For discussion EC(96-97)51
on 16 January 1997

ITEM FOR ESTABLISHMENT SUBCOMMITTEE
OF FINANCE COMMITTEE

HEAD 62 - HOUSING DEPARTMENT
Subhead 003 Recoverable salaries and allowances

Members are invited to recommend to the Finance Committee the creation of the following permanent posts -

    1 Deputy Director of Housing
    (D4) ($135,800 - $139,950)

    1 Deputy Director of Accounting Services
    (D3) ($119,650 - $126,800)

    1 Principal Executive Officer
    (D1) ($86,650 - $91,950)
    to be offset by the deletion of the following permanent post -

    1 Assistant Director of Accounting Services
    (D2) ($102,900 - $109,250)

PROBLEM

The senior directorate structure of the Housing Department (the Department) needs strengthening in order to provide the leadership and management attention necessary to cope with the expanding range of responsibilities and scope of activities arising from the physical growth of estates under management, the rising expectations of the community for more and better services, the continuing pressure to build more quality rental and home ownership flats, and the implementation of a comprehensive programme of internal management reform collectively known as the Management Enhancement Programme (MEP).

2. In addition, the existing ranking of the Assistant Director/Finance no longer reflects the scale and diversity of the financial operations of the Department and is not commensurate with the enhanced role and responsibilities of the post.

PROPOSAL

3. We propose to -

  1. create one permanent post of Deputy Director of Housing (D4) to effect the splitting of the existing Deputy Director/Housing Management and Works (DD/HMW) post (D4) into Deputy Director/Housing Management (DD/HM) (D4) and Deputy Director/Works (DD/W) (D4) to strengthen the senior management of the Department;
  2. create one permanent post of Principal Executive Officer (D1) to provide directorate support for the implementation of the MEP; and (D1) to coordinate the Management Enhancement Programme (MEP) of the Department; and
  3. upgrade the existing post of Assistant Director/Finance (AD/F) (D2) to the rank of Deputy Director/Finance (DD/F) (D3) to more truly reflect the enhanced role and responsibilities of the post.

JUSTIFICATION

(a) Splitting of the post of DD/HMW

4. As a result of the last re-organisation of the directorate structure of the Department in March 1994, the Deputy Director/Housing Management and Works has a heavy responsibility overseeing four operational branches of the Department, covering new development, maintenance and construction services, estate management, and housing administration respectively. They involve over 13 800 staff in 57 grades.

5. Since then, the Department has initiated a large number of reforms and initiatives. These include a major overhaul of maintenance operation, business process re-engineering in the New Development and Maintenance and Construction Services Branches, the formulation and implementation of policies aimed at a more rational allocation of public housing resources, and new policies arising from the Home Ownership Scheme (HOS) review. Responsibility for the co-ordination and organisation of these reforms has rested largely with the DD/HMW. At the same time, the DD/HMW has become increasingly involved in directing and initiating new policies and organisational changes in the four operational Branches, reaching out to tenants and concern groups, attending meetings of the Housing Authority (HA) and its eight committees, and dealing with Legislative Council businesses. It has become increasingly clear that any advantage achieved through focusing coordination in a single senior Deputy is offset by a bottleneck effect. It is also clear that the implementation of initiatives already under way together with new ones coming on stream will be beyond the ability of any single individual to handle. The reforms require intensive policy input and firm direction if they are to succeed. The following paragraphs illustrate the scale of work involved.

6. In the area of new development, the pressure remains as relentless as ever. Meeting production targets has always required high level attention in monitoring progress of construction programmes and industry trends. However, as planning and public consultation processes become more sophisticated and as environmental and other standards rise, it requires still closer supervision required to avoid slippage. These pressures are likely to be exacerbate in the present planning period as a result of the bunching of production of new units towards the end of the decade. In addition, rising public expectations for better quality and the demand for new designs to complement standard blocks, for example single aspect blocks, housing for senior citizens, small household blocks, annex blocks and interim housing, all add to the demands on the New Development Branch.

7. The Branch is currently staffed to handle an average production of 35 000 flats per annum. This is some 17% below the target production over the next five years and the Department has engaged consultants to cope with part of the excess workload. The Department has also commissioned business re-engineering studies to strengthen project management, cost control and on-site quality control, and to streamline procedures, so as to increase output and productivity in a cost-effective manner.

