COMMITTEE OF THE WHOLE
	TO:	Mayor and Members of Council
	FROM:	Peter Loukes, Director of Operations and Asset Management
	PREPARED BY:	same as above
	DATE OF MEETING:	2005-September-27
	SUBJECT:	Operations Division Review

RECOMMENDATION:

THAT the 3-year Organizational & Staffing Plan for Operations, contained within the Operations Division Review, be endorsed and the organizational and complement adjustments recommended for 2005 be approved;

AND THAT the cost impact in the amount of $ 93,050 for the organizational and complement adjustments in 2005 be funded from various Operations 2005 operating accounts to be coordinated with the Operations and Finance Department;

AND THAT the organizational and complement adjustments timed for 2006 be endorsed in principle and affirmed during the 2006 budget process;

AND THAT the organizational and complement adjustments timed for 2007 be reviewed during the third quarter of 2006 , and reassessed in conjunction with the 2007 annual budget process;

AND THAT staff be directed to negotiate (or consult) as required with CUPE Local 905 on changes to bargaining unit classifications required to implement the organizational structure;

AND THAT the Support Services estimates attributable to Waterworks be funded from the combined water and wastewater rates.

PURPOSE:

This report will update Council and seek endorsement for the 3-year Organizational & Staffing Plan for Operations that was presented to General Committee at its meeting of June 20, 2005.

EXECUTIVE SUMMARY:

The Core Services Review encouraged development of a blended organizational model for Operations to optimize efficiency. In conducting the Operations Division Review, a longer-range view of resourcing was taken in consideration of current and planned growth, and to ensure alignment with Corporate and Commission goals. The Operations Division Review also identifies strategies to optimize staff deployment and service delivery methods, address workplace morale and staff satisfaction issues, target skills training, and succession plan for the future. It also pro-acts for the additional maintenance requirements of aging infrastructure, and recognizes the evolving urban model.

Currently, Operations is organized along program-specific functional lines – Roads Maintenance, Parks Maintenance, and Fleet Maintenance, with some minor administrative support. The proposed organizational model would implement a geographic area (or “district”) model, similar to many larger municipalities. Such a model can better accommodate growth over the longer-term. The new geographic districts will be designed to align with the newly revised ward boundaries. Operations and Asset Management staff are reviewing our inventories to balance the infrastructure between the two new districts.

The proposed structure combines Roads & Parks into Operations/East & Operations/West, and blends general maintenance functions within these two areas. Fleet would remain a separate program, and a Business & Technical section is proposed to provide administrative, financial and technical support to these functions.

By implementing the proposed structure, along with improvements in the areas of staff deployment, contractor supervision, asset maintenance planning, and technical resourcing, Markham will be better positioned now and for the future.

The incremental costs for 2005 incremental costs are available in the 2005 budget. Annualized costs for 2005 of our plan, which would appear in 2006, are proposed to be funded from operational savings and the tax levy (with minor amounts from the Water rate).

BACKGROUND:

Subsequent to the Waterworks Review, Ainslie Wood of Wood-Sloan Inc. continued her work with the Department, focusing efforts to bring about a new organizational model for Operations. This was a follow-up from the Core Services Review, which recommended the development of a Blended Operations Model and identification of efficiencies from blending similar functions within the workforce. In addition, the Operations Review needed to strategize on ways to move towards a healthier workplace by addressing morale issues that had resulted in low staff satisfaction ratings, silos, complaints and a less-than-optimum relationship with the “outside” bargaining unit. The Operations Division Review also needed to integrate the Turnkey Report on Fleet Maintenance, examine contractor/in-house service delivery mix, and take a longer-range view of resourcing in consideration of current and planned growth.

Operations’ Scope

The scope of Operations is large. The Division performs about 150 different services/activities, as illustrated on Appendix A - Functional Org Chart. We maintain 686 hectares of parkland, 1702 lane kilometres of road, 581 km of sidewalk, 672 km of storm sewers, almost 17,000 traffic signs, a 600 vehicle fleet, a 900-item parts inventory and about 270,000 trees. We respond to over 10,000 work orders per year, including services-in-kind for 250 community events. Operations’ 2005 net budget is $23.6m (operating and capital combined.) Two-thirds of our 240+ employee workforce is students and seasonals that require recruiting each year. In 2004 we had over 100 open contracts (current + multi-year) to administer, worth over $30m.

