Operational Excellence: an overview as implementation begins

The Operational Excellence initiative has been a source of controversy since 2009, when UC Berkeley became the first campus in the UC system to hire an outside consulting firm to identify ways to save money in light of severe budget cuts from the state.

The history of the initiative is a contentious one, as concerns have been raised about its cost, staff layoffs and a lack of student participation. Actions against the initiative have ranged from passing bills through the student government to a seven-hour protest at the fourth-story ledge of Wheeler Hall.

Now, after nearly two years of planning, the initiative has reached a pivotal moment as it moves into its implementation phase. This fall, projects ranging from the creation of a new campus office with the intent of reducing energy use to mass-ordering supplies — including lab equipment and computers — will begin to unfold.

The project originated because of a $150 million deficit in the 2009-10 school year. In October 2009, UC Berkeley Chancellor Robert Birgeneau announced that the campus would hire consulting firm Bain & Company to identify ways to increase campus efficiency and cut administrative costs, following the example of the University of North Carolina at Chapel Hill and Cornell University.

After meeting with various campus groups for advice — including members of a steering committee, the ASUC, the UC Berkeley division of the Academic Senate and the Council of Deans —  the company released its final diagnostic report April 12, 2010, which identified more than $100 million in savings for the campus.

Though the campus hired the firm in October 2009 at a cost of $3 million, the firm’s continued support of the initiative through Dec. 31, 2010 cost an additional $4.5 million.

In order to carry out the implementation of the initiative, the campus reached an understanding with the UC Office of the President to borrow 75 percent of the initiative’s implementation cost or up to $50 million. The cost of implementation is expected to total $70 million to $75 million to fund the various projects, with an additional cost of $5 million annually thereafter.

In a May 3, 2010 letter, Birgeneau said he would adopt many of the report’s suggested changes with the goal of saving $75 million annually by establishing a program office to oversee the initiative and forming teams to implement changes in procurement, information technology, student services, energy management, organizational simplification, high-performance culture and financial management.

In early June 2010, Birgeneau appointed Albert Pisano, then professor and acting dean of the College of Engineering, as the faculty head of the program office, and 14 team leaders were appointed who received no additional compensation and were expected to devote 20 to 40 percent of their time to their projects. In July, Peggy Huston, former interim director for the campus Technology Program Office, was selected as program director to work along with Pisano.

In early January 2011, Pisano resigned from his position and was replaced by Andrew Szeri, professor of mechanical engineering and dean of the Graduate Division. Bill Reichle, former chief business officer of the California Alumni Association, was selected as the communications leader for the program office in January.

The unit restructuring project has been the most controversial part of the initiative, with Birgeneau’s September announcement that some 200 staff positions would be eliminated starting in January to save the campus about $20 million annually. Campus leaders of 27 different units — including colleges and divisions under vice chancellors — were required to submit plans to consolidate and restructure their departments by Nov. 1, 2010.

In January 2011, Birgeneau announced in a campuswide email that a total of 280 staff positions would be cut by June 2011, 150 of which would be layoffs. In early April 2011, the program office released totals for the first time, showing how much each campus unit had been asked to cut through restructuring and position eliminations.

Students began to raise concerns about a lack of student participation in the initiative through an ASUC bill introduced in September 2010 advocating for the creation of student positions on initiative teams, and a second bill was passed in October 2010 calling for increased student oversight after Pisano presented a student involvement plan that the ASUC rejected.

In December 2010, the ASUC Student Operational Excellence Committee began meeting to discuss ways to increase student involvement within the initiative. The committee is currently working to increase the number of students on implementation teams and establishing a DeCal class centered around the initiative.

The most high-profile action against the initiative occurred March 4, 2011, when eight protesters occupied the fourth-story ledge of Wheeler Hall for about seven hours, citing one of their demands as meeting with Birgeneau about the initiative. In  response to this, Birgeneau met with four students and a union worker about one month later to discuss issues such as staff consolidation in the ethnic studies, gender and women’s studies and African-American studies departments.

The initiative teams submitted about 40 project design proposals by March 31 to the program office, which have since been moving through the office, a coordinating committee and executive committee for approval before their implementation.

Some projects — such as restructuring campus academic units — have already been completed or have begun implementation.
According to Reichle, the proposal review process is taking longer than originally expected and may continue until November or December as the leaders of the initiative decide how much money to invest in each project.

“After lots of design and review, we are going to start to see more implementation happening this year,” Reichle said. “For many people, the concept of Operational Excellence was unit restructuring, but it’s much more than that — we are investing in software tools and processes.”

Alisha Azevedo is the lead academics and administration reporter.

Please keep our community civil. Comments should remain on topic and be respectful.
Read our full comment policy
  • Bronwen Rowlands

    There you have it in that last sentence, straight from the mouth of the OE communication guy. It’s not just downsizing.  Hell, they’re buying software!

  • UCPsychoticLies

    Senator Grassley PWNS the UC for lying to the press and feds about the KPMG audit:

    However, it appears that these representations directly contradict the conclusions reached by KPMG. More specifically, KPMG determined the following with regard to its review of the Boyden Letter:
    UCSF was not able to provide a documented process/methodology used to
    create the “Sources of funds” Schedule. Therefore, recomputation of the
    “Sources of funds” Schedule was not repeatable and could not be reconciled to
    the General Ledger.
    [The Boyden Letter] identifies items that should be separately identified and used
    in computing the figures, but the “Letter” did not identify the specific associated
    fund number(s). Due to the lack of a fully documented process/methodology,
    KPMG could not generate a line by line item reconciliation of the ‘Sources of
    funds’ Schedule to UCSF’s General Ledger.
    Furthermore, KPMG‟s analysis of the Washington Committee review concluded:
    The methodology used by UCSF to create the “Actual Financial Sources and Uses
    Schedules” was not sufficiently documented to be repeatable, or to allow a
    third-party to accurately recreate the figures contained within the “Actual
    Financial Sources and Uses Schedules.”
    Interestingly, KPMG had not seen the Chancellor‟s letter to California Senator
    Maldonado until I gave them a copy. After reviewing that letter, KPMG provided the
    following comments:
    With respect to the schedule in the Boyden letter, KPMG could not reconcile any
    category of revenue back to the General Ledger, including gifts and endowment
     KPMG did not address the accuracy of the figures contained in the Boyden
    Letter because UCSF was not able to provide a documented process/methodology
    used to create the “Sources of Funds” Schedule. Therefore, computation of the
    “Sources of Funds” Schedule was not repeatable and the figures contained therein
    could not be reconciled to the General Ledger.

  • MarcsMom

    77.5 million paid by UC for someone else to do the Chancellor’s job,
    solely for the purpose of the Chancellor gaining political cover for unpopular layoffs,


    the UC is a massively corrupted enterprise
    recall the still unsettled matter of HUNDREDS OF MILLIONS IN GRANT MONEY unaccounted for at UCSF just a few years ago:

    • Worker

      Milan, please stop making dishonest arguments via sock puppets. You know most of the $70m project money paid for on-campus people. Most of it isn’t going to outside vendors.

      Every time you post one of your characteristic screeds, new name or not, you just make it easier for the Chancellor to dismiss all arguments as ‘biased like that crank Moravec’. You’re just making things worse.

  • Guest employee

    So, if I read this correctly, we’re spending 70 +3 + 4.5 = 77.5 million to save maybe 100 million, which was still only 2/3 of the deficit in the prior year… SO, we’re spending 2 years and countless staff hours to “save” 22.5 million dollars (less than 20% of the deficit).  Wow.

  • Guest

    Note that from October 2009 to August 2011 there hasn’t yet been any budgetary saving.