Contents
Page
1
Introduction
3
1.1
1.2
The Strategy
What is Value for Money
3
3
2
Value For Money- Strategic Linkages
4
2.1
2.2
Strategic Links - Internal
Strategic Links - External
4
6
3
Value for Money Strategy
8
3.1
3.2
3.3
3.4
Strategic Policy Aim
Themes of the Strategy
Application of the Strategy Themes
Monitoring the Strategy
8
8
8
11
4
Key Achievements
12
5
New Initiatives and Tasks for 2010/11
Onwards
13
6
The Future and our Aspirations
14
1
Introduction
1.1
The Strategy
Value for Money (VFM) continues to be a business priority for Newark and
Sherwood Homes. It is essential that VFM continues to be embedded in all that
Newark and Sherwood does and achieves for its customers to support long term
financial viability.
This strategy sets out the plans that Newark and Sherwood Homes has towards
the delivery of better VFM and greater efficiency in every aspect of our operations
and business.
This strategy sets out our approach to delivering VFM and outlines recent
developments and internal and external influencing factors.
Newark and Sherwood Homes have identified major themes, which are considered
key to achieving value for money across the Company and these are outlined
within the strategy.
The strategy outlines how we are developing and learning and the new initiatives
and/tasks we will deliver over the coming year and longer.
1.2
What is VFM
The “efficiency agenda” is concerned with both service improvement and good
financial management. Despite this broad intent, the terms of VFM and
‘efficiency’ can sometimes be taken to have a narrow meaning of “cost reduction”.
Whilst cost efficiencies are clearly important VFM is about a broader approach of
improving economy, efficiency and effectiveness including both considerations of
cost and of quality.
The elements of VFM are often referred to as the 3 E’s and it is useful to consider
each element to understand the relationship, sometimes known as the ‘value
chain’.



Economy is the price paid for what goes into providing a service.
Efficiency is a measure of productivity – how much you get out in relation
to what is put in.
Effectiveness is a measure of the impact achieved and can be quantitative
or qualitative.
VFM is high when there is an optimum balance between all three – relatively low
costs, high productivity and successful outcomes.
3

This diagram of the VFM framework (published by the Audit Commission)
clearly demonstrates the relationship between improving economy,
efficiency and effectiveness, including both considerations of cost and of
quality.
Value for Money
Economy
Efficiency
Effectiveness
Qualitative
Costs (£)
Inputs
Outputs
Outcomes
Quantitative
2
Value for Money- Strategic Linkages
2.1
Strategic Links - Internal
VFM is a priority for our organisation. A strategic approach has been taken to
nurture a VFM culture, which embraces innovative ideas and solutions, engages in
modern procurement practices and delivers efficiencies which are recycled to
meet the needs of our customers.
It is recognised that a successful VFM Strategy goes wider than just the delivery
of efficiency gains, by contributing to the Company’s wider objectives. It is
important to recognise how the strategy fits into the Improvement planning
process and to map linkages to maximise delivery in areas such as the following.
A. Company Vision
Newark and Sherwood Homes vision is to deliver excellent Housing Services.
We recognise that achieving better value for money is integral to the achievement
of excellence
We have developed this VFM Strategy in response to the need to deliver ever
improving and cost effective services for all of our customers and in so doing,
meet the requirements of the Tenant Services Authority (TSA) VFM standard and
the need for the efficiency targets to be placed in a whole organisation context.
One of the Company’s objectives is to provide investment and service
solutions to deliver sustainable Homes and sustainable Communities in
the future and one of the five company priorities as identified within our
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business plan is Maximising “value for money” We recognise that we need to
understand our costs and ensure that resources are allocated to support strategic
objectives. New and Innovative methods of working are embraced and inward
investment opportunities maximised.
