90755 Investment Climate l World Bank Group Nuts & Bolts Technical Guidance for Reform Implementation Title Here Implementing a Shared Inspection Management System Insights from recent international experience World Bank Group Businesses, non-governmental organizations, and health care • Decreased administrative burden for businesses and entrepreneurs to providers in developing countries often face an array of inspections comply with regulation; from various government agencies. Leading reformers have turned • Increased quality and effectiveness to shared technology solutions to better coordinate the timing, of inspections leading to improved scope, and targeting of inspections. A recent study conducted by regulatory compliance; the World Bank Group examined the experiences of 12 jurisdictions • Improved internal efficiency and reduced administrative costs for with inspection management ICT solutions shared across multiple governments; and inspectorates.1 The study results confirm that the use of a shared • Increased transparency of inspection inspection management system (SIMS) can help facilitate reform operations for businesses and citizens efforts and expedite their expected benefits. leading to a decrease in corruption. These benefits usually result from: • Gathering and consolidating more Best practice today dictates that business has a key role in improving efficiency, consistent and comprehensive inspections should be organized around transparency, and accountability in information on enterprises subject to the business enterprise; that is, the business inspections. inspection; various inspectorates should ideally coordinate their activities to ensure that • Streamlining the inspection process to Using technology to scale up increase inspector efficiency; all relevant risks are properly addressed during a joint inspection process. business inspection reform • Formalizing policy and procedures to However, experience shows that Inspection management systems are ensure consistency; inspections tend to be uncoordinated, increasingly common in developed • Automating and supporting decision- unplanned and carried out in silos, economies, although most are implemented within single agencies— making to reduce subjectivity in regardless of industry or jurisdiction. and one agency often has several operations and maximize the use of Typically inspecting organizations do systems in place for several processes. resources; not share much information or regularly communicate, which—combined A select number of jurisdictions have • Sharing information across with weak inspection standards and made efforts to implement inspection inspectorates to coordinate inspection procedures, poor documentation of management solutions that are shared scope, improve preparation and findings, and ineffective mechanisms in across multiple inspectorates, albeit with outcomes, as well as reduce the place to relay inspection results back to various levels of success. Online research inspection burden of individual businesses—serves to exacerbate the and a series of in-depth interviews with inspectorates; and situation. government officials who participated in • Providing public access to relevant this study showed that a successful SIMS information leading to increased While many of these deficiencies can be implementation yields: transparency and accountability. addressed through legal, regulatory, and • Improved targeting through a better process reforms, information technology identification and follow up of risks Implementing a Shared Inspection Management System 1 Table 1 Overview of surveyed sims initiatives Level of Commercial-off-the-Shelf Risk-based Participating Jurisdiction Government Primary Inspectorates or Industries (COTS) or Custom Solution Solution? (Y/N) Bosnia and Herzegovina / Political Entity Central Inspectorate COTS / Custom Y Federation of Bosnia and Herzegovina (in development) Bosnia and Herzegovina / Political Entity Central Inspectorate Custom Y Republika Srpska British Columbia, Canada Provincial Meat Inspection Custom Y Colombia Municipal Health, Environment, Police, Fire, Tax Custom Y Collection, City Hall, Chamber of Commerce Croatia Federal Agricultural and Veterinary Inspection COTS / Custom Y (in development) Mongolia Federal Central Inspectorate To be determined Y Netherlands Federal Social Affairs and Employment, Food and Custom N (Company Dossier) Consumer Product Safety Authority Netherlands Federal Meat Inspection Custom Y (Continuous Control & Monitoring Supervision) Netherlands Federal All except Tax Inspection and Customs Custom N (Inspectionview) Nova Scotia, Canada Provincial Food Safety, Provincial Tax, Environment, COTS Y Occupational Health and Safety Redwood City, California, USA Municipal Building COTS N United Kingdom Federal Retail Businesses Custom Y (Retail Enforcement Pilot) Research shows that the introduction of an inspection • Basic solutions incorporate information about businesses management system, especially one shared across numerous and entrepreneurs, their characteristics (e.g. locations, size, inspectorates, helps formalize many of the good practices industry, etc.) and previous inspection results to allow for required to reform business inspection—in addition to the simple planning of future inspection activities. These systems above-mentioned benefits. typically provide a full inspection history by business and