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TRANSCRIPT
Commercialisation in Social Housing
Andrew Carlin
Commercial Director
What PfH members are telling us…….
1/3 Only one third feel they are sufficiently resourced
14% Have total spend visibility. Nearly one quarter believe their spend visibility is poor
70% Feel that procurement’s importance is increasing in the sector
42% Have no CIPS qualified team members
57% Of large and 41% of small RSL’s don’t carry out benchmarking despite thinking it’s important
80% Don’t think their procurement team will increase in size over the next 3 years
Why consider Commercialisation?
• Drivers? – Perception of the sector?
– Welfare Reform
– Certainty of Income?
– Increased operating costs?
– Support and grow Social investment?
• Benefits? – Understand Cost
– Drive better value
– Improve business intelligence
?
Balancing Social & Commercial?
V
More Commercial Focus Protect and Grow Social Investment
What does the future hold for procurement?
• Future Challenges for Procurement • EU Procurement Directives
• Effectiveness of current procurement practice • Compliance v Value for Money
• Are we delivering real value? • Is this the best we can do?
• Consequences and impacts of different approaches to procurement • Need identification through to Contract
Management • What role should procurement play in responding to
the challenging operating environment?
Lessons from the sector………and beyond
• Sanctuary • Category Management • Spend Analysis • Process Improvement • Contract Management • More for less
• Notting Hill
• Spend Analysis • Finance driving Procurement • Senior Management engagement • VfM and greater Social Return
Dr Jo Meehan
University of Liverpool
Management School
Commercialisation in the Social
Housing sector
The research
• Extension of previous work
• Cartrefi Conwy – Knowledge Transfer Partnership with BMU
• PfH – Procurement and commercialisation
• National survey with PfH and Affinity Sutton
• Procurement and commercialisation maturity
• Focus groups with procurement staff from over 30 social housing
organisations
• Manchester
• London
• Scotland
• More planned for 2013 – including non-procurement
Debates emerging from the focus groups
• EU regulations
• Procurement (im)maturity
• Social Value
• Commercialisation
Procurement maturity in social housing
Level of in
volv
em
ent
Need
Identification
Sourcing
process Tendering
Contract
award
Post
contract
Barriers:
• spend analysis
• market intelligence
• status
• resource
• reactive
• structure
Barriers: • contract mgt
• savings tracker
• audit / compliance
• externalisation of
expertise
• no supplier
evaluation
Social Value
• Government policy driver for social value
• Reduce costs and remove the need for government social investment
• Solve complex problems with entrenched social challenges
• Move delivery of services to the private sector
• Suppliers can, and do, use SV opportunistically
• Sharing/displaced apprenticeships
• Hiding overheads/costs
• Adds additional supplier cost – very rarely get this for free
• ‘Free’ things often PR-driven
• Not always embedding sustainable, positive impact in communities
• Impact is difficult to evidence and not managed post-contract
• Short versus long term impacts/social value (e.g. training or jobs)
• Not always appropriate to add to a tender
• Defined by who?
• Who is closer to a community to deliver social value?
• Who do tenants want to deliver social value?
Do we need to be more commercial?
YES!
Commercialisation research findings • External supplier positioning is poor
• Reliance on contractors’ data
• Lack of market intelligence
• Price lists and “social housing” price lists
• High level of knowledge sharing and benchmarking…
• ….but predominantly only with others in the sector
• Same suppliers across the sector – lacks diversity
• Requirement for suppliers to have social housing experience
• Provides ‘legitimacy’ but assumes someone else has tested them
• External pressures on costs
• Not yet fully impacting procurement
• Only focused on revenue streams (tenancy decisions) not costs
• Cultural shift needed – needs to be CEO led
• Huge opportunity to be innovative and sector leader
• Residents involvement – initial reaction is price
The future
Alice: “Would you tell me, please, which way I ought to go from here?”
The Cheshire Cat: “That depends a good deal on where you want to get to”.
Alice: “I don't much care where”.
The Cheshire Cat: “Then it doesn't much matter which way you go”.
• It does matter which way we go
• The impact of not managing costs is significant in social housing
• Values first, strategies follow
• What we stand for (which doesn’t change)
• How we do things (which should never stop changing