Annual Report 2016
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Contents
Our aims for 2017
02 Our aims for 2017
The HCA’s latest quarterly survey, the first after the referendum, declared the housing association sector was in a ‘robust position’ to respond to the uncertainty ahead.
02 What we achieved in 2016 03 Financial overview 04 Chair and Director’s report 05 Preparing for Brexit 06 Business plan 08 Case study: Pickering & Ferens Homes 10 Case study: Monmouthshire Housing Association
Despite this upbeat assessment, we all know the current situation is only the start of a radically new economic environment for social landlords. Pressure is mounting to drive cost efficiencies in order to cope with rent cuts, extended Right to Buy, welfare reform, Brexit and a rapidly ageing population. Throughout 2017, PfH will provide unwavering procurement support to social landlords so they can meet their tough efficiency targets. We’ll give landlords the spend intelligence, tender support, compliant frameworks and technology solutions that will help them to drive up savings, drive out cost and mitigate risk. We want to uphold our sector-leading reputation for delivery excellence, staff capability and customer service. Our aim, over the next twelve months, is to show social landlords the foresight, security and long-term value that strategic procurement can generate for their organisations.
What we achieved in 2016
12 Case study: River Clyde Homes
261m
14 Looking to the future
spend under management; up 11% from 2015
16 PfH Scotland
£52m
direct savings; up 21% from 2015
19 PfH Live 2017
£70m
20 Frameworks and suppliers
energy spend under management; up 5% from 2015
Contact Us PfH, 2 Olympic Way, Woolston Grange Avenue, Birchwood, Warrington, WA2 0YL (for SatNav use WA2 0XF) t: 01925 282 398 e: info@procurementforhousing.co.uk www.procurementforhousing.co.uk
1TWh of power under management
PfH Energy
780,127
now UK’s largest housing sector energy consortium
invoices processed through Quantum
Exposure to footfall
7%
increase in Membership
of 8,000 housing professionals over 3 days at PfH Live 2016
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Financial overview 1st August 2015 – 31st July 2016
Supporting Members’ buying needs
Delivering your service
Running your business
Our category management expertise is aligned to match the buying behaviour of Members.
Powering your organisation
• D elivering your service (Direct Spend) such as asset management spend, typically focused on responsive repairs and planned maintenance. • R unning your business (Indirect Spend) predominantly focused on head office or service spend such as office supplies and recruitment services.
27% 52%
• P owering your organisation energy and utilities spend with greater focus on category, supplier and contract management to improve the efficiency of the business.
21%
38% Purchasing power
Supporting HouseMark
2016 saw a leap in the number of customers signing up for PfH’s energy solutions. Spend on energy and utilities now makes up nearly one third of all spend managed by PfH. Social landlords have been attracted by the significant savings, transparent pricing and bespoke advice on offer.
HouseMark is a subsidiary of the CIH and the NHF and manages the PfH contract. HouseMark, like PfH, is dedicated to the housing sector and it provides consultancy support and business performance data as well as other sector knowledge to help improve performance and achieve value for money. Every year PfH contributes financially to support HouseMark, CIH and NHF in promoting good practice and policy work in the sector. In 2016, PfH’s contribution was £526k up 1.4% year-on-year.
PfH’s asset management frameworks and support services have performed strongly over the past year. A big rise in demand means the asset team will launch a number of new agreements and services in 2017. There has been a 17% rise and we are approaching £100m of annual spend. We’ve also seen a sizable increase in the number of Members using PfH’s procurement services, particularly tender support, spend analysis and procurement health checks.
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Chair and Director’s report First of all, we would like to thank Steve Coffey our previous Chair of the PfH Advisory Group and welcome Mike Owen as our new Chair of the PfH Advisory Group. If there is one thing we have learnt from 2016, it is to expect the unexpected. Leicester City’s Premier League win, Theresa May in Downing Street, Trump in the Whitehouse and Brexit have left many people not just questioning the status quo but wondering whether it will ever return. The currency and market fluctuations that have followed, along with a number of hefty policy changes, have led to political and economic uncertainty across the UK. For social landlords, November’s Autumn Statement delivered welcome news around affordable homes investment and funding flexibility. But changes to the housing benefit cap and ongoing welfare reforms continue to pressure tenants’ wallets. The financial burden this poses for landlords is intensified by the 1% rent cuts and Right to Buy extension. Over the past twelve months, PfH has adapted its services and frameworks to help social landlords cope with this unprecedented combination of market uncertainty and exchange rate fluctuation, new build targets and income loss. Our focus has been on three key areas: enabling providers to drive up savings, drive out cost and inefficiency and mitigate supply chain risk. Housing providers often spend up to two thirds of their cost base with external supply chains, so our message to Members is clear: minimise current threats through intelligent and robust management of your supply chain and costs. In response to Brexit, our legal experts, category specialists and spend analysts are working through all possible supply chain risks. They are supporting landlords on everything from controlling price rises to improving contract management and accommodating contract variations. 2016 has seen an increase in the number of landlords merging to boost efficiencies. PfH has worked with several housing associations that are coming together, helping them to establish how resources should be organised and aligned to achieve cost saving targets and maximise the synergy opportunities within supply chains.
