Report to/Rapport au :

Corporate Services and Economic Development Committee

Comité des services organisationnels et du développement économique

and Council / et au Conseil

29 January 2007 / le 29 janvier 2007

Submitted by/Soumis par : Greg Geddes, Chief Corporate Services Officer /

Chef des Services généraux

Corporate Services / Services généraux

Contact Person/Personne ressource : Lois Pearce, Director Employee Services Branch/Directrice,Direction des services aux employés

(613) 580-2424 x14946, lois.pearce@ottawa.ca

City Wide

Ref N° : ACS2007-CRS-CSO-0002

CRS-FIN

SUBJECT:	City of Ottawa Branch-By-Branch Overtime Review

OBJET :	EXAMEN DES HEURES SUPPLÉMENTAIRES PAR DIRECTION DE LA VILLE D’OTTAWA

REPORT RECOMMENDATIONS

That the Corporate Services and Economic Development Committee recommend Council:

1. Receive for information the report prepared by Deloitte Consulting entitled, City of Ottawa Branch-by-Branch Overtime Review Final Report dated September 7, 2006; and

2. That discussion of overtime budgets take place on a service by service basis as part of 2007 budget deliberations so that any changes contemplated to those budgets would be understood as they relate to service levels or standards.

RECOMMENDATIONS DU RAPPORT

Que le Comité des services organisationnels et du développement économique recommande au Conseil :

1. de recevoir le rapport préparé par les consultants professionnels de Deloitte intitulé, Rapport final de l’examen des heures supplémentaires par direction de la Ville d’Ottawa, daté du 7 septembre 2006;

2. de tenir des discussions à propos des budgets des heures supplémentaires avec chaque direction dans le cadre des délibérations du budget 2007, pour que tous les changements prévus à ces budgets en ce qui concerne les niveaux et les normes de services soient bien compris.

EXECUTIVE SUMMARY

As part of the 2006 budget process, Council directed the City Manager to provide detailed information on the City’s use of overtime on a branch-by-branch basis, with a view to reducing the City’s historical reliance on overtime as a management tool. This report provides a detailed look at the drivers of overtime use both corporately and by individual branches.

Deloitte Consulting was engaged by the City to conduct a detailed branch by-branch review of overtime use at the City. The Deloitte report concluded that the City is using overtime as an appropriate mechanism to ensure that mandated service levels are maintained, that front-line services are provided on a 24/7 basis, including during holidays and crises situations, and as a temporary measure when staffing levels are insufficient.

The report also concluded that City managers have developed informal techniques for tracking overtime use and can provide suitable rationale why overtime is used in their branches. Deloitte recommended that these processes be reviewed, standardized and that a comprehensive system be set up corporately. City staff has begun this process, which is discussed more fully in the body of this report.

Fundamentally, the City needs to use overtime to ensure that Council-mandated or provincially mandated service levels are met. This could be termed as “unavoidable” overtime. There are other causes of overtime use that are more discretionary. These causes would include such things as using overtime to cover staffing imbalances, requiring staff to attend meetings outside normal working hours and deadline pressures that result in managers incurring overtime costs to meet requests for services or products. City managers have often taken measures to reduce these discretionary overtime drivers. These measures include scheduling staff to minimize the use of overtime through staggered hours of work, actively managing staff participation at meetings outside normal working hours, and hiring temporary staff to fill staffing vacancies rather than using overtime. The savings achieved through these management efforts have resulted in fewer overtime hours being used in 2004, 2005 and 2006.

Average expenditures on overtime have remained stable since 2002 despite an increase in compensation costs of approximately 3% per year. Once the Deloitte recommendations are fully implemented, these savings will be easier to quantify as the use and drivers of overtime will be better tracked.

It is also important to note that the City incurs overtime costs that are charged back to outside clients. As a result, there is some overtime use that does not result in additional costs for the City. Staff is in the process of designing a reporting system that will accurately capture both the costs and the revenues associated with these services.

Background

Since amalgamation, City Council and senior management have twice examined the use of overtime for the delivery of City services. The first review was conducted in 2002 by the former Internal Auditor and covered overtime use within four branches: Transit Services, Fleet Services, Surface Operations and Emergency Medical Services (now Ottawa Paramedic Services). The second audit was conducted by the Office of the Auditor General in 2004, and covered overtime use in Fire Services, Utility Services and Real Property Asset Management.

Both of these audits pointed to issues with the budgeting, monitoring and management of overtime. They also identified that certain branches were overspent on their respective budgets for overtime expenditures, although they remained under-spent in their overall compensation budgets. They also identified that the amount budgeted for overtime did not reflect the historical expenditures for overtime.

While the 2002 audit acknowledged that management cannot eliminate the use of overtime, the Auditor recommended that City management budget for overtime expenditures using a benchmark of 3% to 5% of regular compensation. In 2004 during the second audit, the total overtime expenditures (excluding Police Services) were $28.8 million, which equated to approximately 4% of total compensation in that year, and was within the benchmark recommended in 2002.

In December 2005 Council adopted Motion 47/82 as part of the 2006 budget approval process, which directed that “the overtime budget in the Operating Budget 2006 be reduced by $3.5 million.”

The City Manager’s office engaged Deloitte Consulting in 2006 to conduct a comprehensive branch-by-branch review of overtime for the City in response to the release of the Auditor General’s 2005 Audit of Overtime and to assess how to address motion 47/82.

The Deloitte Branch-by-Branch Overtime Review report examines the City’s overall use of overtime from 2003 to 2005, analyzes overtime practices in 31 branches, and makes a number of recommendations to improve the management of overtime at the City of Ottawa.

This report summarizes the recommendations contained in the Deloitte report, and provides further information on how the City is addressing these recommendations, and improving its budgeting and monitoring of overtime.

Key Findings from Deloitte’s Branch-by-Branch Overtime Review

The Deloitte report concludes that the City needs to use overtime to deliver services and is performing well in its use of overtime. It also indicates that the City’s overtime spending remains within the recommended benchmark set by the Auditor in 2002. Overtime expenditures in 2005 again represented only 4% of the City’s total compensation budget.

Further, Deloitte points out that the actual number of overtime hours worked has decreased during the three years reviewed, despite an increase in compensation and overtime costs of approximately three per cent (3%) per year. The average number of overtime hours worked by employees dropped from 83 hours in 2004 to 72 hours in 2005.

The report shows that nine (9) branches each had over $1 million in overtime expenditures and accounted for over 90% of the City’s overtime. The remaining twenty-two (22) branches of the total of thirty-one (31) branches examined, incurred relatively low expenditures on overtime (with branch averages of about $125,000 for 2005).

The nine branches with the highest overtime expenditures include: Transit Services, Fleet Services, Surface Operations, Utility Services, Paramedic Services, Real Property Asset Management, Traffic and Parking Operations, Infrastructure Services and Fire Services. These branches comprise over 55% of the total FTEs in the City and have the largest numbers of FTEs eligible to be paid overtime. Eight (8) of these branches provide front-line services to the public and have 24/7 operations, and many have mandated service levels that must be met regardless of circumstances. Transit Services had the highest overtime expenditures among these branches at $10.4 million. A detailed explanation of overtime usage in each of these branches is provided later in this report.

The Deloitte report concludes that the use of overtime is a cost-effective way to meet fluctuating demands for service instead of hiring additional FTEs. Much of the work conducted by the City is seasonal or cyclical in nature, and demand for many City services and programs vary throughout the year.

While Deloitte states that many branches exceeded their planned overtime budgets, all branches stayed within their overall compensation budgets. Past direction given by the City’s Executive Management Committee required management to manage within their overall compensation budget, but allowed for flexibility within specific line items in order to accommodate changing circumstances throughout the year. The City budgets ~~appropriate~~ correct amounts for overall compensation, however, the ~~apportionment of~~portion this budget allocates to ~~between base compensation and~~ overtime does not reflect actual historical expenditures for overtime. . This limits the utility of the overtime budgets as an effective tool for monitoring the use of overtime.

The Deloitte report also concludes that ~~the~~ management of overtime expenditures has improved over the past three years. The variance between actual overtime and budgeted overtime has decreased from 104% in 2003 to 49% in 2005. Overtime requirements throughout the year are becoming more predictable. Overtime expenditures between 2003 and 2005 varied by less than 6% from the average.

