Demonstrating value for Money in a DLO Rob McNaughton

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

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

What is suitable? Yes 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 about external contracts The Inspector questions 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 My advice – keep it as a marginal activity with community benefit

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

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

Responsive Repair Average Costs

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

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

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

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

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

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

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

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

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

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

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

Ask yourselves Do you know where you are making surplus / loss Do you know where you are making surplus / loss Has everyone a grasp of the basic statistics 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? Have we got records that make show that this operation is managed?

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