Price per PropertyManaging the Risk14.06.12 Passion for... People Performance Procurement Partnering
•Mathew Baxter – Managing Director echelon consultancy•Sue Cooper – Director of Property Services ...
ASG Objectives Identified•Rationalise the geography•Refresh the cost•Benchmark the DLO•Simplify the management•Revise the ...
ASG Process•Development of bespoke PPP Model•Draw out risk elements through process•Focus on incentivisation through model...
Is it the right model for you?Considerations……
Heading Ov v ...
• New model – market sophistication developing• Reliant on accurate data from Client• Service Provider risk of Clien...
Defining the PPP/PPV Model
Price Per Property (PPP) Concept Wide range of costs ...
Development of Model - Concept •Reviewed what’s out there – mixed bag •Drew on our combined experience of PPP •Emphasis...
Inclusions/ Exclusions – Key! • What’s ‘in’ and what’s ‘out’ • Comprehensive list of both • Referrals system • ...
Inclusions/ Exclusions – SampleNo. Component Exclusions Incl ...
The Tender Model….. EementofCost l Per a ofCost ...
Labour •Pricing Matrix for net labour costs •Detailed breakdown of resource requirements in Method Statement •Focus...
Materials •Fully priced schedule of components •Schedule will be volumised based on history (Note – indicative only ...
Site Overheads •Fully priced overhead schedule •Template provided in model •Clear breakdown on what’s included •Some p...
Central Office Overheads & Profit •Contribution to Head Office •Fixed (guaranteed) Profit •Expressed as percentage of P...
Incentivisation •Incentivised Profit – Variable Profit •Ring-fenced against PPP •Paid monthly – key driver will be R...
Voids •Inclusions/Exclusions •Single PPV (AR over and above) •Capped by volume •Based on existing volumes •Performanc...
Risk – Critical Factor in PPP • Provision of accurate data • Understanding what Contractor’s Risks are • Tenderers pric...
Risk Strategy
Risk – Areas identified • Data gaps (defined) • TUPE x3 • Stock familiarity • Specific work-types – Capped by...
Risk – SampleDescription of Quant Unit Rate Risk % Allocation Residual Scope Definition ...
Performance Incentives•Variable fee linked to 2 KPIs•Customer Satisfaction – Repairs – Target 8.5•Average number of Days –...
Performance Incentives – Exceptional Performance•Extra payment of 3.57% if exceed score of 9•Between 8.5 and 9 paid increm...
Thank you – Questions?
Contacts Sue Cooper – sue.cooper@affinitysutton.com www.affinitysutton.comMathew Baxter – mathew@echelonconsu...
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Price per property - managing the risk

Price Per Property – Managing the risk
Published on: Mar 4, 2016
Published in: Business      Economy & Finance      
Source: www.slideshare.net


Transcripts - Price per property - managing the risk

  • 1. Price per PropertyManaging the Risk14.06.12 Passion for... People Performance Procurement Partnering
  • 2. •Mathew Baxter – Managing Director echelon consultancy•Sue Cooper – Director of Property Services Affinity Sutton Group
  • 3. ASG Objectives Identified•Rationalise the geography•Refresh the cost•Benchmark the DLO•Simplify the management•Revise the incentives
