Download - Demonstrating value for Money in a DLO
Demonstrating value for Money in a DLO
Rob McNaughtonRob McNaughton
DLO Work Selection
Why does it matter?Why does it matter? Because of DLO characteristicsBecause of DLO characteristics
Very inelastic costsVery inelastic costsSingle dominating customer – inelastic Single dominating customer – inelastic
incomeincomeSingle statusSingle statusRestrictions on Terms and conditionsRestrictions on Terms and conditions
• Working hoursWorking hours• Bonus and incentivesBonus and incentives
What kind of work are suitable?
Stable income over medium / long termStable income over medium / long term Work that is not best undertaken by Work that is not best undertaken by
sequence production, e.g. mass kitchenssequence production, e.g. mass kitchens Work where general building sub-Work where general building sub-
contracting is availablecontracting is available
What is suitable?
YesYes Responsive and Responsive and
voidsvoids Minor works and Minor works and
batched worksbatched works Out of sequence Out of sequence
refurbishment – refurbishment – may be butmay be but
NoNo Major sequence Major sequence
refurbishmentrefurbishment External paintingExternal painting M&E cyclicalsM&E cyclicals
What about external contracts
The Inspector questionsThe Inspector questions Why is this advantaging your organisation?Why is this advantaging your organisation? How do you deal with customer conflicts?How do you deal with customer conflicts? What happens when it ends?What happens when it ends?
My advice – keep it as a marginal activity with My advice – keep it as a marginal activity with community benefitcommunity benefit
Value for Money
What does not work:What does not work: Average repair cost benchmarkingAverage repair cost benchmarking Baskets of ratesBaskets of rates Void cost benchmarkingVoid cost benchmarking
What may not workWhat may not work Competitive tenderingCompetitive tendering
Value for Money
Cost efficiency only – responsiveCost efficiency only – responsive Cost efficiency – voidsCost efficiency – voids DemandDemand PerformancePerformance Customer satisfactionCustomer satisfaction
05101520253035404550556065707580859095100105110115120125130
25 35 45 55 65 75 85 95
Low value - Percentage of total jobs - High value
Ave
rage
job
cost
s (£
) Responsive Repair Average Costs
Voids -1
You cannot directly compare void costsYou cannot directly compare void costs Void rates are tied to responsive ratesVoid rates are tied to responsive rates You must capture all void costsYou must capture all void costs
Voids -2
You can compare where the money goes:You can compare where the money goes: SecuritySecurity Cleaning and clearanceCleaning and clearance Safety checkingSafety checking RepairsRepairs InvestmentsInvestments Re-decorationsRe-decorations Re-chargesRe-charges OtherOther
Demand
Responsive (excluding gas) between 3 and Responsive (excluding gas) between 3 and 3.5 jobs per unit per annum3.5 jobs per unit per annum
Voids – not relevantVoids – not relevant
Performance - responsive
Average time to complete all jobs (less than Average time to complete all jobs (less than 8 days)8 days)
Total % of appointments made of all jobsTotal % of appointments made of all jobs Total % of appointments met by DLOTotal % of appointments met by DLO Jobs completed at first visitJobs completed at first visit Jobs that go over 20 working daysJobs that go over 20 working days
Performance - Voids
3 days to commission3 days to commission 2 days to hand back2 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 E.g. £2000 void = 3 days plus 2 days plus 2000/250 (8days) = 13 days2000/250 (8days) = 13 days
Customer Satisfaction
I don’t care about satisfied customersI don’t care about satisfied customers I care about less than fully satisfied I care about less than fully satisfied
customerscustomers
Why was it not perfect?Why was it not perfect? What can we do about it?What can we do about it?
What Demonstrates Value?
A strategyA strategy Price testing Price testing Managing the key costsManaging the key costs Managing the (right) budgetManaging the (right) budget Performance measurementPerformance measurement Performance managementPerformance management Benchmarking activelyBenchmarking actively
Performance Management
The jobs – measure the right things and do The jobs – measure the right things and do something with the outputsomething with the output
The people – for productive staff this is a The people – for productive staff this is a daily / weekly eventdaily / weekly event
I am an Inspector
Did you do what I told you to do last timeDid you do what I told you to do last time Is there a vfm strategy?Is there a vfm strategy?
Is it being used?Is it being used? Have you some validation of cost efficiency?Have you some validation of cost efficiency?
Competitive testCompetitive test Meaningful cost comparisonsMeaningful 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 Do you involve tenants and use customer
feedback?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 Why do we use a Schedule of Rates / open book?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 Do operatives know what performance is
expected of them?expected of them? Can your supervisors supervise?Can your supervisors supervise?
Ask yourselves
Do you know where you are making surplus / lossDo you know where you are making surplus / loss Has everyone a grasp of the basic statisticsHas everyone a grasp of the basic statistics
How many jobs – day / week / month / year?How many jobs – day / week / month / year? How much?How much? How we do things?How we do things?
Have we got records that make show that this Have we got records that make show that this operation is managed?operation is managed?
Tailpiece
Delivering service is not a battle it’s a warDelivering service is not a battle it’s a war Action plans win battlesAction plans win battles Agendas win warsAgendas win wars
‘‘Why’ and ‘how’ are your greatest weaponsWhy’ and ‘how’ are your greatest weapons