidy of mortgage interest on the property

MHRC/MHA is financially responsible for DIRECT funding of property taxes and property insurance

MHRC/MHA is financially responsible for DIRECT funding of planned repairs activities (aka M&I)

MHRC/MHA is required to provide technical advice on and monitoring of facility and property management matters 3

Strategic Asset Management (Long Term Planning)

MHRC/MHA is responsible for conducting building level inspection for the purpose of capital planning

MHRC/MHA is responsible for conducting unit level inspection for the purposes of identifying repairs, maintenance and other operating matters

MHRC/MHA is responsible for drafting capital plan for asset preservation and betterment

MHRC/MHA is financially responsible for DIRECT funding of capital projects (e.g. The Loan Act)

MHRC/MHA is responsible for the actual delivery and management of capital projects in accordance to the capital plan

MHRC/MHA is responsible for approval and quality review of betterment projects in accordance to capital plan


The review of Manitoba Housing’s current asset management practices focuses on three components of the Asset Management Framework (section 4.3.1): Integrated Processes, Tools & Systems, and Investments. These three components are important in the tracking of Manitoba Housing’s assets, identifying needs and conditions of these assets, converting these needs into potential capital and repair projects, prioritizing projects, and ensuring projects are delivered to plan.

To assist evaluation of and commentary on the organization current asset management practices, the following structure incorporating key elements from the above three Asset Management Framework components was utilized.

Figure 14 — Capital Asset Management: Current State Focus

Needs Analysis • Maintain an Asset Inventory • Assess building and unit level conditions • Identify issues/ needs

Options & Trade-off Analysis

• Identify and assess alternative solutions • Evaluate total cost of rehabilitation • Identify potential disposal and acquisition candidates

Investment/ Project Prioritization & Funding Strategy

• Prioritize potential solutions • Determine funding source

Investments & Project Delivery

Too l s

&

Sys t ems

• Project planning • Project execution & handoff • Project reporting

The current state assessment is summarized below.

Maintain an Asset Inventory

The most significant assets to Manitoba Housing are the buildings and the major systems within the buildings. They are essential assets to Manitoba Housing’s ability to deliver services to meet its organizational mandates. In order to properly identify, track, and disseminate key information on its housing stock to the appropriate stakeholder groups, it is important that such information is held and maintained in a centralized and well-coordinated fashion. KPMG noted that there is a centralized function to maintain and track all housing projects (“Housing Project Listing”) that are directly under Manitoba Housing’s influence. However, this centrally maintained listing only tracks buildings at a housing project level, which can represent a cluster of different building types. There is no specific reference to the number of building structures within a project in this listing. Therefore, it is difficult to understand the uniqueness of these housing projects without further detail on its makeup.

The Housing Project Listing, which is stored in MS Excel, includes MHRC owned, private non-profit owned, and former federal portfolio, and is updated whenever a change of title to the housing project occurs. Manitoba Housing management


recognizes the importance of maintaining this listing on a centralized basis, thus reinforcing the notion of ‘one version of the truth.’ However, as this list is only accurate at a point in time and is used by various departments and branches for analysis and reporting, a more robust system to house this critical data should be considered.

A separate system, Property Inventory (“PI”), is available to track housing projects at the building level. This system is maintained by IT support to Manitoba Housing. KPMG learned that MHA is not aware of the existence of this system. As a result, information in this system may not be up to date and have not been reconciled to the Housing Project Listing. There is currently no documented process to keep the two systems (Housing Project Listing and PI) synchronized. In addition, this database may not contain all housing projects that are under Manitoba Housing’s mandates (such as building level information on PNP housing projects) and may not contain building asset information such as number of chillers, elevators, boilers, etc.

At a minimum, industry leading practices recommend that the following information to be collected at the building level to enable proper asset evaluation and planning:

- Building number/ name – available already at the project level; - Gross square footage – work in progress, this information is being

accumulated by an insurance consultant working for MHA; - Date of construction – available already at the project level but not

building level; - Type of construction – available already at the project level but not

building level, except as documented in previous inspection reports; - Functional use – available already at the project level but not at

building level, except as documented in previous inspection reports; - Number of floors – number of units is already available at the project

level; - Current replacement value – this information can be current assessed

value. It is critical in the calculation of the Building Condition Index, an index that can be used to measure and benchmark state of condition of buildings.

In terms of building level assets, MHA has made significant progress in identifying major building systems at each housing project. This information was not previously available and as of May 2007, MHA has documented 100% of their major building systems (which represent approximately 15% of total building equipment) for the Winnipeg district and rural districts. While this documentation is captured manually in Excel, it represents a significant first step in establishing baseline information for the development of a Preventive Maintenance Plan.


Assess Building and Unit Level Conditions

Manitoba Housing’s mandate is to perform capital planning and building level inspection on MHRC owned housing projects every three years. This is a minimum threshold that was established in response to the OAG reports of 2002. However, this three year cycle does not run on a continuous basis - the inspection process occurs every three years instead of continuously through out the year. This start and stop cycle may increase the ramp up time needed to initiate the process and may not be an efficient way to maintain continuity and knowledge on MHRC’s sponsor portfolio.

We understand that the MHA has initiated a plan to perform baseline evaluation on all of its managed properties. According to MHA management, this baseline inspection is on track to complete by the end of this summer (2007). This plan represents a significant first step in obtaining baseline information for the purpose of developing a complete picture of the portfolio’s capital requirements and state of well-being of the housing stock.

Currently, Manitoba Housing does not have a comprehensive policy or procedures manual to document the inspection process, staffing requirements, objectives of the inspection, inspection approach, and to provide guidance on certain inspection items such as identification of capital vs. operating issues. This policy manual should be reviewed by all parties (e.g., capital planning team, maintenance and property management team) on a regular basis to keep information current and to improve two-way communication and exchange of ideas.

Currently both MHA’s maintenance group and MHRC’s capital planning group conduct building and unit level condition assessments independently. MHA focuses on its managed properties while MHRC focuses on Sponsor-managed, PNP-managed and RNH housing projects. Many of the inspectors are seasoned trades or technical professionals as well as having in-depth knowledge and understanding of their assigned housing projects. There maybe synergies, best practices and learning that both groups can benefit if the inspection process is organized and coordinated jointly.

MHRC owns all sponsor-managed housing projects and therefore, is responsible for the overall quality of these assets. We understand that Sponsor-managed housing projects have externally hired property manager or building manager to look after day-to-day operations of the property. The role of a property manager or building manager, among other things, is to protect and preserve the assets on-site. However, these managers are not accountable to the MHRC and their activities, including building inspection and preventive maintenance, are not integrated into the MHRC asset management process.

MHRC capital planning branch instituted a peer-review process to ensure the application of common standards and evaluation criteria and to provide quality assurance over the inspection process. This procedure is an important quality assurance and management oversight process and should be adopted organization-wide.


Each significant building system component is properly identified and evaluated in the respective inspection reports for MHRC and MHA. However, there is no specific tracking of scoring (e.g., excellent, good, fair, and poor) at the building component level or the overall building and project level. There is an opportunity to track asset condition on an organization-wide basis in order to compare the state of good repair across buildings and housing portfolios.

MHRC’s Portfolio Administration branch acts as a monitoring and oversight role on Sponsor-managed and PNP housing projects. This group performs operations review and recommend course of action (ultimately transfer of property management responsibility to back to MHA) by consulting to the board of directors of the Sponsors. This role, among other activities performs by the branch, is critical in the oversight and monitoring of MHRC assets under sponsor management.

Identify Issues / Needs

Building condition assessment templates (inspection forms) are used by both MHRC capital planning branch and MHA. Both sets of templates provide a comprehensive tool to track critical building level information, record and accumulate issues/ needs identified at the inspected housing projects. These templates also provide the mechanism to identify capital and non-capital projects, and categorize issues according to types of deficiencies and recommended timing for remediation. There may be opportunities to leverage the features of each template to enable better inspection process and results tracking on an organization-wide basis.

In addition to building level and unit level inspection, MHRC capital planning branch also conduct specific health and safety assessments in relation to the type and purpose of the housing project (e.g., water temperature testing at elderly homes). These types of assessments are important in providing value-added consideration to the comfort and safety of tenants over and above commercial property settings.

KPMG noted that MHA has recently developed a life expectancy table on major building equipment and a priority ranking matrix to assist the inspection team in identifying issues and needs. This type of matrix information is important in providing guidance and standards across the pool of building inspectors.

M&I Year End Commitments reports were collected from MHRC Corporate Services and data were compiled to illustrate housing project needs by fiscal year (Table 17).


Table 17 – M&I Year End Commitments

Fiscal Year Total Needs

Total Committed

Current Year 1 % of Total Needs

Committed CY

03/04 14,058,000 7,567,600 54%

04/05 10,046,200 9,370,600 93%

05/06 9,950,100 7,584,500 76%

06/07 41,693,900 11,906,800 29%

Total Committed includes Amounts Committed and Amounts Pending Commitment and not

deferred. Source: M&I Year End Commitment reports, Manitoba Housing Master Summary

5 Year M&I Capital Plan by Portfolio

Total Needs are identified as major repairs and betterment projects identified through the inspection process or arose during the course of the year requiring attention. These are needs of the housing project over and above regular day-to-day operating activities. Since the Loan Act funding mechanism was not in place in prior years, there was not specific focus on the accounting definition of betterment vs. major repairs. These items were called ‘M&I’.

Total Committed Current Year is the amount of funds Manitoba Housing was able to commit to, such as contractual commitments or pending commitments where the project had been tendered and waiting for finalization/ selection.

In fiscal 06/07, total needs increased from $18,787,400 based on current M&I Plan to $41,693,900 based on Manitoba Housing 2006 year of the Five Year Capital Plan. Of total needs, approximately $23,684,800 of projects to be managed by MHA was identified as betterment projects that would qualify under the Loan Act.

Identify and Assess Alternative Solutions

Project justification forms are being used at MHA to identify alternative solutions and to justify the rationale for spending. This is a significant achievement in the project evaluation and prioritization process.

Evaluate Total Cost of Rehabilitation

Currently, Manitoba Housing does not have information related to the market value or assessed value of its owned housing projects. Therefore, it is unable to determine the relative total rehabilitation costs to the value of the building using indices or benchmarking tools such as Facility Condition Index (“FCI”) to evaluate the reasonableness of total rehabilitation costs of its housing stock. FCI is useful in identifying buildings where the cost of rehabilitation (capital projects, major repair requirements and other improvements) may be significant to the overall value of the property, thus raising the question of whether funds are spent effectively.


Based on MHA’s Five Year Capital Plan data, one can identify betterment projects that may qualify under the Loan Act, and sort these projects based on the building type of the housing project. In the absence of market value or assessed value data, accounting (net book value) data corresponding to these projects to approximate the remaining useful life of these housing projects were collected. The net book value is an accounting straight-line depreciation of the original acquisition cost of the housing project based on a Manitoba Housing’s accounting policy.

KPMG calculated a rough FCI index using the total betterment identified for the specific building type over the five years divided by its net book value. While the remaining useful life of these projects will likely be much lower than the current market value or assessed value of these projects, the data provides an indicator of the relative scale of betterment needs for these housing projects in relation to their remaining accounting useful life. This highlights that while there are significant improvements and betterments identified and needed for these housing projects, consideration should be placed on the effectiveness of this spending given the age of the building, the relative market value of the building and the needs of the community in order to balance the investment priorities (Table 18).

Table 18 — Current State: Facility Condition Index Analysis

Building Type 2006

Betterment 2007

Betterment 2008

Betterment 2009

Betterment 2010

Betterment Five Year Plan Total

Net Book Value FCI

High-rise

5,063,050

6,676,453

3,448,021

1,795,371

8,327,971

25,310,865

27,158,953 .93

Low/Mid-rise

5,631,975

6,045,550

3,021,550

2,289,600

6,356,900

23,345,575

20,202,820 1.16

Multiplex

$587,100

$710,650

$388,750

$299,750

$116,750

$2,103,000

$1,602,991 1.31 Single Family

Dwelling

4,990,800

3,460,814

1,857,650

845,800

1,126,000

12,281,064

7,098,204 1.73 Row

Houses/Townhouses

7,181,705

6,576,884

4,237,943

3,730,559

3,594,409

25,321,500

13,419,518 1.89

Other (Hostels)

230,200

35,000

12,000

-

324,000

601,200

745,245 .81

Totals

$23,684,830

$23,505,351

$12,965,913

$8,961,080

$19,846,030

$88,963,204

$70,227,731

Source: MHA Five Year Capital Plan by Region RRA Year Ended March 31, 2006

Identify Potential Acquisition and Disposal Candidates

We understand Manitoba Housing does not have a formal, documented process to identify housing projects or buildings within a housing project that are candidates for decommission/ disposal based on needs, vacancy rates, and proximity to other similar housing alternatives. FCI, building vacancy rates and housing market analysis are examples of inputs that feed into the asset acquisition and disposal decision making process. As discussed earlier, the lack of market value or current value assessment information contributes to the lack of a formal asset acquisition and disposal plan.


Prioritize Potential Solutions

Manitoba Housing prioritizes projects by level of criticality and urgency for remediation. Projects that affect building systems, structure and envelope are given preference over unit level repairs and upgrades. In addition, due to the Loan Act restrictions, projects are then classified as ‘betterment’ and ‘operating’. Projects are re-aligned between years in order to achieve a total amount that fits within the single year anticipated funding level. However, there is no documented process or scoring mechanism to provide a logical and defendable approach to this re-prioritization exercise. As noted earlier in the Identify Issues / Needs section, MHA has recently developed matrix and life expectancy tables to assist in the evaluation and prioritization process. This is an important step in formalizing and providing a more structured approach to the process.

Determine Funding Source

In previous years the funding of capital projects was determined by the Treasury Board. The approval of capital project spending envelope may not be obtained in time to engage contractors and to take advantage of specific windows of opportunity. With the Loan Act funding mechanism, Manitoba Housing will have the opportunity to properly plan for rolling starts of various projects that qualify under the accounting definition of capital additions. The Act provides much needed sources of funds for long-delayed capital projects in order to preserve, enhance, and extend useful asset life.

In addition to capital additions, there are significant repair and maintenance projects that are needed in order to maintain the building at an acceptable standard. While these projects do not qualify for funding under the Loan Act, a separate funding source is being evaluated in order to properly fund these activities. As noted in the Asset Management Framework diagram, Preventive Maintenance, and Planned Repairs and Improvements are two of the three major outputs of a successfully managed Asset Management Plan. Manitoba Housing’s ability to secure a separate funding source for these projects would positively contribute to the capability of the organization to better preserve its strategic assets.

Project Planning

Projects initially scheduled to start may be pushed back and other unidentified projects may arise due to urgent nature of the request. These changes are prioritized by the project delivery teams. The impact of these late changes, funding effect on the overall capital plan, and equitable distribution of capital funds may not be readily available to decision-makers and other stakeholders on a timely basis. This is due to the fact that capital plans are maintained in Excel format. Reporting from Excel is manual and often a time-consuming process as multiple spreadsheets must be linked and references and data source must be reconciled.


Project Delivery and Handoff

Project delivery is performed by a separate branch within the MHA. This branch provides project management and delivery services to all MHRC owned housing projects. There is currently no documented communication and handoff processes between the capital planning and capital deliver groups within various branches of Manitoba Housing. There have been instances of communication breakdown whereby contractors turned up unexpectedly at housing projects without the building manager’s knowledge. Similarly, building managers may have been expecting certain capital projects that never got delivered at the housing project due to cuts in funding, or other decision factors.

Based on M&I Year End Commitment Reports we reviewed, we noted that in prior years large projects (budget or committed amount greater than approximately $250,000) were deferred due to limited funding. These large projects tend to be more technically complicated, requiring multiple vendors and contract management effort and are likely multi-phased, multi-years. With the new funding model via the Loan Act, there may be more money available to address these large projects, and therefore, may create the sourcing challenges (staffing, workload leveling, technical skills/ training) to MHA’s capital delivery team to address these projects (Table 19).

Table 19 — Large Project Commitments

Fiscal Year

# of Large Projects

Committed Current

Year

Total Value of Large Projects

Committed Current Year

# of Large Projects Deferred

Large Projects Deferred

Large Projects (Committed + Deferred) to % of Total Needs

03/04 7 3,106,265 5 2,245,000 38%

04/05 5 3,363,034 2 850,000 42%

05/06 9 3,374,928 2 737,800 41%

06/07 9 4,285,782 10 5,817,747 24%

Source: M&I Year End Commitment reports, Manitoba Housing Master Summary 5 Year M&I Capital

Plan by Portfolio.

Project Reporting

Due to the current capabilities of the financial accounting system (Masterpiece) and the Maintenance Management System (MMS), project cost accounting is performed using Excel. While Excel is flexible and easy to maintain, it does not provide the appropriate level of reporting capabilities and requires significant effort in reconciling manually keyed data with data in the general ledger.

4.3.3 Capital Asset Management: Future State Recommendations

There are a total of twenty two recommendations on Capital Asset Management presented, grouped into the major components of the asset management framework: Needs Analysis, Options and Trade-offs Analysis,


Investment/Project Prioritization & Funding Strategy Capital Plan, Preventive Maintenance Plan, Acquisition/ Disposal Plan, Investment and Project Delivery, and Tools and Systems. For each recommendation, a high level implementation guideline has been included in Appendix N; recommendations are summarized in Table 20.

Table 20 — Capital Asset Management: Future State Recommendations

Asset Management Components

Sub-components # Recommendation

1 Consider converting data from the 'Housing Project Listing' Excel spreadsheet into Access database for easier query, multi-user read access and for eventual export into a more robust enterprise system.

2 Consider reconciling building information in the Property Inventory (PI) system against the Project Listing to ensure all MHRC owned housing project as well as PNP housing projects, are contain in the system so they can be referenced to further Building Condition Assessments.

3 In order to calculate the Facility Condition Index, an indicator of state of repairs of a building, MHRC/MHA should consider obtaining the latest property assessed value and develop a process to maintain this information up to date in a centralized system (e.g., PI).

4 Continue to accumulate gross square footage information on each building within a housing project in order to build up this data for cost benchmarking purposes. This data can be used to calculate $ per square foot on facility operating costs such as janitorial, waste removal, snow removal, to compare among buildings of similar type.


5 As part of the Building Condition Assessment (BCA) process, continue to identify major building equipment, structures and systems to build up the inventory of building assets. This data should be tracked in a database that can either be linked to PI or becomes part of the PI database, and to budgeting.

6 Develop an Inspection or Building Condition Assessment (BCA) policy describing the set cycles for building review, skills & experience profile, inspection best practices and procedures, checklists and definitions (e.g., capital vs. operating), and quality assurance and peer review procedures. This policy should be communicated and updated on a regular basis to all key stakeholders (maintenance branch, project delivery, capital planning, portfolio administration and technical services).

7 Identify building inspection cycle in the PI database or other similar building information database.

Needs Analysis

Assess Building & Unit Conditions

8 Consider providing a copy of the BCA policy to Sponsor-managed and PNP managed housing projects to encourage adoption of the policy. This will also facilitate the periodic BCA process.




9 Consider issuing a building level condition assessment score (excellent, good, fair, poor) in addition to major equipment class level. This rating will assist in the identification of 'trouble buildings' as well as in the prioritization of required projects.

Identify Issues/ Needs

10 Consider consolidating BCA inspection activities, practices, templates and skills from MHA's Maintenance Coordinators and MHRC's Capital Planning branch into a broader inspector pool to leverage different area of expertise, area of coverage and cross-training opportunities. There is also an opportunity to identify key personnel from both groups as Technical Services Advisors to provide technical support in specific areas such as building engineering, structural engineering, mechanical engineering, electrical, HVAC specialists, etc.

Identify & Assess Alternative Solutions

None


11 Consider employing key indicators such as Facility Condition Index. Set a specific target number to identify assets in significant distressed for further evaluation of needs and consider these assets in the disposal plan.

Identify Potential Acquisition & Disposal Candidates

See above.



12 Consider adding building type or other factors (e.g. building system ranking - risk adjusted ranking among various building components in order to differentiate critical items between sidewalk and HVAC) in the project scoring process to help further refine the list of critical projects in order to meet funding requirements.

13 In order to properly match issues identified during BCA with appropriate funding sources, consider separating these issues into three categories: capital projects qualified under the Loan Act, major repair & improvement projects, and operations.

Investment/ Project Prioritization & Funding Strategy


14 Consider developing an internal guideline with examples on various items classified under the Loan Act. This document should be reviewed by an external accounting and auditing authority such as the Auditor General to ensure guidelines are consistent with the Loan Act's requirements.

Capital Plan, Preventive Maintenance Plan, Acquisition/ Disposal Plan

None.




Project Planning

15 Consider using a RACI (Responsible, Actionable, Consulted and Informed) chart to identify significant stakeholders and their involvement in the project planning, funding and delivery process. Stakeholders should include the Procurement group in order to pool similar projects to maximize purchasing power.