location and use a checklist to obtain consistency across Table 1 provides an overview of the SIMS initiatives examined inspections. Solutions in this category may share information in the study along with details of the inspection activities across several inspectorates; however, there is typically very addressed and the technologies used. limited automation or system-to-system integration. • Intermediate solutions have functionality to trigger Common features and functionality of shared follow-up activities based on the outcome of an inspection inspection management solutions and allow for automated integration of inspection practices Shared inspection management solutions range from simple across inspectorates. They are ideally integrated with database applications that track inspection results and provide government business registries or other sources of enterprise back-office support to complex, web-based systems that information to identify the location, sector and other key automate decision support, manage business processes, attributes of a business. Intermediate solutions may also and provide an online informational interface for enterprises include limited mobile inspection capabilities and support subject to inspection. The surveyed jurisdictions used a wide some level of automated inspection plan creation based on variety of approaches to implementing a SIMS, but many previous inspection results. of the solutions share a common set of features. While all • Advanced solutions include a variety of other features and solutions provide functionality for inspection planning, the functions including: detailed functionality and implementation differ based on • Risk-based inspection planning allows for the the mandate and objectives of the various inspectorates. For scheduling and planning of inspections based on a risk example, in the Republika Srpska, Bosnia and Herzegovina, assessment of the business that includes key information the inspection management system automatically determines such as size of the business, previous inspection results, the annual inspection priorities based on the types of facilities industry, geography, and data from other inspectorates or encountered. government information sources. 2 Investment Climate l World Bank Group • Automated or real-time integration with other information sources, which Key Implementation Considerations generally fall under two broad categories: It is important to understand not only the drivers for change but also the (i) registry information (e.g., business/ individual requirements of each organization. There are often challenges company registration information, licences associated with finding a solution that meets all inspectorates’ needs while and permits); and (ii) risk information (e.g., achieving some level of standardization. According to study participants, the business/company risk based on its activities ability to find balance between solution customization and inspection process and profile, results of inspections or reports standardization is critical to successful partnerships and contributes to the from other inspectorates). inspectorates’ abilities to align with reform initiatives and realize the full benefits • Comprehensive mobile inspection of the shared platform. For several study participants this balance proved difficult capabilities include tools and technologies to achieve. Their inspection management solutions ended up highly customized; that give inspectors the ability to view according to interviewees; more standardization would have helped improve schedules and inspection records as well system usability, maintain information quality and integrity, and more easily as record inspection results while on- facilitate data sharing among inspectorates. site. The study revealed that a number of The following are key issues to be considered during implementation: jurisdictions leveraged mobile computing • Specify the objectives of the shared inspection solution. Ensure that all platforms to support inspectors in aspects of the implementation (legal reforms, governance, ICT solution, the field. The approaches varied from communications, change management, evaluation) align to meet the goals of using notebooks, tablets and hand- the initiative. held devices to full online access using • Understand the legislative and political context governing the inspections. web-based applications. Technology Ensure that the solution is designed to support existing legislation and adoption by inspectors, however, proved identify potential gaps in legislation or the political context itself, to enable to be a challenge in many jurisdictions as shared inspection management (e.g., legislation pertaining to privacy and significant training was required. The age data sharing; willingness support for change). and technical background of the inspectors were typically contributing factors. • Review the inspection processes involved. Will the project implement the processes ‘as-is’ or capitalize on the opportunity to redesign processes and • Performance management capabilities leverage technological possibilities? Consideration must also be given to the enabled through business analytics design of risk-based inspection planning practices. is aligned with risk-based planning and • Define the governance structure and financing sources. In SIMS, the provides capabilities for inspectorates