The controversial collaboration between U. California-Berkeley and consulting firm Bain & Company will continue into the fall, campus officials announced Friday, as the firm carries on its work for the Operational Excellence initiative.
Consultants from Bain could be paid up to $4.5 million for advising the faculty and administrators in charge of the project, which aims to streamline the organization and efficiency of the campus administration.
The group of about 10 consultants will work with the office overseeing the entire initiative, the operational simplification team, which will explore the structure of supervisory roles, and the procurement team, which will examine how the campus obtains supplies.
The campus originally hired Bain in October at a cost of $3 million to advise the Operational Excellence steering committee, made up of faculty, staff, students and alumni. In the initiative’s final diagnostic report, released April 12, the steering committee proposed that Bain continue its work through the next stages of the project.
The firm could now receive up to $4.5 million from the campus in January 2011. Bain will receive $2.7 million in professional fees as well as up to $1.8 million as an incentive payment if it is able to save the campus at least $7.2 million from the restructuring of procurement alone. If the firm partially meets the $7.2 million target, it will only receive part of this incentive pay, according to Claire Holmes, associate vice chancellor of communications and public affairs.
Vice Chancellor Frank Yeary, who is co-leading the organizational simplification team, said he is confident that the target savings will be met and Bain’s compensation will then be paid for through these savings.
“We feel quite good about this because they are willing to put a significant portion of their payment at risk, based on performance,” Yeary said.
Yeary also serves on an advisory committee for The Daily Californian that does not have control of editorial content.
The initiative is expected to save the campus between $75 million to $100 million. Revamping the campus’s procurement process is expected to save between $20 million to $40 million, and efforts by the organizational simplification team are expected to save between $40 million and $55 million.
Mark Schlissel, dean of biological sciences and co-leader of the procurement team, said Bain will be able to advise the team on different methods for obtaining supplies based on the firm’s knowledge of similar universities and businesses. Bain has worked with both Cornell University and the University of North Carolina at Chapel Hill on similar projects.
“That’s one of the biggest advantages of working with outside consultants,” Schlissel said. “We’re taking advantage of their expertise and experience.”
The initiative’s program office and the eight teams will begin making recommendations after they finish recruiting members for their teams.