www.bakertilly.co.uk

VFM/SROI – Our Approach Sustainability & Embedding is the key

Peter Lunio - Head of Social Housing Advisory Keith Ward – Social Impact Services Director

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Baker Tilly - Continuing to Support the RP Sector

•Baker Tilly 7th largest professional services firm

in the UK, with 2000+ staff and 31 office locations

• Leading NFP specialists

-No. 2 provider in the SH sector – UK wide

-No. 1 provider in the ALMO sector - UK wide

• Dedicated team of over 20 Partners and 80 staff

•Thought leaders in Impact Measurement and

Social Investment development in UK and EU

•Professional and academic involvement

• Advisors to Regulators - members of the 2010

SORP working party; European Commission and

Governmental roles

•We invest in adding value to the sector through

our Back Office Benchmarking programme,

Technical seminars, and regular research reports .

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Agenda

• Setting the Scene

• Sustainable &

Embedded VFM

• VFM - through

social impact

• How we can help

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Do you know which provides you with …

The best return on Investment?

The best Social Return ?

We get sustainable VFM from the whole organisation ?

Community

Investment

Asset

Investment

Development

Investment

Social Enterprise

Investment

What we mean by VFM

Value for Money

Low cost

High performance

High satisfaction

VFM and self-assessment – 1&2

The standard - “RP’ shall provide and deliver a comprehensive and strategic approach to achieving VFM in meeting their organisations objectives” •Board’s are required to “demonstrate to stakeholders they are meeting the standard”

Produce a self-assessment

Questions to ask…

• Is our approach going to be one where we merely comply with the standard or are we going to try and embed this into the organisation?

• Are we in a position to complete such an assessment, if not what more do we need to do? • Which member of our executive team is going to take responsibility for delivering the assessment and subsequent statement? 6

Our Approach to embedding VFM

Embedding VfM

Developing a Sustainable VfM Strategy

Systematic

Implementation

HCA VfM Regulations

Common Pitfalls in VFM programs

• Applying blanket cuts across the board. Both core and non core activities suffer

• Just activity based – little/or no analysis

of performance & satisfaction . . • Balking at making hard decisions. Tough calls on costs tend to be avoided because an inability to prioritise risk. • Failing to challenge budgeting. Budget systems should not make it easy for

managers to hide their spending or play the system.

Assessment 3 –

Is your VFM strategic ? • Design and/or redesigned services

from a user perspective

• Link efficiency programmes to

corporate objectives for service

improvement

• Demonstrate executive leadership and

support for, and scrutiny of efficiency

programmes

• Delegate management and monitoring

of efficiency activities to a senior level

executive board

• Evidence trail for efficiency and good

governance

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Meeting the new challenge Sustainable VFM model

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Making VFM stick

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• Efficiency Policy • Service Transformation strategy • Back Office Transformation strategy • VFM Planning & Monitoring • Sustainability of VFM gains • Management & Leadership of VFM

Assessment 4 – Is your VFM sustainable

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Assessment 5 - How Embedded is your VFM ?

Demonstrate the

following ...

• A data driven approach

• A change in

organisational culture

• A comprehensive risk

assessment

• A robust evidence based

cost reduction strategy

• Accountability

• A focus on benefits

realisation

• A business as usual

approach to VFM . 13

VFM Service Reviews

Examples of some of our work

• - LSVT 5,500 units - Reviewed their VFM programme

• – 3, 000 units – VFM planned maintenance

• – 21,000 units – VFM Finance Directorate

• – 11,600 units – Back Office VFM review

“Baker Tilly’s Back Office Benchmarking programme has allowed One Vision

Housing to inform and shape our VFMand Procurement Strategies and priorities in

the last few years. Membership of the club has also opened up our organisation to

an invaluable network of friends and colleagues, who support and assist each other

as we strive for continuing improvement.”

Gaynor Robinson, Operational Director, One Vision Housing

Where do you start ….

Sustainability • Where you are on the VFM journey and

where you want to be and when develop

Roadmap

• Improve VFM strategy ensure that the

benefits achieved are sustainable in the long

term & not just short term gains;

• What lessons learn from your last VfM

strategy

• Robustly review your current level

performance vs your cost

• Ensure VFM targets directly linked to your

corporate strategy;

• Do we have the relevant benchmarks to be

able to achieve the above?

Embedding • Will our VfM approach enable us to comply

with the new regulatory standard?

• Assess whether our VfM implementation is

systematic?

• Do you have an appropriate VfM governance

structure

• What are the cultural barriers that we need

to overcome to ensure that we embed VfM?

• How will we know when VfM is embedded

within our employees.

