Dirty Deeds Done Dirt Cheap

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Honestly have you ever really had a great deal from anything, that was absolutely dirt cheap?

I was chatting about this very thing just last week and the colleague I was chatting with, agreed with me. That was that most things (too) cheap, either have a problem or we will end up paying much more in the long run. That’s generally because we have to patch it up with something better, or the original outfit goes pop, or the original outfit use change control or just sales charisma in some cases, to recover the true cost.

Cost savings often do result in vast amounts of frustration, lost staff time and lost opportunities to crack a lot of that inspirational transformation, we all crave these days. You might be reading this with ‘transformation’ in your job title, or your remit might well include ‘organisational transformation’. It’s a fair ask, everyone wants improvements. We are all stretched, budgets are shrinking and it’s a given, we need to do more with less.

Too few organisations are still not questioning why some things are so cheap. Part of the trick is having some benchmarks, to know your outliers, then to question them.

One recent example I had was a full HMS procurement, where one supplier was half the price of the others. My client operations director thought that wonderful, she was less happy when I said, “to me its ringing alarm bells”. To the experienced, its easy to determine why, although many organisations avoid external help, so can be blind to much of the obvious. I kind of get that, because on occasion I have been described as ‘expensive’, although in contrast, more clients have told me that I “saved them more than they spent with me as a critical friend”. I like that. That’s what I think I am here for.

Have you ever had a project where you have agonised over when procuring, around that cost/quality scoring ratio? If we need great transformation opportunities I generally advise clients to favour quality/functionality over cost. On more than one occasion, I have been asked,”what if we end up with a preferred supplier, £200k more expensive than the others?”. Bear in mind occasionally we are severly limited and in those situations, we need to clearly cut our coat to our cloth.

My answer has always been that if we want the transformation ambition, we probably will be displacing some job roles, as efficiencies are applied, but adding additional value to staff performance. IE freeing up staff to do more for residents, adding more value with tech or with better tech freeing staff up. In that context, £200k might free up ten staff in year one. That’s also a saving in years 2,3,4 – 10 etc. Considered in that context, how could cheapest that could struggle with delivering the transformation, ever be best?

Clearly in an OJEU procurement, to assist everyone, ratios are defined and communicated up front, for the benefit of all. Now many people know quite well I have worked for 14 years on the dark (supplier) side, which makes me very sensitive to supplier as well as my clients needs. In my procurements, I have always refused to move the goal posts part way in the process. Firstly its wrong and unfair, also it violates the rules. On a few occasions, I have said to clients, ‘No you cannot do it’.

The last instance of ‘Done Cheap’ I have encountered, from both sides of the fence, is the tactic of reducing margins down to the absolute minimum. Often if finance are driving outcomes, this looks like a great deal from the client viewpoint. The supplier being totally strapped down however, has nothing in their ‘bank of goodwill’ for flexibility. Every deviation from contract or specification, will inevitably result in formal change control and additional cost and hassle. I do tend to advise some rowing back from that, as we will need some goodwill on both sides in the project, both supplier and client needing a shared bank of goodwill, to travel forward effectively to success.

I am sure many reading this will recognise a number of these insights. The takeaway is that you should not get tied up too much by the bottom line. Its about getting the right value at an acceptable level of risk, that the price will provide. Risk is probably worth a blogpost all on its own. Maybe later in lockdown, I will revisit that old chestnut son.

Related Post: How do you do your process mapping? have you embraced the Swim Lane?

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AC/DC - Dirty Deeds Done Dirt Cheap.
(c) Tony Smith, Acutance Consulting www.acutanceconsulting.co.uk 07854-655009


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On Her Majesty's Secret Service Charge

If you do the Twitter thing, follow me at @hotpixUK

A certain minefield if ever there was one for most housing associations and UK housing groups. We have the ‘Iron Lady’ Mrs Thatcher to thank for most of our service charge woes, with her governments instigation of RTB (Right To Buy) legislation in the 1980’s.  The aim of creating a home-owning Britain was pretty much achieved with very high levels of home ownership, while on the downside decimating quality housing stock.

Eligible residents in attractive and stable areas, (or often their sons and daughters stumping up the deposits after generous discounts) were fools not to take the leap of faith and purchase their own homes. Many of these properties are now in the hands of their second, third or fourth leaseholder, with many original social housing tenants having moved further upward in the housing ladder.

The majority of these properties would have been in communal blocks or at the very least, houses in terraced blocks. Very few are unconnected with a wider neighbourhood or RSL community. Hence at least external repair commitments should still form part of the lease, grass cutting, grounds maintenance, communal door entry etc also often feature. One of the reoccurring themes is that early RTB sales often had incomplete or badly detailed leasehold agreements, possibly omitting responsibility for certain types of service charges.

Systems long since gone failed to record many of these details, leading to many years of charges not levied and disagreements in the current day from recent leaseholders, challenging why they should pay service charges that their neighbours are avoiding (and have been avoiding for decades). Often it’s a long and fruitless battle in many cases to try to claw these back using old records.

Two main areas seem to cause problems for RSL’s in the service charge area are the way customer service staff deal with leaseholders and the whole calculation area, taking far too long and involving too many staff. Leaseholders are a different animal to general residents and they do like to be treated in a special way. Statements for example need to refer to ‘Charges’ not ‘Rent’. Not a big change, but important if you are a leaseholder. A simple change too for IT to manage for you effortlessly.

As soon as a leaseholder calls, the customer service team need to be aware of the fact and precisely what the repair responsibilities of the organisation are. Examples are; Just external repairs, responsive work in shared areas, repairs under a limit everywhere or only after consent after an already agreed limit. This is not information that should be blue-tacked to a wall or buried in a tray somewhere. Intelligent scripting software should be enforcing these rules, whether per leaseholder, the scheme they live in, owning body or area served. This reduces any expectation issues or any future difficulty with expenditure recovery.

A recent story I heard of was where a responsive repair was mistakenly done internally for a leaseholder, which should never had been offered or completed. A satisfaction survey was issued and customer service asked “is there anything else we can help you with”? The answer was another internal repair which could not be recovered. This all cost in excess of £674 plus VAT. Two of these each month could make scripting software to prevent it quite a bargain, not counting other benefits.

Calculation of service charges can often take a whole section of a finance team. If you work like this, ask yourself the methods they use. Excel spreadsheets by any chance, looked after by key personnel? This can make the task of calculation very expensive. Even more so when leaseholders query their bill and would like to know (as they legally can ask) where that charge for £8.71 every month for grass cutting comes from?

Your housing system may have a perfectly adequate service charge module that might satisfy your needs. Do you use it, does it fit your needs? Many do have modules, some are so prescriptive, they are unlikely to fit your needs until seriously tested. If you have the one that requires you to record how many windows each of your properties have, for example, it’s unlikely you are using it. I won’t embarrass anyone by naming it, however if you are in a province where you still have the window tax, it’s probably working pretty well for you!

Alternatives are out there that could more than likely reduce your service charge calculation and management team to a ¼. Look at some of the independents such as Blockwise from Systemwise. You may be able to increase your efficiency at minimal cost. Using your main HMS (Housing Management System) service charge module or having a good interface to a specialist like Systemwise, can also keep your customer service staff and others, plugged into this information. This helps better and consistent decision making to occur all-round. Good for your budgets to be spent in the right ways and for leaseholders to receive better and reliable service.


The propeller heads may have encountered service charges, maybe not quite as we know it.



(c) Tony Smith, Acutance Consulting www.acutanceconsulting.co.uk

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