What is Value for Money?
Crown Simmons Housing's 2017-2021 Strategic Plan "Better, Stronger, Smarter" sets out our commitment for achieving Value for Money (VfM) in all that we do. The current operating environment, including the 1% rent reduction until 2019, means it is even more important that Crown Simmons delivers VfM.
The current operating environment, including the 1% rent reduction until 2019/20, means it is even more important that Crown Simmons delivers VfM. VfM is one of the Economic Regulatory Standards that Crown Simmons complies with and through which the Regulator of Social Housing regulate our sector.
The objectives of this strategy are to:
a) Continue to drive improvements in value for money in the sector;
b) Agree a strategic approach to delivering value for money and embed it within the organisation;
c) Optimise our investment in existing homes and new housing supply.
The Regulator of Social Housing issued a revised Value for Money standard in March 2018, together with a Code of Practice which provides guidance on implementing the standard. The revised standard focuses on outcomes and this strategy has been updated to reflect the revised requirements.
Value for Money is not a new concept; it has been around for many years. It is commonly defined as the relationship between Economy, Efficiency and Effectiveness. Value for Money is achieved when there is an optimum balance achieved between the three "E's" as demonstrated by this flowchart.
Is minimising the cost of resources for an activity (i.e. doing things at the right cost).
In essence economy is the careful use of resources to save expense, time or effort.
Is a measure of things are done i.e. productivity. Efficiency is primarily associated with the process and delivery i.e. performing tasks with reasonable effort (i.e. doing things the right way).
In essence efficiency is the delivering of the same level of service for less expense, time or effort.
Is a measure of the impact achieved (quantitative or qualitative). Effectiveness is primarily associated with the outcomes for customers i.e. the extents to which objectives are met (i.e. doing the right things).
In essence this is the delivery of a better service or return for the same amount of expense, time or effort.
By applying these principles we should achieve the optimum use of available resources, which will in turn lead to extra capacity and allow us to provide better services. From our customers’ point of view, they are constantly looking for value for money in their day-to-day lives e.g. low-cost supermarkets, money saving websites etc., so it is important that as their housing provider we are proving to them that we are offering value for money.
As a smaller housing association with limited resources we need to embrace value for money in everything we do. It is an integral part of our culture and is driven by the Board and reported via Key Performance Indicators and quarterly budget monitoring. As a matter of course, value for money considerations should be integral to all board reports that seek approval to commit expenditure: there will be carefully costed solutions, comparisons of alternative options and assessments on the impact of the proposal on the organisation.
We have adopted 3 over-arching objectives for the delivery of our strategic plan:
Improving Customer Service (“Better”)
Growing our Business (“Stronger”)
Organisational Simplicity, Efficiency and Value for Money (“Smarter”)
By 2021 we will have:
- Achieve continuous improvement in resident satisfaction compared against housing associations nationally, from 85% satisfaction rating achieved in the STAR customer survey of 2016
- Provided more opportunities to our residents to be ‘self servicing’ using digital technology
- Grown our units in ownership and management by at least 15% and will be closer to 1,000 homes in management
- Achieved further external recognition for our positive culture and staff engagement
- An operating margin of 25% with a target surplus of 10% of our annual turnover (minimum 2% in any single year)
- Operating costs per unit at the median level for smaller registered providers (less than 1,000 units in management) nationally.
Our over-riding objective is to have continuous improvement with customer satisfaction with our service as when compared to housing associations nationally. We will have better understanding and engagement with our residents, with more opportunities for ‘self-servicing’ using digital technology and training.
In order to support this objective we will:
a) Offer an increased range of digital solutions so that our customers can self-service where appropriate at their convenience
b) Support our residents through welfare reform with a view to maximising all income due to both residents and the Association.
c) Deliver the improvement plans from the surveys carried out in 2015 and 2016 and carry out a full ‘STAR’ customer satisfaction surveys 2018 and 2020. New improvement plans will be derived from new customer feedback.
Our objective is to deliver the growth ambitions set out in our Business Plan for the next 5 years, and will be closer to 1,000 homes in management. This growth will enable us to reduce our operating costs.
The key targets to deliver this are:
- Obtain £10m Revolving credit facility
- Embed our approach to Risk Management, regularly testing it against the economic and regulatory environment.
- Our focus will be on the intermediate housing market but we will also continue to look at other ways of delivering new affordable housing in our operational area, for example working in partnership with local authorities to reduce homelessness
- Define our ‘red lines’ and requirements around future Merger & Acquisition opportunities.
- Develop our organisational capacity as we move closer to 1,000 units in management and different level of regulatory scrutiny that brings with it.
We will publish at least annually evidence in the statutory accounts and by way of a VfM report to enable stakeholders to understand how we are achieving VfM in delivering our purpose and mission.
a) Performance against our value for money targets and the Regulator of Social Housing’s metrics and how it compares against its peers
b) Measurable plans to address any areas of underperformance, including clearly stating where improvements would not be appropriate and the rationale for this.
This will be published on our website each year by 30 September.
Embedding Value for Money
Crown Simmons will ensure that it meets its organisational purpose and objectives in considering the use of resources and assets. Value for money will be embedded at a strategic level by ensuring it is considered in all strategic decisions and at an operational level through optimising value for money in the activities we carry out.
We will benchmark our costs and performance and compare them to other organisations to understand the relationship between cost and outcome to determine how costs can be driven down.
All decision making will consider the evaluation of all potential options for improving performance. This may include:
a) Cost inputs versus outputs achieved
b) Opportunity cost of using assets and resources in their current function compared to alternative uses
c) Comparison against alternatives
d) Evaluation of implications for delivery objectives
e) Other delivery structures
f) Ensure that returns on non-social housing are commensurate with the risks involved and the balance between risk and reward is understood.