Pressures

One of the key pressures we face is growth - growth in population, programs, legislation, risk, and age of infrastructure. In the four years since the Core Services Review, some examples of growth that Operations has accommodated/incorporated include the following:

• 50% increase in our Streetscape Program (Baskets & Barrels)
• 24% increase in population and/or household growth
• 19% increase in the number of Parks requiring maintenance
• 15% increase in road way lane kms requiring maintenance
• 12% increase in the number of traffic signals to maintain
• 9% increase in hectares of parkland requiring maintenance
• New environmental & community initiatives such as Salt Management, Green Fleet, Anti-idling, West Nile Virus, Smog Alert, Pesticide Reduction, Dog Off-Leash, Concrete Fence Replacement, Communities in Bloom, etc.
• Provincial Minimum Maintenance Standards that set our legislative requirements for road patrols and maintenance/repair timeframes
• Intensified park and streetscape features – more shrub beds, median islands, entrance features, and window street landscape buffers
• Much more use of contracted services and seasonals, which requires a shift in skill sets adding considerably to administrative and supervisory requirements

Other, more subtle but just as impactful, pressures include:

• Planning for Aging Infrastructure – Since 1999, infrastructure 25 years of age or older, has increased 38%, and is expected to double by 2009

• Evolving from a Suburban to an Urban Model – Over the last few years, developments in Markham have begun to evolve to a more intensified urban design. These models incorporate an enhanced streetscape and more compact right-of-way form (i.e. Cornell, Angus Glen, and in future the Markham Centre.) This will require a paradigm shift for Operations to provide an adequate service level and/or service delivery model, and a new financial model to evaluate costs. For example, snow removal and tree pruning is required more frequently on narrow streets with limited boulevard spaces ; more frequent litter pick-up is required with higher densities; there are fewer grassed boulevards, therefore, infrastructure and utility repair will require drilling through concrete, which is more labour intensive

• Operations have expanded contracted services to a point where we have started to outgrow many of our local contractors. The larger demands put us in competition with Toronto and costs are escalating. We have reached a threshold where we need to evaluate our contracted mix to control costs, provide flexibility, improve capacity and match skills. The service delivery mix needs to be a strategic and flexible part of our business planning

• Our workforce demographics indicate that 75% of managers/supervisors in Operations are eligible for retirement in the next 10 years, which accelerates if early retirement options are exercised, and there are fewer practitioners entering these fields. In addition, as our outside workforce ages, they will accrue more vacation time leaving fewer in-house hours to complete the work; and we can also anticipate less capacity for heavy labouring tasks, more sick time and accommodation, and more potential for workplace injury and WSIB claims. It is important to plan now to mitigate these eventualities

• The need for more technical, administrative and supervisory skill sets evolves with higher numbers of contracts and a large/fluctuating workforce to supervise, more performance data collection and measurement, business and financial planning, budget and tender management, and materials and best practice research.

Organizational Structure – Current & Proposed

Currently, Operations is organized along program-specific functional lines – Roads Maintenance, Parks Maintenance, and Fleet Maintenance, with some minor administrative support. In conducting the Operations Division Review, Ainslie consulted with over 70 staff – within Operations and in key departments that we work closely with. In examining the findings from this extensive consultation, augmented with some external research, Ainslie, myself and the Operations Management Team, were able to develop what we believe is a an organizational structure that we can build upon for the future.

Our proposed solution realigns and augments staff resources - laying the foundation for Operations to:

ü Accommodate and plan for growth - now and into the future

ü Improve efficiency, customer service and asset maintenance

ü Align with corporate and commission goals

ü Mitigate risk

ü Succession plan and target training to evolving skills needs

ü Optimize contracted services, seasonal resources and collective agreement parameters

The proposed organizational model, attached as Appendix B (revised), would implement a geographic area (or “district”) model, similar to many larger municipalities. The structure combines Roads & Parks into Operations/East & Operations/West, and blends general maintenance functions and staff (i.e. labourers and truck drivers) within these two areas. Fleet would remain a corporate program, and a Business & Technical section is proposed to support and improve these functions.

