Municipal technical works require a lot of machines, equipment, material, personnel and premises. Large amounts of capital are committed to them, the productivity of which is hardly monitored in the municipalities. The weak financial monitoring of the municipalities was revealed in the recent municipal infrastructure survey by Taloustikkumas.
Municipal engineering includes energy supply, waste management, parks and public areas, traffic routes, real estate and their maintenance, and water supply. The economic study investigated the scope and efficiency of the municipalities' technical sector on behalf of INFRA, Rakennusliitto, Koneyrttäjie union and Suomen Yrittäjie.
The source has been the municipalities' public financial statement information, which covers all of the municipality's industries, as well as the information of municipal-owned infrastructure businesses, agencies and joint-stock companies to the extent that they have been available from public sources.
"The organization of infrastructure activities is very fragmented in the municipalities. It is very difficult to form an overall picture of the financial efficiency of individual municipalities' operations from public data sources such as Statistics Finland, the financial statement publications of cities and the activity reports of the units. In this report, it was still decided to try", CEO of INFRA Paavo Syrjö describes the starting points of the work.
The interpretation of the results is not easy research director I went to Holminka by. There are almost as many ways of service production as there are municipalities. Technical services are provided by agencies, business establishments, municipal associations, municipal joint-stock companies and municipal joint-stock companies. Purchase services are also used. It is difficult to compare and rank the spectrum of operating models.
"It is also very difficult for politicians to monitor the productivity of municipal technology or to compare practices between municipalities. A diverse skein would require extensive commercial training," Holm reflects.
Own production increases expenses
Ideally, the municipal group's machines and equipment are at work as much as possible, preferably 24/7. This rarely happens.
"Efficiency monitoring in municipalities is often in the shoes of a child. Once the allocation for the purchase has been received, there is not necessarily any follow-up, in which case the accounting function is satisfied with EBITDA monitoring instead of directing the use of capital," says Pasi Holm.
The analysis of Taloustukkumas reveals that especially Helsinki and Pori produce more services with their own staff and use less purchasing services than comparison municipalities. The situation is the opposite in Lappeenranta, Hämeenlinna and Vantaa.
"The more the municipality does work itself, the more materials, goods and supplies have to be bought. Personnel expenses are also higher," Pasi Holm points out.
"On average, the surveyed municipalities buy materials, goods and supplies for 420 euros per municipal resident per year. Helsinki buys for around 800 euros. Machines and equipment are owned for an average of 116 euros per member of the municipality. In Helsinki, the corresponding figure is 290, in Vantaa 85 and in Espoo 75."
Own production seems to increase the municipality's material and personnel expenses and clearly increases the amount of capital tied up in machines and equipment - precisely the one whose return is not usually monitored.
Idling can be eliminated
"When the services are implemented as the municipality's own work, the number of personnel and machines is standardized, even though the need, especially in the civil engineering sector, varies strongly from season to season. An alternative would be to purchase a service from the market only as needed, in which case the municipality's money tied up in machines, halls and personnel is freed up for other uses", the chairman of INFRA ry Harri Kailasalo propose.
The organization of SOTE services will be transferred to the provinces during the next council term.
"Municipal decision-makers should already start turning their heads to where the municipality can continue to have a strong influence on its future, its economy and its conditions for success. Then we talk about the technical sector," says Kailasalo.
Pasi Holm is also calling for a change in attitude from the municipalities in how cost monitoring is handled and capital control is taken over:
"It's worth considering purchasing services. It can be easier for the company to use machines and equipment efficiently in various projects 24/7 where there is demand instead of them sitting idle while waiting for the municipality's own work. If the infrastructure in the municipality turns out to be inefficient, different partnerships will also pay off. And if you do it yourself, the company form is worth it, because then the operation can be more easily compared to a private one", sums up Holm.
21 municipalities participated in the economic survey comparison: Espoo, Helsinki, Hämeenlinna, Joensuu, Jyväskylä, Kotka, Kouvola, Kuopio, Lahti, Lappeenranta, Mikkeli, Oulu, Pori, Rauma, Rovaniemi, Salo, Seinäjoki, Tampere, Turku, Vaasa and Vantaa.
ADDITIONAL INFORMATION:
Paavo Syrjö, managing director, INFRA ry, tel. 040 560 1803; first name.surname(a)infra.fi
Pasi Holm, research director, Taloustutkimus Oy, tel. 010 758 5212; first name.surname(a)taloustutkimus.fi
Harri Kailasalo, chairman, INFRA ry, tel. 02071 53394; first name.surname(s) petminkainen.com
Finland's land and water engineers will gather in Joensuu this weekend for INFRA ry's Confederation. INFRA's messages echo from North Karelia to the municipal election fields. Find out at www.infra.fi/resepti.