01935 40456607912 775110

neil.biddiscombe@yhg.co.uk

What is good procurement and what can you do to improve this?

Find out what Advantage SW has achieved and what they are looking to do for members and non-members alike, including members from participating RSLs.

A LLP owned by 4 Partners:

Award winning house designs◦ Over 2,300 built

Procurement club

Started in January 2008 Procurement shared service 2 Full time staff 10 RSLs & 2 Councils 75,000 properties Products selected by Members not Contractors Over £8m savings delivered so far

Awards single supplier frameworks for products Members need:◦ New build◦ Planned replacement◦ Responsive repairs

Not repair or installation except doors & windows Members award contracts from the frameworks Members or their contractors place orders Over 90% usage of frameworks

Better prices and value for money Not about lowest price Products selected by Member not contractor Residents involved in the product selection Consistent products As good as, or better, products As good as, or better, guarantees As good as, or better, service levels

Better products: less likely they will need repairing Resource savings on specification Reduced procurement costs Time to concentrate on the installation contracts Legislative compliance Reduced risk Shared expertise

Use your own existing contractors Do the work yourselves Removes an area of SME cost disadvantage More competitive SMEs

Annual subscription Based on number of properties:◦ A fixed fee ◦ Plus a variable fee per property

£5,000 joining fee

Members save more than their subscription Income equated to 2.5% of spend Income equated to 7.5% of savings No income to Advantage SW from:◦ Rebates◦ Spend related payments◦ Savings related payments

Not about lowest price Robust specification Less than half contracts awarded to the lowest

priced tenderer

Year Savings2009-10 £1.3m2010-11 £1.6m2011-12 £2.1m2012-13 £3.1mTotal £8.1m

Help Members avoid increasing business costs Now measure RPI avoidance £790,000 inflationary increase avoided in 2012/13

Bathroom equipment Ideal Standard Taps Vado UK Kitchen units Moores Radiators Stelrad Heating controls Pegler External doors Britdoors Aids & Adaptation products AKW Medicare Slip resistant & safety flooring Tarkett

Electrical heating Creda Air source heat pumps Daikin Airconditioning PVCu windows Wrekin Windows Solar Thermal systems BDR Thermea (Baxi) Consumer units Electrium Group Fans EnviroVent Boilers Worcester Bosch, Baxi,

Glowworm, Vaillant,

Advantage SW Contracts Manager◦ Framework implementation◦ Helps resolve issues◦ Identifies actual savings

Product groups◦ Problem solving◦ New products◦ Product improvements◦ Service improvements◦ Benchmarking

Re-letting existing contracts◦ Air source heat pumps◦ Windows◦ Electrical heating

Other contracts◦ Member Purchasing Managers working collaboratively

Green Deal – ECO, Provider strategy Renewable Heat Incentive Utilities DLO stores items

Fuel Poverty ◦ Heating system training cascade & support◦ Energy tariff switching◦ Heating video instructions ◦ Website – costed energy efficiency savings

Process sharing & improvement Training co-ordination Library of Documents Member spend analysis

7 Product Groups All Members can be represented on all groups Members set the specification Members set the PQQ & ITT questions and

weightings Members analyse the tenders Residents assess the products tendered Prices submitted in a reverse electronic auction Procurement projects managed by Advantage SW

Kitchens, bathrooms, taps◦ St Austell (Ocean Housing) 25th September◦ Exeter (Kenn Centre) 26th September◦ Yeovil (Yarlington Housing) 27th September

External doors, radiators, heating controls, flooring◦ St Austell (Ocean Housing) 27th November◦ Exeter (Kenn Centre) 28th November◦ Yeovil (Yarlington Housing) 29th November

Almost 200 residents provided their input

ASHP, Windows◦ St Austell (Ocean Housing) 16th September◦ Exeter (Kenn Centre) 18th September◦ Yeovil (Yarlington Housing) 19th September

All Members represented on Product Groups Procurement Consortium Group oversees work PCG made up of senior managers Product Groups make recommendations to PCG◦ Tender shortlists◦ ITT questions

PCG makes recommendations to Advantage Board◦ Awards frameworks

Fuel Poverty group Training on how to use heating systems Tie-up with Energylinx to promote gas & electricity

tariff switching Sharing knowledge & good practice New technologies◦ Monitoring running costs◦ First sight of future products

Benchmarking Liaising with other agencies, eg◦ Central Government – HCA, DECC, MPs◦ Western Power Distribution◦ Water companies

E-tendering system E-auctions Spend analysis Training courses

Category Score (5.00)Performance 4.63Contract Management 4.24Communication 4.59Member focus 4.71Resident engagement 4.18Overall 4.74Average 4.59

Quarterly newsletter Bespoke annual report for each Member Website www.advantagesw.co.uk Secure website https://asw.yhg.co.uk Twitter @advantage_sw

Advantage SW Some pointers on procurement

Give yourself enough time◦ Plan to act as you enter the last year of the contract

Talk to possible contractors◦ What is good practice◦ Is there capacity in the market?◦ Have standards changed?

Talk to other landlords◦ Who is tendering at the same time – collaboration?◦ Who has just tendered – issues?◦ Sharing documents and resources

Consider TUPE & liaise with incumbent about this (legal advice?)

How will you manage the contract?◦ How does this need to be reflected in the contract?

Do you have the expertise to deliver the project?◦ Technical◦ Procurement

Do you have the time to deliver the project?

Must comply with the Public Contract Regulations Goods, works & services Ensure you categorise your contract correctly Huge difference between thresholds Even sub-threshold needs to comply with the

principles of the EU Treaty TUPE implications? Use an e-tendering system – in-built audit Social Value Act

Performance specification Functional specification Mixture of both How do you include best practice in a performance

specification? How proscriptive are the British & European

Standards? If a lifetime detailed, how will it be guaranteed?

No ambiguity Sell your organisation Deal with TUPE responsibly Clear pricing methodology Clear questions, scoring criteria and weightings Clear specification Options identified if relevant Contract management Performance indicators

Capabilities and Capacities Not about how they would do your contract Detail “minimum requirements” and disqualify those

who don’t meet them Don’t frighten off SMEs Small number of questions Be transparent about scoring Have a minimum pass score

Give them enough information Give them enough time Questions must be relevant to the contract If exceeding your requirement is not a benefit,

don’t award it points: have “hurdle” questions Don’t ask too many questions Only ask questions:◦ You intend to score the response◦ Must have an answer

Tell them how you will score, and stick to it

Pricing mechanism will drive behaviour Fixed price can lead to reductions in quality Variable price can lead to increase in costs How will you manage these? Advantage SW Members hybrid approach◦ take the products outside of the tender◦ tenderer prices other items

Supplier challenge process is a global phenomenon

Under PCRs unsuccessful tenderers must have a written debrief

Must provide their scores and successful company’s

Must explain why the successful company won Must detail comparative advantages and

characteristics of successful tender

Don’t “let and forget” Work closely with the incumbent and future

supplier The incoming supplier will not know how you

operate Establish acceptable standards for workmanship Get the communication routes sorted Get the admin sorted Make sure they know how to invoice

Groundwork◦ Specification◦ Service levels◦ Performance indicators◦ Continuous improvement

Resource◦ Skills Challenge Recognise non-compliance Recognise poor performance Monitor Pis◦ Knowledge Specification Service levels Contact details

Process◦ Use the PIs◦ Reporting performance◦ Control of variations◦ Change control◦ Progress meetings

Sanctions◦ Evidence non-performance◦ Know sanctions and how to apply◦ Exit strategy