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The Forum > General Discussion > Costs of contracting out

Costs of contracting out

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About 1991 NSW RTA roads and traffic Authority began a new path.
Talking to its workforce.
A Liberal state government was in place.
Workers reps, mostly union delegates heard about a vastly different future.
Roads would be built and even maintained by, contractors.
Along with a promise natural attrition would reduce the workforce not redundancy's.
I sat among that group learning about those changes.
We heard senior people tell us this.
Yes we know in the short term it will cost more,we will get less for our dollar.
But we workers long term 40 years plus for some, understood it had to come that we had been stripped of the tools to do our job.
The promise that eventually contractors would give better value as they built business and skills and started to compete we some thing we believed, we got that quite wrong.
Contracting out costs taxpayers much more for much less.
Posted by Belly, Saturday, 6 November 2010 2:24:54 PM
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4 hours..no reply...so i will add my thoughts

yes i agree...there isnt any real competition..thus we bneed a better way...[standardise..the cost of the hole]...they fix

so they go looking for them...take photo-graphs..[and measurements..of the 'hole'..]..location..and repair efforts...on standardised forms..to approved contractors

knowing each hole fixed =..say 50 bucks
and payment is immediate...[signed off on..and held legally to accounting..in case of fraud]..this could be extended into any 'service'...on a needs basis

so heavey rain..would see these contracters
going out and fixing things immediatly...
knowing a fair return is assured

extend this top other 'services'...even so far as replacing bald tyres..or repairing vehicles...if its a public danger..repair it first
[then the consumer/defaulter pays]

police..instead of issuing fines
issue repair orders..and what is owed is simply the cost of repairs

[no doudt you put that...concept..into your negotiations?
i been talking about it for years..]
Posted by one under god, Saturday, 6 November 2010 6:12:51 PM
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Yes, I agree this is a very poor model. Probably because it is temporally based on terms of political tenure. Make some silly deal that will collapse in a screaming heap in a few years, because chances are it will be somebody elses problem by then.

Geography plays an important but unrecognised role, the kind of road that works ok in Brisbane for a while simply wont last in the tropics. But the contracts and agreements are formed in Brisbane. For example, the overtaking lanes at Giddins creek near Babinda are full of potholes and surface irregularities one must drive around. It was only opened a few months ago. Will the same company be paid to repair their own shonky work? Well that seems to be rewarding poor workmanship.

