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HAMMAR West Midlands Does size matter in procurement? - PowerPoint PPT Presentation


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HAMMAR West Midlands Does size matter in procurement?. Central Housing Investment Consortium Ltd. John Fisher – Managing Director CHIC - Partner Ark Housing Consultancy. CHIC Presentation. Asset Management Market Summary – How we see it Where does size matter? CHIC’s response

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Presentation Transcript
slide1

HAMMAR

West Midlands

Does size matter in procurement?

central housing investment consortium ltd

Central Housing Investment Consortium Ltd

John Fisher – Managing Director CHIC

- Partner Ark Housing Consultancy

chic presentation
CHIC Presentation
  • Asset Management Market Summary – How we see it
  • Where does size matter?
  • CHIC’s response
  • CHIC in brief
  • A view of the future
affordable housing landlords business model
ANNUAL RENTAL INCOME c.£4,680 (£90 per week)Affordable Housing LandlordsBusiness Model

Surplus

20%

Management

Loans

Responsive

Planned

25%

Asset Spend = £1,600 - £2,000 C.35% - 40%

slide6

Understanding Cost (Not Price)

Risk

% of cost

Contingency

4%

Ownership

Profit

Overheads

6%

Management

Preliminaries

18%

Sub Contractors

10%

Labour

Labour

40%

Materials

Materials

22%

100%

slide12

Housing Asset Management

Volume of orders

High

Low

Value of orders

Low

High

Development

Planned

Responsive

LABOUR

MATERIALS

slide13

Client Function – Silos or Integration?

Development

Planned

Responsive

CONTRACT MANAGEMENT

CLIENT MANAGEMENT

LOCAL OVERHEADS

PRELIMINARIES

LABOUR

MATERIALS

slide18

3 Big Spend Items

  • People (50-60%)
  • Materials (20-50%)
  • Vehicles (10%)
slide19

Contractor Order Book

  • Any business needs to know what it needs to deliver
  • Order book is king
  • How good is your AMS?
slide21

Procurement Solutions

  • Is procurement a FUNCTION or a CAPABILITY?
  • Does the plan drive the delivery solution or procurement drive the plan?
  • Stage 4 of Planning Process = Order book
  • Test – sustainable order book for constant volumes?
slide23

Where does size matter?

Assumption: ‘Size’ means more than one RP working alone

slide24

Housing Asset Management

Volume of orders

High

Low

Value of orders

Low

High

Responsive

Planned

Development

Development

Responsive

Planned

LABOUR

LABOUR

MATERIALS

MATERIALS

slide25

Opportunities from Aggregated Size

Share the ‘costs of shopping’.

Combined volume for M&E Servicing contracts (SMEs’)

Purchase materials direct (control the price and transparent transactions).

Combine planned programmes (shared overheads and prelims and improved social value : CSVs’).

Opportunities for SME contractors from ‘market management’

what is chic
What is CHIC?
  • Formed in early 2010 CHIC is a company limited by guarantee, established by eight member landlords, which operate together as a consortium across and now beyond the Midlands.
  • CHIC is established to secure efficiencies in the procurement of asset management services for housing organisations. We pride ourselves on being the first procurement consortium to operate across the Midlands.
  • CHIC is supported and sponsored by the Homes and Communities Agency (HCA) and is being managed by Ark Housing Consultancy on behalf of its members.
current membership
Current Membership
  • 25 Member organisations throughout the UK comprising:
    • 21 Housing Associations
    • 2 Local Authorities
    • 1 ALMO
    • 1 Consortium (we also work closely with another)

Collectively managing 287,500 homes

slide29

CHIC’s USP’s

Joint Procurement– Share the cost of shopping.

Contract with ‘ecommerce’ agent

Procured Materials / Merchants contracts

Joint (M&E) Service Contracts

Member benchmarking

All contracts have E & S requirements (including materials)

actual efficiency gains works services
Actual Efficiency Gains – Works & Services

Members saved >£1m on the cost of shopping in 2010/11 – 60 Lots in one go Plus annual contract efficiencies:

Business Plan target 7% Actual Saving 18%

materials supply overview
Materials Supply Overview
  • Long term 5 year (+ 5 year) contracts
  • All EU Compliant
  • Currently used by in-house and external contractors
  • Unique Nationwide Merchants Framework
  • Managed by ecommerce provider, Valueworks Ltd
  • Suited to Asset Management and New Build works
  • Can be used within external contracts & contractors

Key benefits:

  • Savings, 19% average saving by members in 2011/12
  • Price control & Invoicing compliance
  • Consolidated invoicing
  • Transaction accuracy
  • Supply chain management
  • Reduced administration
materials supply 1 big ticket items
Materials Supply (1) - ‘Big Ticket Items’

*Some delivery restrictions may apply

actual efficiency gains example
Actual Efficiency Gains - Example

Example individual item savings achieved by members are summarised below:

slide36

So Does Size Matter?

Yes….But

  • Programme planning is key (sustained order book = continuity for workforce)
  • Understand the detail (cost, not price)
  • Be prepared to do it differently (materials vs, labour / joint contracts)
  • Commitment for Employment and Skills Strategy
materials procured direct

Materials Procured Direct

Shared Costs of Shopping