Another area of focus has been energy. In 2015 we launched a solution to help members access energy deals directly. In 2016 we expanded this offer further. PfH Energy is now the largest housing-centric energy consortium in the UK with £70m energy spend and 1TWh of power under management this year. In October we announced our partnership with TSA, the UK body for technology enabled care (TEC) providers. Most landlords buy telecare in silos with little collaboration around volume, quality or market insight. This partnership is helping providers to change this; driving prices down, standards up and encouraging supplier innovation. In 2017 we’ll also be focussing on the development of our TEC offering. With the HCA on high alert for inefficiencies, particularly around asset management; spend on repairs, capital programmes and planned maintenance was key for PfH in 2016. This was strengthened further after the Brexit vote as landlords looked for robust procurement processes to safeguard against payment disputes, particularly in relation to repairs and development. These disputes may occur as contractors’ margins are eroded through above-inflation prices rises around construction materials and labour and they look for ways to make extra money mid-contract. Our relationship with the National Housing Federation, Chartered Institute of Housing and HouseMark is as strong as ever. Being part of this housing sector ‘family’ ensures that everything PfH does is centred on raising standards and delivering performance-driven change within housing. We often receive compliments about the people at PfH - their forensic knowledge, attentive customer service and determination to deliver tangible efficiency gains. We are confident that the new appointments made last year in our procurement, asset management, marketing and PfH Scotland teams, and our ongoing staff development will strengthen the service we offer members as we support them through the turbulent times ahead.
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Preparing for Brexit This article was written in partnership with Andrew Millross from Anthony Collins Solicitors LLP WHAT CHALLENGES WILL BREXIT POSE TO SUPPLY AND SPEND IN YOUR ORGANISATION? This is a crucial question for housing leaders and one that will directly impact the services and value they deliver. Once Article 50 is triggered - by the end of March 2017 - the UK will have two years just to negotiate the exit terms. Reaching trade deals could take longer. So now is the quiet before the storm – the time when social landlords can anticipate the challenges and prepare for opportunities that Brexit presents. Procurement can play a pivotal role, providing intelligence on spend patterns, supply chains, compliance and cost management. This can help departments identify how Brexit might affect their service and how to mitigate risk. PfH is working with experts to help landlords prepare for Brexit. There are a broad range of issues to consider but three questions come up time and time again: WHAT IS YOUR APPROACH TO CONTRACT MANAGEMENT? Some suppliers are trying to pass the risk of supply chain price rises that are their responsibility under contracts onto their clients. The volatility of the pound due to speculation about what trade deal the UK wants and how tariffs will be impacted is also fuelling price rises. It’s true that it’s becoming harder for contractors to stick to their tendered prices, with labour shortages and price rises for raw materials likely to continue for the foreseeable future. However, this does not necessarily mean contractors are able to pass on these costs to clients under their contracts. Legal disputes can be costly, so manage contracts thoroughly to avoid them: • Assess your contract management processes: For example, are payments being checked in line with the contract? Who is checking that the work invoiced for has been delivered on time, to the right standard and charged at the right rate?
HOW WILL YOU MANAGE PRICE INCREASES? Some contracts allow prices to be renegotiated on an annual basis (or more frequently for materials). This might be acceptable for some volatile products as long as they are a small minority of the overall supply. However, this does undermine the tender process if prices can be changed to a figure that bears no resemblance to tendered prices. Price increases should be capped to an appropriate inflation index; not necessarily CPI, as this does not track construction materials and labour prices. WHAT ABOUT CONTRACT VARIATIONS? Where you know you may need to change contract terms, Regulation 72 of the Public Contracts Regulations 2015 gives more scope to do this without having to re-procure. However, careful drafting is needed. Review clauses must be clear, set out the scope of modifications that could be made in the future, and say when those changes are triggered. But it’s not easy to predict the variations that might need to be made. Regulation 72 also offers other options to cope with unforeseeable changes that might need to be made. Contractors are in a stronger bargaining position once they have won a contract. Some landlords feel they have to say yes to price rises because the cost of changing supplier is even greater than the cost of agreeing them. For organisations using PfH frameworks, expert help is available with these issues. PfH frameworks can help to mitigate the impacts of Brexit through the added certainty and cost control they can deliver. The leverage brought by aggregated spend, combined with PfH’s in depth knowledge of – and long-standing relationships with – the social housing sector’s supply chain, puts clients in a stronger position when discussing these kinds of changes with suppliers.
• Listen to suppliers: Regular communication and non-confrontational meetings where suppliers are How treated to findasusequals will reduce the chance of disputes. Our offices are conveniently located in central Edinburgh and shared with CIH Scotland and HouseMark Scotland, who we work with closely day-to-day. If you’d like to find out more about what PfH Scotland can do for your organisation, please get in touch by emailing sherriot@pfhscotland.co.uk, by calling us on 0800 031 5405 or write to us or arrange a visit at Suite L2B, 160 Dundee Street, Edinburgh, EH11 1DQ.
