In Oulu, good experiences have been gained from tendering infrastructure procurements on the market. "The prices are more affordable than if the city does its own work," says Matti Matinheikki, community director of the city of Oulu.
Text: Sari Okko and Anu Ginström
"When we talk about bidding for infrastructure procurement in the market, we talk about the financial crisis of Finnish municipalities. Now we are living in a similar situation to the beginning of the 2000s, when the customer-producer model was developed in Oulu and, after various stages, Oulu's technical business institution Tekli was founded," says Matinheikki.
The subscriber-producer model refers to organizing the production of public services in such a way that the roles of service subscriber and producer are separated. The customer is a public entity, for example a municipality. The producer can be either the municipality's own organization or an organization outside it.
The activities between the customer and the producer are governed by contracts.
Oulu's current model includes infrastructure construction, maintenance of streets and green areas, maintenance of water supply networks, and maintenance and construction of real estate.
"Before the development of the model in Oulu, almost everything was done by ourselves. This year, about half of the maintenance of the streets and the maintenance of green areas will be contracted out to private companies. At the same time, we have achieved big savings and efficiency effects", Matinheikki states.
Our own service production also became more efficient
In earthworks, the share of own production has decreased from almost 2002 percent in 100 to around 30 percent.
The city has outlined that the share of its own infrastructure production will further decrease by 10 million euros by 2020.
The development of the service production model led to the efficiency of the city's own operations.
"The work of our own production and private entrepreneurs is done at the same quality level and with the same procedures for requests for tenders, contracts and site meetings. The quality and price development of private and self-produced services has been monitored annually since 2002. In the beginning, own production was 120 percent more expensive than private production. Now we have managed to get 10-15 percent off, which is a great achievement. We've also managed to keep prices under control, meaning they haven't risen in recent years."
The retirement benefit has been used almost to the maximum for more than ten years. The number of people in own production has decreased by more than 200 people and the number of equipment has been halved. The exit has been replaced by a private service offer.
Let's do it even smarter
In order to be able to compare prices, according to Matinheik, uniform contracts, documents, quality requirements and site practices are needed to guide operations. Cost differences are affected by fixed costs, such as the number of locations, equipment, support functions and personnel.
In Oulu, together with the staff, we thought about how things could be done smarter.
"For example, when we noticed that at 7.30:XNUMX in the morning the park department picks up the trash from their own area and a quarter of an hour later the street department does the same from their own area, we wondered if it would be smarter to handle the job with one group. That's how it was and that's how it was done."
Not a matter of faith
Matinheikki reminds us that it's not just about money, but also about quality and professional pride. Work development has been an empowering factor for the entire staff.
"We have invested a lot in occupational well-being and occupational safety, thanks to which sickness absences have decreased significantly and job satisfaction has increased. 20–25 percent of savings have been accumulated through retirement withdrawal, so we haven't had to resort to redundancies."
Matinheikki recommends a subscriber-producer model similar to the Oulu model to everyone. "This is not a matter of faith. There is also no need to guess at the effectiveness of the model, as we have clear numerical savings to show."
The story was previously published in Infra magazine
More success recipes for municipalities: Infra.fi/Resepti