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Adactus Housing Association

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Last updated 15/04/2015

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  • Overview

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    This article summarises the Value for Money Strategy adopted by the members of the Adactus Group Structure.

    Please note that the Group's latest Value for Money Statement and supporting interactive diagrams are available elsewhere on this site.

  • What is Value for Money?

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    Defining Value for Money

    Value for money (VfM) can be defined as the “optimal use of resources to achieve the intended outcomes” . For members of the Adactus Housing Group, efforts to achieve VfM are focused on curating a portfolio of productive housing assets and managing them well to deliver the following core organisational objectives:

    Q1. Maintain effective governance
    Q2. Provide value for money customer services
    E1. Increase the size of the business through new group members, transfer or development
    D1. Provide targeted neighbourhood investment
    D2. Reduce carbon emissions

    The Group’s approach to achieving value for money is summarised in Figure 1 below.

    Figure 1: Delivering value for money

    delivering value for money

    Figure 1 highlights that VfM can be thought of as an ongoing process of optimising the relationship between resources and outcomes.  This optimisation is achieved through a focus on economy, efficiency and effectiveness:

    Economy
    This is what is paid for what goes into providing a service. Economy is about minimising the cost of inputs for an activity (‘doing things at the right cost’). In essence economy is the careful use of resources to save expense, time or effort.

    Efficiency
    This is a measure of how well things are done i.e. productivity. Efficiency is primarily associated with the process and delivery i.e. performing tasks with reasonable effort (‘doing things the right way’). In essence efficiency is the delivering of the same level of service for less expense, time or effort.

    Effectiveness
    This is a measure of the extent to which intended outcomes are achieved (‘doing the right things’).. For AHG, outcomes are focused on new housing development, tenancy services, and community investment.

  • VFM misconceptions

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    A common misconception is that VfM is about cutting costs. However, as Figure 1 demonstrates, a proper understanding of VfM requires a more complete understanding of the use and maintenance of the Group’s key resources (its housing assets) to achieve its intended outcomes for new housing development, tenancy services, and community investment. It is about getting more quantity and quality alongside spending money wisely.

    Financial resources are and should be considered a limited resource. Therefore AHG needs to be "wise spenders not big spenders". A major element of the AHG’s commitment to achieving VfM is the drive to deliver its objectives with the best quality at the best cost achievable.

    Spending money wisely in order to deliver its objectives will allow AHG to produce efficiency savings which will result in a sustainable organisation and which can be re-invested in new housing units, enhanced neighbourhood services or front line delivery where possible.

    VfM should:

    • reduce inputs for the same outputs
    • reduce processes for the same outputs
    • improve quality/increase outputs for same inputs
    • improve quality/increase outputs for an increase in resources that is less than the increase in outputs (i.e. a beneficial gain).

    Effectiveness will also be measured by the whole suite of Key Performance Indicators and the other assurance gained through accreditations and market testing.

  • Our Approach to Achieving VFM

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    AHG embraces VfM in everything it does. As such, VfM is an integral part of AHG’s culture and is driven by the Board and reported via the Group’s performance monitoring framework.

    AHG’s approach to ensuring VfM
    VfM is a continual and dynamic process. AHG’s VfM review work will underpin the continual review of its operations, how it is structured and the delivery of its business plan objectives.

    AHG’s approach to VfM is as follows:-

    • to have a robust approach to decision making
    • to understand the return on assets
    • to understand the absolute and relative cost of providing services
    • to monitor and scrutinise on-going performance measured against business plan objectives; and
    • to utilise the Adactus500 and where relevant other aspects of the Group’s resident involvement framework in terms of VfM scrutiny and consultation.

  • Robust approach to decision making

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    Every year the key decision taken by Board is the approval of the business plan and budget which sets the framework for the Group’s operations.

    VfM in the budget process will be driven by the continued use of “zero based budgeting” introduced into the Group’s budget setting process in 2009.

    At the business planning and budget setting stage in the financial cycle, all decisions that commit to a growth in expenditure will be discussed/approved by Boards and supported by a full cost/benefit appraisal which will include an analysis of trade offs and opportunity costs. Decisions/consideration will be made to services/expenditures which are deemed to be long, medium and short term in nature to review trade off opportunities. The outcomes of this analysis will underpin the strategic path (and hence determine Group strategies), the annual budget and the 30 year financial plan.

