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									Procurement for
Housing Conference
Delivering More Value
for Less Money

Roy Irwin
The Coalition Government's agenda
for local services

• More localism

• More local accountability

• More local data

• More output

• More local decision making
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The Coalition Government's agenda
for local services

• Less regulation and formal scrutiny

• Less guidance

• Less national/regional apparatus and frameworks

• Less cost

• Less resources
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The Challenges in Improving Economy,
Efficiency and Effectiveness (1)

• Less Resources
            – Rents
            – Housing Benefit
            – Public capital
• Sensitivity of Business Plans to changes in
  income flows

• HRA Reform

• Lender confidence in sector stability
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The Challenges in Improving Economy,
Efficiency and Effectiveness (2)

• Different and differentiated information flows
• Less national data on performance, outputs and
  outcomes
• More local data on transaction values
• More local discretion on non-financial
  information
• Less external validation of data accuracy
• Less direction on data consistency

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The TSA Value for Money standard
In meeting all standards, registered providers shall have a
comprehensive approach to managing their resources
and demonstrate to their tenants:

• how expenditure has been prioritised in relation to each
of the standards and in the delivery of local offers, and in
meeting other needs such as investment in new social
housing provision

• how they have ensured value for money has been
secured and tested
• plans and priorities for delivery of further value for
money improvements
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    So, how well are providers doing?
The Challenges:
• Value for money is not fully embedded throughout all
  organisations. There is not always a comprehensive
  approach to delivering VfM.
• Procurement arrangements are not always well
  understood to achieve maximise value for money and
  comply with legislation.
• Tenants are not routinely involved in managing value for
  money. Issues that are important to them may be missed
  and not targeted for improvement.

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How are well are housing associations
doing on Short Notice Inspections?
                   SNI inspection results 09/10                            •VfM is a cross cutting theme
    100%
                                                                           •In 41% of Short Notice
     90%
                                                                           Inspections (SNIs)
     80%

     70%
                                                  3 - Strengths
                                                  considerably outweigh
                                                                           weaknesses outweighed
                                                  weaknesses

     60%
                                                  2 - Strengths outweigh   strengths in Value for Money.
                                                  weaknesses
     50%
                                                  1 - Strengths and        •This compares to 28%
                                                  weaknesses are in
     40%
                                                  balance                  across all other services
                                                  0 - Weaknesses
     30%
                                                  outweigh strengths
     20%

     10%

      0%
                 VfM        All areas inspected




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A review of collaborative procurement
across the public sector (1)
AC/NAO study May 2010

Adopt a strategic approach to procurement
 – Observe the law
 – Identify unique categories of procurement
 – Manage procurement in the best place for
   your organisation
 – Actively manage end user specifications and
   brand choices to bring greater
   standardisation on common procurements
 – Measure savings achieved
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A review of collaborative procurement
across the public sector. (2)
AC/NAO study May 2010

Explore the case for collaboration
  – Exploit the potential benefits of volume – low
    prices
  – Use price information to challenge suppliers -
    better comparison of unit costs
  – Collaboration results in fewer tendering
    exercises, leading to lower administrative
    costs
  – Allows the provider time to concentrate on
    unique specialised purchases

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‘Tenant involvement: Assessing
landlords’ progress’ AC/TSA study (March 2010)
                                       Tenant involvement is vital to prevent
                                       negative impacts to services when
                                       reducing costs.

                                       Inspections have consistently found a
                                       direct connection between effective
                                       resident involvement and improved
                                       services and value for money.

                                       Tenant involvement is an important key to
                                       continuous improvement.

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   Housing association procurement.
   AC study 2007

   • assess housing associations’ use of modern
     procurement methods;
   • help smaller housing associations to improve
     their approach to effective procurement; and
   • assess the residents contribution to housing
     association procurement.
   And our scope was:
         – Housing associations > 250 units
         – Repairs and maintenance, and housing management

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   Scope to do more.

                                   Annual efficiency
                                                                               Potential annual
                                    gains through
                                                           Number of HAs in     savings if all
     Stock size                     procurement
                                                            this stock range    adopt this
                                    achieved by top
                                                                                approach
                                    performer

     250-2499                                    237,000                254                 60m
     2500-4999                                   337,000                150                 51m
     5000-7499                                   597,000                 65                 39m
     7500-9999                                   371,000                 24                  9m
     10000-19999                             1,734,000                   32                 55m
     20000+                                  1,819,000                    8                 15m
                                                           Total                          229m

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   Associations that use procurement
   effectively have:


1. A procurement strategy                                7. Competitive neutrality / a mixed
2. Procurement training for all staff                       economy of provision
3. Explicit use of procurement to                        8. Critical appraisal of the costs and
   achieve policy objectives                                benefits of procurement options
4. Measurement of procurement                            9. Procurement methods and
   performance                                              approaches that are
5. Resident involvement in                                  proportionate and appropriate to
   commissioning and procurement                            their requirements.
6. Systems for addressing issues
   of equalities and diversity in                        10.A strong driver – business plan,
   procurement                                              inspection report, corporate
                                                            direction

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Surviving the Crunch - Local finances in
the recession and beyond AC study March 2010
• Prepare now for the leaner times ahead;
• Develop a detailed understanding, using scenario planning, of how
  different levels of income affect financial resilience;
• Ensure that members and officers provide strong leadership over difficult
  resource allocation decisions;
• Engage early with staff and the public about options for coping with
  shrinking resources;
• Develop rolling medium and longer-term financial plans despite the
  uncertainties.
• Plans to meet estimated budget gaps should combine basic efficiency
  measures with more ambitious options to transform service delivery and
  manage demand;
• Ensure there is capacity for financial planning and change-management.


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Can tenants help?

• Highlight areas of the service which are inefficient or
  ineffective – what needs to be improved?
• Set priorities for spending – what is most needed?
• Highlight areas of waste – what could be reduced?
• Set targets and performance standards – what represents a
  good service?
• Monitor the quality of external contractors through feedback
  –what is the service really like?
• Shape new services and redesign existing ones


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Providers perform very well when there
is…
• A shared vision with partners and stakeholders on what would constitute
  success for the organisation and the people and places it serves
• Leadership that focuses on continuous improvement, and makes the
  decisions necessary to achieve it;
• Effective and simple performance management frameworks that support
  organisational priorities and are linked to policy and resources
• Clear people management strategies that harness staff energies and skills
  to deliver objectives
• In house capacity is built upon through a robust approach to procurement
  and partnering
• A good understanding of the local context and the diversity within local
  communities in order to identify and meet the needs of those communities

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They look at the design of products and
services from the outside.

• Accessibility How easy is it for customers to find and engage
•                with the organisation?
• Affordability Are costs and prices understood and justifiable
                 – internally and externally?
• Choice         One size for all or bespoke?
• Clarity        Is your “offer” clear, yes, no or maybe…?
• Deliverability Is your word your promise or it depends…?
• Openness       How do you demonstrate your accountability and to whom?
• Suitability    Is diversity understood, respected and responded to?
• Timeliness Appropriate, flexible, cost effective?


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Delivering Value for Money.
• What’s needed?
• A focus of VFM across the organisation, with clear leadership to drive the
  agenda
• Staff understanding of VFM – from caretakers, housing officers to the
  CEx…
• Not just finance – VFM is integral to all aspects of service planning and
  delivery
• Spending priorities reflect policy and improvement agenda and take
  account of VFM
• A cost effective approach to procurement
• Resources are invested in priorities agreed with tenants

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  If you can bring all this together, you
        will deliver more for less.




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•Thanks for listening

•Any Questions?




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