Areas for Improvement

While overall the City is performing well in its use of overtime, there is room for improvement. Deloitte recommends several areas for improvement to provide better management, budgeting and reporting of overtime expenditures within the City, including:

· Overtime policies and procedures – The Deloitte review found that the City did not have a corporate policy or procedures for the use of overtime. The report did indicate that it was common practice to manage overtime through branch-level formal or informal guidelines. The City has since developed a draft corporate policy on overtime and is currently consulting with departments before it is approved and implemented. This policy is anticipated to be concluded in the next few months and will be provided to Council for information.

· Develop and/or adjust overtime base budgets – There are some branches that incur overtime expenditures, but do not~~n’t~~ have an overtime budget. There are also other branches that have consistently under-budgeted for their overtime needs. In 2006, the City adjusted overtime budgets to more accurately reflect overtime expenditures based on historical information. A table outlining the changes is found in Appendix B.

· Track overtime to revenue earned/costs recovered – Because revenue earned and cost recoveries are reported separately, the association between the overtime that was worked to earn the revenue and/or for the costs recovered is not apparent. The City will work with the ~~SAP~~ Information Technology Services technical team to investigate whether cost codes can be established in the SAP payroll system to link overtime to revenue/cost recovery.

· Track overtime causes – Few branches were formally tracking the causes of overtime when the review took place. This led to challenges when trying to analyze overtime expenditures. The City ~~has begun~~ is developing a standard list of cost codes that will track and report overtime causes within SAP. ~~This may become a significant project where subsystems are feeding SAP, as those systems will require enhancements if the requirement is to have all information housed within the SAP system~~

Each of the nine (9) branches with the highest overtime expenditures has already implemented, or is currently undertaking, branch-specific steps to reduce overtime use. These are examined in greater detail later in the report.

Addressing Council’s Motion 47/82

The December 2005 motion directed staff to reduce the 2006 Operating Budget by $3.5 million. The June 30, 2006 Operating Status Report forecasted that a $3.0 million overtime efficiency could be achieved this year. However, this forecast was developed prior to the completion of the analysis of overtime costs and potential savings on a branch-by-branch basis. Each branch was challenged to find savings in their overtime budgets. After conducting a substantial analysis of City operations regarding overtime expenditures, it has been determined that a reduction of $400,000 is achievable. Any further reductions would result in decreases in Council-mandated or provincially mandated service levels. Managers continue to reduce their use of overtime and will continuously implement new management techniques to minimize overtime costs.

The analysis also revealed an additional $1 million in compensation-related savings that have been incorporated into the 2007 base budget. This savings cannot be allocated to true overtime savings, and therefore, the savings have been allocated to another line item in the budget.

The remaining overtime target of $2.1 million ~~(representing the original target of $3.5 million less the $0.4M of identified overtime savings and an additional $1 million worth of other compensation related efficiencies)~~ will be carried over to 2007 budget as part of the Corporate Efficiency Target. As a result, staff will be challenged to achieve an ambitious ~~The effect will be to increase the Efficiency T~~target by $0.3 million ($2.1 million calculated above less the $1.8 million previously identified as overtime savings not achieved in the 2007 Budget Directions report). The Efficiency Target for 2007 now totals of $11.5 million in 2007.

The $400,000 reductions will come from the Public Works and Services Department ~~in the following manner:~~

as explained later in this report.~~Fleet Services: $200,000 reduction~~

· ~~Surface Operations: $200,000 reduction~~

Summary

The detailed branch-by-branch review of overtime use conducted by Deloitte Consulting in 2006 is the third analysis on the use of overtime since the City of Ottawa amalgamated in 2001. The Deloitte report supports the requirement for the use of overtime to deliver 24/7 front line services and to meet the mandated service levels. The report states that in many cases the use of overtime is the most cost effective way to provide services where demands fluctuate or are unpredictable, rather than to add additional ~~FTEs~~ staff to the payroll.

Staff has reviewed the ability to reduce overtime expenditures by $3.5 million, and has concluded that there is $400,000 that can be removed from the budget. Any further reductions are not possible without impacting the current services offered by the City of Ottawa at the mandated service levels.

The City is managing the use of overtime well. Management recognizes that some improvements are necessary and has already undertaken many actions to reduce overtime. The City’s primary concern is to deliver services required to ensure that residents receive the legislated services at mandated levels. Management feels the use of overtime allows them to carry out their operational requirements when circumstances warrant its use.

SOMMAIRE

Dans le cadre du processus budgétaire de 2006, le Conseil municipal a demandé au directeur municipal de lui fournir des renseignements détaillés sur les heures supplémentaires enregistrées dans chaque direction afin que la Ville puisse réduire les heures supplémentaires auxquelles elle a eu recours par le passé pour gérer ses activités. Le présent rapport renferme un examen exhaustif des facteurs qui concourent aux heures supplémentaires tant au sein des Services généraux que dans les directions individuelles.

La Ville a demandé à Deloitte Consulting d’effectuer un examen détaillé des heures supplémentaires enregistrées dans chacune de ses directions. Selon le rapport de Deloitte, la Ville a recours aux heures supplémentaires d’une manière appropriée afin de veiller à ce que les niveaux de service obligatoire soient maintenus, à ce que des services de première ligne soient offerts 24 heures sur 24 et sept jours sur sept, notamment durant les jours fériés et en situation de crise, et en tant que mesure temporaire lorsque les niveaux de dotation sont insuffisants.

Selon les conclusions du rapport, les directeurs municipaux ont élaboré des techniques non officielles pour assurer le suivi des heures supplémentaires et ils sont en mesure de justifier adéquatement pourquoi ils y ont recours. Deloitte a recommandé que ces processus soient revus et normalisés de façon qu’un système exhaustif puisse être établi pour l’ensemble de l’organisation. Le personnel de la Ville a entrepris le processus, qui fait l’objet d’un examen plus détaillé dans le corps du présent rapport.

Fondamentalement, la Ville doit recourir aux heures supplémentaires pour faire en sorte qu’elle répond aux exigences établies par le Conseil ou la province en matière de niveaux de service. Ces heures pourraient être qualifiés d’« inévitables ». D’autres heures supplémentaires résultent cependant de décisions discrétionnaires visant, par exemple, à rééquilibrer le personnel, à permettre à des employés d’assister à des réunions en dehors des heures de travail ou à faire face aux pressions des délais, qui font en sorte que les gestionnaires doivent engager des dépenses en heures supplémentaires pour répondre aux demandes de services ou de produits. Les directeurs municipaux ont souvent pris des mesures pour réduire ces facteurs discrétionnaires de temps supplémentaire. Ces mesures comprennent le recours aux heures échelonnées, une gestion active de la participation des employés à des réunions en dehors des heures normales de travail et l’embauche de personnel temporaire pour pourvoir des postes vacants plutôt que de recourir aux heures supplémentaires. Les économies réalisées à la suite de ces efforts de gestion ont résulté en un moins grand nombre d’heures supplémentaires en 2004, en 2005 et en 2006.

Les dépenses moyennes en heures supplémentaires sont demeurées stables depuis 2002 malgré une augmentation d’environ 3 p. 100 des coûts de rémunération. Une fois que les recommandations de Deloitte auront été entièrement mises en oeuvre, il sera plus facile de quantifier les économies puisque l’on sera mieux en mesure d’assurer le suivi des heures supplémentaires et les facteurs d’utilisation.

Il convient également de noter que la Ville engage des dépenses en heures supplémentaires qui sont facturées aux clients de l’extérieur. Par conséquent, un certain nombre de ces heures n’entraînent pas de coûts supplémentaires pour la Ville. Le personnel s’emploie à concevoir un système de production de rapports qui permettra d’enregistrer adéquatement les coûts et les revenus liés à ces services.

Contexte

Depuis l’amalgamation, le Conseil municipal et la haute direction se sont penchés à deux reprises sur la question des heures supplémentaires dans la prestation des services à la Ville. Le premier examen a été effectué en 2002, par l’ancien vérificateur interne, et a porté sur le recours aux heures supplémentaires dans quatre directions : les services de transport en commun, les services du parc automobile, les opérations de surface et les services médicaux d’urgence (maintenant les services paramédics d’Ottawa). Le deuxième examen a été effectué par le Bureau du vérificateur général en 2004 et a porté sur le recours aux heures supplémentaires dans le service des incendies, les services publics et la gestion des actifs et des biens immobiliers.

Ces deux vérifications avaient soulevé des problèmes dans la budgétisation, la supervision et la gestion des heures supplémentaires. Les vérifications avaient également permis de déterminer que certaines directions avaient dépassé leur budget respectif de dépenses en heures supplémentaires, mais qu’elles avaient tout de même réussi à respecter leur budget global de rémunération. Les résultats ont aussi démontré que le budget des heures supplémentaires ne reflétait pas les dépenses historiques en heures supplémentaires.

