Better forecasting would help, but it is more important that the Agency has the capacity to cope both with anticipated and unforeseen demand. The Agency has taken some measures to improve its capacity, and now intends to change its strategy to prioritise service to the public. The Agency has yet to take a decision on the further roll-out of its new system.
3.31 To avoid a repetition of the crisis in 1999, the Agency will first need to develop better forecasts of demand so that it can plan better, and it will need to ensure that it has sufficient processing capacity (in terms of offices, hardware, software and people) to cope.
3.32 On forecasting, at present it is not clear what volume of applications the Agency will finally receive in 1999-00 because it remains uncertain whether the larger than expected peak in demand between April and June will be matched by a corresponding trough later in the year. The Agency now expects that demand will reach 5.55 million compared to its original forecast of 5.1 million. Looking forward to 2000-01 and 2001-02, the picture is complicated by a number of factors. It is not yet clear whether the higher than expected volume of child applications so far in 1999 will continue at the same levels in future years. In addition, in 2001-02 the 450,000 passports granted two year extensions in 1999 will come up for renewal, thereby increasing demand. Given the uncertainty it faces, the Agency is currently planning for volumes between 5.0 and 5.6 million for 2000-01 and around 5.0 million for 2001-02, and it is considering the resource implications of each volume. The Agency is also examining ways in which its monthly forecasts might be improved.
3.33 Better forecasting will help, but it is more important that the Agency has the capacity to cope both with anticipated and unforeseen demand. On capacity, the Agency has recruited extra permanent staff, and this should help, but the key question is whether the Agency's computer systems, both old and new, will enable this increased number of staff to be sufficiently productive to meet the levels of output required. On this point, during the 1999 crisis the Agency was able to increase output dramatically at the four offices still using its old computer system, and eventually output at the two offices using the new system also increased to match levels attained with the old system - albeit at a higher unit cost, in part because of the level of overtime.
3.34 The Agency has not yet taken a decision on when to roll-out the new system to its other four offices. It commissioned consultants, Cornwell Affiliates plc, to undertake a technical audit of the new system in June 1999. They concluded that it is capable of meeting the Agency's requirements although it will require further tuning to achieve its full potential. The Agency expects that the latest and future releases of the new software will make the computer system easier for operators to use and increase productivity. In July 1999, the Agency also commissioned the consultants Deloitte Consulting to review operations in Newport and Liverpool and to make recommendations about further roll-out. The report from Deloitte Consulting in September 1999 made a recommendation for a plan for improving the new system, including better workflow, better management information, and improved teamwork. Deloitte Consulting concluded that the system would be able to perform to the standards set in the original business case if the plan to define and develop process improvements was fully implemented. The consultants considered this would require completion of a carefully managed and well-executed project which would take a step by step approach to improving the process and, crucially, testing it under increased volumes to confirm the new system's robustness. In the meantime, the Agency has completed work on the old system to make it millennium compliant, at a cost of £200,000.
3.35 Most importantly, on capacity the Agency has decided to change its strategy and intends to prioritise customer service rather than the previous emphasis on containing unit cost. The Agency is planning to introduce a series of measures which are likely to include outsourcing telecommunications, developing a better website, additional accommodation, longer counter opening times and an extension of its high street partnership arrangements. These additional measures are likely to add over £3 to the cost of producing each passport, bringing the unit cost to over £17 from 2000-01 onwards.