Investment & Project Delivery

Project Delivery & Handoff

16 As discussed under Identify Issues/ Needs in the Current State section, MHA's project delivery team has been able to deliver approximately $8 - $12 million worth of projects each year based on current staffing levels and complexity level of projects. It was also noted in the Project Delivery and Handoff section that the number of large projects have been trending up, along with the number and dollar worth of projects having to be deferred. Due to the demand and technical nature of the work, MHRC/MHA may not be able to staff up the resources quickly enough to plan and delivery projects on a timely basis. An alternate strategy is to consider a different resource sourcing strategy, such as partnering with a project management company to handle some of the volume of work.

17 Develop BCA database to capture, maintain and report on assessment data by year.

18 Consider developing asset management database or acquiring an off-the-shelf software tool to house housing project data, major equipment data and building systems data.

19 Develop project tracking database to assign unique project numbers and to retain critical project information: scope, timing, alternatives, funding source and link projects to records tracked in the BCA database.

Tools & Systems

20 Enhance/ replace existing Maintenance Management System (work order and PO system) to incorporate functionalities required for managing large projects (e.g. cross-reference to project number, holdbacks, building level chart of accounts, commitment capturing, etc.).

21 Consider adopting the peer review procedures at the MHRC Capital Planning branch to ensure consistency and adherence to the BCA policy manual (to be developed as recommended).

Oversight, Performance Measurement, Reporting

22 Monitor vendor/ contractor compliance during and after the project delivery process. Consider informing the Procurement group of health and safety concerns by contractors or unfair business practices in order to exclude these vendors from future tenders.

4.4 Summary Business Case Assessment

The recommendations offered in the Business Case are expected to lead to significant improvements in the managerial and performance outcomes of Manitoba Housing. From an analytical perspective, these improvements are captured in Table 21, and reflect the judgment of KPMG and the senior management of MHRC/MHA.


Table 21 — Business Case Analytical Framework

Measurement Core Dimension Sub-Dimension

Worse Same Better Enables Vision, Mission and Values Impact on Client Service Consistency with Government Policy

Service Performance

Impact on Broader Community Participation Enhanced Financial Management and Controls Time to Realization of Full Benefits Impact on Risk Management Ease of Implementation Avoidance of Negative Public Relations Consistency with HR Policies Impact on Managerial Autonomy Impact on Staff Span of Control Clear Lines of Accountability Requirement for new Skills/Competencies Integration with other Departmental Programs Consistency with Modern Management Principles

Impact on Quality of Housing Stock


Impact on Organizational Efficiency Costs/Savings Financial

Impact Impact on Staffing Levels


5.0 Manitoba Housing Transition Strategy The recommendations offered in the Business Case require effort and careful management to be implemented successfully. A detailed implementation plan should be developed for each recommendation, and in each case will require commitment and oversight from senior management to ensure that decisions are made in a timely manner, and responsibilities and accountabilities enforced.

From an overall business Case perspective, a transition strategy has been developed to guide implementation of recommendations. This strategy is presented below, and highlights the importance of a well-developed change management plan, key elements of change management to be implemented, a schedule for delivering the Business Case, and a risk management plan for senior management to guide the overall transition.

5.1 Importance of Change Management

Establishing a formal change management program, especially during a multi-year, multiple initiative implementation, provides benefits integral to success. Key stakeholders are engaged in the implementation; they are mobilized and aligned with the transformation effort. This creates commitment and support for the initiatives, sending strong messages in the organization about the importance of supporting the initiatives. The change management program comprises a consultative and participatory approach to implementing initiatives so that all accept and adopt the new business solutions. As one of the pillars of a change management program, developing and executing a communication strategy (i.e., a comprehensive program of two way dialogue between stakeholders and proponents of the initiatives from the beginning and throughout implementation), knits together the various elements and helps to mitigate the risk of failure.

Managing change is an important integrator and enabler. Together with a rigorous project management discipline, the change management program for Manitoba Housing will channel resources towards successful implementation of the recommended initiatives. Essentially, a change management strategy is a carefully thought through approach to how and when people will be involved in a process of change, and the degree of direction and discretion given to people regarding making things happen at the successive stages in the process of change.

Once the decision is made that a change or changes need to occur, the next step is to decide how the changes should happen. Change strategies can be reactive, proactive, “decide and announce” or collaborative.


Reactive strategies address urgent issues as they emerge, but when used alone typically fail to get at the root causes, steer towards larger organization-wide goals, and are often applied too late in the process to be effective.

Proactive strategies require more initial effort and coordination. These strategies help the organization get out in front of the issues and realize its goals and intentions. Proactive strategies can be used with targeted reactive approaches.

“Decide and Announce” strategies work when issues are trivial, time is of the essence, or those deciding effectively control all resources. When this strategy is used inappropriately, it is seen as a “win-lose” situation and requires extensive selling and “buy-in” as affected stakeholders have yet to agree with the problems.

Collaborative strategies engage all those needed to help accomplish the project’s goals. They create commitment, as the people who have a stake in the outcomes agree on issues and decisions are made together. This strategy should be used with a clear set of constraints and a fallback decision making process.

The change style and the degree of change need to be synchronized. Figure15 highlights the range of change styles and the degree of change capable with each style.

Figure 15 — Change Management Options

Dictatorial Transformation

Used when organization is “out of fit”, there is no time for extensive participation and no support within organization for radical change, but radical change is vital to organization survival and fulfillment of the basic mission

Forced Evolution

Used when organization is “in fit” but needs minor adjustment, or is “out of fit” but time is available and key interest groups oppose change.

Participative Change Strategies

Used when organization is “out of fit”and there is time for extensive participation, but there is support for radical change within the organization.

Participative Evolution

Used when organization is “in fit” but needs minor adjustment, or is “out of fit” but time is available and key interest groups favour change.

Dictatorial Transformation

Used when organization is “out of fit”, there is no time for extensive participation and no support within organization for radical change, but radical change is vital to organization survival and fulfillment of the basic mission

Forced Evolution

Used when organization is “in fit” but needs minor adjustment, or is “out of fit” but time is available and key interest groups oppose change.

Participative Change Strategies

Used when organization is “out of fit”and there is time for extensive participation, but there is support for radical change within the organization.

Participative Evolution

Used when organization is “in fit” but needs minor adjustment, or is “out of fit” but time is available and key interest groups favour change.

Degree of Change

Style

Fine Tuning Incremental Adjustment

Modular Transformation

Corporate Transformation

Coercive

Directive

Consultative

Collaborative

5.2 Recommended Change Management Strategy

The recommended changes to the organization, operations and management of MHRC/MHA represent a high degree of change – a modular-to-corporate level of transformation. Depending on the time-frame chosen for implementing the Business Case, somewhere between a ‘participative’ and a ‘dictatorial’ transformation is suitable for Manitoba Housing.


The current organizational culture of MHRC/MHA is one where the level of transformation envisioned will require very strong leadership to achieve. The recommended appointment of a new Executive Directorship at the senior management level will likely help in this regard, but throughout the transformation, leadership ‘from the top’ will be required. At the same time, communication and participation are required to generate and operationalize commitment at all levels of Manitoba Housing to the recommended changes. The recommended change management framework is therefore a balance between directive and collaborative; dictatorial and participative.

Clearly defined and enforced leadership roles and responsibilities are required for success of the transformation process. On a sustained basis, leadership must clearly and forcefully champion the vision and goals of the Business Case, communicate the need for change, and highlight the benefits for all. This will require:

Calling on people clearly to get engaged in the process, articulating the constraints and fallback process;

Visibly supporting project priorities and its people by helping to clear the issues so people may act, obtaining the required resources as necessary and serving as a coach and mentor;

Establishing, maintaining and monitoring discrete, definable milestones and targets;

Seeking out accomplishments along the way to celebrate project success, to acknowledge effort and achievement, and to reward wins; and

Committing to specific leadership actions in their own area to support all initiatives.

In addition to strong individual leadership, key elements of the change management plan include the following.

Table 22 — Key Elements of the Change Management Plan


Project Management Office

Schedule Milestones

Performance Indicators

Regular monitoring and updates

Issue management

Budget and resource control

Project governance

Implementation

Timing

Budget / Resources

Authority

Resources

Commitment

Communication Plan

Stakeholder identification

Stakeholder engagement strategy

Cultural upheaval

Transparency

Implementation

Resources



Tools / templates

Feedback

Leadership Strategy

Define roles and responsibilities

Coaching sessions

Create Leadership engagement schedule

Tools / templates

Buy-in

Political commitment

Resources

Culture Assessment

Understand current and desired culture

Identify cultural change levers

Buy-in

Manage cultural risks

Unions

Resources

Survey Costs

Implementation Plan for each Work stream

Sequencing of actions

Resource allocations and responsibilities

Timing

Refine focus

Mobilize leaders

Engage people

Define culture

Barriers to implementation

Budget

Timing

Resources

Subject matter experts

Authority

Commitment

Monitoring Post implementation review

Track benefits realization

Revise the change Resources

Strategy

Resources Resources Commitment

5.3 Implementation Schedule

The first step in implementing the Business Case is to establish a Project Management Office (PMO) under the direction of a well-qualified Project Manager. The PMO would house all activities related to the detailed development and roll-out of working-level implementation plans. As outlined above, the PMO (and Project Manager) would have executive responsibility for implementing the vision of senior leaders, and would establish all working protocols, KPIs, and project governance structures, and would be responsible for budget and resource control (including time and effort) for activities relating directly to implementing the Business Case.


The Business Case itself is expected to take eighteen-to-twenty-four (18-24) months to fully implement (including monitoring). And while the specific details of the implementation schedule will need to be developed by the PMO, a high-level implementation schedule is presented in Figure 16.

Figure 16 — Overall Business Case Implementation Schedule

ID Task NameQ2 08Q1 08

MayAprNovJan Aug Sep

3 Confirm Structure

4 Implement Recruiting Process for Senior Management Roles

5 Design Detailed Divisional Structures and People Plan

6 Execute People Plan

7 Employee Opinion Survey for Feedback

Mar OctJunApr

Q1 09Q4 08Q3 08

Jun JulMarFeb

8

9

10

11

May Dec

2 Governance and Organization

Establish a Procurement Lead Role


Quick Wins

Clarify Procurement Roles and Responsibilities, Develop Training Plan

16

15

14

13

12Establish a Procurement Planning Process and Enhance the Tendering Process

Establish a Supplier Management ProcessEstablish Standards and Specifications (on-going)Established Preferred Suppliers and Expand of Standing AgreementsCompetitively Tender Selected Commodities


19

18

17

Asset Inventory

Assess Buildings and Unit Conditions

21 Prioritize Potential Solutions

22

Funding Sources

Project Planning and Delivery

Tools and Systems

24

23

Oversight, Performance Management, and Reporting

20

Q2 09

JanFeb Jul

1 Establish Project Management Office

5.4 Risk Management Plan

Manitoba Housing will face opportunities and challenges as it begins to implement the recommendations in the Business Case. As part of the transformation process, it is thus critical to note the importance of identifying potential risks and outcomes in order to proactively address the issues and ensure that the implementation timeline is minimally affected. Early identification and mitigation strategies addressing risks will aid in a successful implementation. As well, it is important to continually monitor and highlight risks as they become apparent during implementation.


Table 25 below outlines the high-levels risks and potential mitigation strategies that need to be considered by Manitoba Housing as it moves forward with recommended changes in the business case. These risks are identified at a global level, in that they affect the implementation of the full transformation. It is also the case that individual work-streams of the transformation will also require risk mitigation strategies, and will need to be fully developed as part of the transformation itself.

Table 23 — Overall Business Case Risk Management Plan

Risk Possible Mitigation Strategies

Political Commitment needs to be maintained over implementation timeline

Will require DM/ADM planning Communication Plan Strong involvement from sponsors at

Ministerial, Deputy and ADM level

Investment Significant resources and time required for successful implementation

Requires commitment over implementation time period through the Treasury Board submission by the Department of Family Services and Housing and Treasury Board

Schedule Implementation timeline is met

Requires set up of Project Management Office to manage implementation

Requires integration between departments to develop timelines and activities

May require specialized skill set in key implementation areas

Communication Plan

HR Management Union and staff will be required to support the implementation

Communication Plan Work closely with unions early in process to

gain support for implementation Involve staff in development of new work

processes and activities Involve Treasury Board / Civil Service

Commission in process early

Labour Market May require new skill sets for executive, management and staff positions

Retain professional services firm to do executive search

Consider open recruitment process

Organizational Requires strong commitment from staff to meet timelines and implementation plans

Develop Workforce Transition Strategy Communication Plan Involve staff in development of new work

processes and activities


Appendices A. Interview Guide

B. Ministerial Briefing

C. Comparative Jurisdiction Analysis: Vision, Mission and Values of Housing Organizations

D. Governance Overview

E. Comparative Jurisdictional Analysis: Organizational Structures

F. RACI Charts

G. Proposed Organizational Structure

H. Executive Director Job Descriptions

I. Financial Analysis of the HR Transition

J. Supply Chain Management Research

K. Current State Spend Analysis

L. Procurement Lead Position Description

M. Supply Chain Management Recommendations to Challenges

N. Capital Asset Management Implementation Plan

The Case for Change: Transforming Manitoba Housing October 2007 A-1

Appendix A – Interview Guide

Confidential Input Review of Manitoba Public Housing For KPMG Only

Confidential Draft Working Document © 2007 By KPMG LLP, The Canadian Member Firm of KPMG International, A Swiss Non-operating Association. All Rights Reserved.

- Page 1 of 25 -

Data Collection Questionnaire

January 11, 2007 Thank-you for agreeing to participate!

As you are aware, the Government of Manitoba has engaged KPMG LLP (KPMG) to conduct an operational review of Manitoba public housing. The review will focus on the activities of the MHA and MHRC and will include a:

Review of current operational practices of Manitoba public housing by major functions and processes; and a

Review of the relationship between MHA and MHRC in the context of operational impact.

Scope:

As established by the Project Charter, this review will include the following major aspects of Manitoba public housing:

Organizational Structure: Including the composition of management and information systems, lines of authority, segregation of duties, and expertise required to fulfill the mandates.

Accountability: Recommendations for the implementation of a strategic plan for Manitoba public housing that provides a systematic approach to future sustainability, including business models and management practices and processes.

Implementation Timelines: Propose timelines for the implementation of the recommendations made.

Measurement Criteria: Recommendations regarding appropriate monitoring practices and evaluation criteria.

Exclusions:

The scope of the review specifically excludes the following:

• External legislation, regulations and policies; and

• Terms and conditions of employment defined by collective agreements, labour legislation and monetary reward systems



- Page 2 of 25 -


Instructions:

This data collection questionnaire (DCQ) provides the basis for your responses and our follow-up interviews.

This questionnaire and the follow-up interviews are the primary mechanism for you to provide information and insight in the review. We have found that different people have different perspectives. We need your help to identify opportunities to improve current processes, practices and policies.

Please provide any additional material that would assist in this process – this may include things such as job descriptions, process-flow diagrams etc.

You do not necessarily have to have the solution—just please identify the opportunities and concerns.

In advance of your interview, please take the time to document (in electronic typed format) your responses to the attached questions. Please provide a copy of responses to KPMG by end of day January 15, 2007.

KPMG will:

Maintain full confidentiality (i.e., we will not attribute comments to individuals), and

Corroborate and substantiate all information for inclusion in our report.

Should you have any questions or concerns relating to the process, please contact Mark MacDonald (KPMG) at 416.777.8290 or [email protected].

Thanks in advance,

The KPMG Team



- Page 3 of 25 -


MANITOBA PUBLIC HOUSING INTERVIEW GUIDE JANUARY 2007

1. Background Your name

Your current position

Other relevant background, responsibilities, or committees you are a member of.

Please note that there are no ‘right’ or ‘wrong’ answers to the questions on the following pages. Feel free to add any additional pages of other relevant information to this guide.



- Page 4 of 25 -


2. Please provide a brief description of your day-to-day activities as they relate to Manitoba public housing1 (It may be easier to log your activities during a typical day on this form).

1 Manitoba public housing includes the MHA, MHRC and its related governance structure.



- Page 5 of 25 -


3. Please provide a brief description of your group’s overall mandate



- Page 6 of 25 -


4. Please provide a brief description of your group’s activities as they relate to Manitoba public housing2 and the above mandate

2 Manitoba public housing includes the MHA, MHRC and its related governance structure.



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5. How would you describe your group’s ability to meet its mandate?



- Page 8 of 25 -


6. How has the role of your group changed in the past five years?

7. How do foresee the role of your group changing in the next five years?



- Page 9 of 25 -


8. We need your help to understand the major functions and processes that are used to deliver public housing in Manitoba.

We have identified four major functions that are used in delivering housing programs: Executive Management, Program Design, Program Delivery, and Corporate Administration. The following are examples of activities that you may undertake in providing each of these functions to help you better associated your tasks to these major functions:

A. Executive Management

i. Governance ii. Policy development iii. Political interaction iv. Organizational structure

B. Program Design

i. Program and portfolio planning ii. Policy and standards setting iii. Stakeholder engagement iv. Performance management

C. Program Delivery

i. Tenant management - including tenant intake, leasing, rent calculation, billing, stakeholder management, etc.

ii. Facilities maintenance - including janitorial services, repairs, garbage and utilities, etc.

iii. Asset management - including capital planning and execution, inspections, safety audits, etc.

D. Corporate Administration

i. Staffing processes ii. IT support iii. Financial administration and reporting iv. Administrative assistance

We would like for you to identify what activities your group conducts within each of these four functions, and what percentage of your time and resources (dollars) are spent on these activities.

Instructions:

1 Identify and write in the most critical processes that your group is responsible for in each of the four functions in the chart below.

2 Fill in the percentage of your staff’s time.

3 Fill in the percentage of your group’s Operations and Maintenance, and Capital budget that were spent on this activity last year.



- Page 10 of 25 -


The following is only an illustration of how the chart may look after you have completed it:

Name: John Doe Title: Director Agency: Manitoba Housing Authority Group: Property Services Total Expenditures: 1,000,000 Total FTE: 50

ALLOCATION OF RESOURCES

Activities % of Staff Time

Dedicated to Activity % of Operations and Maintenance Budget

% of Capital Budget

1 Executive Management 1.1 Governance 1.2 Policy Development 1.3 Political Interaction 1.4 Organizational Structure 1.5 Other (Please Identify)

TOTAL EXECUTIVE MANAGEMENT 2 Program Design

2.1 Program and Portfolio Planning 2.2 Policy and Standards Setting 10 5 2.3 Stakeholder Engagement 2.4 Performance Management 2.5 Other (Please Identify)

TOTAL PROGRAM DESIGN 10% 5% 3 Program Delivery

3.1 Tenant Management 3.1.1 Tenant Intake 10 5 3.1.2 Leasing 10 5 3.1.3 Rent Calculation 3.1.4 Billing 3.1.5 Stakeholder Management 3.1.6 Other (Please Identify)

TOTAL TENANT MANAGEMENT 20% 10% 3.2 Facilities Maintenance

3.2.1 Janitorial 15 30 3.2.2 Repairs 25 15 100 3.2.3 Garbage and Utilities 10 20 3.2.4 Other (Please Identify) 3.2.5 Other (Please Identify)

TOTAL FACILITIES MANAGEMENT 50% 65% 100% 3.3 Asset Management

3.3.1 Capital Planning 3.3.2 Capital Execution 3.3.3 Inspections 5 3



- Page 11 of 25 -


3.3.4 Safety Audits 10 15 3.3.5 Other (Please Identify)

TOTAL ASSET MANAGEMENT 15% 18% TOTAL PROGRAM DELIVERY 85% 93% 100% 4 Corporate Administration

4.1 Staffing Processes 5 2 4.2 IT Support 4.3 Financial Administration and Reporting 4.4 Administrative Assistance 4.5 Other (Please Identify)

TOTAL CORPORATE ADMINISTRATION 5% 2%

OVERALL TOTAL 100% 100% 100%

As you can see from above, it is not expected that any one group will be, or should be, involved in all activities. There may also be other critical activities that fall under each of those functions that are not already listed. Please feel free to enter those activities under the appropriate function, in the cell labeled “Other (Please Specify)”. The overall total should be 100% and be equal the sum of the sub-total from each of the four functions.

On the following page is blank chart for your responses.



