building a successful consortium

BUILDING A SUCCESSFUL CONSORTIUM29 FEBRUARY 2016Lev PedroNeil Coulson

WELCOME

THIS WORKSHOP WILL COVER

• Drivers for forming a consortium• 10 stages of consortium development

• Consortium models • Risks and mitigation

• Case studies • Q&A

DRIVERS

BARRIERS FOR SMALL ORGANISATIONS

• Unable to find out about opportunities • The procurement process (e.g.

complex, expensive) • Contracts are too big and/or broad• Pre-qualification • Lack of understanding of the

requirements• Cashflow• Social value often not factored in

EXTERNALAggregation of contracts Competition Best valueWhole person based approachesInnovation

INTERNAL (SECTOR)Fragmented servicesCompetitionPatchy qualityLack of scale Tender capability/lack of capacity

OPERATING ENVIRONMENT

DEVELOPMENT PROCESS

COLLABORATION SPECTRUM

Network Partnership

Joint venture Loose consortium

Formal consortiumMerger

1. Sector scoping/gauging interest

2. Steering group3. Start-up funding 4. 3 Year

Strategic/Business Plan

5. Membership Prospectus

6. Membership recruitment

7. Incorporation8. Grant

aid/investment finance for ‘baseline’ hub?

9. Win tenders10. Deliver

10 STAGES OF DEVELOPMENT

CONSORTIUM MODELS

PROVIDER

Contractor

Provider Provision of Services

MANAGING AGENT

Contractor

Managing Agent

Sub-contractors Provision of Services

MANAGING PROVIDER

Contractor

Managing Provider Provision of Services

Sub-contractors Provision of Services

CASE STUDY:YOUTH CONSORTIUM SHEFFIELD• Loose consortium of c. 20 providers• Zest is managing provider• £2m of contracts for Positive

Activities, Targeted Youth Support Services and work with NEETs

MANAGING AGENT/PROVIDER

• Contract top slice• Percentage of contract to pay for

management of sub-contractors’:• performance• quality• financial management

VERTICAL ALLIANCE

Commissioner

Managing Body

Frontline VCS Providers

‘SUPER PROVIDER’

Provider

Provider

Provider

Provider

ProviderProvider

TERMINOLOGY

Super Provider

Formal Consortium SPV

HOW DOES IT WORK?

• Incorporation to form new legal entity• Providers become members of the

company• Hub and spokes operating model

HUB & SPOKES OPERATING STRUCTURE

Support Unit

Provider

ProviderProvider

Provider

HORIZONTAL ALLIANCE

Frontline VCS ‘Super Provider’

Commissioner

OWNERSHIP & MANAGEMENT STRUCTURE

Board

Member Hub Membe

r

SOCIAL OWNERSHIP

Owned and controlled by the members

2 tier governance:• Council of Members• Board

CASE STUDY: GREATER TOGETHER

• CYP & Families consortium in Lancashire• Set up in 2011 - investment from Lancashire

Children and Young People’s Trust Board • Formal consortium established as charitable

company• 2012 - won first contract - £750k to deliver targeted

youth support services• 2013 - investment from Social Investment

Business/second contract secured - £2.5m for Early Support services

• 2014 - third contract secured - £1.5m for domestic abuse services

RISKS AND MITIGATION

CONSORTIUM DEVELOPMENT: RISKS

1. Lack of commissioner buy-in2. Internal conflicts of interest3. Lack of consortium member buy-in4. Lack of start-up / working capital5. Subcontractor / delivery failure 6. Unable to sustain hub

FURTHER INFORMATION

Lev Pedro020 7520 2411lev.pedro@ncvo.org.ukNeil Coulson020 7520 2411neil.coulson123@btinternet.com

NCVO champions the voluntary sector and volunteer movement to create a better society.We connect, represent and support over 11,500 voluntary sector member organisations, from the smallest community groups to the largest charities.This helps our members and their millions of volunteers make the biggest difference to the causes they believe in.• Search for NCVO membership• Visit www.ncvo.org.uk/join• Email membership@ncvo.org.uk2

8