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Business plan Helping social landlords to prepare for the future is key to PfH’s 2017 business plan. DEVELOPING FRAMEWORKS
PFH ENERGY
Renewing and enhancing our existing frameworks is a priority. The following updates have been scheduled for 2017:
2016 was the first year of our energy procurement proposition and saw a large number of customers signing up for the range of energy procurement solutions offered by PfH. They were attracted by the savings potential of the different solutions, open and transparent pricing and the professional set up backing the solutions.
• Office Supplies • Vehicle Fleet Management Services • Telecoms • Paint • Decorating Vouchers • We are currently engaging in a number of pre-market engagement activities regarding the Appliances, Kitchens, Furniture and Flooring frameworks • We will not be retendering the Japanese Knotweed framework, however, there is an opportunity to include this as a lot within a Facilities Management Services framework which we are considering • Other framework developments this year will include Telecare & Telehealth ASSET MANAGEMENT SOLUTIONS In 2017 we will expand our range of asset management frameworks. We’ll also develop a comprehensive series of support services, enabling landlords to take a holistic view of their whole asset management programme. Some landlords still use inefficient systems for repairs and maintenance; something the regulator will penalise as it questions higher than usual operating costs in 2017. Giving landlords easy access to a range of compliant frameworks and valuable management data will help them to reduce supply chain risk – deploying stock and labour more effectively and creating better tender specifications. TECHNOLOGY ENABLED CARE Our partnership with TSA, the UK membership and trade body for technology enabled care (TEC) providers, will help PfH to expand its range of compliant telecare and telehealth frameworks in 2017. The partnership will also support social landlords to manage the procurement and commissioning process, offering support with designing contract specifications, conducting tenders, evaluating supplier performance and analysing spend data.
The PfH team have produced literature and e-guides to help organisations steer through the complex world of energy markets and pricing and ensure that they can evaluate, with PfH support, the most appropriate routes to securing the best value energy deals and the best complimentary services. The range of solutions and the next generation of the supplier framework will be reviewed in the year ahead as we look to maintain our market leading range with value for money propositions using guidance from our knowledgeable energy experts. PROCUREMENT SERVICES In 2017 the HCA will publish data revealing individual housing associations’ costs – following up on regression analysis it published in June 2016. This is likely to cause issues for most organisations but especially those with challenges around spend efficiency intelligence. Our procurement services team will help landlords drive efficiency and bottom line impact by tailoring services to meet specific needs and objectives. Through proactive stakeholder engagement, our team will design service solutions aimed at driving maximum value for each individual member utilising the following tools and approaches where required: • Spending Review – our in-house analytics platform, Quantum, provides landlords with a granular view of expenditure across the organisation which is then developed into a detailed spending report, identifying clear opportunities for benefit creation and risk mitigation.
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• Procurement Health Checks – supporting organisations to derive maximum value from procurement, whatever the approach. Reviewing processes, procedures and strategy, we apply our procurement maturity methodology to determine current and future state, and most importantly how to get there.
TRUSTING RELATIONSHIPS
• Materials and Asset Management Review - We’ve launched a new service reviewing materials supply chains, recommending the optimum model for each member and then re-procuring a materials solution if needed.
It is vital that our members trust PfH to support and protect them. In 2017 we will continue to develop water-tight service level agreements and contract management processes, guaranteeing compliance, maintaining high standards and avoiding extra cost.
• Tender Support – our procurement services team will provide support at every stage of the tender process in a way that is tailored to the needs of the landlords. From ad hoc support, to project lead, through to full procurement outsourcing, we will design an approach around each requirement.
Ultimately, PfH must equip members with the procurement information and capability to help them meet the huge challenges facing their organisations over the next year. This is procurement’s chance to prove it should be at the heart of strategic business decisions going forward.
DURING 2016 PFH: • Delivered two outsource contracts • Supported landlords in the delivery of 24 tenders • Generated average savings of between 7 – 12 % • Launched in-house spend analytics system and analysed over £1bn worth of spend in the UK and US KNOWLEDGE TRANSFER Our Knowledge Transfer Partnership (KTP) continued in 2016 with an associate from the University of Liverpool working at PfH. He has spent the last eight months formulating a project plan to help deliver value to our Members through predictive analytics. Three KTP committee meetings have taken place so far, and more options for collaboration with the University of Liverpool are currently being assessed.
Lack of control is a common issue for our Members. Maverick buying, too many suppliers, an absence of contract terms and key performance indicators can all lead to cost drift and a dip in quality.