B. Corporate Improvement Planning Process
The VFM Strategy forms part of the Corporate Improvement Planning Process
embedding VFM themes in all activities, plans and processes. The key linkages
between this strategy and the other components forming Newark and Sherwood
Homes Corporate Improvement Planning Process are shown in the diagram here:
Business
Review
NSH
business
Financial
Strategy
Plan
NSH delivery Plan
Corporate key Tasks –
Corporate Key
Performance Indicators
Improveme
nt Planning
Process
Budget
Annual
Efficiency
Targets
Value for
Money
Procurement
Strategy
Strategy
NSH
Directorate
Plans
Perform
C. Procurement Strategy
Newark and Sherwood Homes has developed a robust, modern procurement
strategy which is needed to apply best practice in achieving improved value for
money. There are direct linkages between this strategy and the Procurement
Strategy.
D. Resident Involvement Strategy
VFM applies to the whole community and services need to be managed with an
understanding of its diverse communities and in a way that supports equality and
of access to it.
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We have flexible financial systems which enable us to meet local needs and
deliver local approaches, prioritised through meaningful involvement with our
tenants
The Tenant Services Authority (TSA) is the new independent regulator for housing
and works with landlords and tenants to improve standards of service for tenants
and residents. The TSA standards support co-regulation with tenants through the
requirement to agree local standards for performance and provide tenants with
the opportunity to proactively influence service delivery through mechanisms that
are about outcomes and quality as well as costs.
We have an established VFM tenant group which is focused on challenging and
supporting the Company to continually improve value for money across all service
areas and are actively involved in setting the strategic approach for delivering
efficiency.
We promote and support customer involvement in our VFM work, including areas
such as investment decisions, changes to working practices, service reviews and
charging mechanisms.
E. Partnership and Inward Investment Protocol
Opportunities to deliver services in different ways, to branch out into new service
areas and offering our specialist services to others are all ways which the
company can ensure sustainability.
We will be proactive in transforming services and sharing resources through the
principles included within the Company’s Partnership and Inward Investment
Protocol.
There are direct linkages between the VFM Strategy and the protocol which has
an emphasis on the importance of gaining synergy and efficiency through focused
added value partnership and securing future inward investment to offset our
overhead costs.
F. Equality and Diversity Strategy
All VFM and efficiency activities are required to contribute to and support our
commitment to promote equality and diversity and to engage customers. There is
the expectation that Equality and Diversity objectives will be included in work
plans and we can demonstrate compliance with the requirements of our Equality
and Diversity Strategy.
2.2 Strategic Links – External
A. The Government’s Efficiency Agenda
Government guidance has been considered and built into the policy aims of
Newark and Sherwood’s VFM Strategy to deliver the company’s strategic
objectives and to meet the Governments challenges and targets. The housing
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sector has had particular focus on VFM through the VFM KLOE (published August
2005) and the new TSA VFM Standard.
Public finances will be under considerable pressure over the life of this strategy
due to the current challenging financial climate. Already we are experiencing
grant freezes for the new build schemes. We have expectations of reductions in
funding and Government cuts which makes VFM even more important to enable
us to continue to deliver our aim of providing excellent housing services with
reduced resources.
B. Value for Money and Housing Inspection
The TSA VFM standard sets out the required outcomes and the specific
expectations which landlords should deliver.
To meet the TSA standard we are required to demonstrate how much our services
cost and how we manage our overall approach to VFM and the way in which we
are encouraging a culture of VFM within our organisation to meet tenant’s
requirements.
There is also an expectation on organisations to publish information on how
resources are managed; priorities are identified currently and for the future and
how costs and quality compare with others.
C. Performance Indicators
The Government has set a stretching target of at least 3% net cash releasing VFM
money gains 2008/9 to 2010/11. Future targets will be set as part of the next
Comprehensive Spending Review.
Non-cash releasing gains remain an important way of improving VFM, but do not
score against the above target.
The Government monitors delivery of efficiencies through the following national
indicator:
The total net value of ongoing cash-releasing value for money
gains that have impacted since the start of the 2008-09
This indictor is one of a national suite and councils are required to report on
efficiency forecasts and then the actual efficiencies delivered as part of the annual
returns.
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3
Value for Money Strategy
3.1 Strategic Policy Aim
Our VFM Strategy is based around the following VFM policy aim:
“To deliver excellent housing services: Excellent quality, excellent value”
We will achieve this through our commitment to the improvement of value for
money in all services provided to our customers.