- Page 12 of 25 -


Please use the following table for your responses: Name: Title: Agency: Group: Total Expenditures: Total FTE:

ALLOCATION OF RESOURCES

Activities % of Staff Time

Dedicated to Activity % of Operations and Maintenance Budget

% of Capital Budget

1 Executive Management 1.1 Governance 1.2 Policy Development 1.3 Political Interaction 1.4 Organizational Structure 1.5 Other (Please Identify)

TOTAL EXECUTIVE MANAGEMENT 2 Program Design

2.1 Program and Portfolio Planning 2.2 Policy and Standards Setting 2.3 Stakeholder Engagement 2.4 Performance Management 2.5 Other (Please Identify)

TOTAL PROGRAM DESIGN 3 Program Delivery

3.1 Tenant Management 3.1.1 Tenant Intake 3.1.2 Leasing 3.1.3 Rent Calculation 3.1.4 Billing 3.1.5 Stakeholder Management 3.1.6 Other (Please Identify)

TOTAL TENANT MANAGEMENT 3.2 Facilities Maintenance

3.2.1 Janitorial 3.2.2 Repairs 3.2.3 Garbage and Utilities 3.2.4 Other (Please Identify) 3.2.5 Other (Please Identify)

TOTAL FACILITIES MANAGEMENT 3.3 Asset Management

3.3.1 Capital Planning 3.3.2 Capital Execution 3.3.3 Inspections 3.3.4 Safety Audits 3.3.5 Other (Please Identify)

TOTAL ASSET MANAGEMENT



- Page 13 of 25 -


TOTAL PROGRAM DELIVERY 4 Corporate Administration

4.1 Staffing Processes 4.2 IT Support 4.3 Financial Administration and Reporting 4.4 Administrative Assistance 4.5 Other (Please Identify)

TOTAL CORPORATE ADMINISTRATION

OVERALL TOTAL



- Page 14 of 25 -


9. For each of the activities that you listed, please provide a high-level description of the process that your group must complete. Please see the following example, that corresponds with the example from the previous question:

EXAMPLE FOR ILLUSTRATIVE PURPOSES ONLY Process # and name High Level Description

3.3.4 Safety Audits

o Audits are done on a semi-annual basis in each building o We have a standing agreement with an independent contractor that

conducts the audit at arm’s length o Auditor is accompanied through the building by property manager o For buildings with multiple units, a random sample of units is chosen

by the property manager o A set checklist is used to evaluate safety hazards, and is in compliance

with all municipal, provincial, and federal building codes. o Audits are recorded after completion, and are kept on file for five years



- Page 15 of 25 -


Please ensure that the process # and name corresponds with the process number in the resource allocation chart in question # 8.

Process # High Level Description



- Page 16 of 25 -




- Page 17 of 25 -


10. If applicable, what technology and information systems support these processes and how well do they meet your needs?

Process # Technology and/or Systems Used

How well do they meet your needs? (Please include any additional comments as needed)



- Page 18 of 25 -




- Page 19 of 25 -


11. What are the top three housing-related processes3 that you believe work well and why?

3 Processes refer to any activity, manual or automated, formal or informal that occurs within or outside of

your department.



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12. What are the top three housing processes4 that you find frustrating and why?

4 Processes refer to any activity, manual or automated, formal or informal that occurs within or outside of

your department.



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13. What housing-related processes5 seem redundant and why?

5 Processes refer to any activity, manual or automated, formal or informal that occurs within or outside

your department.



- Page 22 of 25 -


14. If you could make three changes to the housing-related processes, what would they be and why (eg. Use of technology, information systems, new policies, etc.)?



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15. What are the barriers to achieving these changes? a) People

b) Policies and procedures

c) Technology



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d) Other



- Page 25 of 25 -


16. Is there anything else we should talk about?

17. Please provide a brief description of your functional responsibilities – please

attach a department organization chart if it exists. Please provide a copy to KPMG electronically upon completion.

THANK YOU FOR YOUR TIME

The Case for Change: Transforming Manitoba Housing October 2007 B-1

Appendix B – Ministerial Briefing

MINISTERIAL BRIEFINGManitoba Public Housing – Operational ReviewMarch 8th, 2007

PUBLIC SECTOR ADVISORY

OPERATIONS IMPROVEMENT

Confidential Draft Working Document

1© 2007 KPMG LLP, the Canadian member firm of KPMG International, a Swiss cooperative. All rights reserved. Confidential Draft Working Document

THE ENGAGEMENT

• The Manitoba Housing Authority recognized the need to conduct anoperational review to develop a comprehensive strategy to improve the organization’s operational efficiency, a system of accountability to standards, and specific goals for achieving the strategy

• The review was to be an examination of the current state of the Manitoba Housing Authority, and what could be done to improve the organization’s performance on a go-forward basis

• The review was not meant to be a historical review – it was a proactive exercise in performance enhancement

• The scope of the engagement included both the Manitoba Housing Authority, and the Manitoba Housing and Renewal Corporation – essentially making it a review of public housing in the Province of Manitoba


PROJECT OBJECTIVES – STAGE I (December 2006 – February 2007)

The following were the project objectives as articulated in the Stage I Project Charter:





Develop Balanced Scorecard factors to assess implications of opportunities

Assess preliminary opportunities against Balanced Scorecard



STAGE I REVIEW (December 2006 – February 2007)

Data Collection Data Analysis

Balanced Scorecard

AssessmentFindings and

Implementation Plan

Project Initiation


PROJECT INITIATION

• Conducted initial stakeholder interviews with all MHA and MHRC Directors and Senior Managers

• Developed a project charter that outlined all accountabilities and deliverables for KPMG, the Project Sponsors, and the Engagement Steering Committee

• Reviewed numerous background materials including past reports from the Office of the Auditor General, Annual Reports, Estimates, etc.


DATA COLLECTION AND ANALYSIS

• More than 20 in-depth interviews with stakeholders from throughout the organization

• Information was gathered from all levels within the organization, from field staff, to line managers, to the Assistant Deputy Minister

• Data collection saw KPMG visit staff and facilities throughout the province including Portage La Prairie, Brandon, Dauphin, Thompson, and Leaf Rapids

• Inclusive process allowed for front line staff to offer their comments through a confidential online suggestion box

• Other documents were collected including policy documents, process maps, and housing statistics

• Full synthesis and analysis of interview data and other documentation, including financial review


BALANCED SCORECARD APPROACH

• The balanced scorecard approach is a measurement tool that can be used to assess organizational performance

• Senior management and the engagement steering committee validated the scorecard model, the scoring system, and weighting applied to each dimension

• KPMG conducted a workshop with the steering committee to determine the current state score


BALANCED SCORECARD

ResourceAllocationAdequacy of Housing

Stock

Public Accountability and Stakeholder

EngagementGood Governance


Manitoba Public Housing Mission,

Vision, and Values


BALANCED SCORECARD DESIRED OBJECTIVES


• Minimize wait times for property repairs, and capital improvements

• Efficient processing of rental applications and appropriate placement within accommodations

• Accessible and responsive application procedures

• Appropriate level of client services

• Due diligence in property management


• Appropriate due diligence is undertaken in making every capital investment decision

• Maximize value for each dollar invested

• Fair and competitive capital procurement processes

• Maintain property portfolio to lengthen its useful life

• Optimal Stock allocation



Public Accountability and Stakeholder

Engagement

• Use of public consultations in policy development

• Fully public transparency in performance management and reporting

• Effective intra- and inter-departmental relationships

Good Governance

• Ensure that the Board and Senior Management are acting in the best interests of Manitoba Public Housing

• Well-defined accountabilities within the organization

• Effective performance management policies and processes

• Effective internal controls and financial management



ResourceAllocation

• Gain economies of scale by using bulk purchasing power

• Lower operating cost of delivering Public Housing in Manitoba

• Reduce waste, and ensure a high level of productivity from established processes

• Modern asset management processes

• Optimal revenue/service balance


BALANCED SCORECARD SCORING

The following weights were assigned to each Scorecard factor by MHA/MHRC Senior Management:

Resource Allocation

Public Accountability &

Stakeholder Engagement


Good Governance


10%

30%

25%

25%

10%


BALANCED SCORECARD ASSESSMENT: CURRENT STATE

Dimensions



3. Good Governance


5. Public Accountability & Stakeholder Engagement

Scores

3

2

1

2

2

Weight

25%

25%

10%

30%

10%

Total Weighted

Score:

43%


KPMG KEY FINDINGS

Capi

tal

Man

agem

ent

Supply ChainManagement

Governance and

Organization

MHA/MHRCRenewal


GOVERNANCE AND ORGANIZATION

Key Risks:

• Governance structure with limited Board independence from Department

• Two organizations with overlapping mandates, exhibiting managerial tensions, lack of clarity in mission and responsibilities

• Multiple collective agreements resulting in inconsistent salary and classification levels, low staff morale, and direct costs for management

• Absence of clear, long-term housing strategy

• No framework for organizational performance management across housing

Key Opportunities:

• Complete review of current and future housing mandate

• Develop and confirm Manitoba Housing Mission, Vision and Values

• Achieve higher level of performance for MHA and MHRC through organizational re-design

• Establish a new governance structure that strengthens the role of the Board and its membership

• Establish an HR Strategy that harmonizes collective agreements at very little cost


CAPITAL MANAGEMENT

Key Risks:

• Lack of a preventative maintenance program limits the useful life of capital assets

• 5 year asset management lacks data integrity, and has no method for prioritizing capital budgeting and expenditures

• Lack of capacity (systems and resources) to deliver a robust capital program

• Poor inspection and maintenance processes contribute to the deterioration of housing stock

• Weakness in capacity to make necessary capital investments

Key Opportunities:

• Complete inventory and analysis of existing housing stock and capital program for coming fiscal year

• Implement renewed procurement model in the coming fiscal year

• Conduct multi-year capital management process re-design to improve asset management

• Implement new programs related to preventative maintenance


SUPPLY CHAIN MANAGEMENT

Key Risks:

• Purchasing is de-centralized, and is conducted independently by each maintenance coordinator

• A lack of policy for standardization of equipment prevents the development of service agreements

• A lack of service agreements and central procurement result in lost economies

• Major impediment to cost savings and quality service delivery in the short term

Key Opportunities:

• Conduct full spend analysis to identify short-term productivity enhancements and cost savings

• Implement program for standardization of equipment and supplies, and the development of standard service agreements

• Full procurement policy review including benchmarking analysis

• Complete procurement process and technology review and re-design


EXPECTED OUTCOMES

• A new organization with better processes that allow for more efficient service delivery and a high level of client service

• Reduced cost inefficiencies, and enhancements to revenue management

• A higher level of staff morale and engagement, and the ability to mitigate risks related to staffing and succession planning

• Key to success is to address all three issues together in a fundamental transformation


IMPLEMENTATION SCHEDULE


NEXT STEPS

• KPMG Letter of Engagement for Stage II (March 6, 2007)

• Final Stage I Steering Committee meeting (March 8, 2007)

• Initial Stage II Transformation Committee meeting– Develop Project Charter– Assign key responsibilities and roles– Establish Communication Plans– Full-scale Stage II planning and initiation

• Continual communication and oversight from ADM and DM


APPENDIX A: STAGE ONE FINDINGS

As presented on February 14, 2007 to MHRC/MHA Steering Group


AGENDA

I. Introduction and Objectives

II. Major Change Opportunities

III. Initial Prioritization and Discussion

IV. Working Lunch Break

V. Dialogue on Major Opportunities

1. Housing Strategy


3. Governance and Organizational Structure

4. Human Resources Strategy (followed by break)

5. IT Services

6. Client Services



VI. Next Steps

10:00 am

12:00 pm

12:30 pm

2:30 pm

4:15 pm


PROJECT OBJECTIVES





Develop Balanced Scorecard factors to assess implications of opportunities Assess preliminary opportunities against Balanced Scorecard



PHASE ONE OPPORTUNITY IDENTIFICATION

Project Initiation Data Collection

Data Analysis

Balance Scorecard Approach

Findings

• Initial stakeholder interviews

• Project Charter

• Review background materials

• More than 20 interviews with stakeholders from throughout the organization

• Collection of other related documentation

• Visits to rural areas

• Review of data collected during interviews

• Review of relevant reports and documentation

• Developed scorecard model

• Determined preliminary scorecard ratings

• Workshop with Steering Committee

• TODAY


TODAY’S OBJECTIVES

Validate findings from analysis

Discuss the impact of potential changes

Identify enablers and inhibitors of change

Explore implementation issues


APPROACH

Findings based on confidential interviews with MHRC/MHA management/staff

Interviews structured on the basis of detailed interview guide, approved by MHRC/MHA

High-level comparative benchmarking

Document review e.g., OAG reports, financial analysis, budget review, etc.

Senior Management Scorecard Workshop

High-level financial analysis

Senior Management Findings Workshop


EIGHT MAJOR THEMES FOR CHANGE

1. Housing Strategy


3. Governance and Organization

4. Human Resources Strategy

5. IT Services

6. Client Services





1. Housing Strategy

Long-term Housing Strategy

Inter-Organizational Agreements

Competition with Other Housing Subsidies

Social Housing Agreement Funding Deferral Process


Preventative Maintenance Program

Asset Management System

Five Year Asset Management Plan

Inspection Process and Policies

Defining ‘Repair’ and ‘Capital’




Board Structure and Membership

Organizational Structure

Rural Maintenance Reporting Relationships

Family Services and Housing Relationship

Communication

Organizational Performance Management

4. Human Resources Strategy

Multiple Collective Bargaining Agreements

Vacancies and Acting Positions

Aging Workforce

Assignment of HR Resources



5. IT Services

IT Application Support

Simplification and Automation

TMS/MMS Functionality

Family Services and Housing Systems Compatibility

E-Services

6. Client Services

Ministerial Inquiries

Appeals Process

Tenant Intake Application Process

Make-Ready Process




Standardization of Equipment



HIGH LEVEL ISSUES MAP

Degree of MHA / MHRC

Control

Benefit1. Housing Strategy



4. HR Strategy

5. IT Services

6. Client Services



12

3

45

67

8


HOUSING STRATEGY

Recommended Next Steps

• Define mission statement and objectives for Manitoba Public Housing

• Identify and define core business services

• Identify opportunities to deliver efficient public housing services

• Develop plan to re-establish funding reserve

Affect on Scorecard

Good Governance

Resource Allocation

Public Accountability and Stakeholder Engagement



Issues Addressed

• Long-term Housing Strategy

• Inter-Organizational Agreement

• Competition with Other Housing Subsidies

• Social Housing Agreement Funding Deferral Process

Key Anticipated Benefits

• Proper resource allocation ingrained in corporate culture

• More attention given to the quality of the housing stock, and developing a long-term plan for sustainability

• A set housing strategy will provide a guiding principle for good governance

1


LONG-TERM HOUSING STRATEGY

Description of the Issue

• Mandate is to provide safe and affordable housing to those who need it in the Province of Manitoba

• A clear housing strategy from the Government of Manitoba could provide guidance to MHA and MHRC staff

• MHA and MRHC require a clear direction from government on issues such as the quality of the housing stock, size of stock, etc.

• Effectively, the Province has no long-term housing policy/strategy – this implies lack of clarity and direction in housing operations

• Need for a clear definition of core services and an approach to the delivery of ancillary services.

Key Decision Making Responsibility

• Cabinet

• Minister, FSH

• DM, FSH

• ADM, Housing

• Senior Management

Stakeholders Affected

• Tenants

• Public

• Management and Staff

• Government

Potential Remedies for Analysis

• Establish a clear set of government housing priorities, to be developed into a housing strategy

Implementation Factors

• Analysis of housing stock

• Demographic analysis

• Cross-jurisdictional review

• Liaison with Government Officials

• Politically sensitive

• Could require public consultation

• Prioritization of Housing Policy across Government

• Multiple decision makers

• Decisions could involve highest levels of the provincial government

Scorecard Factors Affected


• A better understanding of the housing mandate

• A direction on housing policy

• Set expectations for the public at large

• A commitment to efficiency

• A commitment to serving clients and providing adequate quality housing

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance

Public Accountability and



INTER-ORGANIZATIONAL AGREEMENTS


• MHA is involved in the delivery of some programs in cooperation with other government departments (e.g., Health)

• There is some question as to the structure of such agreements from the perspective of ensuring that MHA’s financial and operational interests are appropriately protected


• Deputy FSH

• ADM Housing


• Other government departments


• Government


• Other Government Departments

• Tenants


• Ensure all inter-departmental agreements/relationships are governed by clear funding and service level agreements


• Process review

• Financial review

• Stakeholder engagement

• Politically sensitive

• May result in new operating agreements

• Change management

• Prioritization of housing policy vis-à-vis other government policies



• A lower level of risk exposure through service level agreements

• Transparency in program delivery

• Clear and well communicated reporting relationshipsResource

Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




COMPETITION WITH OTHER HOUSING SUBSIDIES


• In projects with higher vacancy rates, the MHA is competing with other social housing programs for tenants.

• Budget dollars allocated to rent subsidies, building grants for seniors and assisted living complexes, and other housing or housing subsidies must be shared with social housing programs provided by the MHRC and MHA.

• In rural communities, MHA competes with MHRC for tenants


• Minister, FSH

• DM, FSH

• ADM, Housing



• MHRC

• MHA

• All levels of government providing housing initiatives

• Local and rural properties experiencing high vacancy rates


• Increased coordination of housing programs with other government provide housing subsidies (ie Consider vacancy rates in social housing for area prior to authorizing new building grants in same area.)


• Analysis of vacancy rates compared to other housing initiatives in selected regions or locations


• Political impact

• Strategic planning required

• Complex to evaluate



• Using resources where they are needed most

• Eliminating duplication of services in relevant areas

• Provides the appropriate level of serviceResource

Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




SOCIAL HOUSING AGREEMENT FUNDING DEFERRAL PROCESS


• When the Social Housing Agreement was signed, funds were provided by the Federal Government to be used to establish a declining reserve fund

• Reserve funds have been drawn down as part of the Departmental budgeting process

• The reserve fund has almost been fully exhausted, implying financial/funding risk for public housing in the near future


• Cabinet

• Minister, FS&H

• Deputy Minister, FS&H

• All ADMs, FS&H

• Treasury Board Secretariat/Finance



• Managers

• Staff

• Housing

• Family Services


• Establish clear strategy for dealing with future financial/funding risk

• Explore priority position of MHRC/MHA in the Departmental budgeting process

• Explore resource allocation strategy to guarantee funding flows to public housing, such as long-term capital asset management agreements with private sector


• Financial analysis

• Process review

• Legal review of Social Housing Agreement

• Liaison with intra- and inter-departmental officials

• Limited budgetary resources

• Accessibility/suitability of other funding instruments (e.g., Loan Act Authority)



• Better governance from the top

• Fair allocation of limited financial resources

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




CAPITAL MANAGEMENT


• Define listing of equipment that would be included in the preventative maintenance program.

• Define data requirements for developing asset management system

• Re-assess policies and procedures for inspection to align with overall asset management strategy

• Revise long term asset management plan to align with asset management strategy

• Re-assess the preparation and rollup of the budgeting process

• Develop clear procedures for defining repair vs. capital expenses

Issues Addressed

• Preventative Maintenance Program

• Asset Management System

• Five Year Asset Management Plan

• Inspection process and policies

• Defining ‘Repair’ and ‘Capital

• Overall Funding


• A sustainable improvement of the housing stock

• The most efficient use of resources in maintaining housing stock

• Better stewardship of public assets

Affect on Scorecard

Good Governance

Resource Allocation

-Public Accountability and Stakeholder

Engagement



2


PREVENTATIVE MAINTENANCE PROGRAM


• Currently no preventative maintenance program in place (currently being developed)

• An ongoing preventative maintenance program may:

• Extend/increase the life of assets

• Identify potential issues sooner before they become costly repairs


• ADM Housing



• Maintenance Coordinators

• District Maintenance Coordinators

• Building Superintendants


• Implement preventative maintenance program


• Analysis of key items to be included in PM program

• Analysis of costs to maintain PM program


• Costly to implement

• Benefits difficult to measure and not immediate



• Extend the life of housing stock

• Better tenant service through reduced repair disruptions

• Better care of government assets

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




ASSET MANAGEMENT SYSTEM


• Aging housing stock

• Currently no asset management system in place (other than 5 year plan)

• Need for more detailed information on capital expenditures to allow for more effective budgeting.

• Current capital budgeting is more reactive than proactive


• ADM, Housing


• Maintenance Group


• Contract and Budget Administration Staff

• Maintenance Staff


• Develop asset management business framework

• Implementation of packaged or custom developed software tool

• Expand/redesign current 5 year plan process to introduce more detailed information


• Analysis of integration with preventative maintenance program

• Analysis of costs of various solutions

• Identification and analysis of scope of the asset management system

• Cost to implement (purchase or develop software)

• Likely will require additional resources to manage and monitor




• Better quality of housing for tenants


• More transparency of use of tax payer dollars

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




FIVE YEAR ASSET MANAGEMENT PLAN


• Current 5 year plan is prepared using Excel.

• Plan is difficult and time consuming to update and maintain – can easily become out of date

• Plan is not detailed enough to allow proper prioritization of capital expenditures

• Plan is more short term focused – reactive rather than proactive. Longer term focus would better match funding requirements with asset needs.


