VALUE FOR MONEY - SELF ASSESSMENT

Transcription

1 - VALUE FOR MONEY - SELF ASSESSMENT

2 VALUE FOR MONEY - SELF ASSESSMENT To demonstrate how important value for money is for the Society, the Board has included it as one of our key objectives. We set budgets after scrutiny by the Executive Team and Board to ensure that the allocation of resources is in line with our Corporate Objectives. The rent cuts reinforced the need to ensure that we maximise the outcomes from the resource input. Our approach to value for money is to: Consider value for money as part of our decision making process Understand the return on our assets Have a performance management and scrutiny functions in place which drive and deliver improved value for money performance Understand the costs and outcomes of delivering specific services In our value for money strategy we have stated that in addition to cost and efficiency we will focus on the benefits we provide e.g. social, environmental, quality etc. Assessing the outcomes will help us refine our decision making processes in the future. We will be reviewing our Value for Money Strategy in /17. We benchmark our costs with other smaller housing associations in the South West. We have a benchmarking group which allows us to identify the reasons for any variances. We are looking at areas where we could share services and carry out joint procurement to save money. Return on our assets The introduction of FRS102 and the new SORP has changed the value of properties in our balance sheet. Net of depreciation our housing assets are worth 47.6m with the market value significantly higher. We can demonstrate that we are generating surpluses from our assets and using these funds to invest in our existing homes, new homes and the community. Housing Assets (net of depreciation) Surplus after managing and maintaining our homes Return on Assets The surplus has been invested in: - Community development Investing in new homes Net surplus to reserves 47,573 1, % Restated 45,077 1, % The above table considers the accounting profit which includes non cash items such as depreciation. The table below shows how we used our cash surpluses for the year: 2

3 Cash surplus from our assets The cash has been used: Interest of borrowing to fund development Rain cladding works Component replacement Purchase of other fixed assets Development of new schemes Total cash used 2, ,131 Restated 1, % ,297 Asset Management Strategy To manage our assets we have an Asset Management Strategy in place which was revised and agreed by the Board in May. The Asset Management Strategy is based on a 100% stock condition survey carried out in house. This information is updated when components are replaced and visits are made by maintenance staff to properties. To ensure that the information is up to date we are refreshing the data with a further in condition survey in /17. We do not believe we have any issues with areas of low demand. In /16 we had 32 voids in /16. The graph below shows that most properties were let in 7 days or less. We have looked at the reasons for the longer lettings to ascertain whether there is a trend and there are issues with demand. The property that took 49 days to let was in our flats for older people and a review of lets for these flats shows this re-let to be atypical. 3

4 The Asset Management Strategy has identified four properties that do not fit into our portfolio, have a negative NPV and when they become vacant they will be sold. We have 20 properties in Calne and eleven properties in Dorset. Both these areas are outside our agreed operating area and we are planning to carry out an option appraisal on these to determine their future. Development The investment in new homes will lead to the generation of more income for the Society which will, in turn support the development of further new homes and improvements to services. This development also has a demonstrable positive impact on the community. This year we started on site in three different locations, providing 55 new homes which will help to sustain communities. This is especially true in small village locations where providing new homes allows young people to stay in the village and supports local amenities such as the school and village shop. Before a new development scheme is approved an option appraisal is carried out (Pro-val) to ensure that there is a positive net present value (NPV), or if the NPV is negative the Board requires further justification of the scheme. All new schemes are included in the 30 year financial forecast before approval to ensure that future development capacity is not being reduced. Comparing costs We compare ourselves to other similar sized organisation in the South West through our Benchmarking Club. We also maintain a year on year record of our performance so that we can identify trends. Apart from ensuring that we monitor costs, seek the best deals and review the way we operate one of our objectives is to reduce costs through growth. The absolute and comparative costs per week are shown below: Benchmark Average housing management cost per unit (per week) Operating cost as a percentage of turnover Pre FRS % 83% - - Post FRS % 65% 71% Interest cost as a percentage of turnover 13.5% 14.1% 14.56% 14.56% Reactive maintenance Cyclical maintenance Major maintenance Overheads Fees Voids Other Total spend Repairs spending as a % of turnover 34.0%* 35.0%* 35.0%* 15%* *pre FRS 102 turnover 4