3.2 Themes of the Strategy
In developing the strategy and its objectives four major themes will support the
delivery. These are:
1. Understanding and Challenging our Costs & Services Newark and
Sherwood Homes understands and reviews costs in relation to service
delivery, performance and outcomes and identifies areas for action.
2. Multiple Agency Working Newark and Sherwood Homes embraces
opportunities for local community working to improve standards as part of
the VFM culture.
3. Systems and Processes New technology is considered as part of the drive
to continually improve services and deliver more cost effective solutions.
We have local standards which are agreed with our tenants reflecting local
priorities. The opportunity to externally test our services is taken and
learning identified.
4. Staffing and Resources We have a culture which supports effective
deployment of resources. We invest in our staff to ensure Managers and
staff are supported to deliver VFM through training, sharing of best practice
and regular management account meetings.
3.3
Application of the Strategy themes
1.
Understanding and Challenging our Costs & Services
In order to improve and maintain good VFM practice, Newark and Sherwood
Homes recognises that it must understand its current cost position and set a plan
as to where it wants to be in the future.
The Company has accurate financial information on costs and services and has
robust financial budget setting processes, which form part of the business
Improvement Planning Process. This ensures that resources are allocated to
reflect the Corporate Vision and objectives through the Company’s business plan
and delivery plan.
8
The Efficiency Delivery Vehicle sets a clear framework of how the company will
examine and deliver efficiency gains. This business tool is a key mechanism to
systematically drive self challenge to improve service delivery.
We carry out VFM Service Reviews to challenge current delivery methods as set
out in the Efficiency Delivery Vehicle and through this review we understand and
review our costs in relation to service delivery, performance and outcomes and
identify areas for action.
We have a clear understanding of outcomes and future efficiency plans when
making investment decisions and demonstrate delivery following project
completion.
To enable Newark and Sherwood Homes to determine its relative cost and quality
position, areas of strength and weakness and identify better practice,
benchmarking must be used proactively. The Company is committed to using
benchmarking clubs to identify areas for improvement and has over the last year
reviewed the processes to collate data inputs to ensure that we fully comply with
the definitions outlined by the benchmarking clubs and that there is greater
transparency regarding cost drivers.
Annually a review of the Company’s Housemark benchmarking results is
undertaken to establish our current cost position and areas for potential
improvement. These results are compared against our ALMO peer groups and
provide an essential contribution to this strategy.
We have also compared our performance for 2008/9 against four, similar sized
three star ALMOs and overall our performance compares well. A copy of the
comparison is included within Appendix A of this strategy. This work and the
annual review of the Housemark results will be used as part of our action plans
going forward.
2.
Multiple Agency Working
Newark and Sherwood recognises that through the sharing of resources and joint
working a coordinated approach to efficiency will be delivered. Through multiple
agency working a range of solutions to reshape services in the front and back
office to increase community satisfaction and reduce duplicate and wastage can
be developed.
The Company has benefitted from working with other ALMO groups in the past
though joint procurement initiatives, partnership working and sharing of financial
information. This work has resulted in joint pilot schemes for advertising,
identification of best practice working and joined up procurement of services,
including external audit and decent homes works.
We are now aiming to take this agenda to the next level through leading shared
services work by engaging with potential partners to progress multiple agency
working and progressing work to identify future opportunities to work together to
improve standards, meet customer needs locally and drive down costs.
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We have proactively approached our stakeholder, Newark and Sherwood District
Council to identify areas where efficiencies can be generated through maximising
and deploying our resources effectively for joint benefits.
We are also engaging with our Midlands ALMO group to look at future
opportunities of joint ventures, sharing specialist skill sets, shared procurement
and reviewing how we can work together across a whole range of services.
This is an area of focus for the Company to both deliver future efficiencies and
improve local standards and increase community satisfaction levels for services.
3. Systems and Processes
To continually improve services Newark and Sherwood Homes demonstrates high
performance through external challenge. During 2009/10 the company achieved
the Customer Excellence accreditation, RoSPA Gold awards for occupational
health and safety and also renewed and maintained its ISO 9001 accreditation for
customer facing procedures.
