Sunday 15 July 2012

Why maths is useful

From the various articles about G4S's contract with/at the Olympics, a few facts stand out:

* They have to provide 10,000 people to work at the Olympics
* They will be paid about £250 million for this, and
* The Olympics will run for about three weeks.

I find it helpful if we use "division" with "big number" scenarios like this, so let's "divide" £250 million by 10,000 people = £25,000 per person. Then let's divide £25,000 per person by three weeks = £8,000 per person per week.

I don't know how much G4S will pay the people it employs per week, but I would expect it to be in the region of £500 - £1,000, lets call it £1,000.

We can then use another clever maths trick called "subtraction". G4S were due to receive £8,000 per person working at the Olympics per week and they were due to pay each of them £1,000 per week. We can "subtract" £1,000 from £8,000 = £7,000, which is the amount of money G4S gets to keep for each person who does security work at the Olympics.

10 comments:

Bayard said...

So if G4 is now going to "make a loss on the contract", as their boss assures us, they must either be employing some really dodgy bookkeeping or the Army must really be stinging them for providing the backup troops. I hope it is the latter; the biter bit.

A K Haart said...

Sums up the Olympics.

Tim Almond said...

I'm not quite sure how they make such a small profit margin, but it could well be that there's a massive number of outsourcing tiers involved in this, with each taking a profit on the job.

I worked on a large govt contract recently, but we weren't working for the home office. We were working for a company, working for a company, working for the home office.

You see, companies like G4S don't really have much expertise in this - it's all being outsourced, from the companies hiring people, to the companies training people. They just collect a chunk for really just putting together the bid and jumping through the hoops and getting the contract signed.

I've done work for large and small IT consultancies and the small ones actually know what they're doing. I'd recommend them as they're run by experts in the field providing a service. The large ones are just bureaucrats that then pass the work onto someone else at a larger profit (and generally have no idea what good software looks like).

I have no confidence that G4S are going to do a good job because they're just bureaucrats.

Andy Cooke said...

The rate for the job has recently gone up from £8/ph to £14/ph (it's now £140 per day). Assuming 5 days, it's £700 pw.
They are also (anecdotal report) well behind on security vetting.
From experience, the vetting of personnel is likely to be the most expensive chunk of the process. Not sure how much it costs to SC clear someone (DV clearance is a small fortune); probably a four-figure sum, but they'll be getting applications from people who already have clearance which'll offset that to some degree.

Mark Wadsworth said...

B, TS and AC seem to have a good handle on this.

AKH, indeed, we could look at any contract and find similar horrors, the most memorable being flogging off the athletes' accommodation to [the father of] a Tory donor for hundreds of millions of pounds below cost.

AC, I'm not sure what AC and DV clearance are. How many people in the country have them? Could G4S not have split the difference and offered those with the required clearances a £1,000 signing on bonus?

Andy Cooke said...

MW,
They're the two higher levels of security clearance, and the jobs were being advertised on the SC/DV groups on LinkedIn as requiring SC clearance. The four levels of security clearances are:
- BPSS (Baseline Personnel Security Standard) which is really a formal security clearance - carried out by screening identity documents and references.
- CTC (Counter Terrorist Check). As per BPSS plus a full check against national security records; allows some access to sensitive material
- SC (Security Check) as per the above plus deeper UK criminal and security checks and credit check (requires min of 5 years residence in UK). Allows access to SECRET and supervised occasional access to TOP SECRET.
- DV (Developed Vetting). As the above plus a HUGE questionnaire, stringent financial checks, multiple personal and professional references being directly interviewed and a long detailed interview with a vetting officer. Can take bloomin' months and costs the relevant agency somewhere upwards of £20k per time (or so I'm told). Required for personnel with substantial unsupervised access to DV andor working with intelligence services.

As per numbers - I'm not sure but DV is probably on the order of thousands to tens of thousands; SC tens to hundreds of thousands. Note that clearances lapse when not being used.

It's illegal to give those with clearances any explicit advantages (signing-on bonuses, etc) - but in practice, for short-notice posts, a candidate with existing clearance will end up preferred to one who needs vetting, doubtless for completely separate and coincidental reasons. In a completely tangential note, those of us with security clearances irrationally endeavour to maintain them ...

Mark Wadsworth said...

Ac, thanks for the summary. I'm sure that G4S could have dreamed up some entirely separate reasons if they'd really wanted to.

I wonder whether G4S are already in the business of doing SC/DV clearances, that sounds like money for old rope to me. Every now and then a baddie will slip through the net and e.g. assasssinate the PM or something, but most of the people you nod through will turn out to be reliable.

neil craig said...

Oh but they have to recruit and train all these people months, well weeks, before the games start and that costs a lot of money - if you do it.

Andy Cooke said...

MW,

Nah, G4S have nothing to do with the Security Clearance process itself: only the Defence Business Services National Security Vetting (BDS NSV, formerly the Defence Vetting Agency or DVA), FCO Services and Met Police Services may vet people. I believe that the lions share is done by the DBS NSV.
(If we ever meet up for a drink, I'll tell you some of the stories of outrageous questions asked by the DVA during their time :-) )

Mark Wadsworth said...

NC, big if.

AC, ta, yes, at present it seems logical that only a government body can do security vetting of people for other government bodies (in which I include LOCOG). But there's nothing these people can't outsource.