governance structures of both the project and the resulting technology to monitor the efficiency and output of platform are critical to ensure clear decision making and the achievement of their inspection program and individual key objectives. It is also critical to ensure adequate financial resources are inspectors. devoted to maintain the system, once operational. • Public portal capabilities involves • Address change management and communications in the implementation providing access to businesses and plan. Ensure that all stakeholders are fully invested in the new solution. the general public to view inspection • Assess the organization’s ICT capacity. If internal capacity is inadequate, requirements and results, submit determine a strategy to build support and hosting capabilities through complaints, and appeal an inspection. training of existing staff or identifying hosting alternatives within government or the private sector. Challenges in implementing shared • Identify the source of business and location information. Determine if inspection management solutions existing databases (e.g., business/corporate registry, tax administration, 1. Lack of a common database of business business licensing, existing inspection system) can be used and how entities and location information. enterprise information will be kept updated. Respondents reported that access to • Conduct detailed solution planning and design. Spend considerable time a ‘single source’ of reliable business/ designing the system to ensure that the delivered system meets the needs of company information (e.g., a centralized inspectorates. business/company registry) was critical • Focus on project and solution deployment planning. Determine the strategy to the long-term success of a SIMS. The for rolling out functionality to help ensure success (e.g., pilot with one registry should have information on both inspectorate or a group of inspectors a within a central inspectorate; first roll branch and headquarters locations of out basic features and then more advanced functionalities). businesses as either may be subject to inspection, as well as a common company Implementing a Shared Inspection Management System 3 identification number shared across government. Without building is essential, as well as funds for ongoing operation reliable enterprise information, there is significant risk of the system. that inspectorates will lack a full and error-free list of all 4. Complexity of business processes and technology. of business locations subject to inspection. A common Many developed country jurisdictions believed that company identification number is also an important business process and technology complexity as well as a prerequisite for information sharing among inspectorates. high degree of solution customization across inspectorates 2. Weak or unclear governance, leadership and vision. greatly inhibited the capabilities of the SIMS. In many cases While many initiatives easily gained short-term momentum, this can be attributed to inadequate efforts at process this was often difficult to maintain over the long term due standardization prior to automation, while in others to competing priorities and resource constraints. Many the differing objectives of the inspection (e.g., financial survey participants indicated that a more clearly articulated verification versus public safety) prevented full realization of vision, stronger governance and senior leadership would key benefits of the SIMS. have helped maintain the direction and pace of the SIMS 5. Lack of communication and inspectorate engagement. implementation. Stronger governance can also resolve Stakeholder engagement is critical in order to demonstrate issues of data ownership, management, accuracy, and the benefits of a SIMS and gain support for the initiative. In policies concerning data access and modification privileges. the case of Colombia’s SIMS, more targeted engagement Shared data of poor quality can seriously compromise the with the individual stakeholders across the country may integrity of inspection planning and risk analysis. have improved buy-in and solution adoption; less than 3. Lack of business, financial, and technical 10 percent of the stakeholders were reported to be infrastructure. Developing country respondents reported participating in the national system. Jurisdictions that that when jurisdictions designed and implemented the mandate the participation of inspectorates in these inspection solution without ensuring that the necessary initiatives tend to have more success in the area of business and technical infrastructure was in place, there stakeholder engagement. were notable difficulties during implementation (e.g., a centralized business registry, adequate levels of inspection Design and deployment process reform, human resource support, ongoing financial support, and technical/business knowledge and support). Figure 1 provides a high-level roadmap for the design and Early planning for ongoing institutional and ICT capacity deployment of a SIMS. The survey revealed that the decision between a custom-built or a commercial off-the-shelf (COTS) Figure 1: Roadmap for Shared Inspection Management Solution Deployment Project Organization & Project Solution Solution Solution Initiation Governance Scoping Design Development Implementation • Identify and engage • Finalize project • Understand the high • Understand