There is a potential saving of around £1.6bn if housing associations can be more efficient in repairs and maintenance.
A survey by Vantage Business Solutions shows the worrying variations being paid by RPs for some of the main component replacements.
Surveying 15 larger registered providers, Vantage found kitchen and boiler installations cost nearly 20% more when purchased via an external contractor.
They also found component installations via external contractors can range by up to 80% and those delivered by DLO by over 50%.
This analysis showed the potential savings for the 15 alone over a 10 year period was £140m. This then extrapolated across the top 150 registered providers sees the figure rise to £1.6bn over 10 years.
The survey found some good examples of best practice where DLOs were delivering major works programmes. Investment in a procurement strategy has also reaped some reward.
Despite this, the findings reveal some “major areas ripe for tackling” – using one RP as an example, they show there could be a potential 40% saving across kitchens, bathrooms and boiler budgets.
Across the sector, the savings over the 10-year period equates to 350,000 more kitchens, 600,000 more bathrooms or one million new boilers.
They could even be put toward significant number of new homes.
The survey also highlights:
- Re-procurement exercises do not guarantee results if you do not re-think your approach
- In-sourcing planned maintenance can be successful but only with the right teams, infrastructure and culture
- Long term partnership contracts can only drive lower unit rates with the right procurement and contract management approach
- People and capability remain the most vital factor in achieving VFM in major works; there continues to be a skills shortage across R&M management teams.
One example of the help Vantage give the sector is Midland Heart, who saved £3m per annum after they terminated and re-tendered their gas servicing and installation contract.
Using a fresh procurement approach, they were able to get a contract that was better value for money and a new energy efficient boiler scheme that will save their residents money on their energy bills.
The move will see the organisation save £30m over the next ten years, with the association saying they can “invest that money back into our homes and communities”
Rob Bryan, operations director and transformation specialist at Vantage Business Solutions, says: “By focusing hard on DLO productivity and unit costs, taking a more commercial approach to managing and negotiating external contracts and considering more innovative procurement approaches, major savings can be made sector wide.
“The best in sector examples are where RPs take a step back on their delivery models, adopt a more holistic approach to procurement and breathe new life into stale delivery models which are now driven by data-centric commercial decisions.
“This is great news for the sector who need to translate these savings into new homes, more installations and better homes for tenants.”
Get in touch to join the survey http://bit.ly/2kSMlgT