Communities participating in suburban Chicago’s Municipal Partnering Initiative (MPI) “agree that it exhibits characteristics of a learning organization, adapting each year to increase efficiency,” according to a report by business analyst David Rauch, who surveyed the participants in 2013.
His goal was twofold: to analyze cost savings and to gauge how participants view the program’s effectiveness. About 90% of participants responded.
Asked what primary factors contribute to cost savings, they pointed to economies of scale and geographic convenience for contractors. Conversely, “jointly bid projects becoming too large” was cited as the leading cause of higher MPI pricing. Participants were most likely to reallocate any savings toward maintaining or increasing service levels (Figure 4 below).
Figure 4 — Service levels are the top priority for reallocating savings. While staff reductions were cited as an option, no such cuts have been reported. One possibile reason: Positions eliminated during the recession may not have been reinstated.
Credit: David Rauch
The survey also gathered procurement data for crack sealing, concrete sidewalk removal (Figure 5 below) and cold patch starting three years before MPI (2008-2010) through the three years after its inception (2011-2013). MPI prices were compared to average prices in non-participating communities and with a group of DuPage County communities not participating in any joint purchasing.
Figure 5 — Municipal Partnering Initiative pricing (per square foot) for sidewalk replacement remains near or below the 2008-2013 average. MPI divided this service into seven bid groups to optimize costs.
Credit: David Rauch
Results were mixed. On average, MPI prices for crack sealing and concrete sidewalk removal were lower than non-MPI prices but higher for cold patch. However, unit prices don’t by themselves reflect all the factors affecting cost savings associated with MPI.
“All the charts and numbers miss one of the program’s most important components: the sharing of best practices,” Rauch says.
Currently a business analyst for the City of Edmonton in Alberta, Canada, David Rauch completed this research in December 2013 for his Masters of Public Administration (MPA) from Northern Illinois University in DeKalb. Rauch will present his findings at the International Public Procurement Conference in August.