Value for money

What is Value for Money?

For a social housing provider, value for money can perhaps best be defined as ‘The delivery of an organisation’s social objectives and business strategy in the most cost-effective way possible’. In essence, it’s about doing the right things, and doing things right.

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.

VFM

Economy

is about 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.

Efficiency

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.

Effectiveness

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.

So why do we need a strategic approach to value for money?

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.

Our value for money achievements to date

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.

Value for Money Strategy

There are four key elements to our strategy:

  1. Customer involvement
  2. Corporate strategy
  3. Costs and outcomes
  4. Communication and training
  1. Customer involvement

    We need to identify what is important to our customers, both existing ones and potential ones. Residents are well placed to assist the Board with this part of the strategy, as will tenant board and committee members and tenant surveys such as the STAR survey we conduct every 4 years where we can receive direct feedback about resident priorities. Of course we should always look for ways in which we can further involve customers in the value for money process however we are aware that we need to do more to involve our tenants and leaseholders more on decisions that have a direct impact on them. On the plus side, tenants and leaseholders are already consulted on the make up of their service charge budget. They decide whether the services they receive are value for money and whether a new contractor should be sought or perhaps the frequency of the service reduced.
  1. Corporate strategy

    We must ensure that value for money is the ‘golden thread’ through our corporate strategy, and include some value for money objectives. We need to look at assessing what social value we create and how this can be effectively measured. As our values (Innovation, Customer Focus, Delivery, Value for Money and Collaboration) are different to other organisations it will be difficult to compare our social values with those of other organisations, but we need to come up with a set of values that are both meaningful and understandable for our tenants and relevant and measurable for the staff team and Board. It is important to ensure that services do not deteriorate as a result of efficiencies. We should also look to spell out how any gains are going to be used / redirected. Wider issues to consider include the funding environment, general government policy, customer needs, technology changes and risk management
  1. Costs and outcomes

    In 2013/14 we changed the layout of our annual budget to assist our value for money work. It has focused attention on our key business units and spells out how each service (general needs, leasehold, management services, and development) is performing financially. This information will be used in the future to formulate objectives and strategic direction.All Board decisions must be backed up by a comprehensive cost/benefit analysis. This will be especially true of future development opportunities, where value for money in the build process will be foremost in our minds.We will pay more attention our return on assets, and look to maximise these returns, so that they can be re-channelled into new or enhanced services for our customers.We continue to monitor individual schemes/properties on a value for money basis. The Board will be made aware if some of our stock is becoming prohibitively costly to maintain, so that consideration can be given to possible divestment.We will continue to benchmark all of our costs, services and processes against similar organisations, to ensure they represent good value for money. Our membership of SHAPE (Smaller Housing Associations Pursuing Excellence) not only allows us to benchmark against SHAPE members, it also gives us access to Accuity (previously known as Skills & Projects) wider benchmarking analysis, and also the national House Mark data.
  1. Communication and training

    It is important to promote and reinforce value for money. It should be embedded in everything we do. Appraisals should have value for money issues coursing through them, and team meetings should have value for money as a standing item on the agenda. A value for money register will be maintained detailing our record of achievement and how savings have been re-invested. It is also important to capture culture changes that may not have a tangible value, but may nevertheless benefit the organisation or its customers. It is important to build value for money into the training cycle. Regular training should be provided to the Board, staff and customers outlining our value for money plans and how we are going to achieve them.

Priority Actions for 2016-17

It is important for a smaller housing association like Crown Simmons to have a clear focus on what is to be achieved over the life of this Strategy. Detailed below are the value for money areas that we are going to focus on to the end of March 2017 (please see our Value for Money statement for 2016 for more detail on each of the actions):

  1. Repairs & Maintenance Cost Models
  2. Consultancy Support for Partnering Agreement
  3. Reviewing Management Contract Cost Models
  4. Gas Servicing & Breakdown Contact
  5. Scheme Manager Service
  6. STAR Survey Action Plan
  7. Review of Value for Money Strategy
  8. Long Term Pensions Strategy

Reporting Value for Money

The Board is tasked with producing an annual self-assessment that sets out in a way that is transparent and accessible to stakeholders how we are achieving value for money in delivering our purpose and objectives. This will be published on our website by 30th September each year.

This assessment will:

  • enable stakeholders to understand the return on assets measured against the organisation’s objectives
  • set out the absolute and comparative costs of delivering specific services
  • evidence the value for money gains that have been and will be made and how these have and will be realised over time

Click here to view our Value for Money statement: VFM Statement 2016

Click here to view our financial statement: Financial Statement 2015/16

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