oversight

The Work Measurement System of the Department of Housing and Urban Development Has Potential but Needs Further Work to Increase Its Reliability

Published by the Government Accountability Office on 1977-06-15.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                          @7eqeccl
                                DOCUMENT   FESUME
   02557 - [A175-27851

   The Work Measuremerit
                         System of the Department
   Urban Development Has                           cf Housing and
                          Potential but Needs
   Increase Its Reliability.                   Further  Work to
                              FPCD-77--53; B-183124.
   released June 20, 1977.                            June 15, 1977.
                            29 pp. + 4 appendices
                                                    (8 pp.).
  Report to Sen. William
                         Proxmire, Chairman,
  Appropriations: HUD-Independent            Senate Committee on
  B. Staats, Comptroller          Agencies Subcommittee;
                         General.                        by Elmer
   Issue Area: Personnol
                          Management and Compensation
        National Productivity                            (300);
                                (2900).
  Contact: Federal Personnel
  Budget Function: General       and Compensation Div.
                              Government: Central
       Management (805).                           Personnel
  Organization Concerned:
                            Department of Housing
                                                    and Urban
       Development.
  Congressional Relevance:
                             Senate Committee on
       HUD-Independent Agencies                    Appropriation:
                                   Subcommittee.
            The Department of Housing
   began developing a system              and Urban Development
                                                                    (HUD)
   1972, in order to establishfor work measurement standards in
                                   a basis for manpower
  for budget submissions                                  requirements
                           and allocat.on of perscnnel.
  Findings/Conclusions:
                          HUD's
  standards were not justified,original claims of extensive
  standards were used                as revised
                        to develop estimates statements showed that
  staff requirements.                           for   nly about 42     of
                        The reliability of standards
  of weaknesses such as:                                  varied because
                            (1)
  achieving work efficiency, lack of studies on methods for
  questionnaire/interview        (2) variation in data
                             procedures, (3) insufficient produced by the
 of tasks, (4) use of                                          definition
                         subjective judgments,
 documentation, and (6)                           (5) lack of
                           lack of procedures to
 standards. Discrepancies                           review and update
                              were ncted in workload
 some appearing excessive                               forecasts with
                              and some being understated
 compared with prior                                          when
                       years' accomplishments.
 process seemed to inhibit                         The budgeting
                               reliable staffing estimates
 use of contract personnel.                                     and led to
                                 Recommendations: HUD
 practices for developing                                should improve
 performing methods studies  work measurement standards
                                                             by (1)
                                on task efficiency,
data collection and                                    (2) improving
                      analysis, (3) defining
detail, (4) assuring                             tasks
                       independence of individuals in greater
standards, (5) improving                                 setting
                             documentation, (6) formalizing
process for reviewing                                             a
                         and updating standards,
reevaluating staff resources                         and (7)
The Subcommittee on               to develop and maintain
                      HUD-Independent Agencies                the system.
HUD to develop a more                              should encourage
                         objective and reliable
system, and require                                  ork measurement
                     that the budget submission
comprehensive plan and
                          statement on the progressinclude a
*lstem's development.                                   made in the
                         (HTW)
y\     '~'      ;IESTRICTIItO    _
               Aeco0ing cOffe exep
                                     plot to              e       t.    tp eneral
                                                                oo ,fspec
                                                                    peic    approval
               by the olfie of 4 i4ressionoa          e       o,aov




       V.s,     REPORT OF THE
34.             COMPTROLLER GENERAL
t,.o   N'.~     OF THE UNITED STATES



              The Work Measurement System
              Of The Department Of Housing
              And Urban Development Has
              Potential But Needs Further
              Work To Increase Its Reliability
              The budget staffing requests of the Depart-
              ment of Housing and Urban Development
              should be based on techniques Ivhich are re-
              liable and useful in the budget process.
              concept of work measurement offers The   the
              potential to do this.
              The Department has made progress in devel-
              oping work measurement standards and some
              are more reliable and useful than others. How-
              ever, tne standards should not yet be accepted
              at face value for estimating the personnel
              required to efficiently perform the work of
              the Department.
              The Department shoula be encouraged to
              continue to develop its work measurement
              system and to increase the reliability of its
              work standards, where practical. First, the De-
              partment needs to improve its ratices for
              developing standards.



              FPCD-77-53                                               JUNE 15, 1977
 Face0   I:I      COMPTROLLER GENERAL OF THE UNITED STAT
                            WASHINGTON, D.C. 08a




 B-183124



The Honorable William Proxmire
Chairman, Subcommittee on
  HUD-Independent Agencies
Appropriatinns Committee
United States Senate
Dear Mr. Chairman:
     This report describes the extent to which
of Housing and Urban Development has developed the Department
                                               objective,
reliable work measurement standards for personnel
                                                  budgeting
at the national level.
     Our review was made pursuant to your request
                                                    of July 29,
1976, and subsequent discussions with your
                                            office.
quested by your office, we did not obtain formal      As re-
                                                  comments   from
the Department. However, the results of our
cussed with various agency personnel,         review were dis-
                                      including the Secretary
of Housing and Urban Development, and their
                                             comments have been
considered in preparing the report.
      The report contains recommendations to the
Housing and Uroan Development which are set       Secretary of
As you know, section 236 of the Legislative   forth  on page 28.
Act of 1970 eouires the head of a Federal     Reorganization
                                            agency to submit
a written statement on actions taken on our
                                              recommendations
to the House Committee on Government Operations
Committee on Governmental Affairs not later       and the Senate
after the date of the report and to the Housethan   60 days
mittees on Appropriations with the agency's     and  Senate Com-
                                             first request
fcr appropriations made more than 60 days
the report. we will be in touch with your after the date of
                                            office in the near
future to arrange for release of the report
auirements of section 236 can be set in      so that the re-
                                         motion.


                               Si      y you


                              Comptroller General
                              of the United States
REPORT OF THE                       THE WORK MEASUREMENT SYSTEM
COqIPTROLLER GENERAL                OF THE DEPARTMENT OF HOUSING
Of THE UNITED STATES                AND URBAN DEVELOPMENT HAS
                                    POTENTIAL BUT NEEDS FURTHER
                                    WORK TO INCREASE ITS RELI-
                                    ABILITY
          DIGEST
          Developing reliable work measurement standards
          takes time and is not a simple effort. Various
          tschniques are available to develop standards--
          engineered standards, technical estimates, his-
          torical standards--to mention the more common.
          The method or combination of methods used will
          depend to a great extent on the activity to be
          measured. Consideration must be given to the
          long-term benefits and costs of detailed mea-
          surement methods versus less precise methods.

         Tne Department began developing its work mea-
         surement system in 1972. Progress has been
         made and work continues on the system. In
         testimony before the Congress and in recent
         budget documents, the Department referred to
         an extensive system of work measurement stand-
         ards directly relating staffing needs to work-
         loads. In March 1976 a Department official
         testified that 63 percent of its staffing
         was covered by "detailed work measurement
         standards."
         The Department's work measurement standards
         are not as extensive as purported. During
         testimony on the fiscal year 1978 budget, a
         HUD official clarified that standards are
         used to develop estimates for only about 42
         percent of the Department's staff require-
         ments. Most central and regional office m-
         ployees, as well as support staff in area and
         insuring offices, are not covered by work
         measurement standards. (See p. 15.)
        While some standards are more reliable than
        others, they should not yet be accepted at

                                                      FPCD-77-53


TAl Sht. Upon removal. the report
cover date should be noted heron.
face value for use in estimating the person-
nel required to efficiently perform the work
of the Department. There are weaknesses in
the Department's practices for developing
them:
-- Methods studies on how to work efficiently
   and to eliminate nonessential and duplicate
   operations were not a part of standards
   development; hence, standards incorporated
   whatever inefficiencies existed in the way
   work was done.  (See p. 7.)
-- The questionnaire/interview procedures re-
   sulted in data that varied widely, making it
   virtually impossible to develop vaid stand-
   ards from such data.  (See p. 8.)
-- Tasks for some standards were no: defined in
   sufficient detail. This resulted in large
   task times and greater margins of error in
   the data.  (See p. 9.)
-- Data was discarded and personal judgments
   used to develop some standards, making them
   subjective estimates rather than true work
   measurement standards,. (See p. 10.)
-- Program managers were involved in setting
   some of theiL own standards and may have
   influenced them on the high side.  (See
   p. 11.)
--Documentation was not available to support
  some standards, particularly the reasons
  why data was adjusted.  (See p. 13.)
-- Sample offices from which some standards
   were developed are probably not represen-
   tative of the Department as a whole.  (See
   a. 13.)
-- No formalized procedure exists to assure
   that standards are reviewed and updated when
   organizational or procedural changes are made
   to improve efficiency. Withoui this proce-
   dure, standards may soon be outdated. (See
   p. 14.)



                      ii
             Because the standards cannot yet be accepted
             at face value, however, does not necessarily
             mean that they overstate personnel requirements.
             While it is likely that some do, it is also
             likely that some understate them.