• ADM Housing

• Senior management

• Maintenance staff


• All MHA staff – capital budgeting is critical to maintenance and service of housing stock.

• Tenants


• Focus human resources to monitor and update the existing 5 year plan

• Purchase/Develop new tool for budgeting – tied to Asset Management System

• Redesign current 5 year plan to add more detail allowing for better analysis and decision making


• Cost analysis on revising or implementing new budgeting tools

• Process analysis of current year planning process

• Costs to purchase/develop new tools







Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




INSPECTION PROCESS AND POLICIES


• M&I Branch performs inspections of units every 2 years to aid in developing the 5 year plan.

• The Current policy is for the M&I inspections cover only 10% of the portfolios.

• Ongoing unit inspections are also performed by the Maintenance Branch

• M& I building inspections are being performed by individuals with experience in one area rather than individuals, or a team of individuals, with cross functional experience (plumbing, electrical, structural, etc). Result is inspections may not adequately identify issues and address the capital planning needs.


• ADM Housing

• Senior management

• Maintenance staff

• Property services


• Inspectors

• Maintenance Staff

• Manager Contract & Budget Administration


• Increase number of resources to perform more inspections.

• Inspections could be outsourced

• Inspections could be performed by a team of MHA resources each inspecting areas within their expertise.


• Analysis of inspection process

• Cost analysis of potential for outsourcing building inspection

• Cost of additional resources or outsourcing

• Policy change







Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




DEFINING ‘REPAIR’ AND ‘CAPITAL’


• Uncertainty whether or not purchases should be classified as capital or maintenance

• No clear policy to determine whether purchases should fall under M&I or R&M budgets

• Uncertainty leads to confusion of where and how limited budget dollars are spent



• Maintenance Branch Staff

• Corporate Services



• Maintenance and M&I Staff


• Develop formal procedures/policies for clearly defining capital versus repair expenses

• Consolidate all procurement under one functional group



• Process review

• Organizational design

• Organizational change required

• Change management

• Vendor community engagement

• Government procurement policy



• Better accounting practices

• Ability to sustain housing stock with better planning

• Better allocation of capital funds

• Improved use of financial resources

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




OVERALL FUNDING


• A perceived lack of adequate funding for Manitoba’s social housing program

• Overall departmental funding shortfall compared to budgeted estimates

• Perceived inequitable distribution of funds between family services and housing

• Higher levels of funding could allow for an improvement in the quality of existing housing stock, and allow more units to be utilized


• Cabinet

• Minister, FSH

• DM, FSH

• All ADMs, FSH

• Treasury Board



• Staff

• Tenants

• Government

• Public


• Increase overall funding to a level that is sufficient for each branch to achieve their mandate

• A re-allocation of funding to increase resource efficiency



• Budgeting process review


• May require a sizable cash investment

• Analysis of mandates, and ability to achieve them

• Very politically sensitive

• Limited control of outcome for housing



• A higher level of resources should lead to higher level of service for clients

• Increased ability to achieve mandate

• Increased quality of housing stock

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




BOARD/ORGANIZATIONAL STRUCTURE


• Develop new reporting and organizational structure

• Compare organizational structure to other comparable organizations

• Develop corporate communication plans

• Develop procedures to monitor and evaluate ongoing performance against pre-established metrics

Issues Addressed

• Board Structure and Membership

• Organizational Structure

• Rural Maintenance Reporting Relationships

• Family Services and Housing Relationship

• Communication

• Organizational Performance Management


• Significantly improved governance structure

• A higher level of accountability to the public, employees, and tenants

• Re-allocation of resources will allow different parts of the organization to focus on core business

Affect on Scorecard

Good Governance

Resource Allocation



-Adequacy of Housing Stock

3


BOARD STRUCTURE AND MEMBERSHIP


• Currently, the Board is comprised of the Deputy Minister and Assistant Deputy Ministers in the Departments of Family Services and Housing

• There is only one ADM that represents the ‘housing side’ of the department, implying the Board membership might not reflect the requirements of public housing management in Manitoba

• The board meets infrequently, and its specific role is unclear to most staff and management in MHRC/MHA

• Current Board structure may imply an absence of independence from the Department of FS&H, with associated challenges to decision-making independence

• A more active board would be seen by management and staff as more effective, and attentive to issues surrounding Public Housing in the Province


• Minister, FS&H


• All Departmental ADMs

• CSB; TBS


• Board

• Staff


• Public

• Government


• Consider a new Board structure, with new decision making responsibilities

• Consider a new board composition, made up of members from varying associated organizations such as the Department of Health, and Treasury Board who have a direct interest in MHRC/MHA

• Remove the Board from the department’s organizational structure all together, and shift responsibilities to the ADM and Senior management


• Scope of Board accountabilities

• Process review

• Policy review

• Stakeholder engagement (especially with Senior Departmental/Government Management)

• Politically sensitive issue

• Ministerial approval may be required

• Linked to overall strategy decisions for the future of public housing organization



• Better corporate governance structure

• Governance in line with leading practices

• More accountability to the citizens of Manitoba

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




ORGANIZATIONAL STRUCTURE


• Public Housing in the province of Manitoba is currently delivered through two organizations: the Manitoba Housing and Renewal Corporation, and the Manitoba Housing Authority

• Some of the services and programs offered by each organization overlap, sometimes competing with each other for tenants

• A number of processes within both organizations are redundant, resulting in duplication including; procurement, policy development, strategic planning.

• Evidence of significant staff morale issues associated with differences in terms of collective agreements across MHRC and MHA

• A single organization may allow the organization the ability to better focus on its mandate, and to deliver its programs more efficiently


• Cabinet

• Minister, FS&H

• DM, FS&H

• ADM, Housing

• Treasury Board; CSC


• All Staff and Managers

• Public

• Tenants

• Government


• Amalgamate the two organizations into one to offer a comprehensive service to the citizens of Manitoba, including harmonization of existing collective agreements


• Key reporting relationships

• Process review


• Review of resource allocations

• Personnel review

• Policy Analysis

• Program Review

• Create cost savings by eliminating duplicating processes and programs

• Major change management initiative

• Could result in the loss of a limited number of jobs


• Could allow for better service delivery and improved customer service



• Less redundancy, less duplication

• More efficient organization

• Resources obtaining high value through effective allocations

• Transparency

• A logical governance structure

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




RURAL MAINTENANCE REPORTING RELATIONSHIPS


• Maintenance staff in rural districts report to District Maintenance Supervisors

• District Maintenance Supervisors typically work out of Winnipeg and are not as in touch with the operations of the rural operations.

• Maintenance staff in rural districts previously reported to Regional Managers.

• Lack of local support could affect the ability for Maintenance staff to provide adequate and timely service.


• ADM, Housing



• District Managers

• Regional managers

• Rural Maintenance staff


• Rural Maintenance staff report to Regional Manager

• Introduce additional District Maintenance Supervisors to provide closer/more timely support to Rural Maintenance Staff.


• Additional interviews

• Cost analysis

• Org chart and reporting analysis


• Potential cost of new FTE’s

• Organizational Change



• Improved service delivery for tenants

• Better use of resources

• Better engagement of those in rural communities

• Flexibility for those in rural areas

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




FAMILY SERVICES AND HOUSING RELATIONSHIP


• In 1999, the Department of Housing and the Department of Family Services were joined together

• The Housing side of the department is smaller then the Family Services side

• The vast majority of board members are from the Family Services side of the department

• There is a feeling that departmental priorities are more heavily weighted on the side of Family Services, with the implication being that Housing interests are sometimes diminished


• Government

• Managers

• Staff

• Public


• Reconsider process by which priorities and funding decisions are made to give housing an equal opportunity to have its interests served

• Link FS&H relationship issues to overall governance reform

• Enhanced clarity around the FS&H relationship, especially as related to the “integrated service delivery” agenda


• Process analysis

• Housing policy strategic review

• Review of financial resource allocation practices within FS&H



• Change management initiative

• May imply greater direct financial commitments to Housing


• Cabinet

• Minister, FS&H





• Better governance from the top

• Fair allocation of limited financial resources

• More accountability to the citizens of Manitoba

• Stakeholders from all sides will be better engaged

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




COMMUNICATION


• Communication could be strengthened across MHRC and MHA, with positive outcomes for performance, staff and management morale, and tenant outcomes

• Strong communication and leadership plans are required to support operational advances – both within MHRC/MHA, and externally with other stakeholders

• Evidence of poor communication at times between the Urban and Rural regions

• Evidence of poor communication at times between MHRC and MHA, and between Management and Staff


• ADM, Housing


• Management

• Staff

• Treasury Board; CSC



• Management

• Staff

• Tenants


• Develop clear communication and leadership plans

• Enhancements to role definitions for senior managers. management, and staff

• Enhancements to Urban and Rural interface

• Integration of MHRC and MHA


• Communication and leadership objectives

• Housing policy/strategy review

• Organizational design

• Change Management

• Policy development

• Organizational Design Change

• Requires commitment to openness and transparency at all levels within organization



• A stronger, more cohesive team environment

• Open lines of communication

• Engagement from all facets of Public Housing, both functional and geographicResource

Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




ORGANIZATIONAL PERFORMANCE MANAGEMENT


• Unclear framework for performance management across housing, and within existing branches

• Absence of performance management framework implies that management and staff might have difficulty in measuring progress in achieving stated mandates

• Well established performance management systems are the leading practice of modern public sector organizations


• ADM, Housing

• Senior Managers


• Managers

• Staff

• Central agencies

• Government


• Develop an organizational performance management framework

• Develop clear objectives, service level expectations, and responsibilities

• Develop clear accountabilities for performance


• Current state analysis

• Comparative analysis

• Management input

• Lack of clearly defined organizational objectives

• Collaborative process



• Creates an environment of continuous improvement in all areas

• Consistent with other well-managed organizations

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




HR STRATEGY


• Perform a detailed cost analysis of merging collective agreements

• Develop business plan to assess benefits/drawbacks of consolidating collective agreements

• Perform analysis of the current and future composition and demographics of the workforce

• Develop plan to address identified staffing needs

Issues Addressed

• Multiple Collective Bargaining Agreement

• Vacancies and Acting Positions

• Aging Workforce

• Assignment of HR Resources


• Proactive approach to succession planning

• Address a perceived lack of absolute resources

• Better allocation of limited resources

Affect on Scorecard

Good Governance

Resource Allocation




4


MULTIPLE COLLECTIVE BARGAINING AGREEMENTS


• Between MHRC and MHA there are four collective agreements (MGEU Master Agreement, MGEU Winnipeg, MGEU Rural, and IUOE)

• Differences in salaries and benefits by classification level

• Affects staff morale and creates divisions between MHA and MHRC employees

• Affects staff turnover rates


• ADM, Housing

• DM, FSH

• Treasury Board Secretariat

• Civil Service Commission

• MGEU, IUOE

• Cabinet


• All MHA and MHRC staff covered under each of the respective agreements

• MGEU and IUOE


• Harmonize/equilibrate relative compensation and benefits per classification level

• Move all staff under one agreement

• Create new organization covering MHRC and MHA with full staffing and compensation authority



• Review of current collective agreements and associated labour policies and regulations




• Obtaining MGEU and IUOE support

• May affect overall government staffing levels - i.e. Number of civil servants

• May require legislative change depending on specific strategy



• Focus attention onto quality service delivery

• A more committed resource base

• Fair and equitable employment practices

• Equity among government employees

• Improved staff moraleResource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




VACANCIES AND ACTING POSITIONS


• A number of branches/departments are struggling to keep up with duties in a timely manner

• Some of these branches are experiencing staffing shortages

• In some cases, it is perceived that a lack of staffing resources is preventing some from achieving their mandate

• Increased staffing levels could allow some branches to achieve their mandates


• DM, FSH

• ADM, Housing


• Human Resources



• Staff

• Tenants


• Increase staffing to a level that is sufficient for each branch to achieve their mandate

• A re-allocation of staff to increase resource efficiency


• Staffing review



• May require an investment to hire new staff

• Analysis of mandates, and ability to achieve them

• Prioritization of mandates, and the tasks necessary to achieve them



• A higher level of resources should lead to faster services

• Increased ability to achieve mandate

• More accountability

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




AGING WORKFORCE


• The average age of staff is increasing

• All groups are dealing with retirements regularly

• Process to backfill vacant positions is unable to keep pace with the rate of retirements

• Reduced capacity available to perform/supply service requirements

• Introduces business risk


• Senior Managers

• Human Resources

• TBS

• CSC


• Managers

• Staff


• Proactive planning and staffing processes

• Changing retirements policies/regulation

• Technology solutions to retain staff

• Utilization of contract workers

• Higher level of service from HR

• Streamlining of staffing process

• Succession planning


• Demographic analysis

• Workforce profile


• Staffing process review


• May affect overall government staffing levels,

• Labour market conditions



• Maintain adequate levels of tenant service

• Ensures absolute resources are kept to a sufficient level

• Adapting proactively to a changing demographicResource

Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




ASSIGNMENT OF HR RESOURCES


• HR support to all the parts of MHA and MHRC have declined significantly in that time

• Response time for HR support is lengthy, and has resulted in excess vacant and acting positions throughout both organizations

• More dedicated HR resources could help increase productivity and efficiency


• All Staff and Managers

• HR

• Government Services


• Increase the absolute number of resources dedicated to MHA and MHRC

• Establish clarity and communication around ranking of HR priorities

• Establish clarity and communication in resource allocation for HR support



• Process review

• Resource availability

• Government policy

• Alignment with central government policy

• Potential increased investment

• Requires objective decisions about investing, or not, in HR support for MHRC/MHA


• Minister, FS&H



• Government Services



• Increased ability to meet Housing mandate

• Ability to better service tenants and the public at large

• Transparency in the allocation of HR resources

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




IT SERVICES


• Perform analysis of IT resources available and allocation process

• Perform detailed systems analysis to inventory all desired application development projects and system compatibility issues

• Identify potential e-service offerings and conduct feasibility study

Issues Addressed

• IT Application Support

• Simplification and Automation

• TMS/MMS Functionality

• Family Service and Housing System Compatibility

• E-Services


• A better use of resources by taking advantage of technological developments

• Bring Manitoba Public Housing in line with leading practices

• Faster processes leading to more responsive services

Affect on Scorecard

-Good Governance

Resource Allocation


Engagement



5


IT APPLICATION SUPPORT


• Over the past few years, IT support has been centralized, both within the Department of Family Services and Housing, and within the Government of Manitoba

• Perceived decline in response times and attention to IT support requests

• Staff and management are generally unsure about how IT requests are placed in the queue and prioritized.

• Overall increased dependency on IT


• DM, FSH

• ADM, Housing

• IT


• HR


• Staff

• IT

• Management

• HR


• Provide staff and management with transparency on how limited IT resources are allocated

• Increase in absolute IT resources (staff and budget) available

• Consider outsourcing IT support or application development



• Process review

• HR review

• Cost of adding resources

• Staffing process can be long


• Appropriate timelines



• Reduced administrative costs

• Improved responsiveness to tenants

• Faster tenant service and administrative processes

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




SIMPLIFICATION AND AUTOMATION


• A number of manual processes are being performed where there is potential for automation.

• Online banking interface is not compatible with finance system, resulting in redundancy

• Point system for new applicants must be calculated separately and then entered manually into TMS during application process

• Not all Tenant and Lease documents can be produced from TMS

• Simplifying processes may lead to increased efficiency


• ADM, Housing


• IT




• Tenant Intake Group

• Property Services

• Maintenance


• Tenants and Applicants


• Research areas that may benefit from automated processes, such as:

• Automatic rent calculations

• Automatically generated non-rental payment notices

• All necessary forms and processes are in TMS/MMS

• Ensure no manual operations exist if automation opportunities exist


• Comparative Analysis

• Financial Analysis

• Technological feasibility


• Is the cost to implement less than the cost to operate in current state

• Multiple process changes

• Technological infrastructure

• High development costs

• Necessary technological training needed






Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




TMS/MMS FUNCTIONALITY


• Interface between TMS and MMS would provide for better property management, tenant placement, revenue management, expenditure management

• Interfaces between TMS/MMS and Masterpiece could be refined to provide better information for management decisions

• Rent calculations are done through an excel spreadsheet then manually entered into TMS creating duplication and potential for error


• ADM, Housing


• IT





• Maintenance



• Ensure a high level of training for all users throughout the organization

• Explore the use of SAP Real Property module currently being developed in central government

• Prioritize initiatives for TMS/MMS/Masterpiece interfaces

• Allocate appropriate resources to support IT enhancements




• Review of resource levels

• Is the cost to implement less than the cost to operate in current state

• Multiple process changes



• Necessary technological training needed



• Less duplication of tasks and resources

• Better data integrity between systems

• More responsiveness to tenant needs

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




FAMILY SERVICES AND HOUSING SYSTEM COMPATIBILITY


• Most of the systems used by the family services side of the department and the housing services sides of the department are independent of each other

• Systems are incompatible

• EIA payments that are sent to housing from family services have to be entered into system manually

• Family Services has an electronic application system that it uses for child care intake, and may be able to be used for housing application intake


• Minister, FSH

• Deputy Minister, FSH

• ADM, Housing

• ADM, Family Services

• IT




• Accounting


• Tenants

• Applicants

• Staff


• Develop IT projects to allow better integration of applications and data between systems

• Integrate Family Services and Housing back office systems to allow transactions to happen seamlessly




• Process review

• Technology review

• Implementation costs

• Cooperation across both Family Services and Housing

• Integration of systems needs to be feasible


• Appropriate timelines




• Better use of resources


Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




E-SERVICES


• All processes in which MHA and MHRC interact with the public are in person or manual

• All interactions are either on the phone, through correspondence, or in leasing offices

• Aside from the ability to download forms online, there are no electronic services available to the public

• Potential for significant increases in efficiency and service delivery


• ADM, Housing


• IT


• TBS

• MGS


• Tenants and Applicants





• Allowing applicants to apply for housing units through an online process that automatically feeds into the TMS system, and allows for status updates

• Online application processes for Affordable Housing Initiative

• Waitlists and available vacancies posted online and kept up to date in real time

• Provide incentives for use of e-services


• Demographic Analysis

• Statistical Analysis


• Process Analysis

• Reduction in the need for resources

• Multiple process change






• Increased accessibility for the public

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




CLIENT SERVICES


• Develop new or revised processes for addressing Ministerial inquiries

• Develop procedures to re-establish and enforce the appeals process

• Perform detailed process review of the tenant intake practices to streamline the application process, and reduce the length of time to “make-ready” units.

Issues Addressed

• Ministerial Inquiries

• Appeals Process

• Tenant Intake Application Processes

• Make – Ready Process


• Faster tenant intake process

• Higher revenue by getting tenants into their units faster

• A more efficient use of resources

Affect on Scorecard

-Good Governance

Resource Allocation




6


MINISTERIAL INQUIRIES


• Workload challenges associated with MIs

• Responding to MIs interferes with other planned activities

• Existing procedures may limit timely responses

• Procedure requires coordination across multiple management and staffing levels

• Content of some inquiries being used to circumvent established protocols for tenancy appeals


• Minister, FSH

• DM, FSH

• ADM, Housing



• Tenants

• Media

• Public


• Government


• Enforce established protocols for tenancy appeals

• Establish MI protocols across department

• Centralize MI function, e.g.. Public Affairs office with appropriate resourceing


• Statistical analysis








• Centralized function will reduce administrative costs

• Reduce the time needed to respond to inquiries

• Provides the Government and public the information needed in a timely mannerResource

Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




APPEALS PROCESS


• Tenants have the option to appeal decisions made by either tenant intake or property services

• Appeals are heard before a board chaired by the ADM

• Board decisions are based on the application of policy

• Tenants have begun to call the Minister’s office to lodge a complaint instead of going through appeals process

• Calls to Minister’s office lead to time consuming ministerial inquiries

• Tenants are experiencing more success by going to Minister’s office instead of appeals board, creating two different appeals avenues


• Minister, FSH

• DM, FSH

• ADM, Housing


• Housing Appeals Committee


• Tenants

• Media

• Public


• Government


• Enforce established protocols for tenancy appeals

• Establish Protocols that will allow for appropriate political intervention, ie. Whistle blowing policy/procedure


• Process Review






• A single, objective avenue for tenants to take in making appeals

• The ability of the minister’s office to become involved in appropriate situationsResource

Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




TENANT INTAKE APPLICATION PROCESS

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




• The tenant intake process is often long and labour intensive, with a two-application, two-step process. MHA is in the process of removing one of the applications.