8. In the maintenance field, the Department relies largely on contractors. This is a heavy responsibility given the growing size and increasing age of the housing stock on the one hand, and rising expectations for speedier response to maintenance requests and good workmanship on the other. Building on the recent reform of its delivery operations, the Maintenance Division has embarked on a major review of its maintenance programme, procurement strategies and procedures, contract administration and performance assessment system, and service culture. The aim is to improve the standard and efficiency of services, and to inculcate among contractors and staff a proper customer orientation.

9. As regards housing administration and estate management, the Department has introduced a number of important initiatives in the past year. These include the phased establishment of Estate Management Advisory Committees in each of the 167 public rental housing estates, pilot schemes for the privatization of estate management, the contracting out of the management of commercial centres, the continuous roll-out of the enhanced minor maintenance system to rental estates, the review of the HOS, the introduction of the charging of market rents for better-off tenants, publication of tenants’ rights and responsibilities, etc. These will require monitoring and review.

10. In addition, we will publish the Long Term Housing Strategy Review for consultation later in the year. We anticipate that this will require a special response and follow-up by the HA and its committees, and will involve input from most, if not all, of the different bBranches of the Department.

11. The span of control of DD/HMW and the large number of new initiatives which will require leadership and attention at the senior level is beyond the scope of one person to cope with.deputies to heads of some major organisations in both the private and public sector, the current support at that level in the Department is obviously thin. A list of these corporations is at

12. Given the increasing complexity, importance and magnitude of DD/HMW’s duties, we propose to split the post into two, to be designated as DD/HM to look after estate management and housing administration aspects, and DD/W for new works, maintenance and construction services. We will create an additional One permanent post of Deputy Director of Housing (D4) to effect the proposed changes. The job descriptions for the posts of DD/HM and DD/W are in Enclosures 1 and 2.

(b) Creation of a Principal Executive Officer post

13. As outlined in foregoing paragraphs, the Department has introduced a large number of initiatives to improve the quality and efficiency of its services. In addition, the Department has embarked on the MEP. Under this umbrella, the Department is developing a clear vision of the mission, core values, strategic direction, and an overall business plan of the Department.

14. The MEP master plan currently being developed by the Department consists of four components, covering corporate planning, service delivery and standards, culture, and communications. The MEP will thus serve as the roadmap towards achieving an enhanced profile which is mission-driven, customer-focused, and performance-oriented. A list of the current MEP projects is at Enclosure 3.

15. In view of the size and coverage of the MEP, there is a need to establish a framework to review the nature of MEP linked initiatives, classify them logically, and develop a timetable and infrastructure to take the programme forward in an effective, efficient and co-ordinated manner. While the Chairman of HA and Chairmen of other committees will provide overall direction on strategic and policy matters of the MEPother Cc, it will be the responsibility of an Executive Steering Committee, chaired by the Director of Housing to oversee its implementation.

16. The Deputy Director/Administration (DDA) will assume the role of the Programme Director for the MEP. She will assist the Executive Steering Committee in the formulation of long-term strategies at the corporate level, co-ordinating and integrating various initiatives and the Project Teams formed to carry them out, establishing milestone targets and performance measures, as well as enhancing internal communication on the programme.

17. The Department has created a six-month supernumerary PEO (D1) post been created under delegated authority to prepare the ground for the MEP. Now that the decision has been taken to proceed with the programme, D of H proposes the creation of a dedicated permanent PEO post, departmentally designated as PEO/MEP, to provide full-time assistance to the Programme Director in managing the MEP. The job description for the proposed PEO/MEP post is in Enclosure 4.

18. D of H considers that the current workload of DDA is such that he could not reasonably expect the officer to shoulder the work arising from the MEP unaided. DDA is directly responsible for human resource management reform and information technology development which are two key areas of activities of the Department. The work on the development of a new human resource management strategy which emphasizes performance management through competency profiling, training, fair appraisal, recognition of good performance, and staff incentive is expanding rapidly. A full list of the responsibilities of DDA is at Enclosure 5.

(c) Upgrading of the post of AD/F

19. HA is unique amongst large public sector organisations in that it has substantial operations in all the four major financial areas of work i.e. income, recurrent expenditure, capital expenditure and Treasury (funds) management. The combined annual revenue and expenditure are approximately $60 billion, with funds under management of $25 billion to $30 billion (annual turnover is well over $100 billion). HA is financially autonomous and independent from the Government and as a result, the Finance Division of the Department now carries financial responsibilities which are not only almost unique in the public sector but also comparable to those of very large private sector organisations.