When developing future tasks there is the requirement to consider the costs and
the return on investment. A review of the actual efficiency gains delivered
against the original plan should be completed as part of the post project review
and learning shared. Future financial projections must include efficiencies
generated from past investment.
Work plans are currently in place to review the efficiency outcomes from past
investment and drive through the efficiency gains.
The Company has recognised that systems and processes need to be reviewed on
a regular basis to release resources, eliminate waste and meet customers
changing priorities. In response to this during 2010/11 we will appraise the
impacts and costs of the application of a system thinking approach.
Modern technology provides a range of efficiency opportunities and Newark and
Sherwood Homes embraces new innovative ways of working which can automate
processes to release resources to add value. We have future plans to evaluate
and implement the introduction of Hot Desking, Intranet, enhanced electronic
document storage and information and mobile working solutions, in addition we
will evaluate the potential use of IT systems to provide an integrated solution to
performance management.
We aim to achieve upper quartile in our VFM and Cost performance. And the
Governments efficiency targets will be embedded in our suite of indicators
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4.
Staffing and Resources
We have strategic leads to drive the VFM agenda with clear management and
officer responsibility. Individuals are accountable for efficiencies and will recognise
the requirement for delivery of future financial gains as part of decision making
processes
Newark and Sherwood Homes promotes an environment, which encourages
innovation and challenge of service delivery and costs. We provide a culture,
which communicates and celebrates success of VFM schemes and delivery of
efficiencies
We have our Efficiency Delivery Vehicle as a business management evaluation
tool to support staff to challenge services and deliver efficiency gains. We have
the VFM Championship league to promote healthy competition and team pride
about VFM achievements.
We aim to keep VFM high on the agenda through using a variety of methods; we
train our staff to create a clear understanding of our VFM aims and objectives.
VFM is a standard item on team meetings and one to ones and the balanced
scorecard includes a suite of financial ratios and VFM performance targets at each
management level.
We set clear performance targets and have now included efficiency targets at
service level to further embed our culture of proactive VFM management and
delivery.
Through linking the budget process to our Improvement Planning Process we
ensure that resources are allocated and available to support business
improvement and development. We work in an environment of limited resources
and therefore resource planning and understanding the future financial impact of
decisions is essential. We will make challenging decisions regarding the effective
deployment of resources and where under utilisation occurs, progress divestment
options. We aim to deliver self financing projects and as part of this are currently
developing a financial plan to meet ongoing and future depreciation charges.
We have a management framework to support a high quality business culture
though the introduction of our six elements of professional standards. We will
continue to focus on ensuring we have the right people with the appropriate skills,
doing the right roles to deliver excellence.
3.4 Monitoring the strategy
In order that the company applies this strategy, Directors of the Board will be
provided with information on delivery against the 2010/11 performance targets
and VFM tasks on a monthly basis as part of our suite of usual performance
management reporting circulated through the information system.
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4
Key Achievements
i.
Since the introduction of the company Newark and Sherwood Homes has
delivered over £2m of cashable and non cashable efficiency gains in
revenue and capital schemes.
ii.
During 2009/10 we focused on increasing our inward investment, and
improving efficiency through partnership working. We were successful in
securing £376k of inward investment and generated new efficiency gains of
£25k through partnership working.
i.
We have invested resources in a dedicated Business Development Team
to identify and deliver alternative sources of funding for the future.
iii.
In March 2010 Newark and Sherwood Homes successfully pre–qualified with
the Homes and Communities Agency to be able to bid for grant under the
National Affordable Housing Programme. Future new build schemes will
provide new social housing within the District and future income streams for
the company.
iv.
We have challenged a range of service costs which has resulted in
efficiencies/and or improvements in quality. For example:





We successfully retained the responsive repair service following market
test.
We outsourced the grounds maintenance contract delivering cost
reductions and quality improvements.
We retained the Stores function following an option appraisal and
delivered 10% efficiency.
Service Level Agreement Reviews resulted in the insurance and Health
and Safety work being delivered in house within existing resources.