             The Department may not have sufficient staff
             to adequately develop and maintain its work
             measurement system.  (See p. 14.)
            Accurate workload forecasts are a key factor
            in aiving at personnel requirements. GAO
             ioted several discrepancies: workload fore-
            casts that appeaced excessive when compared
            to prior year accomplishments, forecasts that
            appeared understated when compared to the
            past or to procedure manual requirements, and
            workload which was not forecast at all.   (See
            p. 24.)
            The budgeting process, which is the exclusive
            responsibility of the Department's central
            office, seems to inhibit the development of
            accurate workload forecasts and reliable staff-
            ing estimates. The central office decides how
            much of the total workload should go to each
            regional office, although changes can and do
            occur after the overall budget is approved.
            (See p. 24.)
            To compensate for perceived staff shortages
            in subsidized and other housing programs, the
            Department has been relying heavily on fee
            personnel (contract personnel hired to perform
            services such as appraisals) in the insured
            single family program. Fee personnel are paid
            from a separate mutual insurance fund.  (See
            p. 23.)

            The extent to which fee personnel are used to
            supplement Departmental in-house staff was re-
            flected inaccurately in the fiscal year 1977
            budget, and may not be accurately reflected in
            the fiscal year 1978 budget. After the fiscal
            year 1977 budget was approved, the Department
            increased the percent of appraisals estimated
            to be done on a fee basis from 15 to 75 percent.
            This frees for other work 200 staff-years ini-
            tially budgeted for in-house appraisals.  In

Tear Shee                         iii
spite of this 75-percent estimated fee use in
fiscal year 1977, the fiscal year 1978 budget
reflects only a 25-percent fee appraiser   e.
Each -percent increase in fee use over 25 per-
cent will free the equivalent of 4.69 F'aff-
years to do other work. (See p. 24.)

Accurate information relating time expended (in-
put) and number of detailed tasks done (output)
is needed to improve the Department's work
measurement system.   Such information, not now
routinely generated, will permit management to
better evaluate performance, assess organiza-
t onal efficiency, and develop more accurate
   -ecasts of workload and staffing needs. HUD
has established a time reporting system, but
its accuracy is questionable because of re-
porting deficiencies at the employee level.
Moreover, the system is not integrated with the
payroll system or the workload reporting sys-
tem; the latter is in its early stages of
development.   (See p. 19.)
GAO recommends that the Secretary of Housing
and Urban Development improve the Department's
practices for developing work measurement
standards with the goal of achieving more ob-
jective and reliable bases for estimating its
personnel requirements. GAO recommends ways to
improve HUD'- practices. (See p. 26.)

In addition, GAO recommends that the Subcom-
mittee:
-- Encourage the Department to develop its work
   measurement system toward the goal of more
   objectively and reliably determining personnel
   requirements.
-- Direct the Secretary to present with the fis-
   cal year 1979 budget submission (1) a compre-
   hensive plan for proceeding with the Depart-
   ment's work measurement system development
   and (2) a statement on the progress it has
   made in dealing with the issues discussed
   in this report.




                      iv
             As requested by the Subcommittee's office,
             written comments were not obtained from the
             Department. Hwever, GAO discussed the report
             with Department officials and considered their
             views.




Tear Sheet
                       Contents

                                                       Page
DIGEST                                                      i
CHAPTER

   1       INTRODUCTION                                 1
               HUD organization ard staffing            1
               Work measurement standards in HUD        2
               Techniques used in establishing
                 standards                              2
               Review objectives and scope              4
  2       RELiAILITY OF HUD'S WORK MEASUREMENT
            STANDARDS AND COVERAGE                      6
              Reliability of standards                  6
                   Methods studies not performed        7
                   Highly subjective data collec-
                     tion procedures                    8
                   inadequate task definition           9
                   Adjustments to data                 10
                  Objectivity of developed standards   11
                   Lack of documentation               13
                  Offices selected for data collec-
                     tion may not represent HUD as
                     a whole                           13
                  No mechanism for updating stand-
                     ards as efficiency improves       14
                  Staff resources for work measure-
                     ment system development           14
              Extent of coverage                       15
   3      OTHER ISSUES RELATED T HUD'S WORK
            MEASUREMENt SYSTEM                         19
              Integration of work measurement with
                time, workload, and cost reporting
                systems                                19
                  Compatibility of data                19
                  Accuracy of time reporting           20
                  Accuracy of task reporting           21
                  HUD awareness of problem             22
              Use of fee personnel                     23
              Importance of workload forecasting       24
   4      CONCLUSIONS AND RECOMMENDATIONS              27
              Conclusions                              27
              Recommendations to HUD                   28
              Recommendations to the Subcommittee      29
              Agency comments                          29
                                                          Page
APPENDIX

      I    Letter from Chairman, HUD-Independent
             Agencies, Senate Appropriations Com-
             mittee                                        30
  II       Analysis of HUD fiscal year 1978 budget
             request for personnel                         31
 III       Summary of staff-years nd full-time em-
             ployment in permanent positions in HUD,
             fiscal years 1977-1978                       32
  IV       Practical experiences with work. measurement
             systems                                      35
                      ABBREVIATIONS
GAO        7eneral Accounting Office
HUD        Department of Housing and Urban Development
OMB        Office of Management and Budget
                             CHAPTER 1
                           INTRODUCTION
     During thQ fiscal year 1977 budget hearings, the Secre-
tary of the Department of Housing and Urban Development (HUD)
testified that HUD had an extensive system of work measure-
ment standards from which it could reliably estimate personnel
requirements.

     The Chairman of the Subcommittee on HUD-Independent
Agencies, Senate Committee on Appropriations, requested that
we review HUD's progress in developing work measurement stand-
3rds and evaluate the extent to which existing standards are
valid for determining personnel requirements.  (See app. I.)
HUD ORGANIZATION
AND STAFFING

     HUD was created in 1965 to consolidate arious Federal
housing activities into a Cabinet-level department. It is
the principal Federal agency responsible for programs con-
cerned with housing needs and improving and developing the
Nation's communities. It has responsibility for the admin-
istration of Federal assistance programs involving housing,
community development, and related activities.

     HUD consists of three organizational levels:  the cen-
tral office, 10 regional offices, and 76 area and insuring
offices. Determination of staffing requirements and budget
formulation are functions of the central office, which also
allocates staff and workload to the regional office level.
Each regional office, in turn, allocates staff and workload
to its own programs and to the area and insuring offices
within its jurisdiction. Staff distribution between the cen-
tral office and field offices is as follows:

                                      Staff ceiling
                             Approved          Budget request
                         Fiscal year 1977     Fiscal year 1978
                         Number    Pe:cent    Number   Percent
        Central office    3,867        24.8    3,959     23.6
        Field offices    11,703        75.2   12,S31     76.4
           Total         15,570       100.0   16,790   100.0
Note:    A further breakdown of personnel by division is shown
         in app. III.



                                  I
      HUD's budget for salaries and expenses
 $454 million and $489                       i estimated at
                       million for fiscal years 1977 and 1978,
 respectively.
 WORK MEASUREMENT STANDARDS IN HUD
      In 1972, HUD established a task force
                                             to determine the
 feasibility of developing work measurement
 field offices. From this effort, standards standards for the
                                              were developed
 and published covering major field activities.
 that these standards were unrefined,             HUD recognized
                                      but believed they were
 usable for determining manpower requirements.

       In 1974, a Manpower Resources Division
 Staff Resources Division) was established.    (later changed to
 charged with the responsibility for developingThis Division was
                                                   and maintain-
 ing manpower management systems, including
 productivity analysis, cost analysis,        work  measurement,
 systems.                               and manpower   allocation

     The work measurement system and work
                                           standards are in-
tended to provide an objective, reliable
ing personnel requirements for budget     basis for determin-
                                      submissions, allocating
personnel t operating elements of the
                                       agency, and measuring
efficiency ad productivity.

     Office of Management and Budget
requires that work measurement, unit (OMB) Circular A-11
indexes be used to the maximum extent costs, and productivity
                                       practical by Federal
agencies in justifying personnel requirements
workload. The Director, OMB, emphasized        for measurable
and work measurement should be extended, that productivity
to all areas and the data integrated      whenever practical,
                                      into a mnagement con-
trol and evaluation system.
TECHNIQUES USED IN ESTABLISHING STANDARDS

     Various engineering and nonengineering
be used for developing standards.           techniques can

      Engineered standards are based on
ment of the time a task should take to analysis and measure-
                                        produce acceptable
quality under proper working conditions.
                                           They are generally
developed using formal analytical techniques
study, work sampling, standard data and        such as time
systems. Such standards are most useful  predetermined  time
activities where detailed planning and    for high-volume
                                        control are desired,
and are frequently used in an industrial
                                          setting.



