Contractor says billions could be saved by switching outsourcing
A contractor claims savings of up to £2.9 billion could be made by housing associations, ALMOs and councils if changes were made to the outsourcing of housing maintenance and management.
In a report, Tougher Times, Smarter Ways, Morrison has called on housing providers to switch to a ‘transformational’ model of outsourcing which, it claims, could see savings rise to 20 – 35 per cent compared with working in-house.
The company says that currently providers with a traditional outsourcing contract have savings of 10 - 15 per cent and those with collaborative outsourcing contracts make savings of 15 – 25 per cent.
According to Morrison ‘traditional’ outsourcing involves the provider undertaking activities prescribed by the client with costing done per activity and with a contract lasting three to five years.
Collaborative involves the client and provider agreeing inputs, activities and outputs with contracts lasting five to 10 years and costing done per activity and gainshare.
Transformational outsourcing allows the client and provider to agree outputs with costing agreed upfront for a set of outputs for the contract length, which can last ten years plus.
Gordon Brockington, executive director, Morrison said: ‘The financial savings come from increasing the amount of housing providers adopting outsourcing models whilst those who already outsource their maintenance and service management move to bolder methods of outsourcing.
‘The reason collaborative and transformational models offer greater savings over more traditional models is because there is increased efficiency driven through the process, which will help to reduce costs.
‘By truly working in close partnership with clients, a service provider is able to help remove duplication and simplify processes.
‘By opting for a transformational outsourcing model, thus transferring the risk to the private sector, it allows service providers to change the way they deliver services and indeed how they charge for services.
‘By up-skilling our front line workforce, empowering our staff to make decisions on the ground and by reducing the complexity of detailed diagnostics, we can send an appropriately qualified and skilled tradesperson to a job and it will be completed in one visit – reducing cost for the client and improving the tenants experience.
‘What is more, whilst the tradesperson is in situ, they can carry out proactive preventative repairs to avoid being called out again in the near future for a further responsive repair.’