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Tenders, business planning and partnership
Wingspan Consulting
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About this course – approach
Wingspan Consulting
• Building on your knowledge
• Tools and tips
• Exercises
• Presentations
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Background and Purpose
Wingspan Consulting
• Previous tendering round
• Some issues and challenges around delivery not being quite as envisaged
• Some lessons learned
• Exact form of new tenders not finalised….but
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Background and Purpose
Wingspan Consulting
• Care Sector Alliance asked by CCC to offer some support and training on:– Robust business and service planning (and in
particular on costings and on the staffing side of planning)
– Partnership working
– Transition from current to new arrangements
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Outline – Day One
Wingspan Consulting
• Business planning – Purpose
– People (Sandy)
– Costings
– Financial information
– Management information
– Marketing
– Putting this into action
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Outline – Day Two
Wingspan Consulting
• Tendering (Mike)
• Partnership working– Overview
– Experience (Sheila)
– Business planning for partnerships
• What if?– Risk and risk management
– Planning for the outcomes of the tenders
• