consulting expenditure in public administration · source: estimates on data base “operazione...

Consulting Expenditure

in Public Administration

Giovanni Colucci

Public Sector Coordinator

Rome, 20 June 2013

Rome, 20 June 2013

Consulting Expenditure in Public Administration

Consulting Expenditure in PA: 3 main segments

“Above-threshold tenders”

(ICT included )

“In House”

Companies

“Assignments under threshold”

3,500 M€ (ICT)

250 M€ (Consulting)

10,000 employees

(first 20 “In House”

enterprises in Italy) 1,500M€

Source: internal estimates

(2012)

Source: internal estimates

(2012) Source: estimates on data base

“Operazione Trasparenza”, Ministry

of Public Administration and

Innovation (2012)

Not easy questions to answer:

1. What is the total expenditure in Consulting in the PA?

2. How much expenditure is allocated on public evidence tenders?

3. How much expenditure is allocated to improve organization and

process automation?

2

Rome, 20 June 2013


Period: Year 2010 Year 2011

Total amounts € 1,238,561,127 € 689,643,008

“Active” assignments 363,937 209,995

Beneficiaries

(individuals and enterprises) 205,039 133,361

Type of represented information: Assignments by national and local Public Administration to consultants

Data sources:

Estimates of Assoconsult on database “Operazione Trasparenza”, Department of Public

Administration and Innovation (2011).

http://www.innovazionepa.gov.it/lazione-del-ministro/operazione-

trasparenza/presentazione.aspx

Assignments as from “Operazione Trasparenza” (source: Department of Public Administration and Innovation)

3

Rome, 20 June 2013


Mandates assigned to individuals (2010 and 2011) count around 85% in value of the total expenditure

Assignments as from “Operazione Trasparenza”

Individuals vs Enterprises – Total Amount

€/Mln 583

84.6%

€/Mln 106

15.4%

Values in €/Mln

689

Total in €/Mln

Values in €/Mln

1,238

Total in €/Mln

€/Mln 1,049

84.7%

€/Mln 189

15.3%

Year 2010 Year 2011

4

Individuals Enterprises Individuals Enterprises

Rome, 20 June 2013



Individuals vs Enterprises – Numbers of assignments

Mandates assigned to individuals (2010 and 2011) count around 88% in number of the total expenditure

Persone fisiche Società

184,431 (num)

87.8%

25,564 (num)

12.2%

Number of Contracts

209,995

Total contracts

Number of Contracts

363,937

321,889 (num)

88.4%

42,048 (num)

11.6%

Total contracts

Year 2010 Year 2011

5

Individuals Enterprises Individuals Enterprises

Rome, 20 June 2013


189

322

547618 646 662 690

0

100

200

300

400

500

600

700

800

<5 <10 <25 <50 <100 <500 Totale

€M

ln

Soglie importi erogati (valori €/000)

Amount in €/Mln

(cumulative values)

89.6 % of the

total amount


ABC Analysis – Size of assignments/ amount

Assignments under €50,000 represent the majority of the total amount

(2011:about 90%; 2010: about 89%)

Amount in €/Mln

(cumulative values)

312

518

907

1.098 1.179 1.225

1.238

-

200

400

600

800

1.000

1.200

1.400

<5 <10 <25 <50 <100 <500 Totale

€M

ln

Soglie importi erogati (€/000)

88.7 % of the

total amount

Year 2010 Year 2011

312

518

907

1.098 1.179 1.225

1.238

-

200

400

600

800

1.000

1.200

1.400

<5 <10 <25 <50 <100 <500 Totale

€M

ln


88,7 % del totale

importo erogato

312

518

907

1.098 1.179 1.225

1.238

-

200

400

600

800

1.000

1.200

1.400

<5 <10 <25 <50 <100 <500 Totale

€M

ln


88,7 % del totale

importo erogato

6

Threshold amount (€/000) Threshold amount (€/000)

, , , ,

Rome, 20 June 2013



ABC Analysis – Size of assignments/ numbers

Assignments under €5,000 are the main way to engage consultants

302.254

29.247 25.204

5.680 1.246 290 16 -

50.000

100.000

150.000

200.000

250.000

300.000

350.000

<5 5-10 10-25 25-50 50-100 100-500 >500N

umIntervalli importi erogati (valori in €/000)

N° of Contracts

173.411

18.944 14.950

2.161 430 93 6 -

50.000

100.000

150.000

200.000

<5 5-10 10-25 25-50 50-100 100-500 >500

Num

Intervalli importi erogati (valori €/000)

