A PwC Romania analysis identifies 10 areas for increased efficiency in the expenditure structure of the Chamber of Deputies

Bucharest, 13 October 2011. The expenditure structure of the Chamber of Deputies is similar to that of other parliaments of the EU member states, yet there are some opportunities for increasing efficiency, shows a PwC Romania analysis.

"This is the first independent review of the expenditure structure of a major public institution. I am pleased that the PwC experts accepted to undertake such an analysis pro bono and I am confident that the main recommendations will be carefully analyzed by the leadership of the Chamber of Deputies to see how and when they could be implemented. This is an initiative that is in the benefit of the citizen as it will lead not only to cost savings, but also to an increased quality of the legislative process and improved administrative standards", stated Mihaela Stoica, PDL deputy from Neamţ county, the initiator of the project.

Following the cost reduction measures initiated by the authorities during the past two years, the total amount of effective payments made by the Chamber of Deputies decreased by almost 18%, from 246 million RON in 2008, to only 202 million in 2010. Out of these, the largest amount (70%) was related to human capital related costs, while expenses for buying goods and services amount to 23% and investments to just 7%.

The budget of the Chamber of Deputies divided by the number of MPs is approximately three times lower than the European average. Accordingly, expenses per Member of Parliament amounted in 2010 to 150,000 EUR as opposed to an EU average of 431,000 EUR per MP; while in Germany expenses reach over 1 million EUR per MP. Also, the annual cost for every citizen of financing the Chamber of Deputies budget is of 2.33 EUR; four times lower than the EU average of expenses of 8.29 EUR per citizen. However, the Chamber of Deputies budget counts for 0.21% in the overall state budget, almost double from the EU average of 0.13%.

„Our analysis identified several areas where efficiency improvements are possible, could lead to significant cost savings in the future years, and could generate processes optimization inside the institution, increase the productivity of employees and lead to a better definition and monitoring of the key performance indicators", stated George Dorobanţu, Manager, Advisory Services, PwC Romania, one of the authors of the report.

The PwC report proposes 10 areas for increased efficiency:

1. Separation of the administration of the Parliament Building

2. Renewal of the car fleet through operational leasing contracts

3. Increasing the efficiency of the document management processes

4. Centralizing the public procurement processes

5. Reducing the levels of slow moving stocks through sale

6. Implementing a system of ticketing for support activities

7. Efficient allocation of existing office space

8. Reducing the expenditure for utilities

9. Defining and implementing key performance indicators

10. Improving the efficiency of the budgeting processes

In regards to the document management process, the PwC analysis pinpoints that almost 90% of the documents processed in the Romanian public institutions are on paper format. Also, the representatives of the Chamber of Deputies estimate that 40% of the total employee workload is dedicated to managing documents.

Increasing the efficiency of document management could target two aspects: the introduction of an electronic document management system and the reorganization of the printing and copying documents into dedicated centres.

The PwC analysis estimates that the cost reduction resulting from lower paper consumption could reach up to 420,000 RON per year, while using exclusively economic equipment for printing and copying (dedicated centres), could lead to cost savings of up to 1 million RON per year (approximately 30% of the yearly expenditure for printing and copying documents).

Another area of improvement is the separation of the administration of the Parliament building from the leadership of the Chamber of Deputies and the Senate. A separate administrative structure will service all the institutions that operate in the building based on service level agreements that would have clear performance indicators. Also, the leadership of the two chambers of Parliament would be relieved of the administrative burdens and could dedicate their time entirely to the legislative process.

Using operational leasing for vehicle acquisitions would allow the Chamber of Deputies to renew its car fleet without initial capital expenditure, and could also lead to reducing the operating costs. According to the PwC analysis, the annual cost reduction resulting from the introduction of the operational leasing would exceed 100,000 RON, while switching to diesel equipped cars could also save up to 600,000 RON per year. Therefore, over a four year period, the cost reduction could amount to 3.4 million RON.

The analysis of the expense structure of the Chamber of Deputies was performed between January and May 2011, while the final report with PwC's conclusions was submitted to the leadership of the Chamber of Deputies by the end of May 2011. The areas for increasing efficiency identified in the report cannot be substituted for feasibility studies, therefore is of paramount importance to carry out more detailed analyses for the areas that will be found of interest and in the context of the strategy of the Chamber of Deputies.

"Our involvement in this project highlights PwC's constant preoccupation to provide functional solutions for increasing the efficiency of the public sector. This initiative is an important first step for Romania and we are confident that by multiplying such projects we can contribute to raising the performance standards of public institutions and to significant cost savings", concluded Dan Iancu, Partner, Advisory Services, PwC Romania.

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