                              2
       Nonengineered standards are those developed without using
 engineering techniques, and tend to be less reliable
                                                       than en-
 gineered standards. Historical and technical estimates
 the methods most commonly used to develop nonengineered are
                                                          stand-
 ards.

      Historical estimates are based on data relating time
expended to the work produced. A drawback   to this tech-
nique is that it assumes that what has happened in the
good practice and that fture conditions will be the     past is
                                                      same.
With such standards, it is difficult to accurately assign
a reason to significant deviations. They can, however,
quickly applied to provide extensive standards coverage. be
Also, the standards so developed can be updated over time
the use of work sampling or methods studies and adjusted by
more appropriately reflect the time it should take to     to
                                                       do the
work.
     One secific historical technique is based on obtaining
data for work performed under controlled work 4 ng conditions.
After receiving detailed instructions on how to use the
vey forms and the definitions of the work units, employeessur-
record how they have spent their time over a short period.

      Technical estimates are derived by breaking jobs
work units or stages and having a technically qualifiedinto
son estimate how long each of the stages should take.      per-
                                                        Es-
timates can be developed by a panel of knowledgeable
who estimate time requirements and through             people
                                            discussion reach
a consensus of opinion. The work unit estimates are
summed to obtain the standard time. A disadvantage ofthen
                                                         this
technique is that it relies considerably on the jdgment
the persons making the estimates, and as such may vary      of
from the actual time it takes to do the job. This makes  greatly
difficult to assign causes to deviations from the standards.it
An advantage of technical estimates, however, is the
                                                      low
cost of using them to develop standards. It may also
                                                        be
the only technique available to develop standards for
                                                        highly
technical or irregular work such as research or technical
projects.

     The techniques we ave described are not
Basically, the method or combination of methodsallused
                                                    inclusive.
                                                       will
depend to a great extent on the activity to be measured.
standard setter must consider the long-ternm benefits       The
                                                       and
costs usually associated with detailed measurement methods
against the drawbacks and economies of less precise methods.




                              3
 REVIEW OBJECTIVES AND SCOPE

     The specific objectives of our review were to ascertain
the extent to wnich the fiscal year 1978 budget estimates
for personnel were computed by applying work measurement
standards to workload forecasts, and evaluate the reliabil-
ity of existing work measurement standards for national
budgeting purposes.

     Our review was performed at HUD's central office in
Washington, D.C., region V in Chicago, and region IX in
San Francisco. At the central office, we ascertained the
extent to which the fiscal year 1978 budget request for
personnel is based on work measurement standards.

     At the central office and in region IX, we evaluated the
processes used to develop and apply work measurement standards
and consulted with technical advisors on the standards' reli-
ability in relation to budgeting at the national level.
     Our review focused on the work measurement standards in
relation to HUD's four principal program divisions:  Housing
Production and Mortgage Credit, Housing Management, Commun-
ity Planning and Develgpment, and Fair Housing and Equal
Opportunity. 1/

     Within the four divisions, our major focus was on the
larger programs and new or expanded programs requiring added
staffing in fiscal years 1977 and 1978.

     At the regional offices we compared time charge reports
to workload output reports and ascertained the methods used
to allocate both workload and staff to the area and insuring
offices. We also visited the Chicago and San Francisco area
offices and the Cincinnati insuring office to evaluate the
integrity of HUD's time reporting system.

     To compare the use of work measurement by HUD and non-
Federal organizations, we contacted several trade associations
and private mortgage credit institutions and inquired about
their use of work measurement standards. We also contacted
OMB to ascertain what technical assistance is available to
agencies planning work measurement systems.  (See app. IV.)


l/The two housing dvisions have since merged into the Hous-
  ing Programs Division.




                               4
     Our review did not deal with the extensiveness
liability of HUD's producti;ity measurement system or re-
                                                    or its
financial management system.




                            5
                            CHAPTER 2

            RELIABILITY OF HUD'S WORK MEASUREMENT

                  STANDARDS AND COVERAGE

     The Subcommittee, in reviewing HUD's fiscal year 1978
budget, should not accept HUD's work measurement standards
at face value for estimating the personnel required to effi-
ciently perform the work of the Department.  Further, the
standards are not as extensive as purported in budget docu-
ments and in testimony before the Congress.

*RELIABILITY OF STANDARDS

     HUD,   in developing work measurement standards for
field activities of its major program divisions, did not
follow acceptable practices for developing reliable work
measurement standards. Specifically, the defects were
these:
     -- Methods studies on how to work efficiently and to
        eliminate nonessential and duplicate operations
        were not a part of standards development. As a
        result, the standards which were developed or up-
        dated incorporated whatever inefficiencies. existed
        in the way work was done.
    -- The questionnaire/interview procedures resulted in
       data that varied widely, making it virtually im-
       possible to develcp valid standards from such data.

    -- Tasks for some standards were not defined in sufficient
       detail, resulting in larger task times and greater
       margins of error in the data.
    -- Data was discarded and personal judgments were used
       to develop some standards, making them subjective esti-
       mates rather than true work measurement standards.
    -- Program managers were involved in setting some of their
       own standards and seem to have influenced them on
       the high side.
    -- rocumentation was not available to support some
       standards, particularly the reasons why data
       was adjusted.




                                6
      -- Sample offices from which some standards were developed
         may not be representative HUD-wide.
      --No formalized procedure exists to assure that standards
        are reviewed and updated when organizational or proce-
        dural changes are made to improve efficiency. Without
        this system, standards may soon be outdated.
     As a result of these weaknesses, we do not believe that
existing work measurement standards should be accepted at face
value for estimating personnel requirements in the fiscal year
1978 budget.

     This does not, however, mean that personnel requirements
are overstated. While it is likely that some are, it is also
likely that some are understated.  However, because the stand-
ards were developed by means of defective practices, they
cannot be regarded as reliable indicators of how long it takes
to perform tasks efficiently.

     The effect of using inaccurate standards for budgeting
can be great. To illustrate, the fiscal year 1977 forecast
for conditional commitments under the insured single family
proposed construction program is 140,000 units. If the
existing standard of 5.72 hours for processing these appli-
cations is off by only 1 hour (less than 20 percent) it means
an overstaffing or understaffing of 78 positions.

Methods studies not performed

     Work measurement standards should be based on the most
efficient and economical ways for performing given tasks.
If the standards are based on existing procedures they will
incorporate whatever inefficiencies exist in those procedures
and perpetuate them. Therefore, methods studies to identify
the most efficient way to work and highlight nonessential and
duplicate operations should, where practical, be done before
standards development. Yet, because of the time involved in
making methods studies, it may be more practical to establish
standards using historical data or technical estimates without
first making methods studies.  However, in these cases, meth-
ods studies should be subsequently made, as soon as possible,
and the standards revised to reflect "should take" time,
especially where the initially collected data has high varia-
bility.

     In developing its standards, HUD did not analyze the
way its work was being done to identify inefficiencies prior
or subsequent to developing them. Rather, it based its
standards by and large on the existing ways of performing


                                7
tasks. Whatever inefficiencies existed in the way work was
being done were incorporated into the standards.

     A number of recent studies have pointed out inefficien-
cies in the way HUD's work was being performed. It has beer
noted that because of differences in the types and
degree of authority delegated to field offices there had
been duplication of effort at all three levels of HUD's
organization.

     To deal with these problems, HUD began a series of
management initiatives, one of which was a study started
in 1975 known as Process Analysis. This consisted of several
detailed on-site analyses of the processes field offices
used to administer HUD's programs to the public. In essence,
Process Analysis was an attempt to disc:over, through dis-
cussions with field managers, whether there were better,
simpler, more realistic, and more effective ways to perform
HUD's work. All four major program areas in the field, as
well as administrative support functions and operations,
were covered.
      The results of these process analyses were not used in
developing new or rvising existing work measurement stand-
ards, but: hey should have been, and future results should
be also. HUD said in March 1977 that an analysis of the way
work is done will be incorporated in future standards develop-
rment efforts.

Highly subjective
data collection procedures

      In collecting data to develop standards, particular
care must be taken to assure valid data. Time studies in
whicn work performance is directly observed and recorded
are generally reliable. On the other hand, interview or
questionnaire methods by which individuals are asked to
estimate the time they needed to do certain tasks are less
reliable since they depend to a large degree on memory and
can be influenced by personal bias. Particular care must
be exercised when-the questionnaire/interview approach is
used.