    The appraisal will include reviewing trade offs of any such proposals against other opportunities to achieve the required objective. As part of the budget approval process, Boards will determine whether such growth areas demonstrate VfM and therefore whether to include or not in the Association’s budget for that year.

    Board decisions taken outside of this process will highlight a scored assessment of economy, efficiency and effectiveness to ensure that VfM issues are given due consideration.

    Operational decisions made during the year within approved budgets do not generate opportunity costs (as nothing has to be given up).  However in making such decisions, the Executive will continue to ensure the Group remains "wise spenders not big spenders".

  • Understanding costs

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    Understanding the return on assets

    Return on assets will be reported in the Operating and Financial Review of the annual financial statements and published to tenants and other stakeholders.

    The Operating and Financial Review will include:-
    • broad measures of financial return e.g return on capital employed and internal rate of return before interest costs;
    • investment in the Group’s asset base; and
    • demonstrate outcomes for monies spent across new housing development, tenancy services and community investment.

    Understanding the absolute and relative cost of providing services

    Information relating to the costs of services will be reported in the Operating and Financial Review of the annual financial statements and published to tenants and other stakeholders.

    The Operating and Financial Review will include:-
    • the current cost of services;
    • using benchmark information to compare against peer group (cost and performance); and
    • highlight comparatively high cost services and outline areas to improve.

  • Monitoring, scrutiny and consultation

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    Monitor and scrutinise on-going performance measured against business plan objectives

    A high level summary of performance against business plan objectives will be reported in the Operating and Financial Review of the annual financial statements and published to tenants and other stakeholders.

    On an on-going basis, the Board and/or its Committees will monitor VfM as follows:-

    • Economy: through quarterly management accounts, tender exercises, budget proposals and benchmarking results;
    • Efficiency and Effectiveness: through accreditations, external “health checks”, tenant scrutiny reports and a suite of quarterly performance reports,

    As part of Adactus Housing Association’s PFI contract with Renaissance Miles Platting Limited for the provision of housing management and grounds maintenance services, a benchmarking exercise is undertaken every 5 years to demonstrate best value.

  • Reporting

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    VfM scrutiny and consultation

    In accordance with the Group’s Resident Involvement Framework, the focus of tenant scrutiny work will include service areas where performance is below target and/or where VfM is assessed by the Board as in need of improvement.

    The Group will continue to utilise the Adactus500 and other aspects of the Resident Involvement Framework to actively seek customer views on the services it provides

    A programme of tenant scrutiny reports is prioritised by tenants via the Adactus500. All scrutiny reviews are reported to the Group Performance, Scrutiny and Audit Committee and published in full on the Group’s website.

  • Glossary

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    benchmarking

     provides a snapshot of performance and helps understanding of how it compares to a particular standard

    Zero based budgeting

     Zero based budgeting requires the budget request be justified in complete detail by each budget holder starting from the zero-base rather than applying an increase to previous year’s expenditure

    Net promoter score

     A loyalty metric that measures how customers represent a company to their friends, associates etc. by asking them to answer “How likely are you to recommend (our company) to a colleague or friend?”

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  • 15/04/2015

    Updated by Sam Ryan on 15/04/2015 12:10:43

    Comment: updated statement

    Details: (show)

    Chapter titled "Regulatory Background" deleted.
    Chapter titled "What is Value for Money?" content changed.
    Chapter titled "Defining Value for Money" deleted.
    Chapter titled "VFM misconceptions" order changed from "5" to "3".
    Chapter titled "VFM misconceptions" content changed.
    Chapter titled "Our Approach to Achieving VFM" order changed from "6" to "4".
    Chapter titled "Our Approach to Achieving VFM" content changed.
    Chapter titled "Robust approach to decision making" order changed from "7" to "5".
    Chapter titled "Robust approach to decision making" content changed.
    Chapter titled "Understanding costs" order changed from "8" to "6".
    Chapter titled "Understanding costs" content changed.
    Chapter titled "Monitoring, scrutiny and consultation" order changed from "9" to "7".
    Chapter titled "Monitoring, scrutiny and consultation" content changed.
    Chapter titled "Reporting" order changed from "10" to "8".
    Chapter titled "Reporting" content changed.