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Case study:
Pickering & Ferens Homes PfH helps Pickering & Ferens design a winning paint contract Pickering & Ferens Homes manages approximately 1,250 properties in Hull and East Riding, providing housing for more than 1,400 tenants, all aged 60 and over. In 2015, the housing association began planning a major window and door replacement programme. Like many smaller housing associations, Pickering & Ferens doesn’t have a dedicated procurement team so it approached PfH to provide category expertise around painting windows and doors and to offer specialist advice on tendering and resident engagement. Pickering & Ferens wanted to reduce costs on both paint materials and labour and change its painting cycle to fit with the new stock upgrade. In line with the long term refurbishment programme, PfH supported Pickering & Ferens to develop a five year approach to cyclical painting. Done right, intelligent procurement can provide a unique vantage point across a business. PfH helped Pickering & Ferens to take a wider view of their asset management costs, identifying sustainable options and ensuring they aren’t restrained by existing buying practices. PfH worked with the association to develop a bespoke tender approach in partnership with its resident-led scrutiny panel. Not only did the tender have to reflect the phasing out of a five-year painting cycle for timber windows. It also had to accommodate the introduction of a seven-year painting cycle for timber items - such as fascias and fencing - on properties that have been fitted with new UPVC windows (in all areas except conservation and listed buildings). Additionally, the tender had to allow for reduced maintenance requirements. PfH recommended a shift away from a traditional supply and fit approach in favour of two separate contracts for materials and labour. This separation enabled Pickering & Ferens to leverage improved materials rates via PfH’s Paint Supply framework with contractors bidding on a labouronly basis. This attracted smaller, specialist contractors who were highly skilled but cost-effective due to their size and local base – an important social value outcome for Pickering & Ferens.
As a result, the housing association will save 30% on the cost of paint materials – approximately £48,000 over the five year contract. Over 25.6% savings will be made on labour – approximately £141,000 over the contract lifetime. Overall, the new contract will generate £189,000 in cashable savings. Non-cashable savings will be made by reducing the amount of time Pickering & Ferens’ staff spend putting contracts together and communicating to residents – something managed by the new contractors. PfH also worked with the association to embed resident liaison and social value outcomes in the contract. This included weighting tender questions towards a supplier’s ability to involve Pickering & Ferens residents (many of whom are elderly and vulnerable) and also to meet high customer care standards. For instance, suppliers were scored on how they would communicate with residents, deal with complaints and minimise inconvenience. PfH weaved these considerations – as well as how suppliers would deliver social value such as job and training opportunities for tenants – into the process. Pickering & Ferens, PfH and residents all scored the bids and two contractors were chosen. The end result is an agreement that complements the landlord’s wider refurbishment programme, delivers substantial savings, maintains quality and supports the local economy.
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OPERATING MODEL • A dedicated client contract manager • Supply and delivery of paint materials • Supply and delivery of labour to complete cyclical works paint cycles • Adequate paint cycle programme to maintain housing stock • Generation of supply opportunities for local contractors • Ongoing resident engagement RESULTS • £519,000 contract value over 5 years • £38,000 annual savings (approx. £189,000 savings over lifetime of 5 year contract) • 25.6% cashable savings on labour painting costs. Original cost of labour was £550,000. PfH reduced this to £409,000 • Average of 30% cashable savings on paint materials costs. Original cost of paint was £158,000. PfH reduced this to £110,000 • Return on Investment - 27 times • Ensured resident engagement throughout procurement process. This is resulting in: – Improved customer satisfaction – Reduction in volume of calls to contact centre – Reduction in time technical staff have to spend managing paint contracts – Increased level of ownership and motivation from supplier • Capture of social value and local employment through tendering exercises • Invoice consolidation through centralised billing • Robust supplier and contract management to retain savings across multiple years
WHAT THEY SAY:
“Having PfH on hand to provide expertise around the procurement process helped us to line the contract up to our wider stock refurbishment and involve our tenants. We now have a new contract in place that better suits our needs and delivers significant savings.” Sharon Brookes, property services director, Pickering & Ferens Homes
“Pickering & Ferens wanted to maintain the quality of the painting service and make more savings but ultimately ensure residents are happy with the results. Now they are getting equal quality, considerable savings on top, as well as increasing resident satisfaction.” Rob Peck, Director of Procurement Services WHAT ELSE DOES PFH’S PAINT FRAMEWORK OFFER? • • • • • •
Wide product choice, convenient locations and major savings Free next day delivery, specialist guidance and online ordering Products include: internal and external paint, varnishes, preservers and accessories such as brushes, rollers, ladders and dust sheets Detailed management information and spend analysis through PfH’s Account Card It cuts the administrative costs of processing separate orders and helps stamp out ad-hoc spend through PfH’s Account Card Customisable resident points-based voucher scheme
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Case study:
Monmouthshire Housing Association Switch to allpay saves £30k and lightens admin load Time-consuming billing processes have been replaced with a modern, efficient solution at Monmouthshire Housing Association (MHA) after it used PfH’s Electronic Payment Services agreement via allpay. MHA manages 3,600 homes, 290 leasehold properties and 1,500 garages in south east Wales. It has an above-average proportion of customers paying rent via direct debit - around 55%. The housing association wanted a more efficient way to manage these. As a PfH Member, MHA was able to quickly access the fully compliant Electronic Payment Services agreement, benefiting from prices that are significantly below the market rate. The set-up process was straightforward. No further competition or assessment was needed for MHA to begin using the framework, nor was it necessary due to the clear savings and efficiencies the solution had to offer. PfH established the Electronic Payment Services agreement to support landlords as more residents now self-manage their finances following welfare reform. Housing associations can access a range of services from market leaders allpay and PayPoint, safe in the knowledge that solutions are compliant, highly efficient and offer strong value for money. Previously, MHA was using a paper-based system which saw staff posting out direct debit mandates to customers and manually submitting payments to the bank. Every year, the landlord would manually input payment profiles for all 2,500 customers into the HMS (Housing Management System). This took three staff members up to three weeks to complete and resulted in some rent payments having to be delayed.