In Sydney, they sell the rights to operate motorways to private contractors, and then close other roads to force people to use them. Wasnt the premise of constructing motorways to ease congestion? in which case closing roads seems like an admission the motorways arent really needed in the first place.
Posted by PatTheBogan, Saturday, 6 November 2010 8:22:30 PM
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governments none of them could build roads contractors now build, but a great deal of contracting is for maintenance and wasted.
Back to 1991, the DMR as it was before it became the RTA had both a responsive workforce and a wasted one, such was standard for any government endeavor.
Disturbingly the first contracting out was for a day Labour task, over night firms won big contracts.
You could see the plan unfolding , make firms strong , get better competition between them so one day, hopefully, the increasing costs would fall.
At the same time those redundancy's that would never come, came, and a flood took them.
Contractors grew ,concerns about poor work out comes unsafe practices even shonky owners, EX RTA winning the biggest contracts had the three wise monkeys treatment, still the tactic today.
A landslide began about the time I became a union official.
One after another the contractors went broke over night, mid night flyer's, no pay no superannuation nothing.
It was my job to help hungry unemployed workers, victims of the let us create contractors rush.
The ex RTA boss owed the most.
Every construction contract ever let has over run its agreed value,some by most horrible amounts, but hidden from sight is the fact small contracts cost more in over runs and out right poor workmanship!
At the start of this process most workers looked with hope at change, it could not get worse so we hoped it would get better.
Contracting out continues today roadside toilets vegetation and waste removal, this year the contracts cost much more than day labour did,for a great deal less.
We you I every one know it is not good enough but why.
A public servant is so truly remote in this case from the workplace he/she would understand nothing.
An area manager is an engineer but his/her job is to manage, few can.
I have never seen a minister who is hands on never one, some will remember one who spent a fortune on putting his photos up along the road but traveled by helicopter.
Posted by Belly, Sunday, 7 November 2010 5:42:19 AM
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Do not get me wrong, this is not a plea for more jobs, it is a request that some one who cares can tell me why it failed.
Those shovel leaner's, thats how the public see them, often have hundreds of untaken sick days.
40 years service, seeing the dreadful toll of death at midnight or 4am after being called back to work, some suffer break downs and never work again because they have seen too much.
I want the best work out comes from my mates, the only way to keep their jobs is to be the best.
This story is true, I lead a team, wanted to get the best results.
So took hands on approach, became the district sprayer operator for poisoning.
[no I know it only promotes worse weeds but did as I was told]we had a 300 hundred liter tank, I asked for 300 gallon, enough to get between depots without having to return to mine for refill.
The average out put was 900 liters a day.
I offered to cut the program by 9 tenths of its projected time do the lot.
No to expensive, was the answer.
It is now done by a contractor ,with a 300 liter tank.
Management wants to contract out costs do not matter no intention to do it once do it right exist.
The answerer?
contract out management rolls every one of them privatize the public servants .
Posted by Belly, Sunday, 7 November 2010 6:01:54 AM
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The NSW RTA that sent its negotiating team to be trained shoulder to shoulder with its workers delegates soon forgot its mantra.
Remember the task was to consult its workers and see that constant improvement, best quality work out comes took place.
And as natural attrition took place build skills and wealth, their words, so contractors would in the end cost less and produce much more.
After constant problems firms, some not all became good bosses and good deliverers of quality work out comes.
About this time the RTA management team was transfered to state rail, worth remembering later.
And the well established contract suppliers of traffic control and labour hire lost the contracts!
To the most shonky grubby lot yet, on price,without reference to work out comes.
Any investigation will prove much more is spent for much less and courts are seeing government contractors who are nothing but villains very often closing down and starting up the next day with another name.
NSW RTA sponsors such firms the ideas that we learned are dead.
Rail? goggle graft in NSW rail contracts let by ALL government endeavors have been given to wifes and brothers of the one who controls the bid.
Free lunch's and trips on boats buy loyalty and contracts worth millions.
We are not much different than third world country's and it matters not what type of government is in power.
Given the task, most people could run a department better than this, whitewash and self defense stops open investigation but surely tax payers need better out comes.
If the workers are the problem, they are not, even that can be fixed.
Posted by Belly, Sunday, 7 November 2010 11:10:27 AM
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The costs of contracting out are too great for society as a whole. Economically & socially contracting out will eventually impact as much as civil war or major natural catasrophe..
It will bring any nation to its knees. The evidence will be there as soon as the money runs out.
Posted by individual, Sunday, 7 November 2010 11:43:25 AM
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You've got it dead right with this one, belly, although it should be pointed out that a major reason for contracting out is the enormous cost of paying public service employees, thanks largely to the efforts of the very powerful public service unions over many years.

If the RTA could demand as much productivity per employee that private enterprise does, then there'd be no incentive to contract out.
Posted by Antiseptic, Sunday, 7 November 2010 12:44:31 PM
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I also agree Belly.

In the APS there were often moves to outsource for budgetary reasons but in reality the costs were always proved to be higher.

The labour was cheaper per hour but the cream off the top added to the profit margin of the contract companies and the costs were either the same or more expensive in the long term, and without the benefit of committed and loyal workforce. In many cases contract labour had to work side by side with permanent employees on less money per hour even with a casual loading and no usual entitlements like sick leave etc.
Posted by pelican, Sunday, 7 November 2010 1:01:57 PM
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Belly, things might be different in your particular case, I can't
judge that. Contracting out in NSW might also be different.
The way I understand it, NSW is not unknown to be corrupt, which
of course changes everything.

But I think that the unions brought this on themselves to some
degree. Whilst they had the monopoly on things, they hardly made
an effort to provide taxpayers with value for money. I once
watched 5 of them standing around a hole while one was digging.
One of the guys piped up "They don't pay us very much, but then
we don't actually do very much" He had a valid point.