Bien que la vérification de 2002 ait permis de reconnaître que la direction ne pouvait éliminer complètement les heures supplémentaires, le vérificateur avait recommandé à la Ville de faire des prévisions en utilisant un point de référence de 3 % à 5 % de la rémunération régulière. En 2004, au cours de la deuxième vérification, les dépenses totales en heures supplémentaires (à l’exception du service de police) s’établissaient à 28,8 millions de dollars, c’est‑à-dire environ 4 % de la rémunération totale de l’année, bien en deçà du repère recommandé en 2002.

En décembre 2005, le Conseil municipal a adopté la motion 47/82 dans le cadre du processus d’approbation du budget de 2006. Cette motion stipulait que « le budget des heures supplémentaires dans le budget de fonctionnement de 2006 devait être réduit de 3,5 millions de dollars ».

En 2006, la direction de la Ville a embauché les consultants professionnels de Deloitte afin d’effectuer un examen approfondi par direction des heures supplémentaires à la Ville, à la suite de la publication du rapport de Vérification des heures supplémentaires pour 2005 du Vérificateur général et dans le but de déterminer comment répondre à la motion 47/82.

Le rapport de l’Examen des heures supplémentaires par direction de la firme Deloitte porte sur le recours global aux heures supplémentaires à la Ville de 2003 à 2005, il donne les résultats d’analyse de 31 directions et présente plusieurs recommandations dans le but d’améliorer la gestion des heures supplémentaires à la Ville d’Ottawa.

Le présent rapport résume les recommandations présentées dans le rapport de la firme Deloitte, et il donne d’autres renseignements sur la manière dont la Ville accueille ces recommandations et comment elle prévoit améliorer la budgétisation et la supervision des heures supplémentaires.

Principaux résultats de l’Examen des heures supplémentaires par direction de la firme Deloitte

Le rapport de la firme Deloitte révèle que la Ville doit avoir recours aux heures supplémentaires pour offrir ses services et qu’elle s’en sort relativement bien. Le rapport révèle également que les dépenses en heures supplémentaires de la Ville restent dans les limites recommandées, établies par le vérificateur en 2002. Les dépenses en heures supplémentaires en 2005 ne représentent à nouveau que 4 % du budget total de la rémunération de la Ville.

En outre, les consultants de la firme Deloitte soulignent que le nombre actuel d’heures supplémentaires travaillées a diminué au cours des trois années examinées, malgré une augmentation des coûts en rémunération et en heures supplémentaires d’environ trois pour cent (3 %) par année. Le nombre moyen d’heures supplémentaires travaillées par les employés est passé de 83 heures en 2004 à 72 heures en 2005.

Le rapport montre que neuf (9) directions ont enregistré chacune plus de 1 million de dollars de dépenses en heures supplémentaires et qu’elles comptent pour plus de 90 % de l’ensemble des heures supplémentaires à la Ville. Les autres vingt-deux (22) directions du total des trente et une (31) directions examinées ont engagé des dépenses relativement faibles en heures supplémentaires (la moyenne pour toutes les directions est d’environ 125 000 $ en 2005).

Les neuf directions ayant enregistré les dépenses les plus élevées en heures supplémentaires sont : les services de transport en commun, les services du parc automobile, les opérations de surface, les services publics, les services paramédics, la gestion des actifs et des biens immobiliers, la circulation et le stationnement, les services d’infrastructure et le service des incendies. Ces directions comptent pour plus de 55 % de tous les ETP de la Ville et elles comptent le plus grand nombre de postes ETP admissibles à la rémunération des heures supplémentaires. Huit (8) de ces directions offrent des services de première ligne au public et fonctionnent 24/7, en plus de devoir offrir les niveaux de service prévus sans égard aux circonstances. Les services de transport en commun ont enregistré les dépenses en heures supplémentaire les plus élevées parmi ces directions, c’est‑à-dire 10,4 millions de dollars. Le recours aux heures supplémentaires pour chacune de ces directions a été justifié un peu plus loin dans le présent rapport.

Le rapport de la firme Deloitte conclut que dans de nombreux cas, le recours aux heures supplémentaires est une façon plus rentable de répondre aux fluctuations des demandes de services, que d’embaucher de nouveaux employés dans des postes ETP. La plupart du travail effectué par la Ville est de nature saisonnière ou cyclique, et la demande de nombreux services et programmes varie tout au long de l’année.

Bien que le rapport de la firme Deloitte précise que de nombreuses directions dépassent les budgets prévus en heures supplémentaires, il reste que toutes les directions ont réussi à respecter leur budget global de rémunération. D’anciennes directives données par le Comité de la haute direction de la Ville demandaient à la direction de respecter son budget de rémunération globale, mais de faire preuve de souplesse dans certains points de rubriques particuliers afin d’accommoder les changements de circonstances tout au long de l’année. Bien que la Ville prévoit des montants exacts pour la rémunération globale, les montants prévus pour les heures supplémentaires dans ce budget ne reflètent pas les dépenses antécédentes réelles à cet égard. Cette situation limite l’utilité des budgets des heures supplémentaires comme outils efficaces pour la supervision du recours aux heures supplémentaires.

Le rapport de la firme Deloitte conclut également que la gestion des dépenses en heures supplémentaires s’est améliorée au cours des trois dernières années. L’écart entre les heures supplémentaires actuelles et les heures supplémentaires prévues est passé de 104 % en 2003 à 49 % en 2005. Les demandes en heures supplémentaires tout au long de l’année sont maintenant plus prévisibles. Les dépenses en heures supplémentaires entre 2003 et 2005 ont varié de moins de 6 % de la moyenne.

Secteurs à améliorer

Bien que dans l’ensemble, la Ville offre un bon rendement en ce qui concerne le recours aux heures supplémentaires, il y a toujours place à l’amélioration. La firme Deloitte recommande certaines améliorations qui devraient mener à une meilleure gestion, une meilleure budgétisation et de meilleurs rapports de dépenses en heures supplémentaires à la Ville, notamment :

· Politiques et procédures en matière d’heures supplémentaires – Le rapport de la firme Deloitte révèle que la Ville n’a pas de politique ni de procédure générales en ce qui concerne le recours aux heures supplémentaires. On y mentionne qu’il est pratique courante dans les directions de gérer les heures supplémentaires au moyen de lignes directrices officielles ou non officielles. Depuis lors, la Ville a élaboré un projet de politique générale sur les heures supplémentaires et elle consulte actuellement les différents services avant de l’approuver et de le mettre en place. On s’attend à conclure la politique au cours des prochains mois, moment où elle sera transmise au Conseil aux fins d’information.

· Élaborer et rajuster les budgets de base en matière d’heures supplémentaires – Certaines directions engagent des dépenses en heures supplémentaires, sans prévoir de budget pour couvrir ces dépenses. Certaines autres directions ont toujours sous-budgétisé leurs besoins en heures supplémentaires. En 2006, la Ville a rajusté les budgets en heures supplémentaires dans le but de refléter plus exactement les dépenses en heures supplémentaires en fonction des renseignements historiques. L’appendice B présente un tableau qui souligne ces changements.

· Relier les heures supplémentaires aux recettes reçues et aux coûts recouvrés – Comme les recettes reçues et les coûts recouvrés font l’objet de rapports distincts, le lien n’est pas évident entre les heures supplémentaires faites dans le but d’augmenter les recettes ou de recouvrer les coûts. La Ville collabore actuellement avec l’équipe technique des Services de technologie de l’information afin de déterminer la possibilité d’établir des codes pour les coûts dans le système de paie SAP qui permettraient de relier les heures supplémentaires aux recettes et aux coûts recouvrés.

· Suivre les causes des heures supplémentaires – Au moment de l’examen, seules certaines directions faisaient le suivi officiel des causes des heures supplémentaires. Cela a entraîné des difficultés au moment d’analyser les dépenses en heures supplémentaires. La Ville s’emploie à élaborer des listes de codes de coût standard qui permettront de suivre dans le SAP les causes des heures supplémentaires et d’en faire rapport.

Chacune de neuf (9) directions ayant enregistré les dépenses en heures supplémentaires les plus élevées a déjà mis en place, ou entreprend actuellement de le faire, des étapes particulières à sa direction, dans le but de réduire le nombre d’heures supplémentaires. Ces mesures font l’objet d’une examen en détail plus loin dans le présent rapport.