Assisted by PfH and their account manager at allpay, MHA was able to quickly switch to a cloud-based system that allows staff to create and amend direct debits online or over the phone with tenants. Mandates no longer have to be posted, and because allpay offers a fully managed service, it sends out correspondence on MHA’s behalf. The move has cut operational and headcount costs, freeing up staff to focus on other tasks because they no longer have to process paper mandates, file submissions and letters. MHA is also able to offer more payment options to customers, including any-day collection; something that is likely to increase customer uptake of direct debit payments in place of more expensive methods. The landlord estimates over the next four years it will save more than £30,000 in staff time, postage, printing and processing. Customers who don’t pay by direct debit or standing order have been sent an allpay card which they can use to pay their rent via a 24/7 automated phone line, via the allpay mobile app or via text message. MHA have also recently extended use of the allpay card to include payment in person at a Post Office or PayPoint outlet. By using PfH’s Electronic Payment Services agreement, MHA is contributing towards one of its key objectives: to achieve efficiencies of 10% by maximising the use of technology and ensuring that value for money is an embedded principle.
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OPERATING MODEL • • • • • • •
A client contract manager A dedicated customer facing account manager from PfH Access to PfH’s category expertise and associate network Access to PfH’s central operations function in Warrington Access to PfH’s technology and reporting platforms Access to a fully managed cloud-based direct debit service Access to secure payment cards for tenants that don’t pay by direct debit/ standing order
RESULTS • • • •
Over £30,000 savings in staff time, postage, printing and processing across contract lifetime Staff time freed up by 50% Four new payment methods added to the eight that were originally available to tenants Increased tenant satisfaction through a wider choice of payment methods
WHAT THEY SAY:
“We want to make it as easy as possible for people to pay their rent, and the allpay solution offers much greater flexibility and a wide range of payment options. Although Universal Credit hasn’t hit us fully yet, it does mean that we have the facilities ready for when it does comes in.” Mark Winstanley, Database Manager, Monmouthshire Housing Association
“MHA is reaping the benefits of a cloud-based system and all the efficiencies and convenience that brings. Transactional costs have been reduced, processes streamlined and customers have far more payment options. The end result is much more efficient.” Ian Marsh, Account Manager (Wales and South West), PfH WHAT ELSE DOES PFH’S ELECTRONIC PAYMENT SERVICES FRAMEWORK OFFER? • • • • •
Simple, cost efficient bill payment services All payments types can be managed, including rent, council tax, penalty charges and managing arrears A wide choice of payment methods are available: 39,000 locations, online, via app, automated phone call, text or virtual terminal Ideal for residents who struggle to manage budgets or have physical difficulty accessing payment points Fully managed, online direct debit service offering a full range of collection dates and frequencies
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Case study:
River Clyde Homes PfH helps River Clyde Homes strengthen procurement procedures Based in Inverclyde and set up via a stock transfer in 2007, River Clyde Homes (RCH) manages around 6,000 properties and provides services to a further 2,250 homes. With social landlords under greater scrutiny from the Scottish Housing Regulator and new procurement legislation coming into force, RCH wanted to review and enhance its procurement processes.
RCH staff were briefed on every aspect of the Procurement Reform (Scotland) Act, with the PfH Scotland team outlining each regulation in detail, the action that is required and all timescales involved.
PfH Scotland was commissioned to undertake a comprehensive evaluation of the landlord’s £31.2m procurement spend with the aim of increasing both efficiencies and compliance.
PfH Scotland presented the 12 key recommendations to managers across RCH, most of whom do not deal with procurement on a daily basis but who are often involved in procuring large capital works or services.
The team at PfH Scotland cleansed and classified data from River Clyde Homes’ 2015 procurement expenditure before inputting figures into its Quantum software for analysis.
These presentations put the results into context and ensured managers understood the reasoning. Training, both on new procurement regulations and enhanced procurement processes, was delivered.
Data was examined according to spend distribution, locality of spend, spend by category and it was used to analyse invoices and relationships with strategic suppliers. A meticulous assessment of the landlord’s procurement practices also took place and compliance levels were measured in line with the new regulatory landscape.
RCH has now factored PfH’s recommendations into its business development plan and is using the review to inform its procurement strategy. One of these new approaches includes incorporating the procurement function into the finance department. This enables enhanced procurement and wider financial controls as well as more effective resource management, giving the procurement team access to a wider resource pool.
The findings – presented in a comprehensive spend analysis report – identified 12 clear ways that River Clyde Homes could drive out cost, boost savings and mitigate supply chain risk. This included ways to minimise the volume of low value invoices; enhanced management procedures for high value contracts and the role of procurement staff in reviewing higher value expenditure.
