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