• Process:

• Applications are filled out manually and physically submitted at an MHA leasing office and entered into the Tenant Management System(TMS) manually

• Points are assigned, calculated using an excel spreadsheet, and references are checked

• Second application is filled out and submitted manually and applicant interview takes place to provide more information and necessary paperwork

• Upon approval, applicant is placed on waiting list

Key Responsibilities

• ADM Housing




• Tenant Intake Group Staff

• Applicants for Public Housing



• Information Technology Services


• New fully automated application process

• Modifying the current automated child care placement application process currently used by Family Services

• Opportunities to reduce the number of stages/requirements involved in application process

• Move the tenant intake process responsibility from Strategic Planning and Policy over to Property Services

• Restructure the point system


• Statistics related to intake process, such as average application time, success rate, etc.

• Costs related to system development and implementation

• Transferability of Child Care interface and back office system

• Required skills and change management program

• Cabinet approval

• Ministerial approval





• Increased accuracy of application assessments


MAKE-READY PROCESS


• Takes Maintenance group approximately one month to make units ready for occupancy

• One day to scope maintenance work needed, about two weeks to source suppliers and contractors through competitive process, about two weeks to conduct work and clean unit

• Problems in getting quotes can delay process, as can amount of work needed

• In some cases, the full month is not necessary to make units ready

• Process guarantees at least one month without revenue from that unit




• Maintenance


• Maintenance Group

• Property Managers

• Tenants

• Staff

• Contractors and suppliers


• Reduce timeframe for making units ready for occupancy

• Increased use of Standing Service Agreements to minimize the length of the procurement cycle

• Allow for occupancy at any date during the month


• Procurement policy review and analysis

• Historical analysis of expected repair times

• Process review


• Benchmarking

• Government Procurement policy

• Tenant rights codes/legislation

• Ensuring appropriate internal controls

• Potential increase in revenue



• More responsive to the needs of tenants

• Increase in revenue

• More efficient use of time

• Improved procurement practicesResource

Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




SUPPLY CHAIN MANAGEMENT


• Perform cost/benefit analysis of impact of using more standardized equipment and Standing Service Agreements.

• Identify areas where standing service agreement could be used

Issues Addressed

• Standardization of Equipment

• Use of more standing service agreements





Affect on Scorecard

-Good Governance

Resource Allocation


Engagement



7


STANDARDIZATION OF EQUIPMENT USED


• Currently little standardization of equipment or products used.

• Some standardization when standing service agreements used.

• Non-standard equipment (fixtures, appliances, products etc) results in increased time in sourcing parts, performing repairs and installations

• Standardization of equipment/products may provide the following:

• Higher value products – not always lowest bidder

• Opportunity to take advantage of bulk purchasing

• Ease of repair/installation reducing labour costs

• More consistent pricing

• More conformity between housing units.


• ADM, Housing



• Maintenance Coordinators

• District Maintenance Coordinators

• Building Superintendents

• Tenants


• Creation of a list of standard equipment (fixtures, appliances, products, etc) to be used and policies to enforce use.

• Increased use of standing service agreements with reputable suppliers.


• Cost analysis of time spent obtaining bids and sourcing products

• Analysis and identification of potential equipment/products that could be standardized

• Process change

• Potential higher initial cost for equipment projects (not always the lowest bidder)



• Centralized purchasing is more cost efficient

• Reduce the time needed to respond to repairs

• Better use of available funds

• Allows use of mass purchasing power

• More accountability

Resource Allocation

Adequacy of Client

Service

Adequacy of Housing

Stock

GoodGovernance




ENTERPRISE RISK MANAGEMENT


• Establish risk maturity and develop organizational risk profile

• Develop risk management framework to address risk exposure

Issues Addressed

• Enterprise Risk Management Framework

• Internal Policy Compliance





Affect on Scorecard

Good Governance

-Resource Allocation


-Adequacy of Client Service


8


HIGH LEVEL ISSUES MAP

Degree of MHC / MHRC

Control

Benefit1. Housing Strategy



4. HR Strategy

5. IT Services

6. Client Services



12

3

45

67

8


NEXT STEPS

Compile feedback from today’s session

ADM to use KPMG findings and feedback to identify projects to move forward with

KPMG to assist in building roadmaps based on issues selected for action

The Case for Change: Transforming Manitoba Housing October 2007 C-1

Appendix C – Comparative Jurisdiction Analysis: Vision, Mission and Values of Housing Organizations The following table comprises information gathered from websites, documents, policies, brochures, and interviews during the period from March 15 to April 30, 2007.

Jurisdiction Vision, Mission, and Values

British Columbia Vision: Housing solutions for healthier futures.

Mission: Creating the best system of housing and support for vulnerable British Columbians.

Our Values: Integrity, Respect, Commitment, Service, Accountability.

Saskatchewan Saskatchewan Housing Corporation (SHC) promotes independence and self-sufficiency by providing housing and housing services to households that could not otherwise afford adequate, safe, and secure shelter. SHC manages the financial contributions of the provincial, federal, and municipal levels of government for social and affordable housing and plays a lead role in the development of housing policies on behalf of the Government of Saskatchewan.

Toronto TCHC is committed to being the pre-eminent social housing provider in North America, and sets the standards and benchmarks against which other not-for-profit housing providers are measured

Ottawa Mission: Ottawa Community Housing provides and manages quality, safe and affordable housing for low- and moderate-income households. In collaboration with our tenants and partner agencies, and as a leader in affordable housing, we promote the development of healthy, diverse, sustainable and secure communities.

Vision: Ottawa Community Housing contributes to social development within the City of Ottawa by helping people live with dignity in affordable housing, facilitating access to the services they require, and engaging tenants to strengthen their communities.

Values: Accountability, Excellence, Partnership, Respect, Safe Communities, Service, Tenant Empowerment

The Case for Change: Transforming Manitoba Housing October 2007 C-2

Jurisdiction Vision, Mission, and Values

Minneapolis The mission of the Minneapolis Public Housing Authority (MPHA) is to promote and deliver quality, well-managed homes to a diverse low income population and, as a valued partner, contribute to the well-being of the individuals, families and community we serve.

Cleveland Mission: The mission of the Cuyahoga Metropolitan Housing Authority is to be the leader in providing safe quality affordable housing for individuals and families of Cuyahoga County

Vision: Our goal is to create strong communities that residents are proud to call home, communities that are not isolated from surrounding neighbourhoods but are linked to the social, educational, economic and religious institutions of the community-at-large.

Values: Core Values set of basic core beliefs guides our organization and operations: Work Ethic, Integrity, Teamwork, Respect, Customer Service, and Community.

New Zealand All New Zealanders have access to affordable, sustainable, good quality housing appropriate to their needs

The Case for Change: Transforming Manitoba Housing October 2007 D-1

Appendix D – Governance Overview Governance Principles

Good governance fosters public trust and participation that enables services to improve, unlike bad governance which fosters adversarial relationships and low morale that lead to poor performance or dysfunctional organizations (“The Good Governance Standard for Public Services”, CIPFA, 2004)

In 2004, an Independent Commission on Good Governance in Public Services was established in the United Kingdom. It was established by the Office for Public Management and the Chartered Institute of Public Finance and Accountancy, in partnership with the Joseph Roundtree Foundation. Its role was to develop a common code and set of principles for good governance across public services. Building on previous research, and using a series of stakeholder consultations, which focused on the potential value and what needs to be included in a common code, a draft report was produced and subject to further consultation prior to finalization. The report is intended to be used as a guide to help those concerned with governance of public services to understand and apply these principles and to assess the strengths and weaknesses of current governance practice and improve it. This Standard was developed to apply to many organizations with a wide range of governance structures, from central government and local service providers, public sector and independent organizations.

Six core principles, with supporting principles were developed. At the centre is “focusing on the organization’s purpose and on outcomes for citizens and users”.

Surrounding this are the following:

“Performing effectively in clearly defined functions and roles”;

“Promoting values for the whole organization and demonstrating good governance through behaviour”;

“Taking informed, transparent decisions and managing risk”; and

“Developing the capacity and capability of the governing body to be effective”

Encompassing all five principles above, is “engaging stakeholders and making accountability real”.

The central principle should guide all governance activity, as the function of governance is to ensure that an organization operates in an effective, efficient and ethical manner while fulfilling its purpose and realizing outcomes for citizens and service users. While, there are general purposes to public


governance, such as providing good quality services and achieving value for money, each organization has its own purpose.

Good governance also requires clarity with respect to the functions of governance, the roles, responsibilities and accountability of stakeholders, and that all involved behave in ways that are consistent with their roles. It is important that governance decisions are informed by a wide range of experiences and perspectives, as decisions made should further the purpose of the organization rather than the interests of any specific associated group.

Good governance builds on the Nolan principles and follows from a shared culture, systems and structures. A characteristic is the development of shared values, which are part of the entire organization’s culture from staff to board members. Individual behaviour is a large factor in the effectiveness of a board and can influence the organization’s working relationships and morale within it. Conflicts, real or perceived, can arise between the organization’s interests and those of individual board members. The organization needs to implement clear procedures to deal with these conflicts.

Decision making at the board level must further the purpose and strategic direction of the organization, which can be multifaceted and challenging. In order to accomplish this important task, board members need to be well informed and receive support from the appropriate systems to ensure decisions are implemented efficiently and effectively. Clear objectives for the decisions, including: criteria, rationale and considerations will help all stakeholders to more plainly understand the decision and should result in more effective implementations. Also required is a clearly defined level of delegation between the board and the executive team. It is important that board members are not involved with levels of detail that are inappropriate for their role, while at the same time are not too far removed to provide valuable oversight.

Boards need to consider the skills and requirements needed for their particular situation to direct and control the organization effectively. Members can then be recruited or appointed based on the particular skill set required, drawing on the largest possible pool of potential members. Governance is also more likely to be successful if new people with fresh ideas are appointed regularly, while balancing the need for stability to provide continuity of knowledge and relationships.

Boards of public services have multiple accountabilities to the public and within government. The range and strength of different accountability relationships varies between types of boards. Some are more informal and some have a closer relationship with a government minister. The board should make clear, to both itself and staff, to whom it is accountable and for what. It should regularly assess its relationships and determine whether they serve their intended purpose, including the need to strengthen the relationship, and whether any are a disadvantage to the organization.


While staff are accountable to the board, the board has a large responsibility, as an employer, to the staff. Issues such as recruiting, motivation and retaining staff are vital if public service organizations are to be effective. An environment where staff can perform well and a culture that is open and responsive is key to delivering effective services and motivated staff.

A 1998 report by the Office of the Provincial Auditor titled “An Examination of Governance in Manitoba’s Crown Organizations” highlighted four pillars of effective governance based on review of leading practices, jurisdictional research and leading perspectives on board governance. These four pillars are:

Stewardship

Leadership

Responsibility

Accountability

Building on the four pillars, each pillar has several attributes associated with it. Many attributes of an effective board and their importance are highlighted above, including:

Clear understanding of the organization’s goals

Priorities agreed upon

Appropriate relationships with other organizations, executive, government departments

Clear roles and responsibilities for board, management and staff

The board is accountable for the organization’s effectiveness and receives appropriate information for decision making

There are a number of models and approaches for governance, based on the four pillars as defined by the Manitoba Provincial Auditor, although there is a core perspective on what the board should do. The report identified its model of governance, with a set of attributes which operationalize the four pillars and represent an effective board. In general, the more a board fulfills each of the attributes, the more effective the board is.

Comparative Jurisdictional Analysis

Based on the jurisdictional research, several governance models exist. While there is no one leading model, each organization has developed a model that supports their particular environment. Some have active tenant representation at the board level, while others have a process in place for tenants to work with staff to resolve issues and escalate, as necessary. In some jurisdictions, tenants are specifically excluded as board members and in others; board members are drawn from a wide community to ensure that specific skill sets are met. The following information was gathered from websites, documents,


policies, brochures, and interviews during the period from April 1 to April 30, 2007.

British Columbia - British Columbia Housing is a provincial crown agency under the Ministry of Forests and Range and the Minister Responsible for Housing. BC Housing reports through the CEO to a Board of Commissioners, whose members are appointed by the Lieutenant-Governor. Commissioners are responsible to the Minister and have knowledge of, or background in the housing field. The Commissioners set the strategic direction for the organization, in cooperation with the senior management team, and ensures that BC Housing addresses the housing priorities of the government. A Shareholder’s Letter of Expectations is an agreement between the Minister and the Chair that defines the respective roles and responsibilities of both the Ministry and BC Housing.

Saskatchewan - Saskatchewan Housing Corporation (SHC) is a Treasury Board Crown Corporation accountable to Cabinet through the Minister of Community Resources. The board is comprised of members, appointed by the Minister, from the Department of Community Resources, and currently the sole member is the Deputy Minister. There are also local housing authorities, represented by appointed volunteer board members, who oversee the day-to-day operations and management of SHC owned properties. Significant policy and program decisions require the involvement and approval of Cabinet or a statutory Cabinet committee.

Toronto, Ontario - The Toronto Community Housing Corporation (TCHC) is incorporated under the Ontario Business Corporations Act with the City of Toronto as the sole shareholder. The board consists of 13 members, including the mayor or designate and two city counsellors. The remaining 10 members are chosen from the broader community, with at least two representing tenants. TCHC also has Community Housing Unit Councils, with each Housing Unit representing approximately 2,500 units of housing divided geographically. Each council is elected by tenants in the housing unit. The tenant representatives work closely, and are the main point of contact with TCHC staff to resolve and escalate, as needed, any issues. TCHC has 4 subsidiaries, in which one manages the social housing waitlist and delivers rent supplement programs, one delivers select property management services and two are related to large housing redevelopment projects.

Ottawa, Ontario - The Ottawa Community Housing Corporation (OCH) is an amalgamation of City Living and Ottawa Housing Corporation, which occurred in 2002, with the City of Ottawa as the sole shareholder. The OCH Board of Directors currently consists of the Mayor, as an ex-officio member, four city counsellors and three community representatives, which is the minimum number allowed per the bylaws of the corporation. The Board can have a maximum of 14 members, at the discretion of the City. All directors are appointed, and community representatives are not tenants, Corporation employees or Members of the Council to avoid any


real or perceived conflict of interest. OCH also have a Tenant Advisory Group, which is composed entirely of tenants and provides input to the Board on a variety of issues. It also provides a mechanism for tenants to be connected at the Board level.

United Kingdom - Limited governance information from the UK jurisdiction of Birmingham was located. Although input was actively sought, responses were not available. The Birmingham City Council Housing Department appears to manage the homes through a Housing Corporation, an executive, non-departmental public body. The City Council works with Registered Social Landlords, the Housing Corporation and the private sector to ensure that council housing is maintained, meets local needs and contributes to the creation and maintenance of sustainable communities. All reporting for the Housing Corporation appears to go through to City Council.

New Zealand - Housing New Zealand is a Crown Agency that is separate from the Department of Building and Housing. It’s has two mandates: to provide good quality, affordable rental homes for people on low incomes or with special housing needs; and to be the principal advisor on housing to the Government of New Zealand. There are two related organizations, one related to the project management of an integrated urban development on a former airbase and the other responsible for the delivery and promotion of independent policy-relevant housing research. The primary relationship with Government is between the Corporation’s board and the two ministers responsible for Housing New Zealand. Both the Minister of Housing and the Minister of Finance are responsible for the Corporation and managing the ownership interested in the Corporation, Vote and Budget issues. Board members are appointed by the corporation’s responsible ministers and are held responsible for the operational decisions made by the Corporation and for risks and opportunities are managed effectively. The Chief Executive has sole responsibility for providing policy advice to the Minister. The Chief Executive is responsible to the board for the efficient and effective running of the Corporation, direct provision of policy advice, content of budget submissions, and for setting the direction for the corporation and the broader social housing sector.

Minneapolis, Minnesota and Cleveland, Ohio, U.S.A. - Minneapolis Public Housing Authority is a public agency. Limited information with regards to Minneapolis’ governance was found. However, the Executive Director reports directly to a Board of Commissioners, which is similar to the Housing Authority that provides affordable housing the Cleveland area. The Cuyahoga Metropolitan Housing Authority (CMHA) operates with a five-member Board of Commissions. Of the five positions, the mayor of the City of Cleveland appoints two; two are appointed by the Cleveland City Council and one position is appointed by the Mayor of the municipality with the second largest number of CMHA-managed housing units, currently East Cleveland. Of the two appointed by the Mayor of


Cleveland, one must be a CMHA resident. The Board ensures that the CMHA’s purpose and accompanying responsibilities are carried out in an efficient and economical manner, in addition to setting policies governing operations and charting the direction of current and future programs. Commissioners also ensure that the CMHA operates within the law and according to the U.S. Department of Housing and Urban Development regulations.

The research above highlights the numerous governance options that have been implemented to address the various needs of each organization. Based on interviews with senior management within a number of jurisdictions, while each model has its own challenges and benefits, the organizations have made their model fit their particular needs to the best of their ability. While all have mandated requirements as to the size and make up of the board, they have chosen different ways to handle the relationship between the Board and Executive, as well as with the tenants.

Alternative Options for Manitoba Housing

Governance, like other organizational processes and structures, needs to evolve with the organization over its life cycle. There are several models of governance for consideration. Each has benefits as well as challenges to be addressed. The models range from the Current Model, where the organization is a separately incorporated entity with a Board of Directors comprised of the Department of Family Services and Housing ADMs to a model where the Board is comprised of members independent of the Department who are chosen for a particular skill set. Also, there are several options for the board complement, and as seen in other jurisdictions this number can range from one to thirteen members. The various models discussed below have different degrees of government control ranging from tightly controlled as a government department to arms length control similar in nature to Manitoba Lottery Corporation.

Regardless of the option selected, a change in governance structure alone will not inherently solve current issues. Any change must be accompanied by a clear set of directions outlining the roles and responsibilities of Board members and the relationship between the Board, Government and senior management team. In some cases, an amendment to the Housing and Renewal Corporation Act may be required to accommodate any change in the number of board members. Currently the Board must have no fewer than five members; however the make up is not specified.

The following table outlines the strengths and weaknesses of possible Governance models.


Model Description Strengths Weaknesses As-Is Board members are the

ADMs from the Department of Family Services and Housing. MHA and MHRC boards are combined and meet contiguously.

Strong (but not total) alignment between leadership direction for the Department and for MHRC/MHA

Efficient use of staff resources; no need to support two different groups of senior leaders between the Department and MHRC/MHA

Receive some of the advantages of incorporation including carrying funds over the year end and holding mortgages

Governance structure as it currently stands is perceived as being unable to best represent the organization

Apparent conflict of interest, real or perceived, with the role of the DM and ADMs between the Department and the Board.

Perception that Board members are in a difficult position, with multiple roles that they play and the inherent connection between their day-to-day roles within the other divisions of the Department.

Perception exists that some decisions favour the interests of the other divisions within the Department.

Not able to take advantage of the full range of possible Board member skills available from a broader pool of candidates.

Government Department

The organization loses its corporate status and becomes another department under the authority of the Minister with no Board of Directors

Complete alignment between the directions set by the government and that of the department.

No ability to take advantage of the full range of possible leadership skills available from a large pool of candidates for Board of Director positions.

Removing corporate status, MHRC becomes another division. The ability to carry funds over multiple years and issue mortgages will be lost, and revenue received will go directly into a general funding account which may create conflicting priorities with the need to invest in the housing stock.

Corporate Similar to a publicly traded corporation, the Board of Directors is responsible for the best interest of the corporate entity and any real or perceived conflicts of interest are addressed at the time of selecting board members.

Members are selected from a wide range of potential applicants, based on their particular skill set and knowledge; more likely to acquire experience needed by the business aspects of organization

More likely that adequate investments will be made in the housing stock given the Board’s singular focus

May result in a misalignment between corporate direction and government direction.


The Case for Change: Transforming Manitoba Housing October 2007 E-1

Appendix E – Comparative Jurisdictional Analysis: Organizational Structures Based on the jurisdictional review, there are several different organizational design structures currently in use, although there are common threads among them. In many cases, the operational management of the buildings and tenants are closely linked together. The corporate functions, such as finance, information technology and human resources are also closely related. The organizational charts for each jurisdiction are found below. While there are several structural models that can be devised, the business processes that link closely related areas must be carefully developed, as no one structure can overcome the communication and linkages necessary for an organization to succeed. The following table comprises information gathered from websites, documents, policies, brochures, and interviews during the period from March 15 to April 30, 2007.

