The University of California is initiating the next phase in its organizational restructuring effort aimed at creating new operational efficiencies and cost savings, Board of Regents Chairman Richard C. Blum and UC President Robert C. Dynes announced.

The new phase consists of a comprehensive project to review and restructure administrative operations at the Office of the President and across the UC system. The project, which stems from discussions of the Board of Regents and a legislative request last year, also is intended to enhance the customer service provided by the Office of the President to UC’s campuses and to better organize the University’s overall administrative operations.

“With this effort we have a great opportunity, for the first time in nearly 50 years, to take a fundamental look at the University’s administrative structure and align it with the modern needs and expectations of the University,” Blum said. “Not only will this effort result in a clearer and more effective administrative organization, it will achieve new efficiencies and cost savings to make the best possible use of the University’s resources. The investment we make now will generate returns many times over and will free up resources for pressing academic priorities.”

The restructuring project is intended to preserve the strengths of the University’s existing operational structure and enhance its support for the academic quality of the institution.

“This effort provides a much-needed opportunity to review and rethink what functions are best performed by the Regents, the Office of the President, and the campuses,” Dynes said. “We believe the end result will be a more effective administrative structure providing better service to faculty, students, staff, and the broader public we serve – and one that reduces costs as well.”

This project is the second phase of an effort to improve operational effectiveness in the University’s administration. The first phase last year involved a preliminary, pro bono organizational review presented to the Board of Regents last year by McKinsey & Co. That review led to the Regents’ creation of several new leadership positions for the University, including an executive vice president for business operations, an executive vice president and chief financial officer, and a chief compliance and audit officer.

The deeper and more comprehensive organizational review and restructuring now being undertaken was also suggested by the McKinsey review last year. In addition, the Legislature included supplemental report language in the 2006-07 state budget committing UC to undertake “a comprehensive review and analysis of the Office of the President with the intention of enhancing the performance of the University’s management and oversight mechanisms such that they complement and advance the University’s overall academic excellence.”

“I am pleased to see the University moving forward to address its administrative organizational structure,” said former Assemblywoman Carol Liu, who as then-chair of the Assembly Higher Education Committee played the lead role in placing the legislative language in the budget act last year. “This effort has great potential to enhance the operations of the University, improve transparency, and create a structure in which roles are clearer and the different levels of the organization understand each other and work together as effectively as possible.”

To provide objective outside input and management of the process, the University is contracting with Monitor Group, a global management consulting firm with expertise in organization effectiveness and experience in restructuring large, complex organizations, to lead the project. The firm was selected through a competitive Request for Proposals process in which five firms submitted bids. Representatives of the Board of Regents, the UC administration, and the Academic Senate participated in the seven-month-long selection process.

This is a multi-phase project. The initial phase will cost an estimated $1.87 million, plus expenses not to exceed 14.5 percent of project costs. The contract contains provisions allowing termination at any time for any reason. If all phases of the contract are performed, including implementation of the recommendations, the maximum cost would be $6.9 million, plus expenses not to exceed 14.5 percent of project costs.

UC expects to realize substantial efficiencies and cost savings from the project, not only covering the cost of the contract but also freeing up resources to address other pressing University academic priorities. The project will be funded by a one-time internal loan from University endowment funds that will be repaid by the savings generated by the improved administrative efficiencies. The endowment funds to be loaned for the project are neither state funds nor student fee funds and cannot be used for general ongoing costs.

The first phase of the restructuring will consist of a review of organizational effectiveness and where various organizational responsibilities currently reside. Subsequent phases of the project are intended to develop a new understanding of what the respective roles and responsibilities of the Office of the President and the campuses should be; a new organizational structure for the Office of the President in accordance with this new understanding of roles; and redesign of some administrative functions across the system.

The full contract with Monitor Group would last approximately 12 months.

A Q&A providing further details about the restructuring effort is available at www.universityofcalifornia.edu/news/2007/apr24a.html.

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