     A major step in HUD's approach to developing its work
measurement standards was to solicit the estimates of super-
visors and of employees doing the work on how long it takes
to complete various tasks.  In some instances, employees
were asked to recall time spent doing tasks over a 1-year
period.  In all four program areas the frequent result of
this approach was widely varied responses. In our opinion,


                             6
it is virtually impossible to arrive at a valid standard
from data that vary widely.

     Further, when wide variance appears in data, it is a
generally accepted practice to further analyze it and find
out why. There was no evidence that HUD analysts attempted
to do this. As discussed later, in many cases data was
simply discarded.

Inadequate task definition

     We believe another cause of unreliable data and ques-
tionable standards is that in some cases the tasks for which
data was requested were not defined in sufficient detail so
that accurate measurements could be taken.

     We reviewed the breakdown of tasks for four activities
in the Housing Production and Mortyage Credit area, as shown
in the following table:

                                     Activities
                               Single -ily
                      Proposed    Existing   Proposed    Multi-
                      construc- construc-      sub-      family
      Category         tion         tion     division   insured
Number of detailed
  tasks                 25          19            9        35
Percent of tasks
  1 hour or more        36          42         100       100
Average task time
  (hours per task)     1.0         1.2       12.6       24.7
     The average task time and percent of tasks greater than
1 hour are highest for the proposed subdivision and multi-
family standards because these standards were broken down
into broad processing phases, not detailed tasks and sub-
tasks.

     Conceiving tasks as long, general phases rather than
short, detailed steps affects the ability of individuals to
accurately estimate how much time a given task takes. This
is illustrated by the following table, which was based on two
series of estimates made by the HUD San Francisco region in
revising single and multifamily standards.




                             9
                                             Activity
                                  Single Family
                         Proposed    Existing Proposed     Muiti-
                         construc- construc-      sub-     family
     Category              tion        tion     division   insured
Average task time
  (hours per task)         1.0         1.2          12.6    24.7
Average percent devia-
  tion in estimates
  between 1976 task
  time and 1975 task
  time                    232         i4.,          96.3    61.3
     This table suggests a significant      in ability to ac-
curately estimate ime for given t:asks when the average task
time is large.
     As to why tasks were not defined in   ore detail, the
HUD study group said that task sheets and descriptions used
to develop the Housing Production and urtgage Credit stand-
ards were based on HUD handbook procedures, supplemented by
program knowledge. These officials described the handbook
procedures for the four selected standards as (1) detailed
for both single family existing and proposed construction,
(2) not adequately detailed for single family proposed sub-
division, and (3) very vague for multifamily insured projects.
Thus, standards development was begun without clear defini-
tions for all activities to be measured.

     Similar conditions existed regarding the standards
developed in the Housing Management program area. Although
the work measured by the Housing Management standards in-
cludes numerous processing steps, the standards do not re-
flect it. For instance, the task of inspecting property,
listing property for sale, and executing a contract for sale
are all covered by the single family property disposition
standard.
Adjustments to data
     Faced with the wide variability in sample data, HUD
analysts frequently dscar. ~d data as being not representa-
tive. For example:
     --In Housing Management sample data was eliminated
       to achieve the high statistical correlation HUD
       analysts believed as necessary to establish a
       standard. Data collected from 11 of 19 offices
       surveyed was eliminated in developing the standard
       for the management of insured multifamily projects.


                                 10
      -- In developing the standards for field activities of
         the Community Planning and Development Division,
         extreme data points were also discarded, usually one
         high one for each low one. The number discarded
         varied from standard to standard. In one instance,
         36 employees were interviewed concerning the time
         spent in program management activities, and all but
         13 sample results were discarded in developing the
         standards.
     Selective use of data is acceptable when a distorting
factor is known to be present, and then the data may no
longer be representative of the universe
drawn. HUD personnel did not analyze the from which it was
                                          reasons for the
wide variations in times reported by interviewees. Such
analyses should have been made.
Objectivity of developed standards

     Individuals selected to develop work measurement
standards should be, to the extent practical, independent
of the organizational element to which the standards ap-
ply. If such individuals have proprietar,. interests in
the programs for which the standards were developed, they
might influence the results.  They may be relied on for
input where technical estimates are used, but the persons
responsible for setting the standards should review these
estimates and resolve significant differences.

     We examined the groups responsible for developing
selected standards in the Housing Production and Mortgage
Credit area.  We noted that the individuals responsible
for setting the standards were predominantly Housing Pro-
duction and Mortgage Credit officials.  In effect, they
were setting standards for their own operations. The
study participants who set the standards by
division are shown in the following table. office and




                             11
                1975 and 1976 Study Participants

                                             1975                       1976
                           1975             Negotia-   1976           Negotia-
                         Standards           tions   Standards         tions
    Location/              study             task      study           task
    division             committee           force   committee         force
HPMC with program
  responsibility         6 (60%)            8 (67%)       5 (71%)     14 (64%)
Central office or
  region adminis-
  tration respon-
  sibilities             4 (40%)            4 (33%)       2 (29%)      8 (36%)
Total participants      10 (100%)          12 (100%)      7 (100%)    22 (100%)
     We have no way of knowing if or to what extent these
individuals influenced the standards.  We have evidence, how-
ever, to suggest that when section chiefs were allowed to set
task times for their programs, as was the case in developing
the Housing Production and Mortgage Credit standards, they
tended to opt for the larger times, as shown in the following
table.

                        Section Chief Judgment

                                 Task processing time in hours
                                                         De9ference
                             Task times           Final   between
                              obtained Average    task    average
                                by       task     time      and
        Activity/task        interview   time   reported   final
    Existing construction:
        Inner city            3.20
          appraisal           3.00          3.10       3.20    +.10
        Suburban              2.00
          appraisal           2.67          2.34       2.67    +.33
        CRV appraisal         1.00
                               1.00         1.00       1.00     -
        2-3-4-unit            4.50
          appraisal           5.00          4.75       4.75     -
    Proposed construction:
        Appraisal             3.0O
                              4.00          3.50       4.00    +.50
       Valuation-             2.50
         reprocessing         2.75          ".63       2.75    +.12
       Valuation-              .25
         adjustment            .25           .25        .75    +.50
       Architect-             1.00
         reprocessing          .50           .75       1.10    +.35
       Arcnitect-              .30
         adjustment            .25           .28        .25    -.03




                                      12
In most instances, the final field office task times selected
by the section chiefs were the higher of the estimates ob-
tained by interview.

     It appears to us that program managers have influenced
some work measurement standards and, as noted in the preceding
table,  have tended to influence them on the high side.

Lack of documentation

     We could not trace the process used in developing some
standards because of incomplete documentation and the ina-
bility of people to remember.  For example, we were not able
to review the procedures used to develop section 8 program
standards, which account for 924 staff-years in the fiscal
year 1978 budget, because HUD personnel could not locate
the supporting documentation and the individual who developed
the standards had retired.

     In addition, the reasons were not documented for some
of the judgments made in adjusting the data to arrive at
the standards.  As a result, we were unable to completely
evaluate why data was discarded, nor could . determine
the basis for judgments.

     We believe it is important     in developing, reviewing,
and updating standards that the     bases for judgments be
documented and retained so that     they may be examined in
cle course of any future review     or revalidation process.

Offices selected for data collection
may not represent HUD as a whole

     Since almost all HUD standards are national in scope,
applying to all regions, it is important that they be rep-
resentative of HUD as a whole.  If they are not, some offices
will be understaffed and others overstaffed, and the standards
will be defective.

     In developing some of   its Housing Production and Mort-
gage Credit standards, HUD appears to have se. cted the
locations for data collection more cn the basis of conven-
ience or the initiative of a given region rather than the
reprtsentativeness of the offices.  For example, we were
told that the San Francisco regional office took the initia-
tive in revising the standards for two large programs in the
Housing Production and Mortgage Credit area.  In 1975, the
San Francisco region revised standards for both the insured




                               13
single family and multifamily programs; these support approxi-
mately 12 percent of HUD's staff-years. They were subse-
quently updated in 1976, again based on work in the San
Francisco region.  According to HUD staff in San Francisco,
these studies were initiated by the region to justify their
regional staffing needs on the basis of their workload. The
HUD central office applied these standards to all regional
offices except the Boston, New York, Philadelphia, and Chicago
regions, where they increased some single family standards by
as much as 50 percent. There was no conclusive data to sup-
port the increase in the standards for these regions.

     Regional and field office officials have questioned the
appropriateness of national standards for many of the hous-
ing and Community Planning and Development programs. They
cited varying travel requirements, workload mix, and other
differences which cannot be factored into a national stand-
ard.  HUD plans to study the feasibility of developing re--
gional standards.