We have tendered the external audit contract and insurance contracts
resulting in efficiency gains.
v.
We have strengthen the strategic focus on VFM through the Audit
Committee taking the lead on determining Finance and VFM performance
indicators/targets for 2010/11
vi.
We have an active group of tenants who focus on VFM. The VFM tenant
group was established in 2007/8 and is currently focused on self financing
and has been fully involved in the review of this strategy.
vii.
We have introduced the Improvement and Innovation fund which captures
in year efficiencies and redistributes money back to meet future service
requirements and customer’s expectations.
viii.
We have a successful VFM Championship league which has been cited as
best practice by the Audit Commission. This league promotes engagement
in VFM activities and supports keeping VFM high profile within the Company.
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5
New Initiatives and Tasks for 2010/11 Onwards
Value for Money efficiencies has and will remain a priority for the Company and
efficiency targets, challenges and schemes will continue to stretch resources.
Through application of the Efficiency Delivery Vehicle a systematic annual
challenge of services is progressed which will result in VFM reviews of identified
areas within the business.
Newark and Sherwood Homes has identified the need to further increase inward
investment and will continue to seek and identify alternative sources of funding to
be implemented in the short to medium term.
We will continue to drive opportunities to work with others to secure efficiencies
for our tenants and also our local community.
A range of tasks have also been identified for 2010/11 and beyond and this list is
indicative of the tasks planned for the future.
i.
Development of post 2010 Investment requirements and incorporate into the
Asset Management Plan.
ii.
Evaluate and implement the introduction of modern working solutions
providing the opportunity to achieve 20% reduction in office floor space
requirement.
iii.
Undertake a review of the cost effectiveness of supporting people services
iv.
Retender External Audit contract
v.
Retender Insurance contract
vi.
Market Test Out Of Hours Responsive Repairs Service
vii.
Consider new business opportunities available to the stores function
viii.
Feasibility study on electronic postage opportunities
ix.
Development of energy procurement partnership post 2010/11
x.
Review of Procurement Strategy
xi.
Options appraise future usage of under-utilised community centres and
offices
xii.
Develop an appraisal mechanism for new business opportunities
xiii.
Review the fees and charges against service costs annually
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6
The Future and our Aspirations
Based on the current environment and current service levels, financial projections
over a 30 year period indicate that the Company’s revenue stream is sustainable
over the medium term based on current service levels, however in the longer
term the financial situation becomes more challenging as a shortfall develops
between the funding available and the costs of managing and maintaining our
services.
In view of the long term financial issues we will be seeking to continue our robust
financial management and value for money practices and continue to develop our
VFM plans to plan and met the funding challenges.
There are currently proposed changes in Government policy affecting the financial
framework in which the company operates in and the grant funding payable. We
are hopeful that the outcome of any changes will enable us to support the Council
to secure a future delivery vehicle for our tenants which delivers long term
financial viability and addresses and delivers the investment requirements of the
housing stock
It is recognised that the Company’s current Constitution and Management
Agreement would benefit from further consideration in coming years as the
Company evolves and develops. Changes to our authority could provide us with
the opportunity to embrace new and innovate ways to secure inward investment
and contribute to reducing our financial short fall in the longer term and increase
our contribution working with the Council to sustainable communities
We will continue with our work to challenge all costs and aspire to demonstrate
across all service areas an optimal balance of cost and quality when compared to
our peers.
During 2010/11 we will work with multiple agencies with the aim of becoming a
leader in VFM culture change through joint working with other organisations
delivering innovative solutions.
To meet the TSA standards we will be continuing our tenant involvement in the
financial aspects of the company through the improvement planning process, the
continual improvement groups and service improvement groups. We seek to have
a range of tenants engaged and empowered to challenge VFM and plan future
efficiencies. We will continue to develop successful communication with our
tenants regarding how we are prioritising spending and planning demonstrated by
high levels of customer satisfaction in our information sharing and involvement
approaches.
We will continue to build on our past investment in IT and work to streamline
systems, through our aim to develop a culture where we become leaders in
embracing new technological advantages which deliver future efficiencies whilst
improving the customer experience.
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