Réponse à la motion 47/82 du Conseil

La motion de décembre 2005 demandait au personnel de réduire le budget de fonctionnement de 2006 de 3,5 millions de dollars. Le Rapport d’étape des dépenses de fonctionnement du 30 juin 2006 prévoyait que des gains d’efficience en heures supplémentaires de l’ordre de 3,0 millions de dollars pourraient être réalisés cette année. Cette prévision a toutefois été formulée avant que ne soit achevée l’analyse par direction des dépenses en heures supplémentaires et des économies éventuelles. Toutes les directions devaient essayer de cerner des économies dans leurs budgets d’heures supplémentaires. Après avoir effectué une analyse approfondie des opérations de la Ville en fonction des dépenses en heures supplémentaires, il a été déterminé qu’une réduction de 400 000 $ était possible. Toute réduction supplémentaire donnerait lieu à une baisse des niveaux de service. Les gestionnaires continuent de réduire les heures supplémentaires et mettront continuellement en œuvre de nouvelles techniques de gestion en vue de réduire au minimum les dépenses engagées à cet égard.

L’analyse a également révélé que des économies supplémentaires d’un million de dollars pourraient être réalisées au titre de la rémunération, et celles-ci ont été incorporées dans le budget de base de 2007. Ces économies ne pouvant être comptabilisées comme de véritables économies en heures supplémentaires, elles ont été inscrites sous un autre poste du budget.

Le reste de la cible d’économie en heures supplémentaires de 2,1 millions de dollars sera reporté au budget de 2007 et fera partie de la cible d’économie d’efficience générale. Le personnel sera donc mis au défi d’atteindre une cible ambitieuse de 11,5 millions de dollars en 2007.

Les réductions de 400 000 $ proviendront des Services et Travaux publics, comme il est expliqué plus loin dans le présent rapport.

Résumé

L’examen détaillé par direction des heures supplémentaires effectué par la firme Deloitte en 2006 représente la troisième analyse du recours aux heures supplémentaires depuis l’amalgamation de la Ville d’Ottawa en 2001. Les résultats du rapport de la firme Deloitte appuient la nécessité d’avoir recours aux heures supplémentaires pour être en mesure de fonctionner en première ligne 24/7 et d’offrir les niveaux de services prévus. Le rapport souligne que dans plusieurs cas, il est plus rentable de recourir aux heures supplémentaires pour offrir des services, là où les demandes fluctuent et sont imprévisibles, que d’augmenter le nombre d’employés.

Le personnel s’est penché sur la capacité de réduire les dépenses en heures supplémentaires de 3,5 millions de dollars et a conclu qu’il est possible de retirer 400 000 $ du budget. Toute autre réduction aurait automatiquement des répercussions sur les services actuels offerts par la Ville d’Ottawa aux niveaux de services prévus.

La Ville gère bien son recours aux heures supplémentaires. La direction reconnaît qu’il y a lieu d’apporter des modifications, et elle a déjà établi de nombreuses mesures dans le but de réduire le nombre d’heures supplémentaires. La principale préoccupation de la Ville est d’offrir les services nécessaires pour veiller à ce que les résidents reçoivent les services prévus par la loi aux niveaux prévus. La direction croit que le recours aux heures supplémentaires permet de répondre aux besoins opérationnels lorsque les circonstances l’exigent.

BACKGROUND

Since amalgamation, City Council and senior management have twice examined the use of overtime for the delivery of City services. The first review conducted in 2002 by the former Internal Auditor covered overtime use within four branches: Transit Services, Fleet Services, Surface Operations and Emergency Medical Services (now Ottawa Paramedic Services). The second audit was conducted by the Office of the Auditor General in 2004, and covered overtime use in Fire Services, Utility Services and Real Property Asset Management Branch.

While the 2002 audit acknowledged that management cannot eliminate the use of overtime, the Auditor recommended that City management budget for overtime expenditures by using a benchmark of 3% to 5% of regular compensation. In 2004 during the second audit, total overtime expenditures (excluding Police Services) were $28.8 million, which equated to approximately 4% of total compensation in that year, and was within the benchmark recommended in 2002.

In December 2005 Council adopted Motion 47/82 as part of the 2006 budget approval process, which directed that “the overtime budget in the Operating Budget 2006 be reduced by $3.5 million.”

For consistency with previous audits of overtime, Police Services was excluded from the Deloitte review. The Deloitte review also excluded a number of offices throughout the City as the majority of staff within these areas is not eligible to receive overtime payments. These include:

· The City Manager and the Deputy City Managers’ Offices,

· Offices of elected officials,

· Office of the Auditor General, and

· The Committee of Adjustment.

This report summarizes the recommendations contained in the Deloitte report, and provides information on how the City is addressing these recommendations and improving its budgeting and monitoring of overtime.

DISCUSSION

Managing compensation costs is a challenging and important issue for large municipalities. Approximately 95% of the City of Ottawa’s workforce is unionized, which makes controlling compensation costs a major challenge.

One of the ways that the City manages compensation costs is by ensuring that there are tight controls on staffing levels. At amalgamation, there were 12,786 Full-Time Equivalent (FTE) positions. Through reductions from amalgamation, the Universal Program Review and the 2006 budget, 1,236 FTEs have been eliminated.

There has been an overall net increase of 682 FTEs since amalgamation (including 306 more police FTEs), or 5.4% more than in 2000. There are 367 FTEs fewer administrative and support staff than in 2000 and 743 FTEs more operational or front-line service staff.

Change in the FTEs per year, operational vs. administrative
as of (15 August 2006)

Overtime is a reasonable tool available to management to use to continue to provide front-line services to citizens with the flexibility needed in changing circumstances. It is often a cost-effective way of maintaining service levels as compared to the cost of hiring a full-time employee with benefits.

Deloitte concluded that despite the scope and breadth of the services delivered by the City, the use of overtime is well managed and has been fairly stable since amalgamation. Actual overtime hours have been decreasing slightly year over year. The rules governing the payment of overtime are captured within the collective agreements. Overtime is predominantly used to deliver City services within 24/7 operations, and to achieve mandated service levels. This type of overtime can be considered as non-discretionary.

There are other causes of overtime that are more discretionary. These causes would include such things as using overtime to cover staffing imbalances, requiring staff to attend meetings outside normal working hours and deadline pressures that result in managers incurring overtime costs to meet requests for services or products. The City proactively manages this type of overtime expenditure and the hours of overtime worked have consistently decreased since 2004.

In December 2005, Council directed staff to reduce the 2006 Operating Budget by $3.5 million through motion 47/82. After conducting a substantial analysis of City operations regarding overtime expenditures, it has been determined that a reduction of $400,000 is achievable in two branches of the Public Works and Services Department. Any further reductions would result in decreases in Council-mandated or provincially mandated service levels.

The Deloitte review has highlighted that there is room for improvement in the budgeting of overtime use. However, after conducting a substantial analysis of City operations regarding overtime costs, it has been determined that there are no significant savings to be found in overtime budgets of branches across the City without reducing service level standards. Management remains committed to decreasing overtime expenditures where possible, and as a result, a number of initiatives are underway to decrease overtime, both in response to recommendations from Deloitte and to the previous audits on overtime.

The City Needs to Use Overtime to Deliver Services

The Deloitte review found that 22 of the 31 branches examined incurred relatively low expenditures on overtime, with branch averages of approximately $125,000. Some of these branches incur “discretionary” overtime costs as described above. In general, their use of overtime varies from year to year and it is not productive to try to produce the exact amount that will be required. The remaining nine (9) branches each incurred over $1 million in overtime expenditures. Overtime in these branches is primarily “non-discretionary” overtime used to provide 24/7 public-facing services with service levels determined by Council and the Province. This group of nine branches accounts for 90% of the City’s overtime expenditures.

24/7 Operations

Front-line operations generally create the greatest need for overtime usage in order to meet service expectations. Eight (8) of the nine (9) branches that spent over $1 million in overtime have 24/7 operations and provide front line service to the public. Many of the branches with the highest use of overtime are also those with the most staff. The nine (9) branches with the highest use of overtime comprise over 55% percent of budgeted FTEs at the City and have an average of about 700 FTEs in each branch, and with the largest numbers of FTEs eligible to be paid overtime.

Meeting Service Levels

Many of the service levels that drive the activities and decisions for branches have been established by federal or provincial legislation and regulation, Council; or for the centre of expertise branches, by internal service level agreements. The legislated or Council-directed service levels must be met regardless of circumstances; and therefore, leave managers little choice but to incur overtime expenses in order to maintain the prescribed level of service.

Services on Statutory Holidays

The City provides a number of essential services year round including on statutory holidays. In 2005, 9% of the total overtime paid to employees was for work performed on statutory holidays.