N° of Contracts

Year 2010 Year 2011

173.411

18.944 14.950

2.161 430 93 6 -

50.000

100.000

150.000

200.000

<5 5-10 10-25 25-50 50-100 100-500 >500

Num


173.411

18.944 14.950

2.161 430 93 6 -

50.000

100.000

150.000

200.000

<5 5-10 10-25 25-50 50-100 100-500 >500

Num


7

Threshold amount (value €/000) Threshold amount (value €/000)

,

, ,

,

,

, , , ,

Rome, 20 June 2013



Analysis of Expenditure – Type of Consultancy

80.7% of the assignments refers to health-medical services, technical consultancy,

teaching and training, design/engineering/maintenance consultancy,

study & research activities, legal advice and assistance

17.8% 14.0% 12.9% 11.6% 5.3% 3.9% 3.8% 2.6% 1.8% 1.2% 1.0% 5.0% 19.1%

% on total amount

294260

233

200 195

83

49 48 4730 23

73

24

81%

96%

73%

88% 88%

80%87% 85%

78%

87%95%

85%80%

92%

0%

20%

40%

60%

80%

100%

0

50

100

150

200

250

300

350

400

%

€/M

ln

Importo erogato in €/Mln

Incidenza % Persone fisiche su totale soggetti incaricati

139

123

114

80 78

33

24 24 16

11 8 7

32

92%95%

81%77%

94%

78%

89%

84% 86%

94%

67%

97%

85%

0%

20%

40%

60%

80%

100%

-

20

40

60

80

100

120

140

160

%

€/M

ln

%

131

123

96 89

80

37

27 26 18

12 9 7

34

95%

81%

94%

77%

94%

77%

89%84% 85%

94%

67%

97%

84%

0%

20%

40%

60%

80%

100%

-

20

40

60

80

100

120

140

80.7% of mandates in value

8

Amount in €/Mln

% Individuals vs enterprises

Rome, 20 June 2013


The analysis refers to calls for tenders published by the Public Administration (Central Public Administration and Local

Public Administration) in 2011 and 2012

Note:

─ Monitoring on public tenders at national level has been recently established by AVCP

─ All Public Administrations must cooperate with AVCP by transferring all the relevant infos

─ Cat. 11 refers to consulting services

─ Cat. 7 refers to ICT services as the main object even if it includes some consulting services

9

Market analysis on tenders (source: estimates from AVCP - Authority for the Supervision of Public Contracts)

Rome, 20 June 2013


10

Market analysis on tenders

Trend 2011-2012

Amount Average amount

4.876.260

440.171

5.316.431

3.964.728

285.161

4.249.889

- 19%

- 35%

- 20%

- 40%

- 35%

- 30%

- 25%

- 20%

- 15%

- 10%

- 5%

0%

-

1.000.000

2.000.000

3.000.000

4.000.000

5.000.000

6.000.000

Cat. 7 Cat. 11 Total

To

tal am

ount (

K/e

uro

)

2011 2012 Delta

724

400

678 694

322

644 - 4%

- 19%

- 5%

- 25%

- 20%

- 15%

- 10%

- 5%

0%

-

100

200

300

400

500

600

700

800

Cat. 7 Cat. 11 Average amount

Avera

ge a

mount (

K/e

uro

)

2011 2012 Delta

Both ICT and Consulting markets experienced a strong decrease in volume from 2011 to 2012

(around 20% for ICT; 35% for Consulting)

Contracts > 40k Euro

Rome, 20 June 2013



Trend 2011-2012 – Size of tenders for Cat. 7 (ICT)

Amount

2011 2012 Delta

445.227 303.795 262.680

800.137 941.585

2.122.836

385.318 260.999 225.443

694.572 821.582

1.576.814

- 13% - 14% - 14% -13% -13%

-26%

- 30%

- 25%

- 20%

- 15%

- 10%

- 5%

0%

-

500.000

1.000.000

1.500.000

2.000.000

2.500.000

To

tal am

ount (K

/euro

)

>= 40.000 <

200.000

>= 200.000 <

500.000 >= 500.000 <

1.000.000

>= 1.000.000 <

5.000.000

>= 5.000.000 <

20.000.000

>= 20.000.000

11

Relevant decrease can be seen in all ICT tenders in every range of amount

Rome, 20 June 2013



Trend 2011-2012 – Size of tenders for Cat. 11 (Consulting)

12

Tenders in the small-medium range (between 200kE and 1ME) experienced a strong reduction.

