Local fee setting principles

This is one of two pieces on setting fees – see also the companion post on practicals. It’s written at the end of June 2011, when there hasn’t even been an announcement on localisation of fees, let alone any details. It’s based on some thoughts I’ve had and ideas I’ve stolen from front-runner work I’ve been doing with some volunteer authorities (bless you).

The post is written to help discussions between heads of service and their leadership teams.

Pareto in planning

It’s always been true, but the way the new fee structure looks it’s easier to see. 80% of your application activity is spread across 20% of the available codes. These codes are important, but also easier to understand – they represent your bread & butter work. You can do some sampling, they’re part of the management of people’s workload that your teamleaders already do.

So, what do you do with the other stuff ? In fact, what do you do for those fee categories where you’re pretty sure that you’re not ever, ever going to see an application ? Take, for example, the biggest category of housebuilding – applications of more than 4,000 units. Most councils – short of earthquakes, tsunamis and volcanoes – will never see an application of this size. So what should go on the fee schedule ?

My initial thought was “who cares ?”. The way the model is structured, it get’s multiplied out by a quantity to form your anticipated income. Anything times zero is zero. You could price this 4000-unit application at a zillion pounds and it wouldn’t disturb the rest of your model at all.

But that fails to recognise the world that we live in. Our fee schedules will be pored over by people wanting to turn them into news headlines, or to use one council’s numbers to bash another. “Council fatcats award themselves a zillion pounds” doesn’t actually reflect reality, but by then it’s too late to engage in a story of how one part of a fee-setting model balances with another.

If we were estate agents, we would use “POA” and invite interested parties to come in and talk. I don’t think we can do this, as the development industry need some assurance that they can submit an application and proceed to non-determination without getting caught-out by instransigent councils failing to agree a fee.

So, question 1:

Without spending loads of time on it, and without having either gaps or enormous prices in your schedule, how do you signal “negotiate”  to potential developers ?

What sort of work goes into your schedule ?
The principle of how the model works is that the resources and the work must be in balance. Easy to say, tricky to do, difficult to live with. Amongst other uncomfortable truths, it means that if work volumes decrease you have to get rid of people. The good news is that if work increases you don’t have to get everyone to work 10-hour days – you can employ more.

But wait. What if you suspect that a tricky application might appear next year – a greenfield landfill site. Should you put it in your schedule, alongside your best guess at the handling cost ? The answer is probably “no”, and here is why.

Problem 1 is that if you’re not careful you’ll apportion your current resources across your applications (to create a model in balance). Then what happens if the application doesn’t appear ? You’ll have to reduce. Too late you’ll reflect that you should have used your “annualisation” sheet to add more resources in, to cope with this mega application.

Problem 2 is nothing more than these rare, diverse applications are intrinsically difficult to resource. The chances of you guessing the cost – given the unknowns unknowns arising from consultation and committee – are about nil.

So, you decide not to include it. What’s the harm ? You negotiate via a PPA and separately organise a process and its resources. And because it’s a PPA you can agree to review the agreement itself as it goes through its various milestones and gateways. Great.

But where, on reflection, does it make sense to draw this line ? Should you also assume that the largest residential schemes will go via a PPA ? What about going down the foodchain from the “biggest” to merely “big” ?

So, question 2:

Should it make sense to assume that all big, awkward applications are separately managed via a PPA ? Should you only model 80% of your application-handling resources into a standard pricelist, knowing that 20% of your work will be the result of individually negotiated fees ?

Answers below or back in the forum. Note that these two questions are linked.

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3 thoughts on “Local fee setting principles

  1. On my cycle home yesterday it occured to me there is a simple way out of this.

    All we need is space for a flag against each category of development. Most of them are unflagged, because they are core rates for core work. We do not expect to negotiate (unless there are special circumstances).

    But for our “extended” price list – the flagged items – we do *not* expect to receive any applications. These prices are irrelevant.

    This is our shorthand, and a way of signalling to our councillors / public / users where our work is. It is only right that we focus our energy on the most commonly used rates, and do not get distracted by notional prices on applications that we will never, ever receive.

    Simple as that ?

  2. Focus more time on the stuff you get most of, but….

    It is still important that an effort is made to make a realistic estimate of resources for the big size applications. Its not so much the super big applications as surely these will be on your radar through the local plan ( presuming that you have one), but the large opportunity sites that do just appear through changes in circumstances; mergers, relocations, bankruptcies. You need to have a broad idea of how much these will take to deal with and have this on your schedule, because there are still developers who would prefer amputation to discussion with a planning authority and for whom PPA is the far side of nowhere they are going.

    So I say, put a resource estimate down, to generate a sensible (potential) fee and estimate zero in the quantities column. If one of these comes into view, you will be able to bring in the necessary resources to deal with the app, or backfill for your experienced staff to deal with it, without the pain of a bid for additional resources.

    How to estimate the time? – we have a benchmark opening up other peoples experiences to us, and we also have ATLAS as friends with a wide experience of dealing with the big unusual stuff.

    Where you draw your line for negotiated fees is one of the discretions for your council. It will express something both about the way your council delivers services and about the profile of the development that you expect to see.

  3. Re the questions, maybe all cases where the fee is above a certain threshold (not sure what that should be – £xxxx application fee as per the fee schedule or estimated costs of work ?) should be negotiable or individualy determined.

    The negotiation could reflect that well conceived proposals eg in accordance with the relevant plan(s) and with built in high quality community involement at the right time, will take less resouces to decide than the opposite type of proposal. A PPA would be a requirement to support this, and developers would always have the published fee schedule to fall back on.

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