Within the Operations East & West functions, each Manager would also have responsibility for two “specialty” functions, which have less general, more defined, skills. Operations/East would be responsible for a consolidated contract administration section, as well as traffic control maintenance. Operations/West would have Forestry and Horticulture specialty functions.

Adjustments to staff complement are needed to position the structure for success. Appendix C (revised) is a Summary of Proposed/Changed Positions within Operations. (Appendix B also provides a summary of existing and proposed complement, year by year.)

During 2005, our goal is to focus on integrating and balancing front-line and customer response, getting union buy-in to the structure, and building a stronger technical component, as follows:

1. Add 3 fulltime unionized Working Supervisors, 2 would each report directly to an Operations Manager and be the first line of response to complaints and priority items. By dedicating resources to “priority response” both customer service and efficiency are enhanced. Regularly scheduled maintenance can continue uninterrupted, and the Working Supervisor/Priority Response can investigate and remedy (or arrange for remedy) urgent field matters brought to the immediate attention of Operations Managers. The third Working Supervisor would be assigned to Operations East to balance workload and complement geographically.
2. Transfer the Manager of Asset Management to the Manager of Business & Technical Services to consolidate technical and administrative functions and begin to build a stronger business component for the Division
3. We are also proposing to convert a part-time Accounting Clerk to fulltime, and add 3 115-day seasonals to augment winter control in each geographic area, and contract administration.

A total of 3 new positions, 3 seasonals, one transfer and one part-time conversion would bring the existing complement of Operations to about 147 FTE (92 Fulltime).

During 2006, we propose to continue to integrate and augment front-line and supervisory staff as follows:

4. Add 1 fulltime Licensed Fleet Technician. Another mechanic is needed as the corporate fleet has grown, Operations’ small equipment maintenance demands require back-up support, and better resourcing is needed for rotational standby during winter control. This position is proposed to be funded from the Water Rate, as Waterworks currently has 26 units with more planned, plus 30 non-licensed units (such as pumps generators, etc.).

5. Add 1 fulltime Technical Coordinator. This position would have an engineering background and would help to build technical resources for benchmarking and performance measurement/tracking, best practice and materials research, development review/comments, tender specifications, analysis, and technical support to GM and Managers.

6. Add 1 fulltime Horticulture Supervisor. There is a need for dedicated field supervision of horticulture staff, which operates with 6 fulltime and over 30 student/seasonal staff, 4 greenhouses to manage, and more intense streetscapes and beautification projects including Communities in Bloom.
7. Add an Operations Clerk for administrative assistance predominantly to Parks and Fleet & Supplies, help with large seasonal recruitment, perform facility reception, and provide back-up support within the office and when the existing Clerk is seconded to the West Nile Program.
8. Add an Arborist. There is a need for another Arborist due to growth in Forestry volume, and also for increased prevention and disease inspection monitoring re Emerald Ash Borer, Asian Longhorned Beetle, and Norway Maple decline.
9. Add a Working Supervisor – Contract Administration to help develop and augment a newly consolidated Contract Administration function and to assist with volume. There are typically over 100 open contracts within Operations (current and multi-year) that require supervision.
10. We are also proposing to add a part-time Labourer/Driver (mornings only) for the Fleet & Supplies Section.

A total of 6 fulltime and one part-time in 2006 would result in a 2006 fulltime complement of 98 staff, and bring the Division’s FTE count to about 153. (The total workforce would continue to be about 250 actual employees, given that a number of students/seasonals may make up 1 FTE.)