No mechanism for updating standards
as efficiency improves

     Once standards are developed, a system is needed to
assure that changes in procedures which influence standards
are fed back into the standards review process.  This is
necessary to assure that standards are updated as more ef-
ficient procedures are instituted.

      Yet in HUD, as organizational changes have taken place
to increase efficiency, the results have not been used to
revise existing standards.   For example, standards did not
change when HUD merged the two housing program divisions,
a move designed to achieve greater efficiency and effective-
ness.   HUD standards have been revised over the years, but
the revisions were not prompted by procedural or organiza-
tional changes.

     Unless HUD institutionalizes a process for reflecting
organizational efficiency improvements in work measurement
standards, its work measurement system will continue to
have defects and reflect greater staffing and costs than
are actually required.

Staff resources for
work measurement system development

     The organizational unit in HUD responsible for iii-
tiating and coordinating standards development is the Staff



                             14
Resources Division. The Division staff is made up of 15
professionals and 7 clerical personnel. We were told that
the professional staff devotes approximately 5 staff-years
to work measurement development and productivity measurement.

     In recent years the Staff Resources Division has taken
on additional workload such as preparing regional operating
plans and assisting in HUD budget preparation without cor-
responding increases in staffing levels. These additional
two responsibilities take up the majority of the Division's
staff time between mid-May and mid-January. Only about
4 months per year are devoted to developing and validating
work measurement standards; this is between January and May.

      We noted that due to other work, validating work mea-
surement standards has not been done as planned. For ex-
ample, the assisted housing standards are recognized to
be inadequate because no experience data was available for
the section 8 program when tandards were developed. The
Staff Resources Division sees the need for establishing
valid section 8 standards, but no firm -ecision has been
made as to when and where these standards will be redevel-
oped.

     A study, "Improving Work Measurement Systems in the
Federal Goiernment," prepared by the U.S. Army Management
Engineer Training Agency, recommended that several defense
organizations staff their work measurement groups with one
analyst for each 400 employees when using historical or
technical estimates techniques. Applying ,this criterion
to HUD's staffing levels indicates the Staff Resources
Division should have about 44 qualified personnel for stand-
ards development. While we do not advocate this s the ap-
propriate ratio, it does suggest that HUD may not have the
staff to adequately develop and maintain its work measurement
system on a full-time basis.

EXTENT OF COVERAGE

     During the Senate Appropriations Subcommittee hearing
in 1976, the Secretary made the following statements about
the work measurement system:

    "I think that our work measurement standards have
    become quite refined, probably better than in any
    of the other departments of government.  I like to
    think they are among the best."




                             15
     "* * * we are now able to tell you with a high degree of
     reliability the staffing impact of changes in program
     levels     *


     "*   * we have a staffing budget which is demonstrably
     related to workload estimates."

      In March 1976, a HUD official testifying before the
House Subcommi:tee on Housing and Community Development,
Committee on Fa-king, Currency and Housing, stated that 63
percent of tt Department's staffing was covered by detailed
work measurement standards, and he furnished the following
table:

                                            Percent of total
                                               HUD staff
Covered by standards:                                   63
    Field:
        Housing Production and Mortgage
           Credit                                29
        Housing Management                       20
        Equal Opportunity                         3
        pirection and administration              6
    Headquarters:
        Office of Finance and Accounting         5
Covered by other criteria:                              12
    Field:
         Community Planning and Development      8
         Direction and administration            4
Not covered:                                            25
    Field:
        Legai, Federal Insurance Adminis-
          tration, other                         3
    Other headquarters (note a)                 22

              Total                                   100

a/Program staff offices, operating divisions, Inspector Gen-
  eral, and administration.

     In its fiscal year 1978 budget submission, HUD as-
serted that the

    "* * * work measurement system has substantially im-
    proved the accuracy of the staffing estimates for the
    major program areas of Housing, Community Planning and
    Development, and Fair Housing and Equal Opportunity."


                             16
Further, the effort invested in the work measurement system
was said to have resulted in realistic personnel estimates.
The Secretary stated, "* * * we are handing over a strong and
shiny piece of equipment to the new administration. Pro-
grams, work measurement standards and tracking mechanisms
are firmly in place."

      More recently (Ma-. 1977), and subsequent to our review
and briefing to the Secretary on our review's results, HUD
officials substantially evised their estimates of staff
covered by work measurement standards.   Instead of the
earlier 63-percent figure, HUD indicated in testimony before
the Subcommittee on HUD-Independent Agencies that only 45
percent of its staffing is currently covered by work mea-
surement standards. HUD personnel later said that overhead
allowances included in the standards for one operating di-
vision should not have been. Without these allowances, only
42 percent of the Department's staffing for fiscal year 1978
is covered by work measurement standards. This figure is
largely the result of the fact that standards were not used
in developing staffing estimates for most activities of the
central and regional offices and support activities in area
and insuring offices.

     The following table shows HUD's 42-percent work mea-
surement standards coverage in the fiscal year 1978 budget.

                            Staff-years
                       Covered    Not covered               Percent
                       by work      by work                 covered
                     measurement measurement                  by
                      standards    standards Total         standards
Field:
    Housing Programs     5,917            2,237    8,154      73
    Community Planning
       and Development     733              637    1,370      54
    Fair Housing and
       Equal Oppor-
       tunity                  66           355      421      16
    All other              -              3,448    3,448       -
Central office:
    Office of Finance
       and Accounting      896               54      950      94
    All other              -              3,616    3,616       -
       Total             7,612           10,347   17,959      42
A more detailed breakdown of the fiscal year 1978 budget is
shown in appendix II.


                                    17
     We believe that in prior years HUD oversold the exten-
siveness of its system. According to HUD officials, the
Department was under congressional pressure to develop a
system which would justify to the Congress the basis of HUD
staffing estimates. This year, HUD seems to be more realis-
tically presenting the status of its system.




                           18
                           CHAPTER 3
                     OTHER ISSUES RELATED TO
                 HUD'S WORK MEASUREMENT SYSTEM
      In addition to reviewing the coverage
 HUD's work measurement system, we examined and reliability of
                                            other issues which
 relate to HUD's ability to achieve the maximum
                                                potential from
 its system. Specifically, we reviewed

      -- the integration of the work measurement system
         the time, workload, and cost reporting systems with
         achieve measures of organizational efficiency, to

      -- the use of fee personnel ad its relationship
         personnel staffing, and                      to

     -- the validity of the workload forecasting
                                                 system.
INTEGRATION OF WORK MEASUREMENT WITH
TIME, WORKLOAD, AND COST REPORTING SYSTEMS

      In addition to its use in budgeting for personnel,
work measurement system was intended to provide          HUD's
determining and comparing the efficiency of      a basis for
                                             its
Essential to achieving this objective, however,  operations.
methods for reporting time and workload.         are accurate
                                           These methods
should be fully integrated with the work measurement
HUD is not fulfilling this intent because             system.

     -- data collected from its time and workload
        system is not always consistent with work reporting
        ment standards data requirements,         measure-

     --the accuracy of time reporting data is
                                              questionable,
       and
     -- the accuracy of reported work accomplished
                                                   is ques-
        tionable.
Compatibility of data
     When a work measurement system is integrated
                                                   with an
accurate time and cost reporting system,
tions is measurable. The work measurementefficiency of opera-
measures of individual or group performance system establishes
                                             or output; the
time and cost reporting system measures how
                                             long work takes
and what it costs to do it (input). Efficiency
                                                 can then be


                             19
expressed as the relationship between input and output.   If
the same mathematical units are used to describe both input
and output, and the data is accurate, an organization can
measure its efficiency.

     In reviewing HUD's time reporting system in efect
during fiscal year 1976, we sometimes had difficulty cor-
relating data. HUD analysts had similar difficulties.
     In October 1976 HUD revised its time reporting system,
making it more compatible with the work measurement system.
Ev(n with these revisions, the system does not provide data
that expresses the actual work performed.  For example,
under the low income housing program, the following count-
able work units are covered by the same time charge code:
     -- Management reviews.

     -- Engineering surveys.

     -- Utility surveys.
     Another problem exists with Housing Production and
Mortgage Credit standards. Specific time codes apply to
the work units covered by the standards, but other time
expended is also allocated to the activities on a pro rata
basis. Therefore, there is no assurance th. ' the time
charges reflect the amount actually expended on the program.
     To achieve compatibility with the work measurement
standards, HUD needs to accumulate time charges at a lower
work level than it dols now.
Accuracy of time reporting

     HUD's Departmental Time and Cost Reporting System
requires field office employees to record daily time use
information by program activity. Time charges collected
through this system become the source data for work measure-
ment and productivity analyses. If the time reporting data
is not current, its accuracy and the validity of the re-
sulting analysis become questionable. This is particularly
true when individuals record time spent on numerous activi-
ties with several different codes.