20. In recent years, HA has given increasing emphasis to financial advice and information, evaluation and value for money. The Finance Division has therefore assumed a much greater strategic and planning role than previously and is now routinely required to comment on and vet all committee papers with financial implications. In addition, AD/F has been personally tasked to direct a wide range of in-house financial initiatives and oversee the consultancy studies on financial management framework, risk management and insurance policy, and directs the implementation of resulting recommendations. AD/F thus provides high level inputs on financial implications in policy formulation, carries out business viability studies on commercial operations and works closely with senior management in developing financial objectives.

21. Over the last few years, the Finance Division has put in place Authority’s HA’s own Financial & Accounting Regulations, Accounting Policies and other financial manuals with the objective of maintaining high quality financial management. AD/F’s role and responsibilities have increased significantly as a result of these initiatives, as has HA’s reputation for good financial management.

22. At the operational level, there has been a substantial increase in the volume of monies and transactions handled which necessitates larger and more sophisticated financial management techniques and systems. Considerable progress has been made over the last two years in developing the Financial Budgeting, Forecasting and Modelling System (FBFMS), Cash and Funds Management System (CFMS), Stock and Inventory Control System (SICS), Home Purchase Loan Scheme System (HPLSS), Fixed Assets System (FAS), estate operating accounts, contract subsystem etc. All these require high level policy input and direction from AD/F.

23. As mentioned above, by virtue of the amount of available funds, HA has become the second largest institutional investor in Hong Kong and is the largest investor in the HK dollar fixed income market. Much of the day-to-day investment decisions are delegated to AD/F, within policies and guidelines approved by the Finance Committee of HA. AD/F is also required to carry out high-level negotiations with the senior officers of Hong Kong Monetary Authority, the Government and local and international banks.

24. To reflect the enhanced role and responsibilities of AD/F and the personal qualities and stature required of the incumbent, D of H proposes to upgrade the post to Deputy Director/Finance, the job description for which is in Enclosure 6.

25. The existing and proposed organisation of the Department are shown in Enclosures 7 and 8.

FINANCIAL IMPLICATIONS

26. The additional notional annual cost of the proposals at mid-point salaries is :



$

No. of Posts


New permanent post

4,228,200

3

Less

Permanent post

1,273,200

1



___________

___


Additional cost

2,955,000

2



___________

___

The annual average staff cost, including salaries and on-costs, is $5,122,363. In addition, the proposals will necessitate the creation of two additional non-directorate posts (a SPS and a PSII posts) at the notional annual mid-point salaries of $502,860 and a full annual average staff cost of $857,352. We will recover the fullse amounts from HA.

BACKGROUND INFORMATION

27. The HA owns and manages some 660 000 public rental flats and supervises the management of some 220 000 HOS/PSPS flats. It builds on average about 45 000 flats a year. The Department is the executive arm of HA. It is organised into an Administration Branch and four operational branches, covering Estate Management, Housing Administration, Maintenance and Construction Services, and New Development. Each of the operational branches is headed by a Senior Assistant Director (SAD) who is ranked at D3.

28. Members approved the current directorate structure in March 1994 by the creation of two SADs, offset by the deletion of one Deputy Director of Housing and one Assistant Director posts. The intention then was to improve coordination among the four operational branches by placing them under one Deputy Director. The re-organisation also removed the disparity in the ranking of the operational branch heads in the previous setup where there were two SADs and two ADs.

CIVIL SERVICE BRANCH COMMENTS

29. The Civil Service Branch supports the proposal to strengthen the senior directorate structure of the Housing Department to enable the Department to meet its commitments. The grading and ranking of the proposed posts are appropriate having regard to their duties and responsibilities.

ADVICE OF THE STANDING COMMITTEE ON DIRECTORATE SALARIES AND CONDITIONS OF SERVICE

30. The Standing Committee on Directorate and Conditions of Service has advised that the grading proposed for the post would be appropriate if the posts were to be created.

Housing Department
January 1997
(E5467/WIN95)

Enclosure 1 to EC(96-97)51

Job Description -- Deputy Director/Housing Management

Rank : Deputy Director of Housing (D4)

Responsible to : Director of Housing

Duties and Responsibilities

  1. To oversee the activities of the Estate Management and Housing Administration Branches.
  2. To develop public housing policies, and monitor the implementation of the Long Term Housing Strategy in relation to the sale, allocation and management of public housing and the new rental housing HOS and redevelopment programmes.
  3. To direct and initiate policies on estate management and housing administration matters and to recommend changes where appropriate.
  4. To monitor and implement rent and pricing policies taking into account the Housing Authority’s financial and social objectives.
  5. To maintain overall budgetary control of expenditure on estate management, Home Purchase Loans and minor maintenance works, and be responsible for submission of annual estimates and five-year forecasts of expenditure in respect of the Estate Management and Housing Administration Branches.
  6. To ensure the effective deployment of staff resources and cultivation of staff commitment and customer-oriented culture; to direct and monitor the re-engineering of various estate management and housing administration processes for effective delivery of service.

