Shifting social value to the procurement start line

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In the past, family fun days were the social value staple of some housing associations. But six years on from the Social Value Act, things are changing. Lawyer Andrew Millross explores how landlords can use procurement to make a meaningful difference to the communities in which they work.

 

Short-term ‘social value’ initiatives that offer little wide-ranging impact for tenants and come with hidden costs for landlords are, thankfully, becoming less common.

 

The sector is also wiser to the fact that social value must be linked to a contractor’s area of work. Unless your maintenance company also hires out bouncy castles, then a family fun day shouldn’t form part of their tender.

 

Housing providers are also more alive to the fact that they always pay for social value somewhere in the contract. Transparency is important; providers need to know how much they are paying for their social value outputs so they can check they are good value for money.

 

A classic “own goal” is asking a supplier to allocate a proportion of the contract price to “social value activities”. This just increases the contract price (on which the provider pays VAT), and also means that the contractor chooses where to spend the money rather than the provider being able to.

 

So, six years after the Public Services (Social Value) Act was first introduced, what other lessons have been learnt about how to secure lasting social value through procurement?

 

Identify what you want to achieve

Surprisingly, many housing associations don’t begin the procurement process with this important social value question. They should ask it right at the start of the process, when scoping what they want to buy. Instead, they ask their contractor what community benefits they can deliver, rather than thinking about what they, as the client, want to get in terms of a social value. This type of approach doesn’t even comply with the Social Value Act.

 

Some providers may want to create apprenticeships, work placement opportunities or develop school links. Others might want to get their contractors to host DIY training seminars, build a new playground or paint a community centre. These are all familiar outputs, but it’s worth considering a wide range of options. You might want to get more tenants from black and minority ethnic groups into maintenance careers, promote the use of electric vehicles or encourage your contractors to donate surplus materials to community groups.

 

Use good practice guides

Don’t reinvent the wheel when it comes to how you embed social value into contracting processes.  At Anthony Collins Solicitors LLP, we have supported the ‘Tradeswomen into Maintenance’ project by writing a free legal guide for social landlords, ALMOs and local authorities that want to address gender imbalances in the construction trades workforce through their procurement activity.

 

The Tradeswomen into Maintenance Legal Guide explains relevant equality and procurement legislation (including the Social Value Act) and sets out the steps clients can take to promote the creation of opportunities for women in maintenance careers. It includes template clauses for each stage of the procurement and contracting process which could also be used if your housing association wants to help other underrepresented groups into maintenance jobs.

 

The guide can be freely used and it is one of a number of good practice guides which aim to support landlords and other businesses working in the social housing and public sector to increase the number of women working in construction trades. Other guides can be accessed on the Mears website.

 

Invest in enforcement

A supplier promising to deliver social value at tender stage is one thing, but ensuring they deliver on this promise is another.

 

This means that good contract management is crucial to making sure suppliers deliver on their social value promises. The ‘let and forget’ culture that still prevails amongst many landlords makes this difficult as some still see contract management as a back-end process. Procurement teams must change this, setting out how a supplier will be managed from the start – right from when a tender is first being pulled together. They also need to make sure the right resources and processes are in place to manage the contract effectively.

 

The Social Value Act requires housing providers to consider, at the outset of each procurement process for services, what social value (if any) they want to secure. But putting community value at the heart of procurement in a meaningful, enduring way is not easy. Hopefully these pointers can help social landlords design their procurement and contracting process to generate real change in the communities they work in.

 

Andrew Millross is a Partner at Anthony Collins Solicitors LLP, a leading procurement and construction lawyer, and an active member of the Procurement Lawyers’ Association.

Six Steps to Successful Recruiting

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With continuing pressure on funding, housing associations aren’t always able to offer high salaries, but there is much they can do to entice the cream of the crop.

Whitefriars frees up 85% of staff time with PfH framework

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When Rehman Akhtar began working for Whitefriars Housing as a building surveyor, one
of his first roles was to review asset management procurement.

Procurement v asset management: The road to reconciliation

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As a procurement professional in the housing sector I have heard those rasping statements on many an occasion from long serving asset managers – ‘we are more than capable of defining our requirements and negotiating with our suppliers, therefore there is no need for procurements involvement.  Procurement participation proves to be time consuming, costly and, due to a lack of understanding of asset management, does not always generate the correct solution.’

In this highly stressful environment we are often seen as an unnecessary bureaucracy, adding little value and creating barriers or slowing the process down.

To a sensitive soul this may be disheartening, but to a world class procurement professional it is merely the fact that they have not experienced your collaborative, value focussed tenacity yet!

So how can that enthusiastic, tough skinned, value ninja hurl down the gauntlet and convince the asset team to let them in.

Walk in their shoes

The asset management world is a decidedly complex, results driven, high risk, customer challenging environment.  Often there is daily fires to put out, reputational risk to manage, supply chain challenges all of which mean asset managers are extremely sensitive towards any potential disruption or change.  With this as a setting it is understandable that asset managers can lose sight of the overall commercial impact of the current supplier set-up.

Immersing yourself in their work is crucial to understand their critical requirements, the daily challenges they face and the performance of existing suppliers.  Speak the same language and listen to their experience and detailed technical knowledge.  Pick up on the key measures and targets they have and address these in any solutions proposed.  Learn from their past experiences, the impact of lead times, the impact of stock issues, the impact the contractor has on tenant satisfaction, the resource constraints they have, the total cost of ownership or the challenge of training a workforce in new product installation.

Only from this level of understanding can you create the opportunity to bring together a bottom up strategic commercial analysis.

Become an adopted team member

Make sure you take every opportunity to collaborate, work as one team and align goals.  Continuously and evangelically reassert that you want to help them achieve their objectives and goals and show that, not only through words but actions.  Add value in their eyes as well as the wider organisation and never stop challenging yourself about this.  Show your commercial and analytical capability to enable them to understand and challenge the existing status quo and recognise the need for change.