     Our review of daily time reports and interviews with
staff, conducted well into the month when the reports should
have contained several entries, showed that 70 percent of
the staff had noncurrent reports; most of them also charged



                               20
 time to two or more codes.  In one case, a.n individual with
 a noncurrent report told us he usually ctrges time to more
 than 30 different codes.

      The results of our observations at five locations in
 regions V and IX are shown below.

                     Number of   Number of daily time reports
                       staff                      Not
   Location         interviewed Current Percent current Percent
Region V               56           12   21.4     44      78.6
Chicago area
  office               94           30   31.9     64      68.1
Cincinnati insur-
  ing office           55           40   72.7    15
Region IX                                                 27.3
                      111           27   24.3    84       75.7
san Francisco
  area office         154           31   20.1   123       79.9
    Total             470          140   29.8   330       70.2
     An area office official told us 'a did not want his
staff spending time filling out time forms every day. He
thought the reports were merely an exercise and had no credi-
bility as a management tool in the area office. To him,
there was no relevance between the work of his staff and the
Departmental Time and Cost Reporting System. HUD's internal
auditors, in reviewing daily time reports in the New York
region, also found numerous deficiencies which raised ques-
tions about the integrity of 'he system. Some of these were:

     -- Employees prepared the forms only at the end of
        each month.
     -- Employees prepare two to four pro forma forms in
        advance and submit them in successive months on a
        rotation basis.
     -- Program or activity codes are charged according to
        supervisory instructions which are based on remain-
        ing budgeted time or funding availability.
We were told that HUD is nearing completion of an exten-
sive study of the quality of time-reporting data.
Accuracy of task reporting

     Time expended is one basic element of work measurement
systems; the other is work accomplished, or output.


                              21
     Some work covered by work measurement standards is not
counted.  For instance, although HUD has developed standards
to cover environmental clearances, such clearances are not
as yet counted when performed.  In addition, in the Housing
Management program and in the Community Planning and Develop-
ment program areas there are no counts of work accomplished
under several standards.

     When workload is  ounted, its accurac]/ in some instances
is suspect due to inconsistencies in definition of tasks.
For example, central office data showed region V resolved
24,829 section 518(b) cases during fiscal year 1976; the
region reported a total of 29,193.

     We were told that a major effort is underway to refine
the definition of line items included in HUD's Regional
Operating Plan and to identify specific sources for each
so that all field and central office personnel will follow
uniform instructions.

HUD awareness of problem

     Housing program staff in the central office are also
aware of and concerned about the lack of feedback on pro-
gram performance.   One problem they identified was that
data has to b tracked to many sources and manually analyzed
and manipulated to be usable.   Because of this and other
problems, the eficiency of program activities was not being
routinely measured.   Similarly, payroll costs and task
accomplishment data were not being combined to provide pro-
ductivity or unit cost information.

     The housing program staff has developed a Housing Opera-
tions Plan System to attempt to remedy these problems.  The
system is designed to assist managers in carrying out their
responsibilities for goal setting, performance monitoring,
and other analyses.  The basic data, as planned, should com-
bine time and task reporting data into an accessible, common
dcta file to facilitate workload forecasting and development
of work measurement standards.

     The development of the ousing Operations Plan System
will follow a modular approach by program area.  The single
family application processing module is the first one being
developed and is scheduled for completion about October 1977.

     HUD is currently conducting a data quality assessment
and has identified problems with the procedures that are
used to collect and process the single family workload in-
formation.  The Department also recognizes that a system for


                             22
 insuring uniform procedures on data collection
 from region to region is lacking.              and analysis

      HUD believes the program-by-program approach
 sary because most of the workload reporting        is neces-
 which data will be obtained are either       systems from
                                         inaccurate or incom-
 plete. Long-range plans are to expand
 housing programs, and consideration willte system to other
 panding it to a Department-wide system. be given to ex-

 USE OF FEE PERSONNEL

       HUD's budget submission
 sibly 1978 does not accuratelyforreflect
                                    fiscal years 1977 and pos-
 sonnel are used to supplement in-house the extent fee per-
                                           staff in the insured
 single family program. Fee personnel
 arate mutual insurance fund.             are paid from a sep-
                                In fiscal year 1976, HUD
 paid about $9.4 million to fee appraisers,
 to inspectors and $.2 million to mortgage $1 million
 The following chart shows the extent         credit examint=s.
                                        and  purpose of fee use
 during fiscal year 1976 and for the 5
 ber 30, 1976.                           months  ending Novem-

               Appraisals              Inspections      Credit checks
            Number    Amounts        Number   Amount    Number  Amount
1976       189,342   $9,42,350       88,654 $1,034,676 37,400 $187,275
July-
  Nov.
  1976      96,467   4,798,096       53,380     621,700 14,430    71,965
    Total 285,809 $14,222,446 142,034         i1,656,376 51,830 $259,240
     Historically, fee personnel have been
HUD staff during seasonal peaks and in      used to supplement
fiscal year 1977 budget indicated that remote  locations. The
                                       54,000 single family
appraisals, 15 percent of the total,
                                     would
basis. However, the use of fee personnel be done on a fee
                                           has become much
more extensive. In March 1977, HUD estimated
                                               that 271,000
appraisals--75 percent, not 15 percent--would
fee basis during fiscal year 1977, the         be done on a
                                       equivalent of 335
staff-years.

     In the Chicago region, HUD appraisers
to the section 518(b) program which was      are being diverted
Eiscal year 1977 budget. An area office  not  included in the
region has reassigned                     in  the
                      appraisers to the section San   Francisco
                                                  8 subsidized
housing programs, which in their view
due to poor workload forecasting. The have been understaffed
                                        new Secretary of HUD
supports the increasing use of fee personnel.


                                23
      Notwithstanding the estimated 75-percent
 fiscal year 1977 and the inclination           fee use in
                                       to make greater use of
 fee personnel, the fiscal year 1978
                                      budget submission re-
 flects only a 2 5-percent fee appraiser
                                         use and no use of fee
 inspectors and mortgage credit examiners.

      HUD's budgeted fee use of 25 percent
 of 352 staff-years for appraisal services. is the equivalent
 sonnel will be freed to perform other         In-house per-
                                         duties as HUD increases
 the fee use above 25 percent.   The
 over the 2 5-percent level result in extent to which increases
                                       increased staff-years tor
 the appraisal function or provide staff
                                           for other purposes
 is reflected below.

              Percent fee             Resulting staff-year
              appraisals                  availability
                 50                          117
                 75                          234
                100                          352
 Note:   Based on HUD standard of
         and HUD estimated workload2.23 hours per appraisal
                                     of 379,100 appraisals,
         of which 25 percent will be done by
                                              fee personnel.
 In effect, each -percent increase
                                      in fee appraisal use over
 the 2 5-percent budgeted results in
                                      an overstaffing of 4.69
 staff-years.

     The use of fee personnel to supplement
also adversely affect the quality of        HUD staff may
                                     HUD work.  Several
studies have found that:

         -- The $50 appraisal fee, plus clerical
                                                 costs, was at
            least 20 percent more expensive than
                                                 a HUD staff
            appraisal.

     -- Fee appraisers make more mistakes
        because of unfamiliarity with HUD than HUD appraisers
                                          regulations.
IMPORTANCE OF WORKLOAD FORECASTING

      A reliable workload forecasting system
                                              is as important
as reliable work measurement standards.
                                          Forecasts
plied by standards in arriving at personnel          are multi-
                                              requirements
for national budgeting purposes.
key determinant of the appropriate Accurate  forecasts are a
                                    staffing levels to meet
HUD's work objectives.   We identified several factors casting
doubt on the accuracy of forecasts
                                    in the fiscal year 1978
budget.


                                 24
      Budget formulation is the exclusive responsibility of
HUD's central office. Yet some experts on work measurement
                                                             recom-
mend that agencies formulate budgets from the bottom up.
                                                           The
fiscal year 1977 budget formulated by the HUD central office
did not show any workload for the section 518(b) and (d)
                                                          pro-
grams. After a preliminary allocation of workload, however,
the central office was informed by its regional offices
                                                         that
work was expected to be performed under the section 518(b)
program during the budget year.   HUD now expects a combined
workload of 37,500 cases under the programs, and the use
120 staff-years. If the regions had been consulted as partof
of the budget formulation process, this situation may have
been avoided.
     We also noted workload forecasts
and 1978 that appeared excessive when for fiscal years 1977
                                      compared to fiscal
year 1976 accomplishments. For instance, in fiscal year
                                                          1976,
HUD did not come close to its goal of approving 50,000 units
under the section 235 insured single family program. In-
deed, as of December 31, 1976, or after 1 year of operations,
the program had firm nationwide obligations for proposed
construction of only 3,319 units, with preliminary reserva-
tions for an added 14,888 units. A variety of problems were
cited as reasons for the limited activity of the program:

     -- High land and builaing costs making the mortgage
        limits totally infeasible in eastern metropolitan
        areas.
     -- Reluctance of mortgagees and builders to participate
        in the program.
     -- Lack of eligible borrowers able to make the required
        down payments.
Nevertheless, HUD forecasts that preliminary reserva-
tions under the program will be 100,000 a year in both fiscal
years 1977 and 1978. The fiscal year 1977 estimate of 462
staff-years for the section 235 program was determined by
applying the 100,000-unit forecast to the work measurement
standards. If only half of the workload is accomplished
this year, it would mean an overstaffing in this area of
231 staff-years.