Enclosure 2 to EC(96-97)51

Job Description -- Deputy Director/Works

Rank : Deputy Director of Housing (D4)

Responsible to : Director of Housing

Duties and Responsibilities

  1. To oversee the activities of the Maintenance and Construction Services, and New Development Branches.
  2. To develop construction and maintenance policies and strategies, and monitor the implementation of the Long Term Housing Strategy in relation to new public housing production and the maintenance and reuse of existing stocks.
  3. To direct and initiate policies on new development and maintenance matters and to recommend changes where appropriate.
  4. To oversee the implementation of construction and maintenance programmes and monitor its achievement of quality targets.
  5. To maintain overall budgetary control of expenditure on construction programmes and maintenance works, and be responsible for submission of annual estimates and five-year forecasts of expenditure in respect of the Maintenance and Construction Services and New Development Branches.
  6. To ensure the effective deployment of staff resources and cultivation of staff commitment and customer-oriented culture; to direct and monitor the re-engineering of the construction and maintenance processes for effective delivery of service.

Enclosure 3 to EC(96-97)51

Initiatives already identified under the MEP

(a) Corporate Planning and Strategy

• Development and communication of vision, mission and core values

Draft vision, mission, core values and key strategies have been prepared and communicated down to the professional level through a series of seminars. A directorate workshop to bring out the meaning of the vision, mission and core values has also been organised in August. Similar workshops will be conducted for the senior professionals in September and October. The LTHS Review will provide a strategic direction for HA. More work is needed to develop the corporate objectives, targets and performance measurements to be input into the Corporate Information System (CIS).

• Financial objectives

The final consultancy report on Financial Management Framework has suggested some financial objectives. These draft objectives will be discussed at a workshop session of the Finance Committee in October, with a view to formalising the objectives for the approval of HA and the Government.

• Financial Management Framework and Review of Financial Information Requirements

Work of the stage 1 review of IFAS and financial information requirements have been completed. For stage 2, detailed studies on recommended option has started.

• Corporate Information System

The Executive Information System (EIS) and Estate Accounts Systems (EAS) are being developed to enable better monitoring of performance. The EIS will have to be modified to provide high level and consistent corporate information for planning and performance monitoring purposes.

• Risk Management

Approval to set up the Comprehensive Insurance Programme and an Insurance Fund was obtained.

(b) Service Delivery Strategy

• New Works Business Process Re-engineering

A consultancy study has been conducted. The consultants have made recommendations to streamline the approval process, to enhance project management capabilities, to increase financial awareness and cost control, to improve total quality, and to maximise efficiencies from information technology.

• Maintenance Division Management Transformation

The four pillars of the transformation programme are work procurement, project administration, standards and development, and customer service. The ultimate objective is to change the culture within the Maintenance Division and among contractors with a view to providing quality maintenance service. A steering group has been set up to oversee the transformation and to monitor progress and effectiveness. "Quick wins" have been identified for early implementation, and training is in hand to promote staff awareness.

• Process redesign in Estate Management Offices

A major review of the processes and procedures in estate management offices is being carried out by a multi-disciplinary team led by the Management Services Division. The aim is to identify opportunities for efficiency gain, and to devolve responsibilities as far as possible. The study is expected to take about a year.

• Monitoring and allocation of public rental flats

The processes for taking over new flats, refurbishment of vacated flats, and the allocation of rental units have been reviewed. The aim is to identify the key processes, delineate authority and accountability, and improve process management. The ultimate objective is to reduce the overall vacancy rate and improve the quality and consistency of statistics on the housing stock and the vacancy rate.

(c) Culture Change

• Customer service culture

Customer service training is being planned for three pilot sites. Following review of the pilot training, full scale customer service training for front-line staff will be launched. Seminars and focus group meetings to support the launch of Tenant’s Rights and Responsibilities are underway.

• Competency framework for HRM

A competency framework is being developed to integrate various HRM functions and to align staff behaviors with HD’s core values and management practices. Core competency profiles have been established for the HM grade and competency-based assessment methods are being piloted for the recruitment of HOs. Further applications of the framework to other staff groups are under consideration.

• People Development & Training

To provide enhanced training services and development opportunities for staff to meet performance requirements, a unified training and development structure has been created with relevant training committees and board established to assess and plan training needs for different staff groups. Training and Development strategies are being developed to cover vocational, management, communications, language and computer training. New programmes are being planned for staff to support various management initiatives.