Contracting works fine, when its competitive. If you look at the
big miners, they contract out huge amounts. For good reasons.
The machinery is used more efficiently. You can get rid of dud
employees. There is competition, so a reason to do things more
efficiently. Net result a win-win all round.

If that is not working in NSW, then one would have to ask why
and check out who is mates with whom.

Miners can benchmark their costs and compare.

The real problem when working for Govt is that none of them
have a personal stake, so they have no reason to use taxpayers
money effectively. Everyone is busy feathering their own nests,
as best as possible.

People like you, might be an exception, rather then the rule.
Posted by Yabby, Sunday, 7 November 2010 1:10:42 PM
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Since Council amalgamation the Qld Govt. doesn't think twice about engaging a contractor from far across the field as long as his hourly rate is less than a local's. The fact that it costs three times more in flying the contractor in , accommodation, shipping equipment etc. is besides the point because it comes out of another budget. Never mind that it's all public funding that is wasted in further destroying local enterprise. I suppose it does create better superannuation for the bureaucrats who can claim to remain within budget. I just wonder how long we've actually got with that kind of economic logic.
Can anyone explain if I'm wrong & don't understand ?
Posted by individual, Sunday, 7 November 2010 4:02:03 PM
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You know all of the reasons why the Roads and Traffic Authorities fail Belly, therefore your question should be: "when is a Minister, Management, and Staff of NSW Transport going to perform in their positions in order to ensure that Management and Foremen and Women in the NSW Transport Industry perform competently and adequately in their jobs, for the payment they receive?

Belly, just adding my long overdue frustration and disappointment regarding roads and rail for many years.

Cutting costs, incompetency regarding funds and lack of expertise at the higher levels, [know of recent roads entirely stuffed up in two states I travel regularly]: these are a total waste of taxpayer funds.

Incorrect alignment detected by any person not into engineering are one of the key problems. The long stretches of roads will undoubtedly need to be laid again early next year. The aggregate used is cheap on many roads, and broken up within a few months of primarily light weight vehicles used upon these sections of roads; few heavy vehicles used on these roads.

If common sense prevailed and all transport industry bodies acknowledge that it costs LESS and SAVES more lives, to get the roadworks and rail systems RIGHT the first time around, by employing and listening to long term experienced employees and Foremen, at the same time efficiently overseeing all Staff, along with employing the most experienced engineers and heeding their advice, every Australian should benefit, be it employees and or road users.

The sacred ingredient: the old old time great [common sense]is missing.

BTW, Where are all of those old safeguards [working flashing lights and rail boom gates] that were to be installed at most country road level crossings [including Victoria] that have claimed more lives over the past two years?

If those boom gates with the flashing lights had been installed, it is a fair comment to say, that those people may well be alive today.
Posted by we are unique, Sunday, 7 November 2010 5:23:49 PM
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I acre for the RTA, it was the DMR when I came on board, it was kind to me, I had gone broke in small business, was always a hard workers.
I build a life on its payments, bought a house learned a great deal.
Let us look at unions involvement.
I construction gang delegate was up on a high scaffold, called for a full time employee to throw me up some clips, he refused.
Time and again I climbed down loaded up with clips and finished the job.
EVERY man in that team wanted me a casual to get him sacked.
Boss told me, union delegate he could not said union would not allow it.
Years after I was team leader and senior delegate, he was in my team, drunk every day.
Again after official written request handed to the boss by my official and me, they refused to sack him why?
Next post explains but give union credit it had No control over awful management.
Today much more than half the workforce are equal to any, those unwilling to work, outside offices, a real life yes minister place, are protected.
Posted by Belly, Sunday, 7 November 2010 5:48:23 PM
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In the 1950,s government jobs had reserved for returned soldiers written all over them.
Not just in NSW it is much the same every place.
In the 1960,s fortnightly pay drove many, to avoid those jobs.
But pork barreling was alive in all party's.
Unwritten but unbreakable rule said some jobs country towns for sure went to those who would never get a job any other way.
Many made great workers some proved it was right they would never get a job without that one.
Supervisors foremen and such got jobs based on anything but management skills.
Fathers handed down such jobs to sons family's controlled employment 11 of one family worked in one yard.
1991 bought change workers welcomed it with open arms.
But the weeds the non performers unwanted more by workmates than any one survived.
Ask any RTA out door worker[ not you JF] they believe the weeds are protected so managers unable to manage can point to poor workers, let me unionist forever say right now I would have applauded removal of these flees so a start could be made on fixing this shambles.
I cry not for my past jobs, but because my mates in the RTA need more than ever to be helped over come the slanderous lie they are the problem.
I think some fine foremen need to be let run the show, remember I looked after the private contractors building our new roads, they are getting it right and employing the best of the RTA.
would any one believe a boss took VR went in to private Enterprise failed then came back to the RTA on higher wages? these folk blame workers they rarely know for problems they created.
Posted by Belly, Sunday, 7 November 2010 6:06:58 PM
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on the south coast of NSW a contract for cleaning has been paid every month for far more than ten years.
No work ever took place,you will not hear of it but it is true.
Those well developed contractors doing good work with well paid teams lost the contract.
To some one who brings men 200klm to do the job, badly.
The brand new employee who wrote that contract left his position unchallenged, do you think he is working for that contractor? or is there a close family tie there?
If you are concerned about a contract, if you write to a NSW minister, he/she will ask,,,, the very person you question to answer for him.
We are third world in affect the contracting out hides behind the lie workers are the problem and two office staff maybe more exist for every out door one.
Posted by Belly, Monday, 8 November 2010 5:04:02 AM
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Belly,