British Columbia Housing Corporation


Saskatchewan Housing Corporation

Toronto Community Housing Corporation

Board of Directors

Chief ExecutiveOfficer

Chief OperatingOfficer

Vice President:Corporate Planning and

Performance

Chief FinancialOfficer

Chief DevelopmentOfficer

Vice President: Human Resources

Vice President: Corporate

Communications


Ottawa Community Housing

Birmingham (UK)

Strategic Director forHousing and

Constituencies

Maintenance andInvestment

RepairsHousingManagement

Strategy andDevelopment

Resources

Communications Finance

HumanResource

Support Services

InformationTechnology

PrivateSector

HousingNeeds

Development

PathfindersStrategy andPartnerships

Performance andService Transformation

PerformanceMeasurement


Housing New Zealand Corporation

Minneapolis Public Housing Authority

Board of

Commissioners

ExecutiveDirector

Assistant toExecutive Director

Confidential Administrative

Specialist

DirectorSpecial Policy Initiatives

Director of AssetOperations Management

Director ofLabour and Employee

Relations

Director ofResident Initiatives

Deputy Executive Director

Director of Legal Services

InformationTechnology

Procurement

Finance

Section 8 Programs

Facilities andDevelopment

HumanResources

Maintenance Operations

Leasing andOccupancy

Asset OperationsManagement

RentCollections


Leading Practices

When designing an organizational structure there are many aspects for consideration. A key objective is to delivery quality services to clients. In order to accomplish this, one needs to ensure that the skills and capacity are there both at the staff and leadership level. There needs to be clear lines of authority and accountability. The structure needs to be respectful of staff and enable the desired culture. Organizational design leading practices in innovative public sector organizations are:

Customer focused;

Functional groupings as the primary or first level of organizational division of work;

Geographically sensitive, but not likely organized in the first instance by geography;

Appropriate span of control reflecting complexity of work, need for supervision and need for integration;

Task cohesiveness;

Performance management linking objectives to outcomes;

Shared services within and across organizations; and

Integrated service delivery across functions and Ministries.


The Case for Change: Transforming Manitoba Housing October 2007 F-1

Appendix F – RACI Charts The following are examples of RACI charts which should be developed as new business processes and organizational structure are being designed. RACI charts are done for each major business process and should include the associated tasks and subtasks. The tasks and subtasks are then aligned to each organizational position based on their required involvement. RACI charts are helpful when determining job descriptions and communication plans, as well as ensuring that the people required for effective and efficient business processes are properly involved. RACI stands for:

Responsible - who is ultimately responsible and accountable for ensuring the task/subtask is completed;

Action - who is/are required to do the task;

Consulted - who is/are required to be consulted and provide input to the task/subtask; and

Informed - who needs to receive information regarding the task/subtask.

RACI charts help to identify all the positions within the organization that are involved in each task/subtask and assist with the communication plan and that integrating business processes exist to ensure that the task/subtasks are completed effectively and efficiently. It also helps with ensuring that the right people are brought together at the right time. Included are three examples of RACI charts, which will need to be further developed to the subtask level in future stages.


Table F1 — Strategic and Business Planning

Process / Subprocess Pu

blic

Min

iste

r

DM

/ B

oar

d

AD

M

ED

Str

ateg

ic In

itia

tive

s

Dir

, Po

licy

Dev

elo

pm

ent

Dir

, Pro

gra

m D

evel

op

men

t

ED

Bu

sin

ess

Ser

vice

s

Co

ntr

olle

r

Dir

, Pro

cure

men

t

ED

Clie

nt

Ser

vice

s

Dir

, Pro

per

ty S

ervi

ces

Mg

r, C

om

mu

nit

y S

up

po

rt

Pro

per

ty S

ervi

ces

Reg

ion

al M

anag

ers

Mg

r, H

ou

sin

g C

all C

entr

e

Dir

, Ass

et M

anag

emen

t

Dir

, Ag

reem

ent

Ad

min

istr

atio

n

ED

Dev

elo

pm

ent

Dev

elo

pm

ent

pro

ject

mg

r

Dev

elo

pm

ent

pro

ject

ad

min

Co

mm

un

ity

liais

on

Leg

al

Ass

et m

gm

t

Bili

ng

ual

Ser

vice

s

Bu

ildin

g o

per

atio

ns

Issue Identification I R C A C C C

Research & Analysis C R A C C C

Development of Options I C R A C C C

Option Selection C R A A I I I

Implementation Planning I R C A C C C C C

ImplementPilot Cycle I R A C C CRollout and Transfer R A C A I I

Evaluation R

Table F2 — Policy and Program Development

Process / Subprocess Pu

blic

Min

iste

r

DM

AD

M

ED

Str

ateg

ic In

itia

tive

s

Dir

, Po

licy

Dev

elo

pm

ent

Dir

, Pro

gra

m D

evel

op

men

t

ED

Bu

sin

ess

Ser

vice

s

Co

ntr

olle

r

Dir

, Pro

cure

men

t

ED

Clie

nt

Ser

vice

s

Dir

, Pro

per

ty S

ervi

ces

Mg

r, C

om

mu

nit

y S

up

po

rt

Pro

per

ty S

ervi

ces

Reg

ion

al M

anag

ers

Mg

r, H

ou

sin

g C

all C

entr

e

Dir

, Ass

et M

anag

emen

t

Dir

, Ag

reem

ent

Ad

min

istr

atio

n

ED

Dev

elo

pm

ent

Dev

elo

pm

ent

pro

ject

mg

r

Dev

elo

pm

ent

pro

ject

ad

min

Co

mm

un

ity

liais

on

Leg

al

Ass

et m

gm

t

Tec

hn

ical

Ser

vice

s

Bili

ng

ual

Ser

vice

s

Bu

ildin

g o

per

atio

ns

Issue Identification C R R R A A A C A A C A C C A A C C

Research & Analysis R A C C C C C C C C

Development of Options I R A C C C

Option Selection I I I R A C C C I I

Implementation Planning C R A A A A A A I

Implement I I I I I C R I I A C A A I C I

Evaluation I R A C


Table F3 — Building Operations

Process / Sub process Pro

per

ty S

ervi

ces

Reg

ion

al

Man

ager

s

Ass

et m

anag

ers

Pro

ject

man

ager

s

Tec

hn

ical

ser

vice

s

Bu

ildin

g o

per

ato

rs -

MC

Bu

ildin

g o

per

ato

rs -

Su

ps

En

terp

rise

Hea

lth

& S

afet

y

En

terp

rise

Sec

uri

ty

Pro

cure

men

t

Fin

ance

Ten

ant

serv

ices

Clie

nts

/ T

enan

ts

Ho

usi

ng

Cal

l Cen

tre

Manage day-to-day unplanned maintenance requests CI C RA RA I I I C A

Manage health and safety issues CI RA RA C I C A

Manage security issues CI RA RA C I C A

Manage procurement of goods & services for the building CI RA C A

Manage and supervise building operations, repairs & maintenance CI RA RA

Manage capital projects CI I R C CA A C C C C I I

Manage planned repairs activities CI I C RA RA C

Manage preventive maintenance programs CI I R A A C

Conduct building & unit condition assessments CI C R A A I

Prioritize projects for buildings C RA I C C I

Finalize capital plan C RA I C I I I

Budgeting for building operating costs C R C A C C

Review financial results of building operations R I C A I I


The Case for Change: Transforming Manitoba Housing October 2007 G-1

Appendix G – Proposed Organizational Structure The proposed organizational structure below incorporates many of the leading practices listed in Appendix E. There are many options for structural design, including: function or discipline; geography; business processes; customer segment; and strategic issue or critical success factor. The proposed organizational structure below reflects the judgment of Manitoba Housing senior management and KPMG advisors.

The Case for Change: Transforming Manitoba Housing October 2007 -G-2

ADM / CEO

ED, ClientServices

ED, BusinessServices

ED, StrategicInitiatives

ED, Development

Internal Audit(Department of Finance)

Mgr, CommunitySupport

Dir, AssetManagement

Dir, AgreementAdministration

Dir, PropertyServices

Dir, Procurement

Dir, PolicyDevelopment

Dir, ProgramDevelopment

Mgr, SpecialProjects

Mgr, LandDevelopment

Mgr, CommunityRelations

Mgr, ProgramDevelopment

ProcurementLeads

Mgr, Finance &Administration

Controller

Financial Planning & Reporting

Performance Tracking & KPI

AP

AR

Insurance

Contract Administration

Enterprise Risk Mgmt & QA

Mgr, Loans/ Mortgages/Collections

Legal

Human Resources

Information Technology

Administration

Paralegal

Leading Practices

Policy

Procurement Framework

Planning

Tools & Templates

Performance Management

e.g., Homelessness

e.g., Aging in Place

e.g., Aboriginal Directorate

Property ServicesRegional Managers

PropertyManagers

BuildingOperations

TenantServices

TechnicalServices

Mgr, HousingCall CentrePNPs

Sponsor Groups

Shelters

Co-ops

RNH

Rent Supplement

Homeowner & Community Program Groups

Shelter Benefit

Intake & Referral

Security & Loss Prevention

Health & Safety

Project Managers

ProjectAdministrators

InspectionsMaintenance & RepairsPlanned RepairsPreventative Maintenance

Lease Management

Bilingual Services

Supplier Relationships

TransformationOffice/PMO

Manager, Corporate

Communications

The Case for Change: Transforming Manitoba Housing October 2007 H-1

Appendix H – Executive Director Job Profiles Draft Design – Executive Director, Client Services Role Description

Element Description

Mandate Oversee entire housing portfolio Develop and promote compliance with housing policy practices and processes Provide advice and counsel to ADM on Housing Policy Responsible for tying vision, goals and strategies into housing initiatives and strategic plans

Role Summary The objectives are: 1)Provide expertise and support in capital asset management and property services; 2) to ensure appropriate approvals are in place; 3) to promote compliance with housing policy practices and processes; 4) support the establishment of leading practices and processes

Major Responsibilities

Facilitates sharing of best practices advice and lessons learned

Facilitates and leads strategic and tactical planning sessions

Develop and support high-level recommendations, approaches and solutions

Monitor performance of programs to ensure the fulfillment of strategic objectives

Authorize funding to projects Lead and contribute to the

development of the professional capabilities of others

Create new standards or work processes

Builds a cohesive and collaborative Management team within the division

Champions SMT decisions; acts as Sponsor for key initiatives

Acts as a role model for the desired MHA culture

Ensures staff understand Corporate values and appropriate behaviours

Participates with colleagues on SMT to lead the organization in accomplishing its Mission

Support ED, Strategic Initiatives and facilitate appropriate stakeholder representation for new program development

Skills Ability to build and manage customer and community relationships and work collaboratively with clients

Communicates with Impact Strong communication including

facilitation Knowledge of property

management, asset management, policies and ability to interpret

Ability to build and maintain relationships

Ability to analyze complex problems, identify solutions, and implement plans to solve problems

Ability to identify the need for and implement change

Ability to interact with various management levels, including senior staff

Team builder Strategic thinker; innovative


Draft Design – Executive Director, Business Services Role Description

Element Description

Mandate Oversee Business Services, including Controllership functions and Procurement

Provide advice and counsel to ADM, as required Develop and promote compliance with policy practices and processes Responsible for tying vision, goals and strategies into housing initiatives and strategic plans

Key link between Government Shared Service Functions and Housing

Role Summary The objectives are: 1) Provide expertise and support in financial management and procurement; 2) to ensure appropriate approvals are in place; 3) to promote compliance with policy practices and processes; 4) support the establishment of leading practices and processes



Responsible for financial management and contract management

Enterprise Risk Management and Quality Assurance

Security and Loss Prevention Health and Safety Link to Legal, Human Resources,

Information Technology, and Bilingual Services

Lead and contribute to the development of the professional capabilities of others







Support ED, Strategic Initiatives and facilitate appropriate stakeholder representation for new program development

Skills Knowledge of Enterprise Risk Management and Quality Assurance

Knowledge of Security and Loss Prevention

Ability to build and manage relationships and work collaboratively with clients

Strong communication including facilitation

Knowledge of financial management and procurement, policies and ability to interpret





Team builder Strategic thinker; innovative


Draft Design – Executive Director, Strategic Initiatives Role Description

Element Description

Mandate Ensure that all new programs and processes are developed, incubated or piloted until fully ready to be transitioned to the appropriate division or department (permanent home)

Provide advice and counsel to ADM on Housing Policy

Develop and promote compliance with policy practices and processes

Responsible for tying vision, goals and strategies into housing initiatives and strategic plans

Role Summary The objectives are: 1)Provide expertise and support to project groups in program development and policy; 2) to ensure appropriate approvals are in place; 3) to promote compliance with policy practices and processes; 4) support the establishment of leading practices and processes



Provide leadership and in-depth strategic, operational advice and guidance to project groups

Provide expertise to project teams in capturing processes and facilitating the design, definition and documentation of new/revised processes and workflows

Ensure new programs are properly developed and incubated prior to implementation

Ensure proper linkages and stakeholder representation is in place for development of new programs


Ensure validity and integrity of total process design and managing related change procedures

Ensure coherent and comprehensive approach to design and implementation of initiatives across business areas to increase efficiency and minimize cost

Direct the development of programs or services by assessing the impact, effectiveness and feasibility of proposed changes, make decisions or recommendations regarding feasibility and implementation of major services

Monitor performance of corporate strategies, policies programs, to ensure the fulfillment of strategic objectives

Authorize funding to projects

Lead and contribute to the development of the professional capabilities of others







Element Description

Skills Ability to build and manage relationships and work collaboratively with clients


Communicates with Impact

Knowledge of financial management and procurement, policies and ability to interpret




Innovation

Business and Organizational Knowledge

Team builder

Strategic thinker; innovative

The Case for Change: Transforming Manitoba Housing October 2007 I-1

Appendix I – Financial Analysis of the HR Transition A common complaint voiced by MHA and MHRC staff is that there are significant differences in pay between job classifications under the MHRC Master Collective agreement and similar job classifications under the other collective agreements used by MHA employees. For some positions, there were claims that the differences accounted for up to $5K-10K in annual salary.

In order to quantify these claims, KPMG first performed an analysis to map all MHA positions and related job classifications to similar job classifications under the MGEU Master agreement to determine if there were significant differences as claimed. KPMG worked closely with MHRC/MHA and HR staff to obtain input for the analysis.

Through a number of iterations, first by MHRC senior management, and then by HR staff, each budgeted MHA position and job classification was mapped to similar job classifications under the MHRC MGEU Master Agreement. Annual salary calculations were performed by using the position information (part-time vs. fulltime, number of standard work hours, etc) and rate information from the most recent collective agreements. This provided the salary cost by each MHA budgeted position using rates as if they were paid under the collective agreement.

Variances were then calculated by position to show the difference between MHA salary and estimated salary using the wages aligned to classifications on the Master collective agreement.

Since benefit costs make up a large part of the compensation package, these costs were also included in the analysis. Benefit cost estimates were provided by MHRC finance staff by using actual benefit cost divided by total salary for MHA and MHRC staff. The costs of providing benefits were determined as follows:

Organization

% of Benefits to Total Actual Payroll

MHRC 13.2

MHA 17.3

The benefit cost percentage was then applied to each staff position to determine the benefit costs using MHA collective agreement salary rates and MHRC Master collective agreement salary rates.

Other Key assumptions used in the analysis include:

All data was provided by MHRC or Human Resources


The analysis included all budgeted positions. If roles were currently vacant but budgeted for then these were included.

Overtime estimates and northern living allowances were also included where applicable.

Salary information includes the annual 2.5% increases for the fiscal year 07/08.

Salary information includes recent changes negotiated in June 2007 to provide more pay equity between agreements. These changes include:

Monitor role received an additional 2.5% adjustment,

Maintenance Coordinators and Maintenance Trades personnel received an additional 3.0%

Food Service Workers received $0.50 increase in wages.

MHA information includes the appropriate step for the employee at the current role. The MHRC Master Agreement information, in most cases has the wage at the top step. This difference would result in projected increase in salary cost.

The Overtime Allowance and Northern Allowance figures were provided by MHA. The same amounts were used for salary calculation under both scenarios.

The HR department of MHRC took the job descriptions of each MHA individual and compared them to the equivalent job descriptions in the MHRC organization. This resulted in some people receiving an increase in hourly wage while others decreased.

Discussions with HR indicated that although the cost to the organizations in providing the benefits may be different, overall the benefits received by employees under all agreements are very similar.


Change MHA & MHRC (HR)

Change in Salary Change in Benefits Change in Totals

$ % $ % $ % Administration and Maintenance Administration Head Office (27,350) -3.7% (34,018) -26.5% (61,368) -7.1% Districts 116,351 3.2% (132,487) -21.2% (16,136) -0.4% MHRC Recoverable (8,657) -4.3% (9,494) -27.0% (18,151) -7.6%

Housing Communications Centre 7,589 2.5% (11,366) -21.8% (3,777) -1.1%

Congregate Meal Program 139,231 20.5% (9,526) -8.1% 129,705 16.2% Tenant Resource 1,859 0.3% (28,163) -23.5% (26,304) -3.2%

Winnipeg Child & Family Services (7,831) -5.6% (6,733) -28.0% (14,564) -8.9%

Maintenance Branch 15,982 0.4% (157,321) -23.4% (141,339) -3.1%

Total Admin. and Main. 237,174 2.3% (389,108) -21.9% (151,934) -1.3%

Building Superintendent Rural 3,348 0.7% (18,133) -23.1% (14,785) -2.8% Winnipeg 54,418 2.0% (104,112) -22.2% (49,694) -1.6%

Total Superintendent 57,766 1.8% (122,245) -22.3% (64,479) -1.7%

Total Provincial 294,940 2.2% (511,353) -22.0% (216,413) -1.4%

The table shows that, with the most recently negotiated increases included, there is a difference of $294,940 in salaries based on MHA agreements and the Master collective agreements. This would indicate that salaries to MHA employees would increase annually by this amount if the employees were moved on to the Master agreement. If the recent (June 2007) negotiated changes were not included then the difference would be even higher as these negotiations include a number of wage increases to address wage parity issues. These numbers are however slightly exaggerated as the top pay scale step was used for most of the employees.

There were some functions where difference appeared to be more pronounced than others. This included the Congregate Meal Program where total salary cost is low ($680K out of total provincial salary cost of $13,000K) yet the total variance for the group of $139,231 accounts for 47% of the total change. This indicates that this group would receive the greatest overall increase in salary if moved to the master agreement.

In the Head Office function there were two positions that showed the MHA salary significantly higher than comparable job classifications under the collective agreement. Per further inquiry with HR, this could be due to the MHA job classification not being up to date and reflecting the full role.


The benefits variance of $511,353 shows that the potential savings from the lower cost of delivering MHRC benefits would more than out weigh the annual increase in salaries. A possible explanation for the difference in cost of delivering benefits between MHA and MHRC is that there may have been lower negotiated costs per expense under the Master agreement due to the much larger number of employees covered by the agreement. Further analysis was not performed as this was considered outside the scope of the strategic review engagement.

Overall, the above table shows a net annual savings of $216,413 when combining the increased salaries cost and the savings from reduced benefit delivery cost. It should be cautioned that, even though the benefit cost percentages were calculated based on past results, these differences may be due to the nature or types of employees using the benefits. For example, there are a higher percentage of senior management personnel on MHRC’s Master agreement than in the other collective agreements. If the benefit costs can vary based on type of employee, then these numbers may be skewed.

The Case for Change: Transforming Manitoba Housing October 2007 J-1

Appendix J – Supply Chain Management Research Supply Chain Management Leading Practices

The following is an overview of Leading Practices in procurement and supply chain management. The leading practices are grouped into four sections: Procurement Planning, Strategic Sourcing and Procurement, Tools & Processes, and Structure & Staffing. For each leading practice, a brief description and benefit of the practice has been provided as well an assessment of Manitoba Housing relative ranking. The ranking represents KPMG’s opinion based on a review of Manitoba Housing current procurement practices though interviews, workshops, and meetings conducted during this engagement.

Scale: 1 – No Evidence 2 – Minimal Practices 3 – Moderate Practices 4 – Significant Practices 5 – Leading Practices

Procurement Planning

Better pricing based on volume; adherence to strategic contracts; clear expectations of supplier performance.

Elimination of confusion in requirements; more accurate needs forecasting; ensures rapid communication and response to changes; opportunity for immediate feedback.

Mitigation of supplier stock-out risk; better pricing; development of efficient supplier network.

Significant cost savings in terms of delivery, reduced stock-out; improved customer satisfaction.

Benefits

Establishment of baseline forecast incorporating all known information; encompasses regular forecast and incremental events into forecasts.

Baseline Forecasting

Proactive communications and assessment of new requirements, forecast changes and financial information; process should be collaborative among organizational stakeholders (including suppliers and end users/costumers) and integrated throughout organization, ideally in real time.

Collaborative Planning

Setting of Request for Proposal (RFP) requirements, standards, values and principles; creation of policies related to RFP management; development of internal limitation on use of non-contract suppliers (i.e. prevention of direct purchasing from non-authorized suppliers); inclusion of communication and payment processes in RFP negotiation.

RFP Development & Compliance Management

MHA RankingDescriptionLeading Practice

Ability to determine organizational demand requirements (what and how much) and rationale.

Demand Management

Better pricing based on volume; adherence to strategic contracts; clear expectations of supplier performance.

Elimination of confusion in requirements; more accurate needs forecasting; ensures rapid communication and response to changes; opportunity for immediate feedback.

Mitigation of supplier stock-out risk; better pricing; development of efficient supplier network.

Significant cost savings in terms of delivery, reduced stock-out; improved customer satisfaction.