• Performance Management

The objective is to communicate to staff the department’s expectation and preferred practices, to address under performance and to improve individual and collective performance. Performance management linkage with competencies development and strategic departmental objectives is under consideration within the competency framework for HRM. The people development role of managers is being emphasised in new training programmes. A ‘Staff Management Manual’ has been issued and ‘Code of Conduct’ is under preparation. Working groups have been formed to set work standards.

• HRM systems and strategies development

An HRM development team has been established to improve communication among related functions and plan HR strategies and initiatives, which include streamlining administrative procedures; developing a HR information system; improving recruitment and appointment processes; and developing staff incentive schemes.

• Staff alignment and communication

To align staff with the department’s vision, mission and core values, a departmental induction programme has been developed for new recruits. Management briefings and follow-up programmes are being planned to support the MEP. The Induction Programme for HO recruits is under review to better prepare them for their duties and the new service culture.

(d) Communications

• Corporate image-building and community relations strategy

There is a need for HA/HD to reach out more to various sectors of the community and to be more open, transparent and accountable. A more systematic and comprehensive strategy for image-building and publicity will be developed once the action plan to communicate the vision, mission & core values is finalised.

Enclosure 4 to EC(96-97)51

Job Description -- Principal Executive Officer/Management Enhancement Programme

Rank : Principal Executive Officer (D1)

Responsible to : Deputy Director/Administration

Duties and Responsibilities

  1. To steer departmental efforts towards the MEP and to map out strategies to maintain the momentum.
  2. To assist the top management in reviewing the corporate strategies and stipulating specific measures and targets to support the respective strategy.
  3. To plan and manage the continuous dissemination of the vision, mission and core values of the Department to staff at all levels.
  4. To act as the focal point for the co-ordination of all MEP initiatives at the corporate level and to ensure smooth integration of various project activities.
  5. To manage the progress of the programme, review performance against targets and milestones, identify ‘gaps’ and recommend further improvement measures.
  6. To provide executive support to the MEP Steering Committee and MEP Co-ordinating Committee, including preparing progress reports on a regular basis.

Enclosure 5 to EC(96-97)51

Main Responsibilities -- Deputy Director/Administration

Rank : Administrative Officer Staff Grade B (D3)

Responsible to : Director of Housing/Chairman of Housing Authority

  1. Internal Management including overseeing the operation of the various Divisions placed under the Administration Branch.
  2. To administer and monitor the staffing, training, management services, computerization and system development activities of the Department.
  3. To ensure that there is adequate provision of legal services to the Department and HA.
  4. Public Relations including general dissemination of information to the media, general promotion, corporate image, defensive and offensive public relations strategies.
  5. Management Enhancement Programme (MEP) Director, including review of the various Human Resources Management initiatives; to assist the Executive Steering Committee in the formulation of long-term MEP strategies at the corporate level; coordinating and integrating various MEP projects within the Department.
  6. Planning and co-ordination of inter-branch activities.
  7. Secretary to HA , including provision of adequate committee services, conduct of meetings, strategic planning of membership.

Enclosure 6 to EC(96-97)51

Job Description -- Deputy Director/Finance

Rank : Deputy Director of Accounting Services (D3)

Responsible to : Director of Housing

Duties and Responsibilities

  1. To ensure that the finances of HA are managed in line with business/financial best practices and the financial resources are utilized cost effectively, this includes advising on the financial objectives and policies of HA and managing the financial and accounting functions of the Department’s.
  2. To ensure that adequate financial resources are available to meet HA’s production targets under the Long Term Housing Strategy and to manage it’s ‘core’ business operations.
  3. To formulate policies and strategies for HA meet its statutory financial obligations under the Housing Ordinance and the Financial Arrangements with the Government and that it demonstrates proper accountability and propriety for all its financial transactions.
  4. To provide financial and performance based information and advice to assist HA and the senior directorate of the Department to formulate policy proposals and objectives having due regard to the financial implications.
  5. To oversee the daily operation of the Finance Division and make recommendations on the formulation of financial, supplies and accounting policies to be adopted by HA.
  6. To manage HA’s investment and treasury activities including operational cash flows, investment of funds, chairing the Funds Management Working Group and the submission of funds policy and performance papers to Finance Committee and HA .
  7. To direct, design and develop of new financial and accounting systems and enhancements to existing systems to ensure that they are efficient and are meeting effectively the requirements of HA and the Department.

Last Updated on 12 August 1999