Rework: Doing Double for Nothing and How to Fix It.

• Author: Kavanagh, Shayne
• Position: RETHINKING BUDGETING

About GFOA's Rethinking Budgeting Initiative

Local governments have long relied on incremental line-item budgeting, in which last year's budget becomes next year's with changes around the margins. In a world defined by uncertainty, this form of budgeting puts local governments at a disadvantage, hampering their ability to adapt to changing circumstances.

As we all know so well, the ability to adapt has become essential over the last two years--and will certainly remain so for some time. The premise of the Rethinking Budgeting initiative is that the public finance profession has an opportunity to update local government budgeting practices with new ways of thinking and new technologies to help communities better meet changing needs and circumstances. The Rethinking Budgeting initiative seeks out and shares unconventional but promising methods for local governments to improve how they budget, and how they embrace the defining issues of our time.

This issue of GFR looks at three key subjects underneath the umbrella of Rethinking Budgeting: rework, negotiation and persuasion, and equity and equality. The following three articles provide current perspectives as well as guidance on how local government finance professionals can put them into practice.

Rework is when you have to do a task over again because it was not done right the first time. This could add up to double the time needed to complete a task! Rework is a big problem for public finance officers. It ranked as the third largest source of wasted time in a poll conducted by GFOA. (1) In this article, we will explore how to prevent rework.

We can learn a lot about how to prevent rework from "Lean" (2) process improvement. Lean has been used successfully for decades in many industries, including government, to reduce waste in the workplace, including waste from rework. Lean teaches that preventing rework requires getting to the root cause of rework. According to Lean, the immediate cause of rework is "defects." A defect happens when incorrect or incomplete work is sent to the next step in the process or to the customer. Our goal should be to perform work right the first time. This can be achieved by designing and controlling the work process to deliver work that is free from defects, thereby eliminating rework. In this article, we will help you design your work process to reduce the probability of defects.

ERRORS VS. DEFECTS

An error only becomes a "defect" when the faulty work is passed on to the next step in the process and becomes a wrench in the works.

Let's start by defining our core principles for reducing defects:

1. You cannot inspect your way to quality. Inspection or "quality assurance" is not a good solution to defects because our goal is for work to be done right the first time. According to Lean, inspections are a waste because they cost more than doing the work right the first time. Inspections add time to a task and any mistakes caught have to be corrected, which is still rework.

2. To err is human, but defects are avoidable. People are not perfect. They will sometimes commit an error. This is unavoidable. However, an error only becomes a "defect" when the faulty work is passed on to the next step in the process and becomes a wrench in the works. Our goal is not to eliminate human error [which will never happen] but prevent errors from becoming defects by providing feedback and action at the point of an error. For example, if the gallons of water consumed by a utility account are entered incorrectly into the billing system, that is an error. It becomes a defect when an incorrect water bill is sent to the customer. (3)

3. We can design error- or mistake-proofing mechanisms. Systems can be designed to reduce the probability of a defect. Error-proofing mechanisms can either: A) detect the error when it occurs and alert a person who can fix it or B] prevent the error from becoming a defect. To continue our utility billing example, a preventative error-proofing mechanism is automated meter reading that eliminates the need for a person to type the...