Your experience with the RTA using contractors is common amongst the civil service who could not organize a booze up in a brewery. Just look at the complete stuff up of the BER under Julia Gillard where the costs were double those of the private sector.

Contracting is used successfully where there are either specialized tasks, or the workload is fluctuating, and is generally far cheaper than employing people.

Contracting will also become far more popular now that Labor's new laws have made it more expensive to hire permanent staff.
Posted by Shadow Minister, Monday, 8 November 2010 9:33:44 AM
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Belly I believe you. Something I am trying to get throught to
Pelican on another thread, is the problem always comes back to
the fundamantals of human nature.

Fact is that when there are no checks and balances, people will
invariably become complacent, fat and lazy, feathering their
own nests along the way. Not just in Govt, in private enterprise
too, when there is a lack of competition.

Govt depts by their very nature, usually function as monopolies
in their duties. Staff don't have a financial stake in them,
nobody wants to rock the boat or change anything. Just let sleeping
dogs lie and cash in the handsome paycheck each week. Taxpayers
just cough up, decade after decade.

It is incredibely difficult to sack public servants, or even to
move them to a lower paying job. Alot of these people spend their
whole lives with one department, they intend to retire from there.
They don't want any changes or to rock the boat that supports their
cushy lifestyle.

The only solution that I can think of is, what some companies do
every few years in Europe. They bring in somebody intelligent,
objective and financially literate from outside. These people
go through the whole system, talk to everyone from workers to
bosses, then impliment changes as required. It sure rocks the
boat, but it also brings about huge benefits. The same could
be done with govt depts.
Posted by Yabby, Monday, 8 November 2010 10:14:53 AM
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Shadow minister, yabby, I am not joking.
Truly believe if you two and hasbeen ran the NSW RTA, no one else.
Took away all control from the public service, every thing.
Asked me or one of a hundred workers for advice.
Costs could be cut in half in one year,productivity doubled for that sum.
Now truly, I never had a job I did not give my best to,but nothing can convince this mob to hear the voices of its workers.
We must all understand better work out comes mean safe jobs and tax payers should get much better .
I question the need for so many public servants, our biggest international road construction contractors do without even close to a tenth of the number of office sitters and do much better too.
Posted by Belly, Monday, 8 November 2010 8:43:50 PM
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Belly, I certainly believe you.

I had alot to do with Qantas cargo, over many years. The white
shirts would sit upstairs, in their own little world. They had
no association with the blue collars, who I became very friendly
with. They even got me through a strike one day, with special
dispensation. They were ok, but management totally lacked people
skills. So there was real animosity between the two, for no other
reason then bad management.

If those managers had gotten off their butts occasionaly, had a beer
with the boys and treated them differently, that whole place could
have run far more efficiently.