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Back Office

Groups The value of impact

Keith Ward

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“Full” Social Impact

“Limited view” social impact

Local area economic (LM3-

type)

Wider cashable savings

Narrow cashable savings

Categorising Financial Measures of Social

Impact

THINK

• Timescale and

measure

• Viewpoint

• Purview

Inputs Activities Outputs Outcomes Impacts

What is it?...

Primary Secondary

• What change/outcomes does your work achieve (short / long term)?

• Understanding how that change is achieved

• And for whom (direct and indirect beneficiaries)?

...who benefits and how?

...focusing your resources on maximising that change

Social Impact – in context

Financial Accounts Social Impact

They measure Economic transactions: the cash flows, assets and liabilities

Social transactions: the difference we make, to whom, and how we make it

Why we want to know Manage our finances Manage the effectiveness of our work

How we measure it Cash flow forecasts; I&E accounts, balance sheets; financial or proxy KPIs

SROI Social Accounting Total cost accounting

So we can....... Manage resources Influence funders and partners Assess our ability to fund our work Explain our finances

Improve effective delivery Focus resources where most needed Influence funders and partners Explain our work

Why does this matter in social housing …?

BECAUSE …but…

We do so much more than just

housing

how do we show it ?

We want to partner with others how do we get their buy-in ?

We spend £750m a year on

community activities

how do we choose…….

And then how do we know we’re

doing them effectively

how do we increase their

impact…focus them better ?

In the challenge of raising funding

we need to show effectiveness…

…the funders require proof…

By knowing what we’re achieving

for whom……

…we may find gains that show

where we can find income (funding)

……..Yet research shows we’re not doing it well

Assessment 6 - How effective is this spending?

A recent study by the Housing Associations Charitable Trust (HACT) confirmed “that the measurement of community investment impacts across the housing sector is very patchy”. Landlords were found to use a variety of tools and models to measure their work, but there was “no consistency and little analysis of community investment that took account of the landlord's core housing role and the impact of its local spending power”

Demonstrating value for

communities, not companies

Impact of ASB team Impact of Homelessness team Impact of supporting people team Impact on you

Education, Police, Fire, local GPs, families, your communities A & E Department, Social Services NHS, Social Services, families, other agencies Overspent budget

We all know the benefits ripple out, now we are

• quantifying them

• telling our story in our audience’s language

SROI: How does it work ?

Impact = ΣOutcomes – (deadweight + alternative attribution + displacement)

• Deadweight The outcome that would have happened anyway • Alternative attribution

The outcome that arose as a result of other interventions – importance of recognising the work of others

• Displacement The disadvantage or reduction in positive outcome, or social cost arising as a consequence

SROI as an influencing tool...

Internal view: • Understanding which projects

achieve the most to support

prioritisation of scarce resource

• How can we do the same (or

more) for less?

• Developing relevant

performance measures to

monitor impact

• Deeper understanding of how

change is achieved

• Identify new opportunities

External view: • Highlight value to defend

against cuts

• Use to open new sources of

funding

• Use to work more closely with

other bodies

• Use for promotional material

Presenting

the answer

We talk about... We mean... We explain.....

Outcomes The difference we make: the change achieved

Who benefits

How

How much (the Impact)

Theory of change How did that change happen ? What part did we play ?

The logic of how it happens

What would have happened anyway

Who else contributes

Our part in the achievement

Return on Investment How hard did the cost invested work ?

The ratio of Attributable Impacts to cost invested

The absolute value brought

Other helpful presentations

Inputs Activities Outputs Outcomes Impacts

Payment by Results –

linking funding to Impact • Why PBR ?

• Economic trade

• Meaningful measures

• Measuring what matters:

“Informed” Outputs

Funding

Social Finance and the emerging SIB

• Issuer defines terms

• Multi-party funding; same

terms

• Application for specified

social purposes (Impact)

• Investor reward balance

Funder markets

Match the project to the

funder market:

• Social Finance funds

• Public funds

• Third Sector

• Corporates

• Individuals

• Family offices

THINK......

• Project

• Provider

• Purpose

• Presentation

Why now?

• Impact measures are

increasingly expected…

• Are a valuable strategic tool…

• And are intrinsically linked to

Social Finance structures

…Be part of developing the

agenda now or wait until

someone else imposes theirs

on you…

How we have helped our clients

VFM strategy reviews:

• Utilising our VFM diagnostic

• Developing a roadmap from -transactional -

transformation

• Supporting/reviewing implementation

BOB Benchmarking

Social Impact:

• Measurement

• Improvement

• Contract structures and funding

Pure cost reduction exercises

Evidencing………demonstrating……..realising……..VfM

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Your self assessment scores are ?

For more information contact: Stand 59

keith.ward@bakertilly.co.uk peter.lunio@bakertilly.co.uk

Thank you for your time in return please pick up a free copy ……

Sustainable VFM The Value of Impact BOB – Back Office

Benchmarking Service