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Reader Sound-Off: DCD's wrinkles in its plan need ironing out
The taxpayers of Kitsap County have become the stockholders in a new startup business, the Department of Community Development Enterprise Fund. DCD is now a complete business that designs and builds its product (Code and Regulation), sells the product to select consumers (development permits), and provides full lifetime service for the product. The director of DCD agrees that establishing the Enterprise Fund is essentially a new business startup. Like most startup businesses, there are still a few wrinkles in the business plan to be worked out. Here are some of the more significant wrinkles disclosed by the DCD Director in a recent Fee (setting) Presentation.
The senior managers are not sure of the current product line. They know they offer more than 150 products (permits) but they are not sure what each of them actually does, or how they all work.
There is no reliable data on the labor and overhead requirements to produce each product (permit) for a customer and costs are estimated.
Because managers do not know the actual cost of the products, prices to the customers are based on estimates and considerations of what it will take to keep the business afloat and to keep essential people on the payroll. An effective and tested method to establish actual cost based pricing does not currently exist. This is a monopoly business so customers have no choice but to pay the price or forego the product.
The business has an information software system supposedly designed to collect and track key cost and service data. Unfortunately the staff has not been trained to use the software or has not been required to use it. The system is effectively not functional for the business. A major training and evaluation effort is planned.
Although the design and production (planning) side of the business creates the products, the sales and service (permitting) side does not have the full level of understanding of the entire product range. Sales and service, in many cases, are not able to close deals efficiently and often causes customers to incur unnecessary costs or experience unwarranted delay in receiving the product.
Middle managers are uncertain as to their responsibilities and authority and, as a result, may not be able to take advantage of opportunities to be more efficient and effective for the business and the customer.
The business plan does not provide for independent analysis of process and procedure, as developed and implemented, to assure maximum effectiveness. The same managers responsible for creating the fixes while getting the normal business work done, are responsible for the assessment function.
Not well advertised, the director expects a revenue shortfall of about $1 million during the first year. Fortunately, the parent corporation, the County General Fund, will make a long-term loan to cover the revenue shortfall.
This business startup could easily have been delayed for at least one year to allow DCD to act on the wrinkles and to correct some of the long-standing problems. Unfortunately, one or more of the commissioners felt the need to make this move immediate. Perhaps the move was necessary to get DCD off budget to help solve problems in that area or to demonstrate positive leadership before the stock holder vote next year.
This startup could only occur for a government entity. No responsible lender would even consider backing the business plan as offered. In addition to the noted wrinkles in the Enterprise Fund business plan, current management has no firm estimate on time to correct the deficiencies, the time and cost impact to the individuals and businesses applying for the product (mainly development permits) or even the total cost to be imposed for a single permit actually authorizing development.
In the end, this scheme may work but the cost in time, people and money to achieve that success by this route is not warranted. Perhaps the commissioners should rethink their decision, delay implementation for at least one year and allow DCD to become both efficient in process and cost effective. Perhaps we need to consider making sure our not for profit business plan also results in a not for loss operation.