     A HUD official stated that in the current fiscal year
(1977) a probable shortfall in the section 235 program will
be more than offset by an overage above the budget estimate
for the section 23(b) program. Both of these programs,
we were told, are single family and utilize the same skills
and staffs in the field offices.


                             25
     Some important work required by administrative procedures
rather than by statute is not being accomplished.  For ex-
ample:

     -- Our August 1916 report 1/ indicated that realty
        specialists of the Chicago area office had not been
        properly supervising the activities of area mnanagers.
        An official of the area office stated he had only 35
        authorized positions to d 48 staff-years of work.

     -- The April 1976 HUD central office evaluation of HUD
        region V reported staff shortages in 10 housing man-
        agement areas, noting that physical inspections of
        multifamily projects were being done on an emergency
        basis and that there was a tremendous backlog of
        unreviewed financial statements.

     We did not review in detail HUD's entire workload fore-
casting system.  The examples presented above may not be
representative of t   total system and should not be so in-
terpreted.

     A HUD central office official stated that several years'
experience with field participation in budget formulation
has clearly demonstrated that field input exaggerates the
demand fcr HUD programs and thus tends to make workload
forecasting unreliable.



l/"Protecting and Disposing of Single-Family Properties Ac-
  quired by the Department of Housing and Urban Development',"
  Aug. 31, 1976 (CED-76-141).




                             26
                            CHAPTER 4

               CONCLUSIONS AND RECOMMENDATIONS

 CONCLUSIONS

     We believe that a need exists in HUD and  overnment-wide
for objective, systematic ways to estimate personnel
                                                     require-
ments.  The Congress, too, needs budget requests that are
based on reliable personnel requirement estimating
                                                   techniques.
The concept of work measurement offers potential
                                                 for yielding
more objective anc reliable personnel requirements
                                                   estimates.
     Yet, the nature of much of the work in civilian
                                                      govern-
ment agencies, including HUD, is such that engineered
                                                        ap-
proaches to establishing work measurement standards
                                                     ,hould be
very costly, and in many cases may not be cost
                                                effective.
This is because much of the work is seasonably
                                                variaDle, non-
routine, or has long cycle times.  In these cases, work mea-
surement standards based on historical experience
                                                   or properly
conducted technical estimates may be the most cost
                                                    effective
method for developing the time to perform a given
eration.                                           task  or op-
           These types of standards can be established quickly
and at significantly lower cost than engineered
                                                 standards.
The inherent disadvantage, however, is that they are initi-
ally less reliable since they tend to be based on past ex-
perience and therefore incorporate whatever inefficiencies
exist in the way work is done.   However, the standards so
developed can be updated over time by the use of work samp-
ling or methods studies arid adjusted to more appropriately
                                                            re-
flect the time it should take to do the work.

     HUD's work measurement standards have not progressed to
the point where they can be accepted at face value for
                                                        es-
timating personal requirements.   In part, this is because
of weaknesses in the practices used. In spite of this,
                                                         HUD
should be encouraged by the Subcommittee to develop its
measurement system. It would, in our view, be a mistake work
                                                           to,
as one HUD official put it, "throw out the baby with the
water." However, in moving forward, HUD needs to be more bath
cerned with assuring that the standards developed are basedcon-
                                                               on
sound work measurement practices.   The method or combination
of methods should be used that is cost effective.

     We identified weaknesses in HUD's procedures for stand-
ards development. These must be corrected before standards
are further developed.




                              27
      HUD's work measurement system is also not integrated
with time, payroll., and workload reporting systems. Although
HUD has a time reporting system, its integrity is questionable
because of deficiencies in initial reporting at the employee
level.   In addition, HUD's workload reporting system is in an
early stage of development, and steps have been taken to get
better feedback on actual performance to compare with work
measurement standards.

     To compensat- for perceived staff shortages in the
subsidized and o,er housing programs, HUD has been relying
on fee personnel in th: insured single family program. The
extent HUD is using fee personnel to supplement its staff
has not been ully disclosed to the Congress.

     Faulty workload forecasts may be contributing to unreli-
able estimates of personnel requirements. If the goal of
obtaining reliable estimates of personnel requirements is to
be realized, HUD must develop accurate forecasts of workload.
RECOMMENDATIONS TO HUD
     We recommend that the Secretary of Housing and Urban De-
velopment improve the Department's practices for developing
its work measurement standards. To do this, the Secretary
should:

    -- Perform methods studies or other similar studies to
       identify the most efficient and effective way to do
       the tasks beina measured. Standards should, to the
       degree practical, be based on the time it should take
       to efficiently perform the given task.
    -- Exercise more care in using the questionnaire/interview
       approach to data collection and evaluate other methods
       of aata collection. The costs and benefits should be
       considered in deciding what approach or approaches to
       use.
    -- Define in further detail the tasks for which stand-
       ards will be developed, thereby increasing the re-
       liability of the data collected.
    -- Examine data which seems out of line and ascertain
       the reasons for it.
    -- Assure that the individuals responsible for setting
       standards are independent of the organization being
       measured and that they carefully review technical
       estimates of program managers for accuracy and relia-
       bility.

                            28
      -- Better document the procss of
                                        and reasons for judg-
         ments used in developing work standards.

      -- Assure, to the, extent feasible,
         selected for data collection to that sample sites
                                          develop standards are
         representative of the whole Department.
       -- Formalize a process for reviewing
                                             and updating stand-
          ards as organizational or procedural
                                                 changes occur.
      -- Reevaluate the sufficiency of
                                        staft rsourcen to de-
         velop and maintain the work measurement
                                                   system.
      -- Integrate the work measurement
                                         system with the Depart-
         ment's time, payroll, and workload
                                              reporting systems.
      -- Insist upon top management's
                                       recommitment
         measurement system effort and communicate to the work
         HUD staff involved.                         it to all

RECOMMENDATIONS TO
THE SUBCOMMITTEE

     The Subcommittee should encourage
work measurement system toward         HUD to develop its
                               the goal of more objectively
and reliably determining staffing
                                  requirements.
     The Subcommittee should direct the
                                          Secretary to present
with HUD's fiscal year 1979 budact
hensive plan for proceeding witi,    submission (1) a compre-
                                  its work measurement  systems
development, and (2) a statement
ment has made in dealing with the on  the progress the Depart-
report.                            issues presented in this

AGENCY COMMENTS
     As requested, written comments
Department. However, we discussed    were not obtained from the
                                    our report with Department
officials and their views have been
                                     considered.




                             29
         APPENDIX I                                                                                APPENDIX I

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                maw"11CI
                           -A-O--AMW
                                  .cAwL,
                                      STAMrTOr
                                                                                 July 29, 1976



          Honorable Elmer B. Staats
          Comptroller General
          General Accounting Office
          Washington, D. C. 20548
          Dear Elmer:

              For some time now I have been concerned over the increasing demands
         for staffing at the Department of Housing and Urban Development (HOD),
         and the extent to which these staffing levels are supported by valid,
         objective work measurement standards.

              In recent testimony, HUD officials again requested additional
         staffing and stated that such standards now exist for a substantial
         percentage of their personnel. I would therefore like to request
         that you undertake an independent study for this Subcommittee directed
         at assessing the progress that HUD has made in recent years in develop-
         ing these work measurement standards and the extent to which the standards
         that now exist are valid for determining personnel staffing requirements.
         As a miniun I would appreciate your being in a position to brief the
         Subcommittee on yourtentative conclusions by April 1977 with a final
         report to follow at a later date.