Benefits of Reorganization

We see many benefits to the proposed structure, including:

• Blending Roads & Parks General Maintenance
• Breaks down “silos” and promotes sharing of resources, tools, equipment
• Broadens knowledge base of staff, diversifying skill set for cross-functional placement, making jobs more interesting and challenging, and creating more back-up contingencies for rotational standby, emergencies and vacation coverage
• Designates resources for “priority response” enhancing customer service, and improving the efficiency of crews
• Provides a broader pool of candidates for succession planning
• Eliminates perceived duplication in areas such as boulevard cutting, litter pick-up, winter maintenance, etc.
• Retains/recognizes specialty functions – Forestry, Horticulture, Signs
• Consolidates contract administration and develops a formal contract management function
• Balances workload and streamlines the Division in general
• Geographic split makes it easier to know “who does what,” promotes pride of “ownership” of an area, and accommodates volume increases into the structure easier
• Consolidates and builds a technical and business section
• Builds a well-rounded and more streamlined Operations Management Team
• Allows for phase-in implementation, and encourages acceptance of integration by the Union

By implementing the recommended structure, along with improvements in the areas of staff deployment, contractor supervision, asset maintenance planning, and technical resourcing, Markham will be better positioned now and for the future.

FINANCIAL CONSIDERATIONS:

Costing for the Operations Organizational Model & Staffing Plan is detailed in the following table:

	2005	2006	2007	Total Annualized Cost by 2007
Annualized Staff Cost From Previous Year		300,612	757,671
Annualized Costs for New Staff in Budget Year	45,050 (Incremental)	457,059	325,114	1,082,785
Sub Total Operating Costs	45,050	757,671	1,082,785	1,082,785
Funding/Efficiencies:
Base Budget Adjustment from Previous Year			(512,107)	(749,841)
Support Service to Waterworks		(70,564)	(92,944)	(92.944)
Existing Driver/Labourer vacancy (new 2005 FTE)	(50,000)	(50,000)	(50,000)	(50,000)
Sign Maintenance Contracts		(50,000)	(50,000)	(50,000)
Parking Lot Plowing Contract		(40,000)	(40,000)	(40,000)
Loosetop Maintenance (Material & Equipment)		(35,000)	(35,000)	(35,000)
Hired Loaders			(65,000)	(65,000)
Sub Total of Funding & Efficiencies	(50,000)	(245,564)	(845,051)	(1,082,785)
Capital Costs	48,000	75,000	113,000
Funding from Closed Accounts	(48,000)
Annual Surface Treatment Program		(75,000)	(113,000)
Base Budget Impact	0	512,107	237,734	749,841
Estimated Households	74,516	77,516	80,516	80,516
Base Budget Impact per Household	$0.00	$6.61	$2.95	$9.31

Notes:

1. This table does not include any funding that will be requested for Growth.

Funding for 2005 with a cost impact in the amount of $ 93,050 for the organizational and complement adjustments will be funded from various Operations 2005 operating accounts to be coordinated with the Operations and Finance Department.

Approval of the 2005 phase will commit the Town to annualized costs to an upset limit of $245,564 before any other growth-related considerations. Funding of $245,564 in 2006 and $845,051 in 2007 excludes normal budget increases for growth and that these potential funding sources could be reallocated based on efficiencies achieved to lower the projected overall cost impact.

BUSINESS UNITS CONSULTED AND AFFECTED:

This report was prepared in collaboration with:

Paul Ingham, General Manager, Operations

Management Team within Operations Division

Sharon Laing, Director of Human Resources

The following Departments/staff were consulted during the Operations Division Review:

Commission	Contact
Community & Fire Services	All full time Operations Division staff Stu Taylor, Director, Strategic Services Shayne Mintz, Deputy Fire Chief, Fire & Emergency Services
Corporate Services	Janice Harrison, Manager, Contact Centre Bill Wiles, Manager, By-Law Enforcement & Licensing
Development Services	Linda Irvine, Manager, Parks and Open Space Development
Office of the CAO	Sharon Laing, Director, Human Resources

ATTACHMENTS:

Appendix A – Functional Overview of Operations

Appendix B – Proposed Organizational Chart of Operations – 2005-07 (Revised)

Appendix C – Summary of Proposed/Changed Positions (Revised)

Peter Loukes, P. Eng. Director of Operations & Asset Management

Jim Sales, Commissioner of Community & Fire Services

Q:\Commission Share\Operations and Asset Management\Reports\2005\Peter Loukes\operations division review.doc