  • 4. ASG Process•Development of bespoke PPP Model•Draw out risk elements through process•Focus on incentivisation through model•Flexibility for different delivery models•(i.e. isolation of labour/overhead/profit)•Detailed Term Brief - full stakeholder input•CD process to hone the delivery model and PPP
  • 5. Is it the right model for you?Considerations……
  • 6. Heading Ov v er iew ImpactReduces Administ aion rt Significa r ion in pa w k a t numberofcomponent in t inv ae r nt educt per or s he s he oices r educed Costsa ings forCl a Ser ice Pr ider v ient nd v ovM na a gementbyE ion xcept M na a gementis focussed on except lit iona ems. Impr es t pr bil yofbeterout ov he oba it t comes w h mor it e St ndad cost ae cov ed byt PPP. a r s r er he focus on t issues t tmat he ha terV it ofBudget a Cost isibil y s nd s Ser ice Pr ider ae a e t pl n a decl r t budget w h costcera y. v ov s r bl o a nd ae heir s it t int Impr ed l ihood ofsuccessfulSer ice Pr ider ov ikel v ov R ces ae ma ged t a e t pr ectgoas. esour r na o chiev he oj l del er a budgetcont ol iv y nd r Cl s obt in beterv it ofpl nned a a ua r cing ient a t isibil y a nd ct l esour E ryw r ofdev nce fr pl n al aning ia om aIncent e t Per m iv o for Ser ice Pr ider ae incent ised t impr e efficiencyw hin t fr mew k ofKey v ov s r iv o ov it he a or Costsa ings t Cl a Ser ice Pr ider v o ient nd v ov Per ma Indicaor (KPI’s) for nce ts Impr ed focus on exceedingKPIs ov Aoids div sions t ma v er o ximise costr er underSoR ecov y s.R Ca Be M na isk n a ged R ca be defined a shaed (e.g. T ) isk n nd r UPE Shaed benefit r M na equit bl posit a ged a e ionBenchmaking r Benchmakingca be used w h ot Cl s r n it her ient Confir per ma a instpeer m for nce ga sSoRr t ae obt ined a t aes r a t ender SoRr t ae used forexcept lit out oft PPP. aes r iona ems side he Cont ingencypr ementpl n forCl ocur a ient T ca be used ifitbecomes necessayt a tfr t PPP hese n r o bor om heM r T ed aket est R t s showconv gence ofpr (w hin 2%) ecent ender er icing it Cr t t r env onmentforsuccess eaing he ight ir E on modeldev oped t ough exper a diaogue chel el hr ience nd l M r t ed w h Cl s a Ser ice Pr ider aket est it ient nd v ov s
  • 7. • New model – market sophistication developing• Reliant on accurate data from Client• Service Provider risk of Client taking calls• Service Provider taking more commercial stance on repairs responsibility (i.e. saying ‘No’)• Service Provider IT capability of capturing cost & repairs data• Changes in processes within Client• Service Provider underestimates risk• Cultural shift in ‘control’ of repairs ordering (i.e. currently dictated by Client orders)
  • 8. Defining the PPP/PPV Model
  • 9. Price Per Property (PPP) Concept Wide range of costs brought within single average
  • 10. Development of Model - Concept •Reviewed what’s out there – mixed bag •Drew on our combined experience of PPP •Emphasis on comprehensive Inclusion/ Exclusions List •Clear process for managing exceptions •Understanding risk is critical factor •Strip back to basics!
  • 11. Inclusions/ Exclusions – Key! • What’s ‘in’ and what’s ‘out’ • Comprehensive list of both • Referrals system • All comes down to risk?