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  • 09/10/2014

    Updated by Brian Moran on 09/10/2014 14:13:14

    Comment: Deleted chapter which contained summary of old VfM self assessment. Added intro text to point to Financial Statements for the latest VfM assessment.

    Details: (show)

    Chapter titled "Overview" content changed.
    Chapter titled "2013 Action Plan" deleted.

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  • 03/10/2014

    Updated by Suzy Robinson on 03/10/2014 09:34:30

    Comment: tags removed

    Details: (show)

    Chapter titled "Glossary" content changed.
    Tag assignment removed: "VFM".
    Tag assignment removed: "VfM".

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  • 20/09/2013

    Updated by Brian Moran on 20/09/2013 13:04:27

    Comment: Minor amends to improve text and correct errors.

    Details: (show)

    Chapter titled "Regulatory Background" content changed.
    Chapter titled "What is Value for Money?" content changed.
    Chapter titled "Defining Value for Money" content changed.
    Chapter titled "VFM misconceptions" content changed.
    Chapter titled "Our Approach to Achieving VFM" content changed.
    Chapter titled "Robust approach to decision making" content changed.
    Chapter titled "Understanding costs" content changed.
    Chapter titled "Monitoring, scrutiny and consultation" content changed.
    Chapter titled "Reporting" content changed.
    Chapter titled "2013 Action Plan" content changed.
    Chapter titled "Glossary" content changed.

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  • 31/05/2013

    Updated by Brian Moran on 31/05/2013 12:31:55

    Comment: Added tags for 'cost of services' to improve links with other information on the site.

    Details: (show)

    Chapter titled "Glossary" content changed.
    New Tag assigned "cost of service".
    New Tag assigned "cost of services".
    New Tag assigned "Cost of Services".

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  • 06/03/2013

    Updated by Athanasios Protopapas on 06/03/2013 16:30:51

    Comment: Added glossary. Please note that this Strategy was reviewed and approved at the Group Board Meeting on February 2013.

    Details: (show)

    New Chapter added; title:"Glossary" image:"" order:"12".

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  • 06/03/2013

    Updated by Athanasios Protopapas on 06/03/2013 16:05:12

    Comment: Added benchmarking process under AHG's approach to VFM

    Details: (show)

    Chapter titled "Our Approach to Achieving VFM" content changed.
    Chapter titled "2013 Action Plan" content changed.

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  • 06/03/2013

    Updated by Athanasios Protopapas on 06/03/2013 15:47:05

    Comment: Updated strategy following review and approval at the February Board 2012

    Details: (show)

    Chapter titled "2013 Action Plan" content changed.

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  • 06/03/2013

    Updated by Sam Ryan on 06/03/2013 13:21:07

    Comment: editing text

    Details: (show)

    Chapter titled "Regulatory Background" content changed.
    Chapter titled "What is Value for Money?" content changed.
    Chapter titled "Our Approach to Achieving VFM" content changed.
    Chapter titled "The VFM Review Process" content changed.
    Chapter titled "Communication" content changed.
    Chapter titled "Glossary" content changed.

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  • 11/07/2012

    Updated by Elesh Makwana on 11/07/2012 15:45:06

    Comment: Table amended to 100%

    Details: (show)

    Chapter titled "Our Approach to Achieving VFM" content changed.
    Chapter titled "Glossary" content changed.

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  • 11/07/2012

    Updated by Elesh Makwana on 11/07/2012 15:43:26

    Comment: Table amended to 100%.

    Details: (show)

    Chapter titled "Our Approach to Achieving VFM" content changed.
    Chapter titled "Glossary" content changed.

    Look back >
  • 09/07/2012

    Updated by Elesh Makwana on 09/07/2012 15:12:47

    Comment: Set the images to 100%.

    Details: (show)

    Chapter titled "Defining Value for Money" content changed.
    Chapter titled "Our Approach to Achieving VFM" content changed.

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  • 30/05/2012

    Updated by Sam Ryan on 30/05/2012 15:08:17

    Comment: Made active

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