The rules governing the payment of overtime are set out in the Employment Standards Act, the overtime provisions within the respective collective agreements which have specific clauses related to the payment of staff working on statutory holidays, and in some cases, the Canada Labour Code. Further, some collective agreement provisions state that senior staff must be given the opportunity to work any approved overtime before it is offered to more junior staff, which can result in higher costs for this overtime.

Other Causes of Overtime

City management identified a number of reasons why non-discretionary overtime expenditures occur, including:

· Unforeseen/unplanned events: e.g. weather / snow storms, water main breaks;

· Periodic high service level demands: e.g. maintaining service levels at busier times of the year (construction, arrival of new fleet, development applications);

· Planned events: e.g. festivals, Canada Day;

· Special projects: e.g. Rural Summit;

· Deadline requirements: e.g. construction projects;

· Vacancies: e.g. from lack of applicants, hiring freezes;

· Provision of services outside regular working hours: e.g. public health inspections;

· Attendance at public consultation meetings outside regular working hours; or

· Requests from Councillors to attend meetings outside regular working hours.

Absenteeism

It had been suggested in previous audits that rates of absenteeism may be impacting overtime expenditures within various City Services. This does not appear to be the case on further analysis, and the Deloitte report found that the degree of correlation between absenteeism and overtime use across the City was relatively low. The City has a structured program in place to monitor and address absenteeism. The original Attendance Improvement Program was revised in 2006 to provide managers with a better tool to manage absenteeism in the workplace.

The City is Managing its Use of Overtime Very Well

Average expenditures on overtime have remained stable since 2002 despite an increase in compensation costs of approximately 3% per year. More significantly the actual number of overtime hours worked has decreased over the past three years.

While the Deloitte report found that many branches exceeded their overtime budgets, it is important to note that all branches managed their compensation expenditures to stay within their overall compensation budgets. This reflects past direction from the Executive Management Committee to maintain compensation budgets and allow flexibility in relation to specific line items within those budgets. This procedure has provided operational management with a certain amount of flexibility to accommodate changing circumstances throughout the year.

However, this budget practice is not enabling the City to budget and/or monitor overtime costs as accurately as possible. That being said, budgeting for overtime has improved over the past three years. The variance between actual overtime and budgeted overtime has decreased from 104% in 2003 to 49% in 2005. Overtime requirements throughout the year are becoming more predictable. Overtime expenditures between 2003 and 2005 varied by less than 6%, or $1.75 million, from the three-year average. In 2006 overtime budgets were adjusted to reflect actual requirements.

Overtime as a Cost-Effective Way of Maintaining Service Levels

Another common concern that was explored within this review was the debate on whether it is more or less expensive to hire additional employees than to pay overtime costs to provide the same service. The review found that in programs where demands for service fluctuate or are cyclical in nature, it is more expensive to hire additional FTEs than to use overtime to meet these variable demands. The case in Transit Services best illustrates this point.

In 2004, Transit Services commissioned a study entitled the Transit Operator Establishment Review to establish a formula to define the appropriate number of FTE operators (transit operators) required to effectively cover its annual service hours. The surprising conclusion in that study was that Transit Services should be increasing its overtime hours as a proportion of its total annual service hours since reducing overtime expenditures could increase overall costs.

That report stated that 5.8% of total annual service hours resulted from contract provisions and could not be reduced materially without contract changes. It also concluded that a total 8.7% of annual service hours should be overtime hours. At the time of the study, Transit Services had been targeting 5% of annual service hours as overtime. Given this recommendation, staff has gradually increased the amount of overtime towards the recommended target of 8.7%. It is currently at 6.5%.

The report also stated that budget reductions should be achieved by reducing either the approved service hours and/or non-service related elements. Some of the “non-service” activities include: vacation, sickness (short-term and long-term), Workplace Safety and Insurance Board (WSIB) claims, filling temporary posted positions, full-time union executive status, and relief positions (instructors, supervisors, dispatchers and booking clerks), union time-off and committee participation.

The study also found that some “desirable overtime” had low impact on service reliability for providing the following services: Sundays, charters, special events and other services, and extensions (of work shifts related to unforeseen events such as weather, collisions and traffic congestion).

This situation is not limited to Transit Services and other branches have also concluded that the use of overtime is a cost effective way to manage periodic fluctuations in demand for service. Some of these examples are described later in the report.

The City Is Improving Its Overtime Budgeting and Monitoring

Budgeting for Overtime

The previous audits pointed to some large gaps at the branch level between the budget for overtime versus actual overtime expenditures. Deloitte states that while many branches exceeded their planned overtime budgets, all branches stayed within their overall compensation budgets. Past direction given by the City’s Executive Management Committee required management to manage within their overall compensation budget, but allowed for flexibility within specific line items in order to accommodate changing circumstances throughout the year. The City budgets ~~appropriate~~ correct amounts for overall compensation, however, the ~~apportionment of~~portion that this budget allocates to ~~between base compensation and~~ overtime does not reflect actual historical expenditures for overtime. This limits the utility of the overtime budgets as an effective tool for monitoring the use of overtime.

During the 2006 Budget discussion, Council adopted Motion No. 47/86 which stated that, “the City Manager be delegated the authority to adjust overtime budgets within the total compensation envelope to reflect actual spending where necessary”.

Budget adjustments were made in 2006 following consultation with all directors to address Motion 47/86. These adjustments to overtime line items were based on historical trends and forecasted needs. Branches will be expected to be in line with their overtime budgets in the future. A list of these budget adjustments can be found in Appendix B.

Policies and Procedures for the Management of Overtime

Both the previous audits and Deloitte’s 2006 Branch-by-Branch Overtime Review found that few branches had formal or informal overtime policies and procedures in place. The City has now developed a draft corporate overtime policy and consultation is taking place with departments on the content of the policy prior to approving it by senior management.

Tracking the Causes of Overtime

Deloitte points out that directors were readily able to identify the causes of overtime within their branches. They also point out that these causes are not formally tracked and monitored on an on-going basis, as there is no means to do this within the current configuration of the SAP payroll system. However most branches had developed informal methods or practices for monitoring overtime use. Since that time, some branches have begun to track the causes of overtime using third-party tools such as Telestaff (used within the Ottawa Paramedic Services) and MS Excel (used in other areas). Real Property Asset Management is currently utilizing a feature available within the property management module of SAP to track their causes of overtime expenditures.

As a result, the City is currently developing a standard list of cost codes within SAP to capture, track and report overtime causes that will be available to all branches.

Revenue Earned and Cost Recoveries from External Sources

The Deloitte report states that the City should more accurately identify and isolate overtime expenditures that are offset by revenue and cost recoveries to clearly understand the net cost of overtime. For example, in Fleet Services all maintenance work related to manufacturers’ warranties is recovered from the appropriate manufacturer. In Traffic and Parking Operations, there are many recoveries for staff time from developers and insurance companies that if tracked against the gross overtime expenditures would show a lower actual overtime expense to the City.

Any additional revenue the City receives to offset overtime expenditures (for example, Festival Operations) are reported separately from expenditures; and therefore, the correlation between these two elements is not apparent.

Currently the City is examining the feasibility of more accurately identifying overtime that is offset by revenue earned/costs recovered in order to reflect true net overtime costs. This would enable City Council and management to have a more accurate picture of the true bottom-line overtime costs to the City.

Branch-by-Branch Overtime Use Findings

The Deloitte report shows that nine (9) branches each had over $1 million in overtime expenditures and accounted for over 90% of the City’s overtime. The remaining twenty-two (22) branches of the total of thirty-one (31) branches examined during the review, incurred relatively low expenditures on overtime (with branch averages of about $125,000 for 2005).

A closer examination of the nine branches that had the highest overtime expenditures is provided below in order to better understand the circumstances leading to high overtime expenditures.

Transit Services

Transit Services has approximately 1,750 FTEs eligible to be paid overtime. Most of these employees are transit operators. The 2002 audit resulted in two key recommendations:

· Review establishment management processes to ensure the available operator complement is sufficient to meet operational requirements; and

· Prepare and document a detailed analysis to demonstrate when the use of overtime is more cost effective than new hires.

Transit Services commissioned a study by KPMG entitled the Transit Operator Establishment Review to “establish a formula to define the appropriate number of FTE operators (transit operators) required to effectively cover annual service hours. The study concluded that in some instances if more overtime were used there would be a net overall savings when operating below the approved transit operator level, or when drivers are performing non-operational duties, overtime is the only option available to meet the on-street service delivery target of 99.5 %.