  • 12. Inclusions/ Exclusions – SampleNo. Component Exclusions Incl usions Not L aions es/imit t Sect I -Int na ion er ls W e t SPconfir t kit is beyond her he ms he chen economica r iritw lbe r r t Cl foraful l epa il efered o ient l r a epl cement Ift r r lis a ed t SPw only . he efera ccept he illI.1 Kit chen T ntOw A nces ena ned pplia Kit Unit (t include door hinges, ha es a shelv chen s o s, ndl nd es) be responsible forma a forafurher2 yeas if int ining t r notr a (a erw pointSPw lbe r epl ced ft hich il eimbursed forr ir epa s) Capetorot t ntfited floorcov ing r her ena t er W kt or ops W eG hit oods M st seaa t w kt a floorcov ing a ic l nt o or ops nd er Sink Cha a Plugs ins nd E Pa s nd nel
  • 13. The Tender Model….. EementofCost l Per a ofCost cent ge _____% L bour a _____% M t ias aer l _____% Sit Ov hea e er d _____% Hea Office Ov hea &Pr (F d er d ofit ixed) _____% V r bl Pr aia e ofit _____% Risk 10 % 0 T a PPP ot l
  • 14. Labour •Pricing Matrix for net labour costs •Detailed breakdown of resource requirements in Method Statement •Focus on productivity •Sub-contractors quantified and named
  • 15. Materials •Fully priced schedule of components •Schedule will be volumised based on history (Note – indicative only volume is SP risk) •Focus on high demand items •Qualitative assessment on integration of Supply Chain
  • 16. Site Overheads •Fully priced overhead schedule •Template provided in model •Clear breakdown on what’s included •Some prescribed items (Call Centre/ Mobilisation Workshops etc.) •Cross-referenced with MS •One-off mobilisation costs
  • 17. Central Office Overheads & Profit •Contribution to Head Office •Fixed (guaranteed) Profit •Expressed as percentage of PPP •Ring fenced as % of PPP •Clear definition
  • 18. Incentivisation •Incentivised Profit – Variable Profit •Ring-fenced against PPP •Paid monthly – key driver will be Resident Satisfaction •Targets will be defined in KPI Handbook •Focus on 2 KPIs (more later!!) •Potential shared savings mechanism(s)
  • 19. Voids •Inclusions/Exclusions •Single PPV (AR over and above) •Capped by volume •Based on existing volumes •Performance on key to key
  • 20. Risk – Critical Factor in PPP • Provision of accurate data • Understanding what Contractor’s Risks are • Tenderers price Risk • High Risk items isolated (within PPP) • and ‘risk pots’ with draw-down or cap •Risk will be reviewed at the end of the 1st year •Risk is capped for subsequent years
  • 21. Risk Strategy
  • 22. Risk – Areas identified • Data gaps (defined) • TUPE x3 • Stock familiarity • Specific work-types – Capped by annual spend (not per item)- Aids and Adaptations, Fencing, Drain Clearance, Asbestos Works
  • 23. Risk – SampleDescription of Quant Unit Rate Risk % Allocation Residual Scope Definition Mitigation Strategy Measures Reporting/Update ProcessRisk Allowance Allowance Prob to Year 1 Allocation to Total Tender Year 1 PPP We will capture the information as part of our monthly report. We will report to Origin on a quarterly basis on the 4851 Properties x 1 extra repair number of jobs compared to at £112 x 5% probability. We the cap. In the event that the have assumed an average of number of jobs is over theIncrease in the 2.2 jobs per property i.e. Weather is the main reason and we will seek cap or indeed close to it, wevolume of jobs Volume increase caused by 10,672 per year. If, at the end the most cost effective repair solutions, will present a detailedcaused by £ £ £ £ Residents or unforeseen of the year, the number of jobs 4851 Props 5% including batching repairs where possible. We analysis to Origin of whichResidents or 112.00 543,312 27,165.60 27,165.60 circumstances requiring was 25% or more higher than will involve Origins officers in cases where the properties are causing theunforeseen more repairs that, we would request that resident is over-using the service. breach of the cap with ourcircumstances Origin pay for the jobs over the suggestions of the number of cap i.e. any jobs above 13,340 jobs can be reduced. This in a year at an average cost of may mean looking at the £112 per job need for planned works in some properties or the more active management of a resident and their use of the service
  • 24. Performance Incentives•Variable fee linked to 2 KPIs•Customer Satisfaction – Repairs – Target 8.5•Average number of Days – Void – Target 9 DaysIf hit….•Equates to £18k month (£10 PPP) on Repairs PPP•Equates to £43 per void
  • 25. Performance Incentives – Exceptional Performance•Extra payment of 3.57% if exceed score of 9•Between 8.5 and 9 paid incrementally•Extra payment of £15/day for each void <9 days
  • 26. Thank you – Questions?
  • 27. Contacts Sue Cooper – sue.cooper@affinitysutton.com www.affinitysutton.comMathew Baxter – mathew@echelonconsultancy.co.uk www.echelonconsultancy.co.uk

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