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OPERATING MODEL • • • •
Dedicated account manager from PfH Scotland with additional support from central procurement services team Comprehensive review of procurement spend through analysis of data, benchmarked against sector Detailed spending report identifying where improvements can be made Bespoke procurement training from PfH Scotland to update RCH managers
RESULTS • • • • • •
RCH now has baseline information against which it can gauge future performance PfH Scotland’s spending review assisted the landlord in devising a procurement strategy that delivers corporate objectives and legislative compliance The review identified key areas with the most potential to deliver savings and greater efficiency Supported RCH to rationalise supplier base Identified potential savings through reduction in number of low value invoices Enabled RCH to maximise potential for savings around high value expenditure
WHAT THEY SAY:
“PfH Scotland brought an independent, objective view combined with industry knowledge. What was produced in the period of time and for the cost was very good value for money. I would like to commission the spending review again next year to see how effective our action plan has been in changing things.” Richard Turnock, Executive Director, Group Services, River Clyde Homes
“By carrying out a thorough review of financial data we were able to identify areas where both processes and performance could be enhanced. Through rationalisation and a greater focus on suppliers that will have the biggest impact on River Clyde Homes’ business, it’s possible to drive efficiencies and savings that can have a major impact on the bottom line. Rob Peck, PfH Scotland WHAT ELSE DO PFH SCOTLAND’S PROCUREMENT SERVICES OFFER? • • •
Spend analysis: analysing spend data to provide recommendations for tangible efficiency gains Procurement health checks: full analysis of your procurement performance and how to improve it Tender support: looking after every step of the tender process
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Looking to the future A defining decade While the social housing sector has been through a period of major change recently, it will be nothing compared with what’s likely to unfold over the next 10 years WHAT WILL THE SOCIAL HOUSING SECTOR LOOK LIKE IN 2027? In an uncertain world – particularly following a year as unpredictable as 2016 – it might be deemed a pointless exercise to even begin to ponder the shape of things to come. However, with diminishing financial support from government; pressure to develop new homes to meet growing demand; and uncertainty, due in part to Right to Buy, over the asset base of housing associations; an already disparate sector will become even more fragmented as organisations respond to these challenges in different ways. Some will fight to preserve social rent, others will continue to diversify into other tenures. It is predictable that the trend towards mergers and takeovers will continue, however the justification for agglomeration and its outcomes will come under greater scrutiny as financial results are made much more widely available. Whatever path landlords choose, there are some fundamentals that each will have to consider if they are to remain both sustainable and resilient to the rocky road ahead. These include taking a longer-term view of their business, anticipating changes, embracing emerging technology and employing practices from leading edge organisations outside of their peer group. From a procurement perspective, this means starting to gather and interpret ‘big data’. Using more sophisticated modelling and real-time information to produce work streams based on predictions. Being able to understand the impact of today’s choices in 5, 15 or 30 years not only will support financial and operational planning, but also allow influence over the supply chain with longer lead times, realistic demand cycles and manufacturer level purchasing. All contributing to a much lower overall cost.
One of the largest contracts PfH operates is our Materials offer. Worldwide prices have been increasing rapidly over the last 12-24 months, especially in commodity areas, but also generally for imported materials. Using our own ‘big data’ and relationships with manufacturers and the biggest merchants, PfH has effectively managed to avoid the rises widely reported in the press as having a massive effect on the construction sector. PfH can show suppliers many years of data and trends spanning previous downturns and also investment peaks and troughs and succinctly describe what the sector will demand in the future. This gives them not only the ability to purchase ahead of demand, but also to justify the keen pricing that PfH demands for our Members. Another noticeable change over the last 12-18 months has been the increase in pressure for the different agencies working across the social sectors, healthcare, emergency services, housing and local authorities, to work together more effectively. There is recognition that each ‘gateway’ between services represents cost. So to minimise this immediately provides financial benefits, but also creates stability for the individuals in receipt of the care package. Housing associations have long been an essential cog in the wider shift towards prevention and integration now being seen across health and social care. Ideally placed to influence the behaviour of some of the most vulnerable people in society and to support independent living, technology is now playing an essential role in reducing social care needs, lowering demand on acute NHS services.
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The Inprova Group, the managing agent of PfH, has this year created a partnership with the Telecare Services Association (TSA), the membership body for technology enabled care (TEC) providers. The purpose of TEC is to allow those in need of care to remain in their own homes for longer and with more peace of mind for them and their families. Care and monitoring is provided via technology reducing the need for scheduled and even more importantly unscheduled visits to medical centres and hospitals. Being able to release people who need ongoing monitoring back to their own homes also frees up much needed beds in hospitals and extra care facilities. Combined this with the preventative nature of constant visibility of ongoing conditions and a more rapid response to negative change and it is clear to see how all partners in the care as well as the recipient benefit. The Inprova Group, through PfH, allows all Members to engage the market leading suppliers in this field and also benefit from the advice and guidance provided by the TSA and their Members. This is a true multi-sector partnership which will aggregate demand to cut costs, but also improve standards and supply chain innovation. Our hope is that we will continue to see the breaking down of barriers between sectors and organisations over the coming years as collaboration becomes the norm. As we progress through the next decade, with all of the political change and global financial pressures that we see on our horizons, PfH is continuing to invest in technology, people and knowledge that we believe will ensure our Members are ready to make the most of their unique position in people’s lives. Whatever that may look like in 2027.