The audit also reviewed the costs of overtime. The regular hours include benefits of 27% added to the base hourly wage. Overtime hours include the standard hourly rate factored up by the overtime premium of 50% plus about 5.9% to cover other employer benefit costs.

The study concluded the cost of straight time was 5.8% more than the cost of an hour at overtime rates. Drivers are paid for an average of 2080 hours a year but are only available to work about 74% of that time, or 1,584 hours annually.

The report concluded that a total 8.7% of annual service hours (this is currently at 6.5%) should be overtime hours. Reducing overtime further could increase costs. The report also stated that budget reductions should be achieved by reducing either the approved service hours and/or non-service related elements and not overtime.

Steps to Reduce Expenditures

The Transit Operator Establishment Review also provided Transit Services with a number of recommendations to reduce non-service related factors. These included improving attendance (reduce sick leave, Workplace Safety and Insurance Board claims, long-term disability), negotiating changes to collective agreements, and continuing to control the use of extensions [of shifts] to supplement on-street service.

Transit Services has responded to these challenges by:

· Reinstating the medical certification requirement for all sick days taken after six (6) days in a calendar year;

· Denying all requests for leaves of absence because of the inability to backfill these positions; obtaining the approval to backfill bus drivers who are elected to full-time union executive positions;

· Filling a number of vacancies in other sections of Transit Operations that were temporarily filled by bus drivers;

· Tracking bus driver departures and producing a ‘succession planning’ schedule;

· Streamlining the recruiting process with Employee Services branch;

· Scheduling meetings more effectively; and

· Significantly reducing extensions.

Barriers to Reducing Overtime

Some significant factors impacting Transit Services’ use of overtime are the high turnover rate of about seven (7) operators per month (84/year) and a 3% annual growth rate (45/year). The challenge to achieve and consistently maintain the full bus driver establishment is compounded by the Operational Training Unit that requires a “relief instructor” compliment of 17, all of whom are transit operators, to conduct training. This happens on a continual basis, which means that there is a constant struggle to fill these vacancies. To address this the branch, in conjunction with Employee Services, has implemented an aggressive and streamlined recruitment program. These initiatives, as highlighted in the Branch-by-Branch Overtime Review, are expected to decrease the overall compensation requirements within Transit Services.

Transit Services Overtime Reduction Target

There are no additional reductions made to the Transit Services overtime budget as a result of this review.

Fleet Services

In 2005, Fleet Services branch had about 550 FTEs eligible to be paid overtime. The majority of employees are mechanics. The branch was partially audited in 2002 at which time, he two main recommendations of that audit were to:

Improve staff levels; and
Decrease absenteeism.

The branch’s ongoing staffing issues relate to the fact that there are large numbers of staff who are of retirement age and there is an annual increased service need related to the growth rates of Transit Services. The branch has implemented a new recruitment and hiring process to address their needs.

While hiring is becoming more effective, there is still a time lag to complete training, which affects productivity and results in some additional overtime. The branch has now started recruiting in February in order to have the new mechanics trained to replace senior mechanics for summer vacation and to be ready to work on the additional buses that go into service in the autumn.

In 2005 absenteeism in Fleet Services was at 12.2 days/employee. The branch has developed work procedures that include a safety component and kick-off meetings are held at the beginning of each shift where staff is reminded of safety in the workplace. The branch has also implemented the City’s Attendance Improvement Program. These steps have had some success in reducing absenteeism.

Recovered Overtime

Overtime work conducted by Fleet Services staff for warranty work, or work done to get new buses prepared for the road is recovered from vehicle manufacturers. Fleet Services recovers about $1 million annually in warranty work but this is not accounted for in the current tracking of overtime.

Steps to Reduce Overtime

· Increased accountability and responsibility has been given to supervisors and program managers to plan and prioritize overtime more carefully to cover only essential work.

· The branch has been conducting optimization studies. These have resulted in fewer defects and an increased distance between failures.

· Workloads are now being shared more equitably among garages and plans are in place to further adjust shifts to off-peak times when the buses are not in use.

Barriers to Reducing Overtime

The branch identified some barriers toward the goal of decreasing overtime expenditures. The collective agreement for the majority of employees in this branch does not readily allow for contracting out work. The union must be given the opportunity to bid on any work before it is contracted out. This often leads to work being completed using overtime which may be less efficient. Conversely the branch anticipates that the ability to plan and schedule work and measure performance will greatly improve once the new fleet management information system is in place. This new system will lead to a better level of preventive maintenance and a decrease in unplanned work and therefore less overtime. The implementation of this new system was delayed and is now expected to be in place by the end of 2007.

Fleet Services Overtime Reduction Target

Fleet Services have established an overtime reduction target of $200,000. The key tool to manage overtime is the implementation of the Fleet Information Management System, which will take place at the end of 2007. Achieving the overtime reduction target in 2007 will be a challenge. In an effort to achieve this Fleet Services will continue to manage overtime by repair section. The branch will attempt to minimize in house-work on warranty issues and will advance the hiring process in an attempt to ensure full staffing in time to accommodate growth.

Surface Operations

Surface Operations branch has approximately 726 FTEs eligible to be paid overtime. Employees in this branch are responsible for such services as clearing the roads and sidewalks of snow and ice, providing forestry services and maintaining parks and sports fields.

Overtime use in Surface Operations was included in the 2002 audit. The main recommendation in that audit was for management to review and adjust scheduling in order to reduce the amount of overtime built into the booking schedule. The branch implemented some changes that have yielded positive results but are still struggling with issues related to the scheduling restrictions of the collective agreement. Management is currently working with the union to implement alternate schedules with a goal to decreasing overtime costs in maintaining the 24/7 operations. Currently the branch complements its workforce with contracted services.

Just over 80% of this branch’s overtime expenditures are related to the unpredictable winter events that it manages. Flexibility in meeting these kinds of demands is key to operational effectiveness.

Steps to Reduce Overtime

The branch is awaiting the recommendations of the audit of its summer operations (roads, parks and sports field maintenance, and forestry services);
It is continuing to fill vacancies;
It is developing an overtime policy and procedures;
It is implementing a strategic project that is expected to improve efficiencies within the branch by having more detailed reporting available for analysis on a weekly basis and moving a number of accountabilities such as planning and forecasting closer to the front line, at the supervisory level.

Surface Operations Overtime Reduction Target

Surface Operations has made a number of changes to its 24-hour shift schedule that will result a reduction of systematic overtime by approximately $200,000 per year.

Utility Services

Utility Services has about 509 FTEs eligible to be paid overtime. Employees in this branch ensure the provision of drinking water services, wastewater and drainage services, and collection of solid waste.

The majority of overtime incurred in this branch is unplanned. Overtime is used to address emergencies and maintain service levels in order to prevent customer service interruption, prevent property or environmental damage, avert regulatory infraction, avoid financial loss to the City, and/or mitigate imminent risks to public health or safety. Unforeseen events such as extreme weather, power failures, critical equipment breakdown, chemical spills, fires, and flooding drive the majority of overtime incurred within this branch.

The branch consists of highly regulated operations that have established standards and require staff to have specialized certifications. Some of the overtime incurred in these facilities arises from the need to ensure compliance with the regulations that require appropriate certification and training levels to be achieved. In order to meet the requirements of the regulations overtime is used to replace staff away for training, pay staff who work on statutory holidays, cover staff away on leaves (e.g. vacation or sick), and during periods of constraints in hiring.

Steps to Reduce Overtime

Developed a comprehensive overtime policy. The document provides clear guidelines, by division, on when discretionary and non-discretionary, planned and unplanned overtime use is justified.
Implemented the City’s Attendance Improvement Program, which has yielded positive results. In 2005, the rate of absenteeism was 8.9 days/employee.
Implemented automated weigh scales at landfill sites (reducing the amount of staff needed to do this work) and increased the staffing levels of the mechanical operators.

Utility Services Overtime Reduction Target

There is no additional reduction made to the Utility Services overtime budget as a result of this review.

Ottawa Paramedic Service

In 2005, the Paramedic Service had 416 FTEs eligible for paid overtime. The branch was also included in the 2002 audit. The branch’s overtime expenditures are primarily related to its front-line service to residents.

Planned overtime is used to provide paramedic service at special events including hockey games at Scotiabank Place, rural fairs, festivals and concerts, or where large gatherings of people occur (Canada Day, Remembrance Day). Unplanned overtime is used to address other unforeseen activities.

Recovered Overtime

The branch often recovers the full cost of planned overtime costs. In addition, the Ministry of Health Long Term Care (MOHLTC) funds the Central Ambulance Communications Centre and planned overtime incurred is recovered through the MOHLTC. The actual overtime expense to the branch would be more accurately reflected if costs were tracked net of recoveries.

