UC Berkeley could save more than $100 million from its ongoing operations cost base, but it will take a one-off investment of up to $70 million over three years to achieve significant annual savings, according to a report released today by consulting firm Bain & Co which was hired by Cal in October to help it to reduce expenditure and increase efficiencies.

The report recommends Cal make at least $75M in operational cost savings over the next three years. Areas ripe for streamlining include the university’s organizational structure and its procurement systems. Bain also recommended standardizing many business processes with the use of technology and accelerating programs to monitor and reduce energy usage. Further down the line, it suggested close analysis should be made of space management, fundraising, athletics and facilities.

One of the costs involved in achieving long-term efficiencies might include setting up a Program Management Office to coordinate and track progress on the initiatives recommended in the “Operational Excellence” report.

Severe cuts in state funding for the university has left Berkeley with a $150 million shortfall this year.

Chancellor Birgeneau will  now review the report’s findings and make the final decision on which initiatives to pursue.

Tracey Taylor

Tracey Taylor is co-founder of Berkeleyside and co-founder and editorial director of Cityside, the nonprofit parent to Berkeleyside and The Oaklandside. Before launching Berkeleyside, Tracey wrote for...

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  1. Not only that, but they are now paying Bain some unspecified amount of extra money to continue to work with them on the suggested improvements throughout the fall.

  2. UCB Chancellor Birgeneau Loss of Credibility, Trust
    The UCB budget gap has grown to $150 million, and still the Chancellor is spending money that isn’t there on expensive outside consultants. His reasons range from the need for impartiality to requiring the “innovative thinking, expertise, and new knowledge” the consultants would bring.

    Does this mean that the faculty and management of a world-class research and teaching institution lack the knowledge, impartiality, innovation, and professionalism to come up with solutions? Have they been fudging their research for years? The consultants will glean their recommendations from interviewing faculty and the UCB management that hired them; yet solutions could be found internally if the Chancellor were doing the job HE was hired to do. Consultant fees would be far better spent on meeting the needs of students.

    There can be only one conclusion as to why creative solutions have not been forthcoming from the professionals within UCB: Chancellor Birgeneau has lost credibility and the trust of the faculty as well as of the Academic Senate leadership that represents them. Even if the faculty agrees with the consultants’ recommendations – disagreeing might put their jobs in jeopardy – the underlying problem of lost credibility and trust will remain.

  3. As a long-time staff member who has been to several Bain led staff meetings, I agree completely with Thomas Lord’s take on the Bain report. While Bain made a big deal about not having reached a final conclusion, and being open to comments, it was all for show. Nothing in this final report is different from their initial findings. They ignored the misgivings of staff that I heard expressed at these meetings. They have added a sprinkling of comments to the final report that supposedly support their findings, but I heard few of these positive comments. Also their questionnaires gave people opportunities to dish “dirt” on others so they could use these comments out of context as justification for elimination of positions.

    Any time the university goes on about embracing “change” you can be pretty sure the change will not be in your best interest. And, yes, after 20 years, after taking on multiple new tasks that have been pushed onto the academic departments by central departments, I’m pretty disheartened to hear that we staff are wasted overhead. In my experience small departments are much more efficient than large. Everyone knows what needs to happen in the department and everyone pitches in to make it work. And many, many of the things that get done at a department level are not considered in this report. These needs won’t go away, just because Bain has determined that some people should be in an HR unit and some should be in a Student Services unit and some should be in a Financial Services unit. Much more than that goes into running a department successfully.

  4. This is a kind of subjective response but: that report just doesn’t smell right to me. It fails the smell test.

    Very early on in this process “procurement” was cited as something likely to turn up as an area of cost reductions. The conclusion was offered before data was gathered. Then data was gathered. And, lo, procurement is the biggest area of savings. Oh, and the second runner up early on was to flatten the hierarchy and, lo, the data reveals that flattening the hierarchy is a big area of savings. I’m not buying it. The conclusions preceded the data. The conclusions sell products if they are taken seriously. This smells like a commercial interest that sells the consulting as an opener to then sell (off some other loading dock) consulting / IT to build centralized procurement. As a free offer they’ll toss in some “excuses to fire” during the initial consult (no additional purchase required).

    An up-front $70M cost over three years for purported savings down the road is precisely the kind of performance goal that has essentially zero consequences for anyone making the decision. Nobody is going to follow up on that in 10 years, in any serious way, to see if the savings materialized. Nobody will lose their job and be discredited when the savings don’t materialize. Meanwhile, some private interests become many millions of dollars richer. I call B.S.

    First procurement: I’m pretty sure that, indeed, many research projects pay more than they need to for, say, basic lab expendables. If you add up the theoretical price premiums they pay, it probably adds up to a lot. But I’d bet dollars to donuts that (a) very little of that money actually comes from any general budget; (b) there are little real savings from centralizing that procurement or else budget-conscious folks on campus would have spontaneously self-organized to centralize long ago. What, you think departments *like* blowing their budgets on retail prices?

    From the point of view of the campus micro-economy, centralized procurement is more or less like imposing a monopolist retailer between suppliers and consumers in a small town. There is no way that that is a 10 year solution. The Right Answer that the consultants didn’t give is to do it bottom up, not top down. As consultants, they should have identified segments with shared purchasing needs and paired them up. To each pair: “You two: work out how to save money between yourselves. No, there is no direct budget for this work but your departments get to keep 100% of the savings for the first 3 years.”. That either works or it fails and you can probably sense what works within 1 or 2 years. If it works, then you start pairing up the pairs that work: “You four: work together.” Then in 10 years you’ve spent next to nothing – probably netted a profit. You’ve found the natural lines of collective buying rather than the fantasy concocted by consultants. Everybody’s happy.

    Next: hierarchy. It’s all well and good to look at the org charts and say that the ratio of “managers” to “staff” is ridiculously large at Cal but such an analysis really doesn’t get how Cal works.

    On many, perhaps most, career paths at Cal your salary is capped unless you get “reclassified” to a higher level. This is in part because of the strong and generally (though not always) beneficial presence of unions on campus. At a certain point, if you merit higher pay, the only way you are likely to get it is to take on supervisory responsibilities – otherwise, no re-class.

    Now, that isn’t by any means a perfect arrangement but neither is it terribly broken. You have a high ratio of supervisors to supervised because you have a pretty decent ratio of those with seniority to new blood. I’ve come to know a number of Cal supervisors in this supposedly top-heavy management structure and, at least the ones I know, damn sure know how to stretch a budget buck. And far from being gratuitous “overhead” on campus operations, they are they improvisational jugglers who exercise the flexibility of their position to keep the damn campus operating *at all*. I’ve yet to meet any of those folks at that level who don’t go far over and above the call of duty to make Cal work. And now in waltzes this consultant for leave-the-money-on-the-dresser session to tell them “half of you are just wasted overhead” — I’m just not buying it.

    Cal is under bad management at the highest levels.