Know the housing market better than your colleagues

As a procurement professional you should have a unique position that you understand and know the suppliers in the market, their capabilities, emerging innovation, technological developments – anything less and you will have no credibility.  Knowing the daily challenges that the asset team faces from ‘walking in their shoes’ gives you the opportunity to engage with the broader market, probe incumbent suppliers, engage with prospective suppliers or new entrants on how to overcome these challenges.  Identify from your network how other organisations are dealing with these challenges and improving service delivery.  Look at how innovation is driving continuous quality and cost improvements.  Try to encourage the asset team to explore a broader view of the supply chain and facilitate learning opportunities for them that will shift their mind set that ‘only one supplier can deliver their needs.’

Shine a light on your commercial capability

As a procurement professional make sure you do your job properly.  If you only accept invitations to manage an EU procurement process or manage the sourcing and implementation process as an extra pair of hands then you will not be able to influence and change the mind set of the asset management team.  You need to become part of the team, know the market and walk in their shoes but you also need to be relentless in ‘doing your job’.  Complete your bottom up commercial analysis as part of your continuous supplier relationship and contract management process.  Analyse spend, identify opportunities, measure performance, create benchmarks and assess against external information, obtain data and interpret it.  Spend the time educating the asset management team on this so that they can assess the capability, innovation, risk, commercial models of both the incumbent suppliers and prospective suppliers.  Spend time educating and agreeing with the asset team what they require, the negotiation strategy to be deployed, the risk profile they are prepared to adopt, the key measures of performance that will drive quality, value for money and ultimately tenant satisfaction.  Show your commercial prowess and wait for the moment when your true value is recognised!

 

Procurement and asset management can and must become a complementary pairing if housing organisations are going to deliver on their business plans.  Both have critical roles to play and value to add – it is imperative that you understand the effort required to achieve your organisations goals – now make it happen!

 

As the dedicated procurement services provider to the housing sector, PfH works with you to assess procurement and asset management effectiveness – enabling us to identify opportunities for short-term as well as sustainable efficiencies and improvements.

Many of our Members achieve step-change improvements through our combined approach of delivering immediate cost savings at the same time as driving insightful long-term benefit through smart and strategic procurement.

If you’d like to discover how you can reconcile procurement with asset management within your organisation, contact our Consultancy team for a no obligation discussion:

consultancy@pfh.co.uk

01925 282398

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A smarter approach to buying kitchens and bathrooms

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The way in which landlords approach the purchasing and installation of kitchens and bathrooms will have a major effect on the effectiveness of their asset management strategy.

As well as having significant cost implications, choices made can impact on your organisation’s wider environmental sustainability goals, the quality of life for tenants and customer satisfaction.

Narinder Chahal, head of procurement at East of England based Flagship Group, believes the key to success lies in ensuring this critical area of spend is part of a smarter approach to procurement…

Plan ahead – whether you have the capacity in-house and only require supply or require supply & installation, this is a major area of spend and one where a programme setting out a cycle of replacements should be in place. I’m always surprised at the number of organisations that are fairly reactive and do not have a contract register in place. You need to put contracts onto one document and review it on a monthly basis. That will certainly help you to forward plan your spend activities.

If procurement capacity is an issue, get help – many housing associations do not have dedicated procurement departments but they are very much geared up towards exercising some element of control and can therefore be reluctant to source outside support. But it should not be seen as relinquishing control. A good procurement consultancy will not only save you money, it will give you greater control in the long run, leading to enhanced efficiencies and better use of resources.

Don’t let suppliers take your custom for granted – I spent many years working in procurement and supply chain management in the private sector, including in the United States where I had clients that were multinational corporations such as Boeing, Lockheed and Chrysler. In the private sector, quality of service and delivery are taken as a given – the expectation is that suppliers will demonstrate how they want to work with you and your business to show they are striving for continuous improvement in order to provide better products and service.

The social housing sector is very different and compliance, quality and delivery seem to be the main concerns. I think there are lessons to be learned from the private sector. Don’t simply stick with the same suppliers because that’s what you’ve always done – question whether you are getting value for money and ensure those relationships are mutually beneficial.

There’s strength in numbers – I can’t stress enough the need to aggregate and leverage spend wherever possible, particularly around a high value, low volume category like kitchens and bathrooms. Flagship has a repairs and maintenance arm, RFT Services, which not only serves our own 22,500 homes but also housing associations, local authorities and businesses across the East of England. But even our relatively high volume of spend is a drop in the ocean compared with the leverage PfH can exercise through the combined spend of its members (which is one of the reasons why we’ll be using the new kitchens and bathrooms framework!).

I’ve been involved in developing the framework as a member of the PfH product group. As well as covering kitchens and bathrooms it offers a wider range of options: supply only, supply and install, and install only. I think that more defined scope will appeal to landlords of every shape and size.

Narinder Chahal is head of procurement at Flagship Group.

He is a member of the product group for PfH’s new kitchens and bathrooms framework, which is made up of representatives from the social housing sector. The group has helped to shape the framework to ensure it meets members’ needs.

Flexibility for Hire

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Vehicle leasing companies are offering innovative solutions to housing associations keen to include electric vehicles in their fleets, says Lewis Cardwell at PfH

Procuring Social Value

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It’s taken many years for social value to become a mainstream issue. No longer on the fringes, it’s now being embraced across the public, private and third sectors, albeit to varying degrees.

Safer, Smarter Services

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For procurement, finance, maintenance and asset management departments Blockchain is a gift – offering secure, automated transactions that cannot be tampered with without leaving electronic fingerprints all over the scene of the crime.