Steps to Reduce Overtime

· The 2002 Audit of Overtime Costs recommended that the branch increase its number of FTEs and decrease its absenteeism rate. Currently the branch’s absenteeism rate is 10.6 days/employee. The branch is still addressing a staffing shortfall. The Ottawa Paramedic Service will implement a recruitment strategy to hire spring 2007 paramedic graduates and improve the staffing complement.

· In the 2005 budget deliberations Council passed a motion, “that funding for paramedic overtime be reduced by $120,000 in 2005 and that these funds be applied to hiring the 20 new paramedics.” Twenty new paramedics were hired in January 2006. Overtime costs are expected to meet targets.

· Overtime policy and procedures have been implemented to reduce the incidence of overtime. Specific rules are built into the branch’s scheduling software (Telestaff) that controls the issuance of overtime in accordance with service levels.

The branch is also short of communications officers and has recently received authority from the province to hire additional staff. Communication Officer hiring is on going.

Ottawa Paramedic Services Overtime Reduction Target

There are no additional reductions made to the Ottawa Paramedic Service overtime budget as a result of this review.

Real Property Asset Management

Real Property Asset Management (RPAM) is responsible for the rationalization, design and construction, maintenance, security and life cycle renewal of the City’s real property portfolio. The branch provides property and facilities management services for over 900 buildings. In 2005, it had about 700 FTEs eligible for overtime. The branch spent $1.31 million for overtime, which represents an under expenditure of 14%. The average absenteeism is 7.77 days/employee.

The majority of overtime expenditures in this branch are non-discretionary. Expenditures are driven by:

Statutory holidays – Many of the City's facilities operate during the statutory holidays requiring a reduced, but mandatory staffing level to meet program requirements.
Unforeseen emergencies and staff – Annually, the branch responds to between 800-1000 after hour emergency calls to address a wide range of emergency situations such as fire, gas leaks, access problems, vandalism, water leaks or fire alarms. The branch has on-call staff ready to deal with such events. Staff replacements are required in situations such as holidays, sick leave, long term leaves, and temporary vacancies because of the need to provide a standard level of service at all facilities in support of program requirements (e.g. legislative inspections, basic housekeeping services, repairs, etc.).

Circumstances that lead to discretionary overtime within the branch include:

Fast tracking of special projects (e.g. P3 projects),
Project deadlines as determined by clients and/or Council,
Seasonal work which impacts project loads,
Event driven activities, (e.g. Lansdowne Park), and
After hour public meetings including meetings for Council, Standing Committees and Advisory Committees.

Other causes for overtime within the branch include corporate wide emergency responses (e.g. ice storm, electrical blackout, fires), and environmental cleanup projects (controlled emergency) that tend to run around the clock until finished.

The main recommendations of the 2005 audit of overtime were to continue its efforts to monitor and manage overtime within the limits of their established overtime budget, and require staff to provide rationale and justifications for the reason any overtime is claimed.

Steps to Reduce Overtime

· In response to the audit’s recommendations RPAM implemented a new process to track the specific causes of overtime using the Plant Maintenance module in SAP. The branch had already been using the module in its business practices. In addition consistent time tracking guidelines have been developed and time tracking has been implemented in most of the branch with the balance to follow in the near future.

· The branch has also made efforts to consolidate hours of operation through consultation with clients (e.g. arena usage).

· In an effort to minimize overtime costs a casual/part time pool of employees has been established who can, on short notice, respond to unforeseen leaves of absence.

· Staff replacement is controlled by authorization of the supervisor. Not all employees are replaced when not at work, only positions that must be filled for operational purposes.

· The overtime costs associated with special programming outside of agreed hours of operation are now recovered as part of the contract with the event organizer. If the overtime costs for these services were tracked against the recoveries the actual overtime expenses to the branch would be more accurately reflected.

RPAM Overtime Reduction Target

There are no additional reductions made to the RPAM overtime budget as a result of this review.

Traffic and Parking Operations

Traffic and Parking Operations branch is responsible for pavement markings, signage and road safety devices; traffic control signals; red light cameras; street lighting; parking operations; traffic safety, investigations, and studies; rights-of-way, permits, by-laws and inspections; and traffic network management. In 2005, it had about 258 FTEs eligible for overtime. About 60% of the overtime costs of this branch is recovered from external organizations.

Recovered Overtime

Much of the work the branch performs that causes overtime is work related to construction projects, developer projects and accidental damage repairs to City-owned assets such as traffic signals, traffic signs and street lighting. Often there are locations where work cannot be scheduled during the daytime due to the high volume of vehicles, pedestrians or transit vehicles so work is scheduled during non-peak hours for the safety of City employees as well as to convenience the public. Other work for which overtime expenditures are recovered occurs when the branch needs to meet deadlines related to development applications for site plan traffic reviews within the 90-day provincially mandated timeline. The costs are billed directly to and recovered from the developers and insurance companies. Actual overtime expenses to the branch would also be more accurately reflected if they were tracked net of recovery costs.

Other non-discretionary overtime expenditures within the branch are incurred to conduct repairs for non-scheduled failures of things such as burned out red lights, shorts in wiring, controller malfunctions, hydro failures, and storm damage. These emergencies must be addressed when they occur and result in overtime expenditures. After roadway repairs are conducted there is often a requirement to paint pavement markings as quickly as practical. This work is often done during evenings and weekends when traffic is lighter.

In addition, all of the branch’s road/traffic inspectors are required to rotate through an on-call schedule so that some one is available at all times to initiate a Traffic Incident Management Plan. An incident could be the result of a flooding, fatal collision, or a truck rollover on any road or highway in Ottawa. When these incidents occur, there is no discretion other than to attend the scene and initiate traffic detour plans.

Other reasons that the branch incurs overtime include:

Invitations to attend public consultations, in the evening, either as part of the normal consultation process or at the request of Councillors;
Special Events such as Winterlude or BluesFest that require signage or temporary signage to be prepared/erected outside of regular working hours;
Traffic Control Central Computer and Video Centre Operations operation during special events and hockey games at Scotiabank Place, which occur outside regular working hours.

Steps to Reduce Overtime

· The branch has implemented new shift times by changing a job description and is looking to do more of this for weekend work.

· It has begun to cross-train employees to have more staff available for peak periods of work.

· Some staff members are working within core hours but flex their start times depending upon the relevant collective agreement.

· Work is being done to document appropriate response times and to decrease the reliance on overtime.

· The branch is working to better align the staff complement to the level needed to undertake the work and to streamline the processing requirements to minimize workload as much as possible.

· An additional staff position was approved to deal with ongoing and significant overtime in the development review area. This was required to meet the City’s commitment to development application review timelines.

· The branch has undertaken some analysis to determine if the use of overtime is more cost effective than hiring additional FTEs. The conclusion was that overtime incurred for activities such as traffic operations (signals area), special events, and for completing the work for developer applications is a better alternative to hiring more staff.

Traffic and Parking Operations Overtime Reduction Target

There is no additional reduction made to the Traffic and Parking Operations overtime budget as a result of this review.

Infrastructure Services

The Infrastructure Services Branch is responsible for asset management of the municipal right-of-way infrastructure, managing the design and construction of new construction and rehabilitation projects and undertaking inspection and acceptance of developer constructed municipal infrastructure. In 2005 it had approximately 253 FTEs eligible to be paid overtime. The absenteeism rate in the branch is among the lowest in the City at 5.56 days/employee.

Overtime for the Infrastructure Services Branch is primarily related to the delivery of the Capital Program. The overtime incurred is directly proportional to the magnitude of the annual program. The majority of overtime is related to the construction management of various projects. During the construction season the regular hours of work for contractors is between 50-55 hours per week. Typically the City’s inspection staff is on site all day to oversee construction activities and mitigate any risk to the City. This results in overtime being worked.

The branch addresses the fluctuations in the number of incoming development inspections and approvals with the use of overtime rather than hiring additional FTEs. In addition, occasionally there are increased work loads in the general operating areas for work not related to capital programs such as engineering studies and requirements to attend meetings outside of the regular working hours that cause the branch to incur overtime expenses.

Steps to Reduce Overtime

The Infrastructure Services Branch is currently developing an Overtime Policy that will be implemented for 2007. In addition, the branch is currently conducting a Competitive Service Delivery Review (CSDR) that should provide strategies that may lead to a reduction in overtime expenditures. The CSDR will assess alternate methods for delivery of design and construction programs and recommend appropriate service delivery options. Benchmarking for the CSDR will be to the consulting industry.