                                                                                HUD-I     ndent Agencies
                                                                                Senate Appropriations Committee




                                                                        30
APPENDIX II                                                    APPENDIX II
                        ANALYSIS OF HUD FISCAL YEAR 1978

                          BUDGET REQUEST FOR PERSONNEL

                                                             Percent of total
                                               Staff-years       HUD staff
   Covered by standards
   Housing Programs:
       Insured single family existing
         and proposed construction                1,269             7.1
       Section 235 single family housing            507             2.8
       Section 8 subsidized housing                 924             5.1
       Insured multifamily                          323             1.8
       Public housing construction-
         traditional and Indian                     285             1.6
       Single family property disposition           640             3.6
       Multifamily property disposition             158              .9
       Management of public housing                 500             2.8
       Management of multifamily loans              613             3.4
       Ail other programs                           698             3.9
                                                  5f917            33.0
   Community Planning and Development:
       Block grants                                 457             2.5
       Comprehensive planning                        73              .4
       Categorical programs                          97              .5
       All others                                   106              .6
                                                    733             4.0
   Fair Housing and Equal Opportunity               66               .4
   Office of Finance and Accounting                896              5.0
           Total                                 7,612             42.4
   Covered by staffing allocations,
   other criteria, or not covered
   Central office functions
     other than the Office of
     Finance and Accounting                      3,670             20.4
   Field.
       Housing Programs                          2,237             12.5
       Community Planning and Develop-
          ment                                     637              3.5
       Fair Hcusing and Equal Opportunity          355              2.0
       Administration and direction              2,08S             li.6
       Reimbursable disaster                         70               .4
      All other                                  1,289              7.2
                                                10,347             57.6
          Total staff                           17,959            100.0




                                    31
APPENDIX III                                          APPENDIX III


               SUMMARY OF STAFF-YEARS AND FULL-TIME

          EMPLOYMENT IN PERMANENT POSITIONS IN HUD

                      FISCAL YEARS 1977-1978


                            Fiscal year 1977     Fiscal year 1978
                            Employ-   Staff-     Employ-   Staff-
                             ees      years       ees      years
Housing programs:
    Washington                705     793.0        685        768.0
    Field                   7,223   7,580.2      7,976      8,153.6
        Total               7,928   8,373.2      8,661      8,921.6
Government National
  Mortgage Associa-
  tion:
    Washington                 41       40.8          43       44.7
Community Planning
  and Development:
    Washington                273     296.8       283        309.8
    Field                   1,189   1,251.1     1,377      1,370.0
        Total               1,462   1,547.9     1,660      1,679.8
New Communities
  Administration:
    Washington                 75      87.6           75      38.0
Federal Insurance
  Programs:
    Washington                191     207.0       215        237.0
    Field                     107      97.0       184        161.9
        Tctal                 298     304.0       399        398.9
Consumer Affairs and
  Regulatory Functions:
    Washington                189     188.7       189        201.0
    Field                     180     185.0       180        185.0
        Total                 369     373.7       369        386.0




                               32
APPENDIX III                                  APPENDIX III

                         Fiscal year 1977   Fiscal year 1978
                         Employ-   Staff-   Employ-   Staff-
                          aes      years     ees      years
Policy Development and
  Research:
    Washington             204     227.0     208      229.0
    Field                   -       17.0      -        15.0
        Total             204      244.0     208      244.0
Fair Housing and Equal
  Opportunity:
    Washington              94     91.7      161     162.8
    Field                , 363    398.0      388     421.0
        Total             457     489.7      549     583.8
Federal Disaster
  Assistance Admini-
  stration:
    Washington             68      82.4       68      83.4
    Field                 100     155.2      100     173.7
        Total             168     237.6      168     257.1
Departmental Manage-
  ment:
    Washington            162     173.3      164     175.3
Office of General
  Counsel:
    Washington            200     217.1      200     220.2
Field Legal Services:
    Field                 315     332.0      325     341.7
Office of Inspector
  General:
    Washington             87      92.2       90      94.2
    Field                 404     405.9      408     412.5
        Total             491     498.1      498     506.7




                           33
APPENDIX III                                     APPENDIX III


                           Fiscal year 1977     Fiscal year 1978
                           Employ-   Staff-      Employ-   Staff-
                            ees      years        ees      years


Administration:
    Washington             1,578      1 992.5     1 578    1,952.8
Field direction and
  operational support:
    Field                    668        732.1       668      737.0
Field administration:
    Field                  1,154      1,279.0     1,225    1,351.7
All activities:
    Washington             3,867      4,490.1     3,959    4,566.2
    Field:
        Regions           11,052   a/11,734.4   12,099    12,535.0
        Other                651        698.1      732       788.1
    Subtotal,
      field               11,703     12,432.5   12,831    13,323.1
        Total permanent
          full-time       15,570     16,922.6   16,790    17,889.3
Reimbursable disaster
  staff-years                           149.7                 70.0
Total staff-years                    17,072.3             17,959.3

a/Includes 1,725 positions authorized     10
                                           LO. regional offices
  and 9,228 positions authorized for 76 urea and insuring of-
  fices.




                              34
 APPENDIX IV
                                                   APPENDIX IV

                   PRACTICAL EXPERIENCES WITH

                    WORK MEASUREMENT SYSTEMS
     Work measurement systems have received increasing
tion in recent years, but some studies conclude         atten-
agencies are not getting the maximum benefits    that Federal
work measurement. The following are examples possible   from
                                              of some of the
experiences public and private institutions have
                                                  had with
work measurement systems.

Study of work measurement in
Fed eal agencies

     The U.S. Army Management Engineering Training
which has been providing work measurement training Agency,
sulting services to Federal agencies since 1952,    and con-
                                                  conducted
a study of the work measurement systems of 11 Federal
cies. In a report issued in 1973, it concluded          agen-
few exceptions the initial attempts to establish that  with
                                                  work
surement systems had been only partially successful. mea-
benefit was not being derived from many of the existingMaximum
measurement systems, in spite of their use in the         work
Government for over 20 years.                      Federal

Department of Defense
     In August 1976, we reported that the full potential
the Department of Defense's work measurement             of
                                             efforts was not
being realized. 1/ We expressed the belief that
                                                 savings could
have been considerably greater than the $121 million
if the work measurement potential had been fully     reported
                                                 realized.
     In a review of work measurement systems in the
services' real property maintenance operations,      military
                                                2/ we noted
that standards used were largely outdated and that
ices did not have adequate work measurement         the serv-
                                            system reporting.
As a result, the services fell short of their potential.

     We also reviewed operations at a Government-owned,
contractor operated ammunition plant and found
                                               that the work


l/"Improvements Needed In Defense's Effort to
                                              Use Work Mea-
  surement" (LCD-76-401, Aug. 31, 1976).
2/"Major Cost Savings Can Be Achieved By Increasing
                                                     Produc-
  tivity In Real Property Management" (LCD-76-320,
  1976).                                            Aug. 19,


                             35
APPENDIX IV                                      APPENDIX IV

measurement program was partially successful, but did not
fully meet the objectives intended. 1/ Although the plant
had made notable progress in its wore measurement program,
it was not achieving intended results because of deficiencies
in the direct labor standards, and was not achieving attain-
able productivitiy.
Department of Health,
Education, and Welfare

     Like HUD, the Department of Health, Education, and Wel-
fare has a staff management system designed for estimating
staff requirements and for fostering efficient management of
personnel resources. As part of its efforts, the Department
has developed, with the help of outside consultants, manuals
describing procedures for gathering data and implementing
manpower management systems.

     One of the Department's component agencies, the Public
Health Service, has conducted work measurement and manpower
utilization studies to broaden the coverage of its work mea-
surement system.

Farmers Home Administration
     The Farmers Home Administration is in the second year
of a 3-year project to establish a work measurement system
for its 1,750 county offices. With assistance from the
Joint Financial Management Improvement Program, the Civil
Service Commission, the General Services Administration, and
GAO, it developed a plan to survey 75 percent of its offices
through a process of detailed employee time reporting. Upon
completion of the project, work measurement standards rep-
resenting local conditions for each State are to be developed.

     Currently, data generated by its work measurement system
is used to estimate national staffing needs, subject to ad-
justment where the data is not reliable.

Local government

     Work measurement standards were successfully used by a
city water department to increase its productivity. With
the help of consultants, the department developed work


l/Letter report to the Secretary of the Army on e-xults of
  review at Lone Star Army Ammunition Plant, 1Txurkana,
  Texas (B-175462, Oct. 26, 1976).

                              36
APPENDIX IV                                      APPENDIX IV

measurement standards and systems to report time and produc-
tion data. As a result of a methods improvement study and
work measurement, the department reduced its staff 25 per-
cent while workload and service levels stayed the same.

Private mortgage banking
and insurance industries

     Based on contacts with six companies and a number of
industry associations, use of formal work measurement sys-
tems dces not appear to be widespread in the mortgage bank-
ing or mortgage insurance industries. Standards and work
measurement systems were generally considered impractical
because of small staffs, variety in the work performed, and
nonuniform work units.

     Staffing requirements were not based on scientific
methods, but instead on overall workload volume indicators
(such as the number of loans or dollar volume per employee),
subject to management judgment and discretion.




                             37