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Our achievements to date 4
18 48 PfH Scotland currently has 71 Members, including 48 Housing Associations, 18 Local Authorities and 5 Associate Members
418,000 PfH Scotland members account for around 418,000 homes, equivalent to 69% of Scotland’s total stock of social housing.
OUR AMBITIONS FOR 2017 In 2017, we will deliver an additional five new Asset focused frameworks that meet the specific regulatory and compliance requirements in Scotland. • • • •
Our focus will be to give our members greater access to local SME’s across Scotland and to increase the use of local contractors in line with the Scottish Government’s ongoing procurement reform agenda. Our aim is to enable our members to deliver sustainable long term community benefits through better procurement decisions using our frameworks and services. We plan to grow a dedicated PfH Scotland team, co-located with our colleagues at CIH Scotland and HouseMark Scotland, to meet the specific needs of our members in Scotland, led by our experienced Head of Operations Stephen Herriot. We will launch a new updated PfH Scotland website with a range of practical features and procurement advice to assist our members.
So far, we have launched 4 procurement frameworks that meet the specific regulatory and compliance requirements in Scotland.
WORD FROM STEPHEN HERRIOT, HEAD OF OPERATIONS, PFH SCOTLAND I am delighted to assume the role of Head of Operations at PfH Scotland at an exciting and challenging time for Scotland’s housing sector. With offices co-located with the Chartered Institute of Housing in Scotland and HouseMark Scotland, PfH Scotland is uniquely placed to help the Scottish housing sector to rise to the challenges it faces and to achieve a real step change in procurement performance. Financial constraints have become a long-term reality of life for most housing providers in recent years. At the same time, demand for housing is at unprecedented levels and the issue has never been higher up the political agenda in Scotland. Scotland faces the highly ambitious target to deliver 50,000 new affordable homes between now and 2021, more than double the current rate at which new build social housing is being delivered. Bold commitments have been made when it comes to funding. But money alone is not going to make it happen.
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When it comes to increasing the supply of social housing, our members across Scotland are at the frontline of delivery. PfH Scotland’s objective is to give our members the tools they need to deliver by driving continuous improvement in organisational efficiency and value for money through procurement excellence. We have our own ambitious programme of activity in the year ahead. This will include reaching out to our existing members and new members alike to help them make real savings while continuing to provide high quality services to their customers. We aim to embrace the Scottish Government’s procurement reform agenda by driving greater involvement of local SMEs in procurement and helping our members to deliver sustainable long term community benefits through the procurement decisions they make. By bringing more compliant frameworks online in Scotland, by growing our team and refreshing our website and online tools, our ambition is to offer services and solutions that are more carefully tailored than ever to the specific needs of Scotland’s housing sector.
DID YOU KNOW? • • • • •
PfH Scotland can help you to carry out a comprehensive review of your existing procurement strategy so as to identify unmanaged spend, ineffective processes and areas for rationalisation. We can help you to make sure your procurement practices are in full compliance with all relevant rules and regulations including those that relate specifically to Scotland. We can work with you to ensure your critical procurement projects are delivered on time and on budget. We offer bespoke tendering solutions specifically tailored to your organisation’s needs. Our services include professional contract and supplier management and performance benchmarking to eliminate the risk of price creep and to ensure procurement savings are sustainable in the long term.
HOW TO FIND US Our offices are conveniently located in central Edinburgh and shared with CIH Scotland and HouseMark Scotland, who we work with closely day-to-day. If you’d like to find out more about what PfH Scotland can do for your organisation, please get in touch by emailing sherriot@pfhscotland.co.uk, by calling us on 0800 031 5405 or write to us or arrange a visit at Suite L2B, 160 Dundee Street, Edinburgh, EH11 1DQ.
2017
27-29 June 2017 PfH Live will return to Manchester Central in 2017, co-located with the CIH Housing Conference and Exhibition at Manchester Central. The focus this year will be: Preparing for the future. PfH will bring leading experts from the supply chain, asset management, technology and legal sectors together to inspire and inform delegates. They will offer practical advice on how social landlords can meet the challenges of the next decade through intelligent procurement. Sessions on the role of procurement in Brexit, mergers, rent reduction, DLO in/out sourcing, social value delivery and innovative house building will all be covered. For more information on speakers, sessions and how you can get involved please visit our website.
