Building Services for Troy, MI
Realigning Operations After A Growth Boom
Having the Right Number of People, With the Right Expertise, When You Need Them.
One of the most significant outcomes of a well-executed privatization program is cost savings. Financial reserves are often realized through economies of scale, access to cutting-edge technology, innovations, or simply a different way of completing the work. Reduced labor costs can help a jurisdiction better manage its financial burdens. Troy, Michigan is the largest city in Oakland County, with a population of 83.813. Troy’s building services department was operating at a substantial deficit; the City’s comprehensive annual financial report claimed a cumulative shortfall of $6.6 million, caused by years of increases in employee costs, pensions, and related operational costs. Troy had grown significantly, and that expansion had required additional full-time staff, all union positions. As the economy and construction activity slowed, staffing could not be adjusted in the same timely manner, so the City was now overstaffed. This created an environment to evaluate all departments and make recommendations on scalability. City officials recognized many areas where improvements could be made, and they hired a consulting service that specializes in the areas of municipal organization, management and process studies to evaluate all departments and make recommendations. The consulting company suggested several options for the building services department, but none were embraced by staff or the union. City officials then decided to privatize the building inspections department. The private firm, SAFEbuilt, manages the daily operations of the building department, performs inspections, plan reviews, staffs the front counter, archives City records, and works with City officials on departmental budget. The firm also works with the economic development department to encourage growth and promote business opportunities within the community. In return, SAFEbuilt receives a percentage of the City’s permit fees. This fee structure means that Troy never has to worry about building department costs exceeding revenue, even with fluctuations in building activity. In other words, the firm turned the City’s fixed costs into variable costs based on activity levels.
Excellent service and cost efficiency go hand-in-hand. By looking for ways to improve the department’s processes and create efficiencies, the firm helped bolster the department’s financial performance. For example, reconfiguring the department’s office space within City Hall has improved its workflow, now using half the square footage to accomplish the same amount of work. Thousands of paper records were scanned for more efficient archiving and retrieve. Inspectors were equipped with wireless laptops, so they could access and enter information in the field. Many of these changes were based on SAFEbuilt’s initial recommendations. One of the main recommendations for making the department work more resourcefully was around staffing changes. At its peak, there were 21 full-time staff members in the building department. There were some vacant positions when SAFEbuilt initially began running the department. Currently, Troy’s building department has nine full-time employees and four “floaters.” The firm interviewed and retained several building inspectors who were originally with department, and the other employees either retired or were redeployed to other City departments. In addition, Troy has improved interdepartmental and intergovernmental relations through better communication. As a result, permit technicians disburse permits for water and sewer, planning, and for other City departments, refining the flow of information among City workers, as well as saving time and money. SAFEbuilt, now fully operating the building department, has built upon these improvements, streamlining work processes to reduce processing times.
The changes saved the City of Troy’s building inspections budget $1 million the first year of the contract. City officials understood the building services department had traditionally provided services ineffectively. By privatizing services and allowing for greater efficiencies, the City addressed the reduction in tax and state revenues, and it enabled more proficient and customer-friendly operations.