Benefits

Establishment of baseline forecast incorporating all known information; encompasses regular forecast and incremental events into forecasts.

Baseline Forecasting

Proactive communications and assessment of new requirements, forecast changes and financial information; process should be collaborative among organizational stakeholders (including suppliers and end users/costumers) and integrated throughout organization, ideally in real time.

Collaborative Planning

Setting of Request for Proposal (RFP) requirements, standards, values and principles; creation of policies related to RFP management; development of internal limitation on use of non-contract suppliers (i.e. prevention of direct purchasing from non-authorized suppliers); inclusion of communication and payment processes in RFP negotiation.

RFP Development & Compliance Management


Ability to determine organizational demand requirements (what and how much) and rationale.

Demand Management

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5


Strategic Sourcing and Procurement

Intimate knowledge of suppliers smoothes tension more easily; can lead to cost reductions and other savings.

Includes: establishment and regular tracking of supplier performance metrics; establishment of supplier compliance program to ensure suppliers are adhering to organizational standards, specifications and policies; supplier collaboration to determine mutual areas of process improvement and technology incorporation; development of respect for supplier needs, requirements and drivers.

Supplier Relationship Management

Common repository of contract knowledge ensures strategic pricing.

Greater supplier involvement and performance; strong alliances.

Reduction in administration; improved pricing.

Clarification of scope of procurement activities.

Benefits

Working with end users to reduce variety of products in use within organization and buy fewer products, in increased volumes, from fewer suppliers: determination of extent of standardization in reorganization (i.e. which commodities would be standardized and prioritized); use of negotiation and evidence to persuade various stakeholders of benefits and efficiency opportunities.

Identification of Product Standardization Opportunities

Rationalization of supplier base in conjunction within product standardization; strategic suppliers determined through purchasing volumes and spend analysis to identify highest-value relationships.

Strategic Sourcing

Single longer-term corporate contracts developed per item category in order tomaximize leverage with supplier; centralized negotiation base on total cost of ownership including quality, delivery, lead-time; centralization of sourcing function with contracts and standards specification managed together.

Contract Centre of Excellence


Explicit determination of most appropriate strategy for procuring commodities, primary goals and objectives of acquisition, special requirement or constraints, particular methods to be utilized (i.e. RFP or single source).

Definition of Acquisition Strategy

Intimate knowledge of suppliers smoothes tension more easily; can lead to cost reductions and other savings.

Includes: establishment and regular tracking of supplier performance metrics; establishment of supplier compliance program to ensure suppliers are adhering to organizational standards, specifications and policies; supplier collaboration to determine mutual areas of process improvement and technology incorporation; development of respect for supplier needs, requirements and drivers.

Supplier Relationship Management

Common repository of contract knowledge ensures strategic pricing.

Greater supplier involvement and performance; strong alliances.

Reduction in administration; improved pricing.

Clarification of scope of procurement activities.

Benefits

Working with end users to reduce variety of products in use within organization and buy fewer products, in increased volumes, from fewer suppliers: determination of extent of standardization in reorganization (i.e. which commodities would be standardized and prioritized); use of negotiation and evidence to persuade various stakeholders of benefits and efficiency opportunities.

Identification of Product Standardization Opportunities

Rationalization of supplier base in conjunction within product standardization; strategic suppliers determined through purchasing volumes and spend analysis to identify highest-value relationships.

Strategic Sourcing

Single longer-term corporate contracts developed per item category in order tomaximize leverage with supplier; centralized negotiation base on total cost of ownership including quality, delivery, lead-time; centralization of sourcing function with contracts and standards specification managed together.

Contract Centre of Excellence


Explicit determination of most appropriate strategy for procuring commodities, primary goals and objectives of acquisition, special requirement or constraints, particular methods to be utilized (i.e. RFP or single source).

Definition of Acquisition Strategy

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

Tools and Processes

Faster and more seamless transactions; improved accountability.

Automated PO generation and scheduling; vendor summary billing and posting; automated recurring payments; “procure-to-pay” software; demand planning software; workflow approval (automated approval requirements, audit capabilities).

Process Productivity Tools

Improved measurement capability for all costs related to purchased goods; better understanding of total supply chain impact.

Use of data warehouse capability to comprehensively analyze purchases and utilization by item, category and cost centre; ability to access historical data (inventory, supplier, financial) and reports on multi-site basis.

Comprehensive Understanding of Spend Data

Preparation for SCM issues.

Improved accountability of SCM; clarification of financial position and SCM opportunities.

Improved strategic assessment capability for all costs related to purchased goods.

Better control of payment timing; better analysis capability for purchasing financials; ability to identify SCM-related financials issues and opportunities.

Reduction of petty cash; reduction of invoicing requirements and time spent tracking small transactions.

Benefits

Automated integration of purchasing and SCM information (purchase orders) with Accounts Payable information (invoices); automatic interface download to General Ledger software.

Integration of Purchasing & A/P Information with G/L

Focus on total cost of ownership of purchased products and services (beyond price discounts); includes purchase prices, quality considerations and process costs plus costs of all other activities needed to perform the action; needs to be data-driven.

“Total Cost”focus

Measurement and reporting of key elements of SCM: pricing, total cost of ownership, costumer service; need for upfront collaboration with key stakeholders regarding measures and report parameters (e.g. forecast accuracy, actual versus budget); ability to track improvements and efficiency of key processes.

Performance Measurement & Balanced Scorecard Reporting


Development of risk management procedures, practices and contingency plans.

Conscious Risk Management

Use of purchasing credit cards for small-dollar, high-transaction purchases completed by end users.

Purchasing Cards

Faster and more seamless transactions; improved accountability.

Automated PO generation and scheduling; vendor summary billing and posting; automated recurring payments; “procure-to-pay” software; demand planning software; workflow approval (automated approval requirements, audit capabilities).

Process Productivity Tools

Improved measurement capability for all costs related to purchased goods; better understanding of total supply chain impact.

Use of data warehouse capability to comprehensively analyze purchases and utilization by item, category and cost centre; ability to access historical data (inventory, supplier, financial) and reports on multi-site basis.

Comprehensive Understanding of Spend Data

Preparation for SCM issues.

Improved accountability of SCM; clarification of financial position and SCM opportunities.

Improved strategic assessment capability for all costs related to purchased goods.

Better control of payment timing; better analysis capability for purchasing financials; ability to identify SCM-related financials issues and opportunities.

Reduction of petty cash; reduction of invoicing requirements and time spent tracking small transactions.

Benefits

Automated integration of purchasing and SCM information (purchase orders) with Accounts Payable information (invoices); automatic interface download to General Ledger software.

Integration of Purchasing & A/P Information with G/L

Focus on total cost of ownership of purchased products and services (beyond price discounts); includes purchase prices, quality considerations and process costs plus costs of all other activities needed to perform the action; needs to be data-driven.

“Total Cost”focus

Measurement and reporting of key elements of SCM: pricing, total cost of ownership, costumer service; need for upfront collaboration with key stakeholders regarding measures and report parameters (e.g. forecast accuracy, actual versus budget); ability to track improvements and efficiency of key processes.

Performance Measurement & Balanced Scorecard Reporting


Development of risk management procedures, practices and contingency plans.

Conscious Risk Management

Use of purchasing credit cards for small-dollar, high-transaction purchases completed by end users.

Purchasing Cards

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5


Structure and Staffing

Greater ability of SCM personnel to recognize and respond to issues that can have strategic impact.

Investment in higher SCM skill sets including: strategic sourcing, cost management, eCommerce, new purchasing techniques and expertise, specialized commodity knowledge.

Development of SCM Skill Sets

Improved customer service and ability to deal with suppliers; improved supplier relationships.

Specific buyers will have shared responsibilities with pre-defined specialist users to act as key sources of information across organization for certain commodities.

Commodity Specialization

Standardized approach to SCM and clear understanding for organization and suppliers.

Better understanding of areas of potential cost savings and impact of SCM on overall business and financial results; clarification of strategic importance of SCM.

Keen understanding of strategic impact of SCM; clarification of roles and responsibilities.

Clarification of supply chain value across organization.

Clear authority of supply chain decisions; senior visibility; consistency of quality and pricing; easier to implement SCM solutions.

Benefits

Awareness of SCM at executive level and enabling of strategic supplier relationships, whole organization must know about SCM and possible impact.

Senior Management Support

Strategic SCM decisions and activity must be controlled centrally; transactional execution can be decentralized.

Strategic SCM Leadership

Shift in focus to customer service and on relationship building with end users; providing single point of contact.

Transition from “Transaction to Interaction”Mindset

MH RankingDescriptionLeading Practice

Definition and clarification of purchasing activities; financialrestrictions; lines of responsibility; clear and consistent codes of conduct and ethical behavior for all SCM activities.

SCM Policies and Procedures & Code of Conduct

Common reporting line for all SCM functions for single or multiple organizations, reporting to one Sr Executive (potentially in Finance): all purchasing functions consolidated into one or a few central groups (depending on the size of organization) at one site, with all products and services bought with knowledge of or approval from purchasing.

Integrated and Aligned SCM Leadership

Greater ability of SCM personnel to recognize and respond to issues that can have strategic impact.

Investment in higher SCM skill sets including: strategic sourcing, cost management, eCommerce, new purchasing techniques and expertise, specialized commodity knowledge.

Development of SCM Skill Sets

Improved customer service and ability to deal with suppliers; improved supplier relationships.

Specific buyers will have shared responsibilities with pre-defined specialist users to act as key sources of information across organization for certain commodities.

Commodity Specialization

Standardized approach to SCM and clear understanding for organization and suppliers.

Better understanding of areas of potential cost savings and impact of SCM on overall business and financial results; clarification of strategic importance of SCM.

Keen understanding of strategic impact of SCM; clarification of roles and responsibilities.

Clarification of supply chain value across organization.

Clear authority of supply chain decisions; senior visibility; consistency of quality and pricing; easier to implement SCM solutions.

Benefits

Awareness of SCM at executive level and enabling of strategic supplier relationships, whole organization must know about SCM and possible impact.

Senior Management Support

Strategic SCM decisions and activity must be controlled centrally; transactional execution can be decentralized.

Strategic SCM Leadership

Shift in focus to customer service and on relationship building with end users; providing single point of contact.

Transition from “Transaction to Interaction”Mindset

MH RankingDescriptionLeading Practice

Definition and clarification of purchasing activities; financialrestrictions; lines of responsibility; clear and consistent codes of conduct and ethical behavior for all SCM activities.

SCM Policies and Procedures & Code of Conduct

Common reporting line for all SCM functions for single or multiple organizations, reporting to one Sr Executive (potentially in Finance): all purchasing functions consolidated into one or a few central groups (depending on the size of organization) at one site, with all products and services bought with knowledge of or approval from purchasing.

Integrated and Aligned SCM Leadership

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

1 2 3 4 51 2 3 4 5

Supply Chain Management Jurisdictional Analysis

The following is a review of procurement practices of other public housing organizations in Canada and the United States. KPMG contact procurement professionals in four other organizations: the BC Housing Corporation, the Toronto Community Housing Corporation, Ottawa Community Housing, and the Cuyahoga Metropolitan Housing Authority (Cleveland). Interviews were conducted during April and May of 2007. The key observations from these interviews are:

Manitoba Housing is at the low end of the range for spending on Purchase Orders but on the high end for the number of Purchase Orders.

Manitoba Housing has the lowest average Purchase Order value of the group.

The use of Purchasing Cards is mixed across the organizations we spoke to.

All public housing authorities have dedicated procurement staff.

Procurement is managed in either a centralized, decentralized, or hybrid structure. In some cases this is dictated by the amount of transactions or the nature of the spend (i.e., Capital).

The organizations we spoke to were generally at the early stages of procurement planning and item standardization.


Enterprise contracts (Standing Agreements) are a common practice within contract management.

Average contract duration ranges from 1 to 3 years.

Identifying preferred vendors is a common practice to build supplier relationships, and leverage buying power.

Vendor performance reviews is a common vendor management practice.

Procurement training is commonly deployed for staff with procurement responsibilities.

Software-based tools, such as e-purchase, approval workflows or procurement dashboards have been used to a limited extent.

Manitoba Housing

British Columbia Toronto Ottawa Cleveland

PO Spend $13.7M $100M not available. $12M

(everything on PO)

$25M

#PO's #48,720 #5,794 not available. not available. #5,000 Average Value $281/PO $17.3K/PO not available. not available. $5K/PO

Invoice Spend $34.1M Invoices approx. $100M

not available. not available. $25M

#Invoices #66,739 50K invoices. not available. not available. #6,000 Average Value $510/Invoice $2,000/Invoice not available. not available. $4,200/Invoice Fi

nan

cial

PCard (Y/N) and if (Y) Spend on PCard

no.

Yes, for BC housing, only

Travel expenses and

for small appliances.

yes. For services and

travel. no. no.

Sta

ff

Procurement FTE (strategic sourcing vs. buyers vs. contract management FTE's)

none.

Currently 7; not separated. Future plan: 4 for strategic

procurement.

7 in corporate office.

10 8 (not separated)

Go

vern

ance

What it the current procurement model? (Decentralized, Centralized, Center-Led)

decentralized.

Transactions below $50K

are decentralized, above: central procurement is involved.

decentralized. centralized primarily decentralized

Po

licy Do you have a

formal procurement policy in place?

yes. yes. yes. yes. yes.


Manitoba Housing


Pro

cure

men

t

Pla

nn

ing

Does an annual procurement planning process exist and when does it occur? Do regional/program plans consolidated into a single procurement plan?

no. not yet. But in planning.

no. yes, January to December.

yes. Monthly/ongoing.

No regional.

Do you have commodity/category managers or specialists that are primarily responsible for specific commodities (eg. Plumbing, HVAC, etc)

no. no. no. no. no.

Co

mm

od

ity

M

anag

emen

t

Standardization of equipment?

early stages. not available. some, but not broad.

no. no.

Enterprise contracts in place (Y/N) (AKA: Standing Service Agreements)

some. many. (no numbers available)

yes. no. yes.

Spend on contracts (# and %)

not available. not available. not available. not available. $20M of $25M.

Vendors on contracts (# or %)

not available. not available. ca. 100 vendors.

not available. 150 vendors.

Is there centralized management and storage of contracts

no. not available.

each community

(27 have their own),

remaining is corporate.

not available. yes.

Co

ntr

act

Man

agem

ent

Average contract duration (eg. 3 + 1 + 1; note: 3 yr contract plus two 1 yr renewals)

1 + 1 not available. approximately

3 years. not available. 2 years.

Number of active vendors

2,000+ 2,975 not known. estimated 10K

1,000

Number of preferred vendors not identified.

no list of them. 100

yes, invitational

500. 50

Ven

do

r M

anag

emen

t

Percent of vendor turnover (year over year)

not available. not available. not available. no. 5%


Manitoba Housing


Do you establish service level agreements with key vendors?

not identified. no. no. no. yes.

Do you undertake vendor performance reviews? If so, what percentage of the active vendor base is reviewed?

no. no. starting it currently.

yes. Every contract >$15K is reviewed.

yes. All.

Tra

inin

g Is there procurement

related training? Are there any mandatory courses, and if so what are they?

no.

yes. Alignment

with PMAC SCM

programs, Buyers have

level 3, Seniors level 4, managers have CPP.

yes, varies by position. not available.

yes. Nothing mandatory.

ePurchase Order? (Y/N)

no. no.

financial packages, which also

handle POs. (not specific)

no. no.

eRFx or Reverse Auctions? (Y/N)

no. no. no. no. no.

Approval workflow? (Y/N) no.

some capability with

JDE. no. yes. paper approval.

Contract Management? (Y/N)

no. no. no. no. no.

To

ols

Procurement Dashboard? (Y/N)

no. no. no. no. no.

The Case for Change: Transforming Manitoba Housing October 2007 K-1

Appendix K – Current State Spend Analysis Spend Baseline Overview

The Manitoba Housing Spend Database is based on data from Manitoba Housing’s MMS (PO) and Masterpiece (Invoice) systems. Specific vendors, such as cities, townships, employees, government agencies, other housing organizations and other non-procurement related vendors, have been excluded from the investigation in order to get a more accurate spend analysis. Specific G/L Accounts have been excluded that represented non-addressable spend.

$14.3 M

$34.1M

$131.4 M

$5.2 M

$185 M

All Invoices Date Range Limit(Feb 1, 2006 to Jan 31, 2007)

Excluded Vendors

Procurable Goods &Services

Focus of Focus of analysisanalysis

ExcludedAccounts

Source: MHA Spend Database (Feb 1, 2006 to Jan 31, 2007)

PO Spend Distribution

It is worth noting the number of low value purchase orders Manitoba Housing has created in one year. Purchase order data is from MMS which represents primarily maintenance procurement and approximately 40% of total spend. There is a high volume of low dollar transactions: Two-thirds of POs are under $200, and more than 95% of purchase orders are below $700, representing 58% of the purchase order spend. The majority of these are likely un-tendered orders. There is an opportunity to move the approval limit from $700 to $1000, reducing the volume of split purchase orders under $700.


-

5,000

10,000

15,000

20,000

25,000

PO Threshold ($)

Num

ber o

f PO

$-

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

Spen

d C

DN

($00

0,00

0)

Number of POs 19,257 12,793 11,390 2,995 1,752 366 154 13

Spend (000,000) $1.0 $1.7 $3.5 $1.7 $1.9 $1.1 $2.0 $0.9

<100 100 to 200 200 to 500 500 to 700 700 to 2,000 2,000 to 5,000 5,000 to 50,000 50,000 to 100K


Total #POs = 48,720Total PO Spend = $13.7 M

High number of low value POs: 32,050 POs between $0 and $200; and 46,435 POs between $0 and $700

95.3% of the POs were less than

$700, representing 58% of the amount

spent.

65.8% of the POs were for

less than $200, and represent

20% of the amount spent.

Invoice Spend Distribution

There are a high number of low value transactions that Manitoba Housing is processing, representing an opportunity to streamline payables processes, for example, through the use of a Purchasing Card.

-

5,000

10,000

15,000

20,000

25,000

30,000

Invoice Threshold ($)

Num

ber o

f Inv

oice

s

$-

$1.0

$2.0

$3.0

$4.0

$5.0

$6.0

$7.0

Spen

d C

DN

($00

0,00

0)

Number of Invoices 27,475 14,021 14,855 5,956 3,238 440 268 127 14 1

Spend (000,000) $1.4 $2.0 $4.7 $3.9 $6.6 $3.0 $4.3 $5.9 $1.9 $0.5

<100 100 to 200 200 to 500 500 to 1,000 1,000 to 5,000

5000 to 10,000

10,000 to 25,000

25,000 to 100K

100K to 500K

500K to 1M

62% of the invoices were for less than $200, and

represent 9.8% of the amount

spent.

93.8% of the invoices were less

than $1000, representing 35%

of the amount spent.


High number of low value Invoices: 41,496 Invoices between $0 and $200; and 62,397 Invoices between $0 and $1000

Total #Invoices = 66,739Total Invoice Spend = $34.1 M


Invoice Count by Vendor

The analysis indicates the vendors that are driving significant volume of small dollar value transactions, where there are vendors with a high volume of invoice, but providing relatively low value. Manitoba Hydro delivers by far the most low value invoices and also the most high value invoices, also in terms of total value. Nearly half of all invoices originate from 30 vendors, but less than a third of total value is represented by these 30 vendors. This could present an opportunity for consolidated billing. Some vendors, such as Manitoba Hydro, generate approximately 25 invoices per day. The Top 30 Vendors combined send on average 116 invoices per day.