Also tenders above 1ME count relevant decrease in the total amount (-43%, -120 MEuro)

Amount

2011 2012 Delta

76.104

40.974 35.669

115.902

75.597

95.925

61.103

38.531

20.987

117.481

26.859 20.200

- 20% - 6%

- 41%

1%

- 64%

- 79%

- 90%

- 80%

- 70%

- 60%

- 50%

- 40%

- 30%

- 20%

- 10%

0%

10%

-

20.000

40.000

60.000

80.000

100.000

120.000

140.000

To

tal am

ount (K

/euro

)

>= 40.000 <

200.000

>= 200.000 <

500.000 >= 500.000 <

1.000.000

>= 1.000.000 <

5.000.000

>= 5.000.000 <

20.000.000

>= 20.000.000

Rome, 20 June 2013



Trend 2011-2012 – Type of contracting authority (cat. 7 and 11)

13

Some subsectors are stable (utilities, local gov.), some others are suffering strong reduction (central

administration, healthcare, public companies, central procurement agencies, welfare entity, …)

1.109.828

321.219 447.978

693.753

616.133

68.285

565.287

41.576

524.401

67.019 146.369

615.297

99.287

1.084.590

270.599

487.433

676.107

463.624

52.714

225.325 303.772

243.804

74.407 8.239

244.053 115.223

- 2%

- 16%

9%

- 3%

- 25%

- 23%

- 60%

631%

- 54%

11%

- 94%

- 60%

16%

- 200%

- 100%

0%

100%

200%

300%

400%

500%

600%

700%

-

200.000

400.000

600.000

800.000

1.000.000

1.200.000

To

tal am

ount (K

/euro

)

UTILITIES HEALTH-CARE

REGION /MUNICIPALITY PROVINCE…

MUNICIP./ REGIONAL/ IN HOUSE COMPANY

CENTRAL ADMINISTRAT.

EDUCATION/ RESEARCH...

PUBLIC COMPANY

TRANSPOR TATION

CENTRAL PROCUREMENT

AGENCY

TELEC. AGRICOLT. ENTITY

WELFARE ENTITY

OTHERS

2011

2012

Delta

Amount

Rome, 20 June 2013


“In House” Companies

There are no specific sources that provide accurate figures of the “In-House” phenomenon.

Some estimates can be made on the basis of numbers of employees.

“IN HOUSE” Entities All “Consulting” Enterprises

10,000 Employees

(First 20 enterprises

in Italy)

• 34,000 Employees

• 3,000 M€ Market Value

Sources: Assoconsult

estimates (2011)

Sources: Assoconsult

observation (2011)

Activities directly managed by “IN HOUSE” entities is relevant and

can be estimated at around 50% of the value of ALL the “Consulting Market” (both PA and Private)

14

Rome, 20 June 2013


Final remarks

1. At a glance: the public demand is rapidly decreasing due to the spending review

2. A key issue is about reputation of “consulting” services

3. There is an issue on quality of spending (spending too fragmented, consultancy fees even more

lower, poor result-based initiative, etc.)

4. There is still a very large quota of demand (“IN HOUSE” and assignments under threshold) not

expressed through public tenders

5. Rates are experimenting an even stronger competition due to the large offer at disposal

6. To boost the public demand (together with new ideas and innovative projects) European

Commission structural funds could represent an opportunity

15

Rome, 20 June 2013


Trend 2007-2011

Tender amount (Mln €) Year

Service Category 2007 2008 2009 2010 2011 Gross total

ICT Services 1,432.29 591.11 641.63 537.57 299.16 3,501.76

Consulting 104.09 316.03 390.83 260.47 119.19 1,190.62

Advertising Services 237.13 67.81 108.00 110.82 174.45 698.22

Training 51.13 19.04 20.15 18.69 60.95 169.97

Architecture & Engineering 7.51 14.88 2.30 4.02 0.00 28.72

Gross Total 1,832.16 1,008.87 1,162.92 931.58 653.75 5,589.28

Tender Amount (Mln €) Year

Category 11 - Consulting 2007 2008 2009 2010 2011 Gross Total

Technical Assistance 32.99 234.92 191.61 128.26 55.68 643.46

Management Consulting 64.07 68.98 131.19 118.66 61.55 444.45

Other 7.03 12.13 68.03 13.56 1.95 102.71

Total 104.09 316.03 390.83 260.47 119.19 1,190.62

16

Rome, 20 June 2013


Index Chart: Consulting Market Trend (Year 2009=100)

17

140.00%

120.00%

100.00%

80.00%

60.00%

40.00%

20.00%

0.00%

Technical assistance

Management consulting

Other

Total

consulting expenditure in public administration · source: estimates on data base “operazione...

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