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Demonstrating value for Money in a DLO

Demonstrating value for Money in a DLO

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Demonstrating value for Money in a DLO

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  1. Demonstrating value for Money in a DLO Rob McNaughton

  2. DLO Work Selection • Why does it matter? • Because of DLO characteristics • Very inelastic costs • Single dominating customer – inelastic income • Single status • Restrictions on Terms and conditions • Working hours • Bonus and incentives

  3. What kind of work are suitable? • Stable income over medium / long term • Work that is not best undertaken by sequence production, e.g. mass kitchens • Work where general building sub-contracting is available

  4. Yes Responsive and voids Minor works and batched works Out of sequence refurbishment – may be but No Major sequence refurbishment External painting M&E cyclicals What is suitable?

  5. What about external contracts • The Inspector questions • Why is this advantaging your organisation? • How do you deal with customer conflicts? • What happens when it ends? • My advice – keep it as a marginal activity with community benefit

  6. Value for Money • What does not work: • Average repair cost benchmarking • Baskets of rates • Void cost benchmarking • What may not work • Competitive tendering

  7. Value for Money • Cost efficiency only – responsive • Cost efficiency – voids • Demand • Performance • Customer satisfaction

  8. Responsive Repair Average Costs

  9. Voids -1 • You cannot directly compare void costs • Void rates are tied to responsive rates • You must capture all void costs

  10. Voids -2 • You can compare where the money goes: • Security • Cleaning and clearance • Safety checking • Repairs • Investments • Re-decorations • Re-charges • Other

  11. Demand • Responsive (excluding gas) between 3 and 3.5 jobs per unit per annum • Voids – not relevant

  12. Performance - responsive • Average time to complete all jobs (less than 8 days) • Total % of appointments made of all jobs • Total % of appointments met by DLO • Jobs completed at first visit • Jobs that go over 20 working days

  13. Performance - Voids • 3 days to commission • 2 days to hand back • £250 per day in the middle • E.g. £2000 void = 3 days plus 2 days plus 2000/250 (8days) = 13 days

  14. Customer Satisfaction • I don’t care about satisfied customers • I care about less than fully satisfied customers • Why was it not perfect? • What can we do about it?

  15. What Demonstrates Value? • A strategy • Price testing • Managing the key costs • Managing the (right) budget • Performance measurement • Performance management • Benchmarking actively

  16. Performance Management • The jobs – measure the right things and do something with the output • The people – for productive staff this is a daily / weekly event

  17. I am an Inspector • Did you do what I told you to do last time • Is there a vfm strategy? • Is it being used? • Have you some validation of cost efficiency? • Competitive test • Meaningful cost comparisons • Do budgets and spend correlate? • Is the written policy the one that operates?

  18. I am an Inspector • Do you understand demand? • Do you involve tenants and use customer feedback? • Do you use monitoring information? • Do you look outside? • Is your DLO scrutinised (cliented)? • Are you managing business risk?

  19. Ask yourselves • Why do we use a Schedule of Rates / open book? • Do we know the history? • Is our income secure for the next five years? • Do operatives know what performance is expected of them? • Can your supervisors supervise?

  20. Ask yourselves • Do you know where you are making surplus / loss • Has everyone a grasp of the basic statistics • How many jobs – day / week / month / year? • How much? • How we do things? • Have we got records that make show that this operation is managed?

  21. Tailpiece • Delivering service is not a battle it’s a war • Action plans win battles • Agendas win wars • ‘Why’ and ‘how’ are your greatest weapons