5 Our responsive maintenance this year has been reduced due to lower demand. We carried out analysis in November to determine whether this has been due to the planned maintenance programme in particular the rain cladding work. There was a clear reduction in requests for work exceeding 300 or 1000; thresholds set for post inspecting work. There was no clear correlation between this and our planned programme that was evident, though it would be reasonable to make the assumption. We are retendering the responsive and void maintenance contract this year. The major maintenance work is for rain cladding works. We identified issues in 87 of our 1950s properties with damp issues inside and paint flaking off the outside. We did a significant amount of work to determine the best solution for the problem and decided to carry out full cladding and renewing wall ties at an average cost of 27,000. This was a significant decision at the time for the Board to take as the total cost is 2.1m. There was an opportunity cost as funds invested here could not be invested in developing new homes. The impact on the NPVs of these properties was also taken into consideration. Tenants in the improved properties are pleased with the result as their damp issues have been resolved and there is a significant improvement in the appearance of these properties. This work has also led to an extension of the life of these properties. We have 15 properties left to complete and then we will be able to allocate these resources to other projects. The increase in management costs in /16 is largely due to an increase in SHPS pension deficit contributions payable, where new accounting standard FRS102 requires the Society to recognise the obligations to pay contributions until In the last six years our borrowing has increased from a zero base to 12m. This investment in property is increasing the return on assets. We are using our capacity to best effect to enable us to develop new homes for families in the south west. We strive to ensure that we provide a high quality repairs service for our tenants. We are achieving high satisfaction levels and control costs by regularly tendering our service. Our main repairs and maintenance contract will be retendered during /17. This will ensure that we achieve the best price for the quality and service we require. We will involve our tenants in the process as customer satisfaction is important to us. Staffing In the last five years we have grown (property numbers) by 15%. Turnover has increased by 52% and staffing costs have increased by 23%. Staffing costs as a percentage of turnover are detailed below Housing management/maintenance 6.1% 5.6% 5.8% 5.3% Corporate/ business support 6.2% 5.7% 6.1% 5.9% Finance 3.3% 3.2% 4.1% 3.3% We are pleased that staffing costs are reducing as a percentage of turnover and aim to sustain this reduction as we increase property numbers over time. We have allocated resources to giving young people an opportunity to gain work experience through setting up apprentice posts with training provided through Weston College. We recruited a second apprentice this year and are pleased with the contribution our new colleagues are making. We also hope that this scheme will encourage the next generation to remain in social housing. We were pleased that our apprentice training programme was recognised in the Weston College Business Awards with the Society being awarded the New Apprentice Employer of the Year. Performance In addition to measuring costs and aspiring to continued improvement we measure our performance and compare ourselves against our peers. 5

6 Benchmark Responsive repairs per property Repairs completed on the first visit 99% 99% 90% Rent arrears 1.8% 2.57% 2.3% 2.6% Time taken to re-let a property 18.1 days 16.7 days 10.9 days 21.8 days Value for money Recognising the rural nature of our communities we have supported local groups with grants from our community fund. For example, this year we helped Fry s Farm in Calne, an outdoor learning resource for the local school. The grant will be used to help build new goat stables and rabbit hutches. The children at the school benefit considerably from this opportunity to care for animals. We maintain a value for money log that is monitored by the Executive Team at its monthly meetings. In /16 we saved 33,000 through specific value for money initiatives including: Savings as a result of tendering insurance services - 7,000 Introducing web based training for staff e.g. health and safety - 2,500 Removing a photocopier and reducing printing through electronic storage - 3,000 We expect these to be ongoing savings. This year we have invested our Value for Money gains to save in the future. Key to this is digital by default. We have invested 20,000 in an electronic document management system which will allow us to improve efficiency by working remotely. Our staff will not have to come into the office to access information. We will also save money on printing, stationery and storage. Tenants will be able to access their rent accounts on line. Value for money against objectives It is a requirement of the HCA Value for Money Standard that we assess value for money against the Society s objectives. Objective We will invest in and maintain our existing assets to support our aspirations We will achieve sustainable growth We will invest in our people and the organisation to secure positive outcomes for residents We will put value for money at the heart of what we do Value For Money 195,000 invested in component replacement with contracts for work competitively tendered 541,000 invested in rain cladding works awarded after a competitive tender Saved 35% against our responsive repairs budget on /16 through effective investment in planned works Carried out 815 responsive repairs at an average cost of 144 and average number of repairs per property was 1.46 Started on site in three different locations which will generate an additional 300,000 in rent for the Society With the exception of Section 106 schemes all development contracts are subject to competitive tender Restructuring resulted in a the new post of Asset Manager being created whilst maintaining staffing costs within budget 8% value for money savings achieved in designing out operating waste to ensure that services are not cut for tenants Investing in technology to ensure that our services are accessible for all (processes are in place for tenants who do not embrace technology) The return on our assets for /16 is 2.7% Tendered the insurance contract making a 20% saving on the previous policy Maintain a value for money log to record our savings Reinforcing the importance of value for money at staff briefings 6

7 We were pleased with the high tenant satisfaction levels (2013 survey) of our tenants with the services we provide: Benchmark Overall satisfaction with the landlord 94% 94% 94% 91% Percentage of tenants satisfied that we listen to their views and act on them 81% 81% 81% 78% Percentage of tenants satisfied that with the repairs and maintenance service 87% Our satisfaction levels are high but we do not feel that it would be value for money for the Society to continue to improve on these figures. Value for money targets Each year we strive to improve our understanding of value for money and to be able to quantify savings. Targets for /17 are: To provide value for money savings on overheads of 5% Carry out an option appraisal on Calne and Dorset properties To identify the NPV for all our assets by scheme To carry out a new tenant satisfaction survey with the objective of achieving a 90% overall satisfaction level To improve the service to tenants by allowing them to see their rent accounts online To introduce agile working for visiting staff 7