current • Develop solution • Plan solution key stakeholders and governance and team level functionality of state and desired implementation as a • Keep all project decision makers structure the solution future state separate process aspects in balance (technology, business) • Understand and map • Define roles and • Understand whether • Conduct detailed • Ensure a “system the political, responsibilities for all changes to inspection • Collect and prioritize deployment planning design” is produced administrative, stakeholders processes are in functional and for stakeholder • Conduct training regulatory and scope technical • Define senior-level review and feedback economic context requirements • Implement the sponsors and • Identify existing • Create different solution—consider a • Define project sponsorship model systems to consider • Incorporate key technical “soft launch” objectives systems and sources • Confirm data • Identify/plan for risks environments for of data in the design • Implement business • Determine scope of governance development, testing, • Ensure the use of process changes the initiative • Plan data training, and • Understand resource strong project conversion/migration production • “Turn off” old • Identify impacts on capacities management systems and stop key staff methodologies • Develop technical • Conduct system, • Determine reporting conducting old blueprint functional and user • Ensure financial mechanisms processes acceptance testing commitment Change Management, Communications and Training Project Reporting and Evaluation Activities Financial Management 4 Investment Climate l World Bank Group Why Shared Inspection Management Systems? The Case of Kenya A restaurant in Nairobi, Kenya can expect to be visited as many as 5–7 times per year by inspectors from up to 19 agencies in charge of reviewing building safety, food safety, occupational health and safety, environmental and water quality, and practices related to serving alcohol, to name a few. The restaurant will be visited by these inspectorates once or multiple times per year, in many cases unannounced and unplanned, placing significant strain on the business owner. Additionally, inspectors may not share the reason for or the outcome of the inspection. Inspection criteria and results often are not readily available to the restaurant owner and different inspectors may provide contradictory feedback regarding whether the establishment is in compliance with the rules or how to resolve any deficiencies identified. Over 85 percent of businesses in Kenya can expect to be inspected in a given year, as compared to around 20 percent in European Union countries. This compliance burden takes time away from the primary focus—growing the business, remaining competitive, and contributing to the local economy. Unclear, subjective rules with limited accountability placed on the inspector can also quickly lead to corruption by creating a situation where it is simply easier to bribe the inspector than attempt to maintain compliance. In any case, the lack of information and guidance frequently means that the impact on compliance, health and safety is minimal—if any. technology solution was largely based on the functionality Mike Davis (Barrington Consulting), Ferry de Rijcke (the Netherlands’ required by stakeholder inspectorates. The majority of civil service), and Goran Vranic (Republika Srpska Inspectorate). study participants opted for a custom-built solution, which provided maximum flexibility in design and future adaptation; The findings and views published are those of the authors and should however, it is important to note that in the instances where not be attributed to IFC, the World Bank, the Multilateral Investment a COTS solution was selected, the technology still provided Guarantee Agency, or any other affiliated organizations. Nor do any enough flexibility to configure the system to meet individual of the conslusions represent official policy of the World Bank or of its inspectorate requirements. Executive Directors or the countries they represent. Conclusion The results of this study highlight the most important business, Notes technical, and institutional considerations when planning, In addition to the survey of SIMS projects, the research deliverables in- 1 designing, and implementing a SIMS. The jurisdictions cluded: (i) a detailed implementation roadmap for project managers; (ii) a detailed checklist of information and functionality requirements reflecting highlighted throughout this note are among the leaders in current best practices; (iii) a model consultant terms of reference for the inspections reform and represent a commitment to ongoing SIMS design; and (iv) a model request for proposal for the procurement and innovation as it relates to inspection practices. deployment of the SIMS application. Based on the information summarized throughout this note, it is clear that a SIMS, together with adequate supporting business and technical infrastructure, is an emerging best practice in government efforts to reduce the compliance burden on business. Analysis and note prepared by John Wille and Florentin Blanc (Investment Climate Department, World Bank Group), Contact John Wille l Lead Private Sector Development Specialist l Investment Climate Email: jwille@worldbank.org TEL: 1-202-473-2707 www.wbginvestmentclimate.org Implementing a Shared Inspection Management System 5