PfH Live 2016 Last year’s event took place four days after the UK voted to leave the EU. Andrew Millross at Anthony Collins Solicitors was on hand to answer Members’ questions and provide an overview of Brexit’s likely impact on procurement regulations. Dr Jo Meehan from the University of Liverpool Management School shared her latest research findings about driving value in procurement. She challenged the sector to be more strategic, suggesting they explore an alternative path to achieving procurement maturity. CIPs board member and former director of the North West Centre of Excellence, Colin Cram, led an interactive debate on ‘smart procurement’, looking at what keeps social housing CEOs awake at night. PfH Live 2016 provided: • 3 days of masterclass seminars • 8 speakers • 58 suppliers in the PfH Live exhibition • Footfall over 3 days of more than 8,000 people
Our frameworks and suppliers Delivering your service Decorating Vouchers
Japanese Knotweed and other Invasive Weeds
B&Q
Country Grounds Maintenance
Facilities Management Soft Services
Japanese Knotweed Control Japanese Knotweed Specialists
Chequers Contract Services Kingcombe Aquacare Hi Spec Facilities Services Plc Orbis Pinnacle Housing
Jewson/Grahams National Merchant Buying Society
Plumbing Trade Supplies
Kitchens Rentokil initial UK
Flooring
Impey Showers
Prism UK Medical
Phlorum
Wettons Cleaning Services
Grafton Merchanting GB
Powred Heating Components
PBA Solutions
Superclean Services Wothorpe
Edmundson Electrical
Rexel Group UK CLC Contractors
Stannah Stairlifts
Forrest Wolseley Jackson Jackson & Sons YESSS Electrical Keepmoat Regeneration Paint
Crown Flooring Magnet Designer Contracts Moores Furniture Group Gas Servicing and Multi-Fuel Maintenance and Installation Aaron Services Housing Maintenance Solutions K&T Heating Liberty Gas Group Sure Maintenance Warmer Energy
Richmond Cabinet Company Rixonway Kitchens
Crown Paints ICI Paints AkzoNobel PPG Architectural Coatings
The Symphony Group
Renewables and Energy Efficiency Works and Associated Consultancy Services
Materials and Associated Managed Services
Anglian Building Products Campbell & Kennedy
AKW B&Q/Trade Point Ceramic Tile Distributors City Electrical Factors Contour Showers
info@procurementforhousing.co.uk
Cenergist Encraft Forrest Golden Gates
www.procurementforhousing.co.uk
01925 282 398
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Running your business Joju Solar
Care and Support Recruitment Services
Brakes Bros Ltd
Keepmoat Regeneration
BS Social Care
GC Birchall Ltd
Rothwell Plumbing Services
Caritas Recruitment
H.N. Nuttall Limited
SolarKing
CRG Social Care
KFF
VolkerLaser
Dean Healthcare
M.J. Baker Foodservice Limited
Evro Recruitment
R.Hannah & Sons Limited
Keystone Employment Group
Thomas Ridley and Son Ltd
Morgan Hunt
Turner Price (on behalf of CRF)
Residential Furniture and Associated Products Furniture Resource Centre PeelMount Pineapple Shackletons Whitaker Services
Randstad Care Legal Services Reed Specialist Recruitment Search Consultancy Service Care Solutions
Void Property Management Starting Point VPS
Swanstaff Recruitment
Anthony Collins Brabners Stephensons Solicitors Walker Morris Weightmans
Windows and Doors Supply, Delivery and Installation
Commercial and Domestic Appliances
A&B Glass Company T/A Asset Fineline
Avinity
A Connolly
JLA
Anglian Building Products
Electronic Payment Services
Lone Worker Protection Services
AVR trading as National Monitoring Guardian24 NNTC
Esh Construction allpay
Orbis
Housing Maintenance Solutions PayPoint
Suzy Lamplugh Trust
Joedan Grocery, Provisions and Chilled Foods
Office Supplies
Nova Group Sovereign Group
BAKO North Western Group Ltd
Wrekin Windows
Bestway Wholesale Ltd (Batleys) Bidvest Foodservice Blakemore Food Service
Office Depot
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Print Management and Multifunctional Device Solutions
Telecare and Telehealth
Altodigital
Appello
Man, Truck & Bus
Arena Group
Close Circuit Security
Peugeot
Capita Document & Information Services
Medtronic
Renault
CDP Cubiquity GPS Document Management
MSD Tunstall Healthcare UK Wealden and Eastbourne (Wellbeing)
M2 Office Depot Resource Print Solutions Ricoh Toshiba Recruitment Services
Adecco UK & Ireland Blue Arrow Brook Street (UK) Carbon60 Eden Brown Synergy GEM Partnership Hays Specialist Recruitment ManpowerGroup
Lookers
Renault Trucks Rygor Toyota Vauxhall (General Motors)
Telecommunications Workwear, PPE and Janitorial Britannic Technologies Daisy Communications Gamma Network Solutions Social Telecoms Vehicle Fleet Management Services
Bunzl Greenham EuroSafe Joseph Gleave & Son Nationwide Hygiene Supplies Office Depot
Automotive Leasing Bott Days Contract Hire Lex Autolease
PWS
Powering your organisation Energy Procurement and Supply
Masternaut British Gas Shell Corona Venson Automotive Solutions Gazprom Energy
Morgan Hunt Vehicle Purchasing
Npower
Randstad Reed Specialist Recruitment Service Care Solutions Step Ahead Employment
Citroen
Opus Energy
Euro Commercials
SmartestEnergy
Ford
SSE
Isuzu
Total
info@procurementforhousing.co.uk www.procurementforhousing.co.uk 01925 282 398