Infrastructure Services Overtime Reduction Target

There is no additional reduction made to the Infrastructure Services overtime budget as a result of this review.

Fire Services

This branch has 977 FTEs eligible to receive overtime. In the last two years Fire Services has significantly reduced its overtime spending. Overtime expenses in 2003 were just over $2 million and in 2005 they were at just over $1 million, which was lower than it had budgeted. Overtime as a percentage of compensation is 1.2%.

Most of the overtime incurred in this branch is non-discretionary and is attributable to the collective agreement, which established the minimum staffing of a pumper vehicle at four (4) fire fighters and an aerial apparatus at three (3) firefighters. These factors, along with the number of stations, dictate a minimum staffing of 154 firefighters per shift. Maintaining this service level requires the use overtime.

Some discretionary overtime comes from fire prevention activities in the evening, but this overtime makes up very little of the total overtime. Some overtime is also used to cover staff leaves and unforeseen absenteeism such as bereavement days, sick days, modified work, and so on.

Recovered Overtime

Fire Services sometimes receives cost recoveries or revenue for some services it provides such as conducting recruitment testing, building inspections, fire investigations, title searches, and summary reports. The Ministry of Transportation of Ontario pays Fire Services a fee for responding to calls on 400 series highways depending upon the type of vehicle deployed. Some costs are recovered for overtime incurred as a result of attendance at special events and unforeseen activities where the City requires additional support (e.g. G8 meeting, dignitary visits, power outage). If overtime costs for these services were tracked against recoveries, the actual overtime expenses to the City would be more accurately reflected.

Steps to Reduce Overtime

Recommendations from the 2005 audit include:

· Modifying some staffing practices which necessitate changes to the collective agreement;

· Decreasing absenteeism due to sick leave; and

· Improving the time lapse in submitting leave/overtime forms.

The branch had initiated a number of actions prior to and since the audit.

· Management took the issue of paying overtime to the captain level and higher to the union and eventually to arbitration. The arbitrator ruled in favour of the union submission and consequently no overtime savings in that regard are available.

· Fire Services is strictly adhering to the City’s Attendance Improvement Program to reduce sick leave days and closely monitors all absences. Sick leave has decreased by approximately 32% since enforcement began in 2003 (15.88 days in 2003 and 10.79 in 2005).

· To address the recommendation to improve the time-lapse in reporting, forms are now put through as quickly as possible and missing timesheets are caught daily through the use of a daily report.

· The branch has documented policies and procedures that provide detailed guidelines for appropriate actions to the various circumstances that would require overtime. For example, in the Fire Prevention division, overtime is treated on a case-by-case basis, as night-time events all require the use of overtime. There is a certain amount of overtime that is budgeted for these situations and out-of-budget requests have been turned down in the past.

· Employees are trained on overtime procedures, which are also laid out on the overtime forms. The policies and procedures documents are located in every fire station.

· The branch uses an Excel spreadsheet to monitor closely all the reasons for overtime because SAP is not currently configured to track the reasons for incurring overtime. This process has greatly assisted decision-making. This data also supplements and validates the data stored in SAP.

Fire Services has done an analysis to determine if the use of overtime is more cost beneficial than hiring additional firefighters. The results indicated that the use of some overtime is indeed more cost beneficial, especially in the busy season from about May to September.

Fire Services Overtime Reduction Target

There are no additional reductions made to the Fire Services overtime budget as a result of this review.

Summary

The detailed branch-by-branch review conducted by Deloitte is the third analysis on the use of overtime since the City of Ottawa amalgamated in 2001. The findings from Deloitte illustrate that the City requires the use of overtime to deliver its 24/7 front line operations and to meet the mandated service levels. In many cases the use of overtime is the most cost effective way to provide services where demands fluctuate or are unpredictable, rather than to add additional FTEs to the payroll.

While management found $400,000 in reductions in the overall overtime budget for the City, they are unable to reduce overtime expenditures by the remaining portion of $3.5 million target directed in the Council motion if they are to provide the current services offered by the City of Ottawa at the mandated service levels.

FINANCIAL IMPLICATIONS

An overtime efficiency target of $3.5 million was included in the 2006 operating budget as adopted by Council. Based on the review conducted by Deloitte Consulting, $400,000 has been identified as being achievable in order to allow City operations to continue providing services at the current levels.

The remaining overtime target of $2.1 million (representing the original target of $3.5 million less the $0.4M of identified overtime savings and an additional $1 million worth of other compensation related efficiencies) will be carried over to 2007 budget as part of the Corporate Efficiency Target. The effect will be to increase this target by $0.3 million to $11.5 million in that the 2007 Budget Directions report had already incorporated $1.8 million as a carry-over of overtime savings not achieved.

SUPPORTING DOCUMENTATION

Appendix A - 2006 Branch-by-Branch Overtime Review from Deloitte Consulting dated
07 September 2006 (previously distributed to all members of Council and held on file with the City Clerk)

Appendix B - Table - 2006 Overtime Realignment

DISPOSITION

The respective branches to implement Council's directions with respect to the management of overtime, should such directions be given during the 2007 budget deliberations.

APPENDIX B

2006 Overtime Realignment

Overtime - 2006 Budget / Actual

	Actual	Budget	(Surplus) / Deficit

Govern Political Support	25,571	-	25,571
City Manager's Office	4,551	14,000	(9,449)
Office of the City Auditor General	12	-	12

Chief Corporate Services Offices	1,957	2,500	(543)
Client Services & Public Information	98,129	88,500	9,629
Financial Services	298,401	237,200	61,201
Real Property Asset Management	1,120,554	1,314,406	(193,852)
Legal Services	17,559	20,000	(2,441)
Information Technology Services	394,623	414,147	(19,524)
City Clerk's Services	653,283	450,078	203,205
Employee Services	59,907	100,000	(40,093)
Corporate Services	2,644,414	2,626,831	17,583

DCM Planning, Transit & the Environment	435	2,000	(1,565)
Building Services	188,172	325,000	(136,828)
BS-Other Permits & Compliance Reporting	669	-	669
Planning & Infrastructure Approval	121,413	107,000	14,413
Planning/Environment/Infrast/Policy	37,526	30,000	7,526
Economic Development & Strategic Project	92,455	12,000	80,455
Transit Services	9,903,222	9,470,075	433,147
Planning, Transit & the Environment	10,343,892	9,946,075	397,817

Committee of Adjustment	20,797	15,000	5,797

CPS Deputy City Manager's Office	1,183	2,500	(1,317)
Paramedic Service	1,518,541	1,658,777	(140,236)
By-Law Services	396,932	186,271	210,661
Office of the Emergency Management	7,729	4,941	2,788
Fire Services	1,417,890	1,144,832	273,058
Housing	48,598	60,000	(11,402)
Parks & Recreation	211,863	-	211,863
Public Health Budget	229,783	273,641	(43,858)
Employment & Financial Assistance	3,800	-	3,800
Cultural Services Community Funding	74,598	99,000	(24,402)
Long Term Care	103,425	75,000	28,425
Community & Protective Services Budget	4,014,343	3,504,962	509,381

Library Services	221,426	-	221,426


DCM Public Works & Services Office	20,989	39,000	(18,011)
Surface Operations	4,780,452	4,425,000	355,452
Traffic Operations	1,067,581	1,088,701	(21,120)
Waste & Drainage Services	346,556	458,827	(112,271)
Drinking Water Services	1,307,170	1,521,566	(214,396)
Solid Waste Services	189,268	178,820	10,448
Infrastructure Services	915,383	736,229	179,154
Fleet Services	3,062,053	2,445,000	617,053
Public Works & Services	11,689,452	10,893,143	796,309

Total	28,964,458	27,000,011	1,964,447

EXAMEN DES HEURES SUPPLÉMENTAIRES PAR DIRECTION DE LA VILLE D’OTTAWA

Key Findings from Deloitte’s Branch-by-Branch Overtime Review

Addressing Council’s Motion 47/82

Summary

Contexte

Principaux résultats de l’Examen des heures supplémentaires par direction de la firme Deloitte

Réponse à la motion 47/82 du Conseil

Résumé

The City Needs to Use Overtime to Deliver Services

Services on Statutory Holidays

Other Causes of Overtime

The City is Managing its Use of Overtime Very Well

Overtime as a Cost-Effective Way of Maintaining Service Levels

The City Is Improving Its Overtime Budgeting and Monitoring

Budgeting for Overtime

Policies and Procedures for the Management of Overtime

Tracking the Causes of Overtime