VendorNumber of Invoices <$5K

Value of Invoices <$5K

Number of Invoices >=$5K

Value of Invoices >=$5K

Total Number of Invoices

Total Value of Invoices

1 MANITOBA HYDRO 6,198 2,946,693 246 2,611,140 6,444 5,557,833

2 WINNIPEG DOMESTIC APPLIANCES 1,718 140,150 - 1,718 140,150

3 INITIAL SECURITY SERVICES 1,561 414,107 4 21,923 1,565 436,030

4 RESCUE ROOTER SEWER AND DRAIN 1,278 113,903 - 1,278 113,903

5 BEST WINDOWS & DOORS INC 1,247 263,111 - 1,247 263,111

6 COSS PLUMBING & GAS FITTING 1,218 270,629 - 1,218 270,629

7 APPAREILS PROVENCHER 1,152 82,842 - 1,152 82,842

8 ALLIED SECURITY LOCK SERVICES 1,032 126,392 2 29,648 1,034 156,040

9 ALL BULLION PLUMBING 883 300,292 - 883 300,292

10 CONCISE CONTRACTING 842 107,003 - 842 107,003

11 BILL FROVICH ELECTRIC 809 192,884 3 31,643 812 224,527

12 AMPERE ELECTRIC CO LTD 806 128,698 1 9,630 807 138,328

13 I R N J CONTRACTING 745 176,175 - 745 176,175

14 GARDA 702 212,675 2 10,540 704 223,215

15 VILLA CLEANING SERVICES LTD 679 184,175 - 679 184,175

16 GE SECURITY CANADA 670 183,277 4 63,273 674 246,550

17 PRATTS WHOLESALE LTD 674 186,410 - 674 186,410

18 TAURCAN CONSTRUCTION 651 156,033 4 43,253 655 199,286

19 BRICK WAREHOUSE 648 288,486 2 14,119 650 302,604

20 WINNIPEG WATER HEATERS 644 127,117 2 12,171 646 139,289

21 SELKIRK PLUMBING & SUPPLY 602 95,719 - 602 95,719

22 HOME HARDWARE (SELKIRK) 555 34,544 - 555 34,544

23 COINAMATIC 532 220,797 - 532 220,797

24 WINNIPEG ELEVATOR (1978) LTD 519 105,475 - 519 105,475

25 CHURCHILL HOME BUILDING CENTRE 471 95,089 - 471 95,089

26 KEIR PLUMBING AND HEATING LTD 415 138,622 3 30,762 418 169,383

27 BRAUN C 414 105,214 - 414 105,214

28 ACTION EXTERMINATOR 379 37,374 - 379 37,374

29 NORTHERN SPECIALTIES LTD 378 14,051 - 378 14,051

30 MX RENOVATIONS LTD 358 152,996 10 154,644 368 307,640

TOP30 Vendor Total 28,780 7,600,932 283 3,032,746 29,063 10,633,678

GRAND TOTAL 65,889 18,413,284 850 15,663,838 66,739 34,077,122


Top Vendors

Only a few vendors represent the vast majority of spend volume. The Top 50 vendors (2.3% of all) represent 60.7% of total spend. Developing these strategic relationships and optimizing the procurement agreements will have a high impact on the total spend volume. A long tail of marginal vendors consumes resources, dilutes leverage and blocks standardization.

Vendor name Amount1 MANITOBA HYDRO 5,557,833$

2 GARDON CONSTRUCTION LTD 1,769,760$

3 STITTCO ENERGY LTD 1,038,361$

4 B A EVANS - CORS CONCENTRIC 792,283$

5 READY ENTERPRISES LTD 773,266$

6 COMMUNITY CONTRACTORS LTD 749,942$

7 STANTEC CONSULTING LTD 509,128$

8 WHEAT CITY ROOFING LTD 466,149$

9 ADT SECURITY SERVICES CANADA 454,607$

10 INITIAL SECURITY SERVICES 436,030$

11 JED'S CONSTRUCTION LTD 364,730$

12 MX RENOVATIONS LTD 307,640$

13 BRICK WAREHOUSE 302,604$

14 ALL BULLION PLUMBING 300,292$

15 COSS PLUMBING & GAS FITTING 270,629$

16 OAKWOOD ROOFING & SHEET METAL 265,575$

17 BEST WINDOWS & DOORS INC 263,111$

18 GE SECURITY CANADA 246,550$

19 N L POULIN'S LTD 232,347$

20 BLEROT MASONRY (2000) LTD 225,156$

21 BILL FROVICH ELECTRIC 224,527$

22 GARDA 223,215$

23 COINAMATIC 220,797$

24 LANSARD BROTHERS ROOFING LTD 220,652$

25 HADLEY PAINTING 216,956$

26 ND LEA ENGINEERS & 215,465$

27 G & J INTERIORS 213,494$

28 EASTSIDE VENTILATION 213,311$

29 FIRE PROTECTION PLUS INC 208,171$

30 GLOBAL REFRIGERATION & 208,051$

17,490,631$

34,077,122$ 2119 Total Vendors

• Top 50 Vendors (2.3 %) represent 60.7% of spend.

• Top 149 Vendors (7 %) represent 80% of spend.

• Top 500 Vendors (24 %) represent 95% of spend.

• Long tail of marginal vendors consumes resources, dilutes leverage, and blocks standardization.


Spend Distribution(Top 500 Vendors of Total 2,119)

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

100.0%

Numbe r of Ve ndor s


Top Vendors by Region/District

More than 85% of all procurement spend is done by Winnipeg and rural district offices. With the 30 largest vendors, the Winnipeg office spends double the amount than the rural offices. A central coordination of procurement could further leverage the buying power towards these vendors.

Source: MHA Spend Database (Feb 1, 2006 to Jan 31, 2007); * = Non District Office/Head Office related

Vendor nameWinnipeg District Office

Rural District Offices

MHRC Spend*

Waverly West

Head OfficeHousing Programs

Corporate Services

Rural and Native Housing

TOTAL

1 MANITOBA HYDRO 3,676,971 1,343,923 531,505 1,070 4,364 5,557,833

2 GARDON CONSTRUCTION LTD 155,639 982,415 631,706 1,769,760

3 STITTCO ENERGY LTD 169,941 868,420 1,038,361

4 B A EVANS - CORS CONCENTRIC 236,773 555,509 792,283

5 READY ENTERPRISES LTD 458,895 290,511 23,860 773,266

6 COMMUNITY CONTRACTORS LTD 237,380 512,563 749,942

7 STANTEC CONSULTING LTD 509,128 509,128

8 WHEAT CITY ROOFING LTD 267,206 198,944 466,149

9 ADT SECURITY SERVICES CANADA 454,607 454,607

10 INITIAL SECURITY SERVICES 434,214 1,816 436,030

11 JED'S CONSTRUCTION LTD 364,730 364,730

12 MX RENOVATIONS LTD 276,153 26,383 5,104 307,640

13 BRICK WAREHOUSE 242,250 56,344 4,010 302,604

14 ALL BULLION PLUMBING 300,292 300,292

15 COSS PLUMBING & GAS FITTING 270,629 270,629

16 OAKWOOD ROOFING & SHEET METAL 143,536 122,039 265,575

17 BEST WINDOWS & DOORS INC 260,989 2,122 263,111

18 GE SECURITY CANADA 245,147 488 915 246,550

19 N L POULIN'S LTD 221,590 10,757 232,347

20 BLEROT MASONRY (2000) LTD 225,156 225,156

21 BILL FROVICH ELECTRIC 224,153 373 224,527

22 GARDA 222,878 337 223,215

23 COINAMATIC 157,095 63,702 - 220,797

24 LANSARD BROTHERS ROOFING LTD 209,942 10,710 220,652

25 HADLEY PAINTING 211,489 5,467 216,956

26 ND LEA ENGINEERS & 215,465 215,465

27 G & J INTERIORS 163,344 50,150 213,494

28 EASTSIDE VENTILATION 213,311 213,311

29 FIRE PROTECTION PLUS INC 7,296 200,875 208,171

30 GLOBAL REFRIGERATION & 208,051 208,051

TOTAL 9,789,423 4,901,013 2,070,169 724,592 - - 1,070 4,364 17,490,631

Remaining vendors 7,597,904 7,311,718 1,015,051 154,190 186,563 164,852 94,078 62,135 16,586,491

GRAND TOTAL 17,387,327 12,212,730 3,085,220 878,782 186,563 164,852 95,148 66,499 34,077,122


Spend by Category Group and Office

This chart shows the magnitude of spend by Region/District for each of the Spend Categories. “Contractors” is by far the largest category group, representing nearly one third of total spend. All offices in Winnipeg and rural districts spend a comparable amount on contractors. The category groups “Utilities”, “Services” and “Building” show a similar distribution pattern. The total spend of these four categories represents more than 80% of grand total spend.

OrgGroup

Una

lloca

ted

Wav

erly

Office

Category | TOTALContractors # ## # # # # # # # # # # # # # # # ## ## # # ## ## 12,060,674$ Utilities # ## # # # # # # # # # # # # # # # ## ## ## ## ## 6,524,156$ Services # ## # # # # # # # # # # # # # # # ## ## # ## 4,941,163$ Building # ## # # # # # # # # # # # # # # # ## ## # ## 4,501,049$ Professional Services # ## # # # # # # # # # # # # ## ## # # # ## # ## ## ## ## # 1,513,552$ Supplies # ## # # # # # # # # # # # # # # ## ## # ## ## 1,299,521$ Appliances # ## # # # # # # # # # # # # # # ## ## 1,268,656$ Misc # ## # # # # # # # # # # # # # # # ## ## # # ## # ## # # ## ## ## 812,273$ Office & Admin # # # # # # # # # # # # # # ## ## # ## # # ## # # ## ## ## 311,359$ Furniture & Equipment # ## # # # # # # # # # # # # # # # ## ## # # # ## ## ## 270,721$ Meals ## 234,341$ Travel # # # # # # # ## # # ## # ## # # ## ## ## 163,348$ Communication # # # # # # # ## # ## # ## # # ## ## ## 113,845$ Event Management # ## # # ## ## ## 25,820$ HR # # # # # # ## # ## # 17,928$ Marketing # # # # # # ## # ## ## 11,173$ Information Technology # # ## ## ## 7,542$

$ 1

,970

,989

$ 2

,688

,521

$

2,4

66,7

34

$ 1

,150

,883

$

1,4

34,2

22

$ 2

,079

,844

$

9

12,6

35

$ 1

,736

,913

$

1,2

08,2

96

$ 1

,478

,995

$

2

59,2

95

$ 1

,154

,557

$ 2

,643

,472

$

1,8

71,9

15

$ 2

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,585

$

6

63,3

80

$

966

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$ 2

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,305

$ 3

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,220

$

8

78,7

82

$

290

$

47,5

34

$

12

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$

1

25,7

75

$

169

$

33

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$

71,6

91

$

46

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$

12

,701

$

23

,556

$

71

,592

$

5

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$

60,6

80

34,077,122$

Cor

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Spend by Group and Category

To reduce complexity, KPMG has clustered Manitoba Housing spend into category groups. These are subdivided into categories. There may be an opportunity to develop a procurement strategy that applies to all the vendors within each category.

GROUP CATEGORY TOTALContractors General Contractor 5,785,538

Roofing 1,741,489Plumber 1,301,248Painter 1,275,433Electrician 884,219Plumbing&Mechanical 687,692Locksmith 282,634Carpenter 95,049Welder 7,031Paving 340

Contractors Total 12,060,674Utilities UTILITIES 5,693,775

PURCHASES - PROPANE 808,776WATER & SEWER 14,541HYDRO 7,064

Utilities Total 6,524,156Services Security Services 2,116,033

Fire&Safety 635,144Cleaning Services 566,507Landscaping&Fencing (incl. grass cutting) 386,297Janitorial Labour 369,565Extermination Services 278,681Contract Caretaker 191,559Waste Removal 161,205Grounds 113,588Snow removal 96,942Window Cleaning 21,275Sign Painting 4,368

Services Total 4,941,163Building Construction 1,620,707

Mechanical (heating&ventilation) 898,026Building Interior 611,346Windows 370,620Elevator 281,844Flooring 190,186Other 170,252Cabinets 127,991Building Exterior 117,145Doors 95,357Windows&Doors 7,258Vandalism 5,217Upholstery 5,100

Building Total 4,501,049Professional Services ENGINEERING 738,582

PLANNING 213,086ARCHITECTURAL CONTROL 181,009PROF. & CONSULTING FEE 176,963Consultants&Engineers 94,305LEGAL COSTS 68,810SURVEY 40,797

Professional Services Total 1,513,552

GROUP CATEGORY TOTALSupplies Hardware Supplier 434,995

Concrete 279,075Electrical Supplier 170,822Mechanical Supplies 143,488Lumber&Building Supplies 135,289Cleaning Supplies 86,773Janitorial Mtls 47,919TOOL & BOOT ALLOWANCE 1,159

Supplies Total 1,299,521Appliances Appliances 1,256,500

Appliance Repair 12,155Appliances Total 1,268,656Misc Miscellaneous 812,273Misc Total 812,273Office & Admin OFFICE,STATIONARY,PAPER 163,704

COURIER 126,114POSTAGE 14,137SUBS./MEMBERSHIP/DUES 4,146Printing (incl. bulk print copying) 3,258

Office & Admin Total 311,359Furniture & Equipment Equipment 105,267

FURN. & EQUIPMENT 103,077Small Equipment Purchase/Repair 62,377

Furniture & Equipment Total 270,721Meals NOON MEAL-GROCERY 234,341Meals Total 234,341Travel AIR 73,380

FOOD & BEVERAGE 51,171ACCOMMODATIONS 38,798

Travel Total 163,348Communication COPIER/FAX & RELAT'D SPLYS 102,447

CELLS/MOBILES/PAGERS 9,976TELEPHONE 1,422

Communication Total 113,845Event Management SEMINARS/WRKSHOP/COURSES 21,802

MEET/CONF.RM/EQUIP RNTL 4,018Event Management Total 25,820HR RELOCATION COSTS 9,303

EMPLOYEE HIRING 8,625HR Total 17,928Marketing ADVERT'G & PROMOTION 11,173Marketing Total 11,173Information Technology COMPUTER COSTS(INCL DESKTOP) 7,542Information Technology Total 7,542Grand Total 34,077,122


Top Spend Categories

Categories of high spend within the Manitoba Housing:

High % spend - General Contractors (17%), Utilities (16.7%), Security Services (6.2%)

High # of vendors - Miscellaneous (397), Plumber (151), Electrician (127), General Contractor (122)

Low $ of avg. invoice - Hardware Supplier (112), Locksmith (184), Electrician (192)

High # of invoices - Utilities (6,520), Plumber (6,313), Appliances (5,978)


Category Spend # Invoices Avg. $ per Invoice Vendors % Spend Cumulative Spend1 General Contractor 5,785,538 5,915 978 122 17.0% 17.0%

2 UTILITIES 5,693,775 6,520 873 2 16.7% 33.7%

3 Security Services 2,116,033 2,802 755 44 6.2% 39.9%

4 Roofing 1,741,489 238 7,317 21 5.1% 45.0%

5 Construction 1,620,707 107 15,147 17 4.8% 49.8%

6 Plumber 1,301,248 6,313 206 151 3.8% 53.6%

7 Painter 1,275,433 2,022 631 73 3.7% 57.3%

8 Appliances 1,256,500 5,978 210 59 3.7% 61.0%

9 Mechanical (heating&ventilation) 898,026 1,620 554 59 2.6% 63.6%

10 Electrician 884,219 4,598 192 127 2.6% 66.2%

11 Miscellaneous 812,273 3,088 263 397 2.4% 68.6%

12 PURCHASES - PROPANE 808,776 14 57,770 1 2.4% 71.0%

13 ENGINEERING 738,582 86 8,588 7 2.2% 73.2%

14 Plumbing&Mechanical 687,692 1,658 415 21 2.0% 75.2%

15 Fire&Safety 635,144 1,562 407 27 1.9% 77.0%

16 Building Interior 611,346 1,814 337 113 1.8% 78.8%

17 Cleaning Services 566,507 1,801 315 71 1.7% 80.5%

18 Hardware Supplier 434,995 3,901 112 117 1.3% 81.8%

19 Landscaping&Fencing (incl. grass cutting) 386,297 995 388 89 1.1% 82.9%

20 Windows 370,620 1,661 223 21 1.1% 84.0%

21 Janitorial Labour 369,565 473 781 39 1.1% 85.1%

22 Locksmith 282,634 1,536 184 13 0.8% 85.9%

23 Elevator 281,844 1,026 275 9 0.8% 86.7%

24 Concrete 279,075 69 4,045 7 0.8% 87.6%

25 Extermination Services 278,681 720 387 3 0.8% 88.4%

26 NOON MEAL-GROCERY 234,341 1,123 209 21 0.7% 89.1%

27 PLANNING 213,086 20 10,654 6 0.6% 89.7%

28 Contract Caretaker 191,559 457 419 20 0.6% 90.3%

29 Flooring 190,186 176 1,081 21 0.6% 90.8%

30 Architectural Control 181,009 31 5,839 7 0.5% 91.3%

TOP30 Subtotal 31,127,182 58,324 1,685 91.3%

Remaining 48 categories 2,949,940 8,415 1,102 8.7%

GRAND TOTAL 34,077,122 66,739 2,787

The Case for Change: Transforming Manitoba Housing October 2007 L-1

Appendix L – Procurement Lead Position Profile

Element Description

Mandate Drive value for money in all procurements Promote compliance with procurement policy practices and processes Leverage buying power of Housing Facilitate procurement without acting as a gatekeeper

Role Summary The objectives are: 1)Provide procurement expertise and support; 2) to ensure appropriate approvals are in place; 3) to promote compliance with procurement policy practices and processes; 4) support the establishment of leading practices and processes


Act as a central procurement contact within Housing

Provides procurement process support and advice to internal clients

Provides risk assessment advice to senior management on exceptions to open competitions


Build procurement processes and frameworks

Facilitate issue resolution between clients and vendors

Leads procurement planning process and facilitates preparation of Corporate Procurement Plan

Procurement workload planning

Develop Manitoba Housing procurement strategy

Prepares / provides input for briefing notes

Provide compliance reporting with procurement policy practices and processes

Provides procurement policy interpretation and advise

Provides input on policy changes Prepare and submit annual

procurement reports Identify need and facilitate

acquisition external Procurement Specialists

Provides assistance on contract development and negotiation

Provides advice on contract management

Liaises with legal services Identify procurement training

requirements and coordinate training

Skills Ability to build and manage customer relationships and work collaboratively with clients


Knowledge of procurement policies and ability to interpret





The Case for Change: Transforming Manitoba Housing October 2007 L-2

The Case for Change: Transforming Manitoba Housing October 2007 M-1

Appendix M – Supply Chain Management Recommendations to Challenges The following table illustrates which challenges are addressed by recommendations.

Procurement Process and Organization Recommendations

Challenges Addressed

1. Establish a Procurement Lead Role

(3) Lack of resources & capacity in MHA to deliver on the current capital (7) No centralized procurement office

2. Clarify Procurement Roles & Responsibilities

(3) Lack of resources & capacity in MHA to deliver on the current capital (11) Maintenance Coordinators manage significant spend with limited resources (14) After the fact purchase orders are being created (17) Inconsistent auditing compliance of procurements (21) Perception of poor communication within the organization (22) Lack of experienced staff in certain areas (23) Performance management challenges (24) Some POs are closed before the work is completed

3. Develop a Procurement Training Plan

(11) Maintenance Coordinators manage significant spend with limited resources (14) After the fact purchase orders are being created (22) Lack of experienced staff in certain areas

4. Establish a Procurement Planning Process

(2) No long term life cycle plan for existing housing stock (3) Lack of resources & capacity in MHA to deliver on the current capital (4) Timing of the budget cycle

5. Enhance the Tendering Process

(9) Restrictive Government procurement policies (10) Lowest cost policy (13) Lack of Total Cost of Ownership philosophy (18) Impact of change orders for capital projects

6. Establish a Supplier Management Process

(12) Minimal supplier measurement and management programs

The Case for Change: Transforming Manitoba Housing October 2007 M-2

Procurement Process and Organization

Strategic Sourcing

Strategic Sourcing Recommendations

Challenges Addressed

1. Competitively Tender Selected Commodities

(5) Rising maintenance costs and squeezed budgets (8) Poor leverage of purchasing power

2. Establish Common Standards and Specifications

(8) Poor leverage of purchasing power (11) Lowest cost policy (12) Minimal supplier measurement and management programs (18) Impact of change orders for capital projects

3. Establish Preferred Suppliers for Parts / Materials / Supplies

(15) Limited qualified contractors to provide 3 quotes (16) Urban vs. rural requirements challenges

4. Expand Use of Standing Agreements

(15) Limited qualified contractors to provide 3 quotes (16) Urban vs. rural requirements challenges

The Case for Change: Transforming Manitoba Housing October 2007 N-1

Appendix N– Capital Asset Management Implementation Plan The following table provides an implementation timeline for the Capital Asset Recommendations:

Implementation Timeline


Sub-components #

Already in Place

Immediate (now to 6 months)

Short Term (6 - 12

months)

Medium Term (1-

3yrs) Long Term (5yrs out)

1 2 3 4


5 6 7 8

Assess Building & Unit Conditions

9

Needs Analysis

Identify Issues/ Needs

10

The Case for Change: Transforming Manitoba Housing October 2007 N-2

Implementation Timeline


Sub-components #

Already in Place

Immediate (now to 6 months)

Short Term (6 - 12

months)

Medium Term (1-

3yrs) Long Term (5yrs out)


Identify & Assess Alternative Solutions


11

Identify Potential Acquisition & Disposal Candidates


12

13 Investment/ Project Prioritization & Funding Strategy


14 Capital Plan, Preventive Maintenance Plan, Acquisition/ Disposal Plan

Project Planning

15 Investment & Project Delivery

Project Delivery & Handoff

16

17

18 19

Tools & Systems

20 21 Oversight,

Performance Measurement, Reporting

22

Documents

The Case for Change: Transforming Manitoba Housing