But those managers had no need to do anything. They were running
a virtual monopoly, their salaries were assured, us consumers
were paying them, as there was no other choice.

I would have loved to reorganise that place, but in all the years
that I was going there, nobody ever bothered.

That is why I make my point. With no checks and balances, people
become fat, lazy and complacent. The notion that those who work
for govt, do it for the good of the people, is totally flawed.
Posted by Yabby, Monday, 8 November 2010 9:04:57 PM
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One of the fat cats has found me here in this thread, I noted his presents some time ago, and my comments have bought about a return.
Try these brand new road, bypassing a country town,name of that town means fig,as in fig tree.
RTA sets out a plan months in advance, grows figs plants them at the highway entrance to? that town.
Very nice not cheap but well done.
New time waster,sorry Lady on a mission, sends a rough nut team leader this note, remove the Ferrel fig trees!
I looked at the note wrote on it over my dead body ,responsive active foremen saw it,rang said never saw that letter did we?
Trees look good.
Do we talk about 15 months to put mirrors on a machine, after driver said I am frightened to drive it?
Consultant higher ed at what cost to find out what materials was used in a road built by and recorded by the DMR/RTA?
Consultant got ex grader driver to tell them what quarries bought in the fill, nothing else.
I Do not understand, never will, the idea public servants have to run such enterprises, in fact they do, in to the ground.
Given the task, ANY road building contractor could use current out door staff and make it work.
Given a chance current out door staff without the dead hand of management could do it almost over night.
Why are we afraid to try?
Posted by Belly, Tuesday, 9 November 2010 5:03:12 AM
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I lead with my heart in this thread.
Truly made it my own.
I will end it with why I did so.
The storys are true.
In that first year of EB negotiations a survey of all workers, me among them, found management was not believed trusted or respected, it was understated.
Some of those workers gave it every thing they had, some worked past meal breaks even not stopping all day, to get it done.
22 years working there every day wanting to do it better.
I won leadership awards, but only if what I was saying was agreed with by the people in charge.
Say something they did not like?
My return as a union official was interesting, the man, single manager, I trusted welcomed me with praise.
The dead unresponsive hand of the public service types briefly put down the coffee cups to defame me.
Industrial Relations, work out comes, contracting out, public servants being involved in these things, will be reviewed.
We can do better.
We Can find new managers and make public endeavors work.
Put the shovel leaner's out of your mind, try to see what I saw and see, men who could work with any of us, and do well, who are not given the chance.
Right now, my ex workmates, ex union members are back to day one.
That poll would not be any different if done now.
Posted by Belly, Wednesday, 10 November 2010 5:30:53 AM
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About twelve months ago I returned to the RTA.
It became one of my duty's to look after members there.
I found a workforce unhappy, clearly they had issues with my union.
They wanted to express those issues but a boss said lets not! my boss!
I got into fixing it, but found management remote from its workers.
15 years of under payments to some workers in the worst area, 15 years a great deal of money up to 6 hours pay for every week.
If fought my battles ,often had to be rude to be heard.
RTA workers regained trust in me and my Union.
Yet that is why I left a man unaware of the rights, thoughts, ideals of my ex workmates, current one's for that, informed me I was to control myself in the fight for honesty.
No not me, a unionist should never start a fight, never be needlessly rude or provocative.
He/She however must not ever fly the white flag if their case is just.
We are seeing story about casual workers in the computer/camera factory.
Seen via my eyes one district of the NSW RTA is worse.
Posted by Belly, Wednesday, 10 November 2010 5:43:36 AM
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Enjoy your week Belly.

Excellent issues needing to be addressed.
Posted by we are unique, Wednesday, 10 November 2010 10:32:07 PM
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We are unique I am having a good week, every week.
My move removed me from my life's work but not life.
Without the stress I am 7kgs lighter and going down.
My garden is glowing ,I am too.
I pass the baton, but never except so much public money in the hands of blind spend thrifts who return so little of value.
Who have no need to give better results,and who put their faults and waste at the feet of workers .
And get away with it.
Posted by Belly, Thursday, 11 November 2010 4:41:22 AM
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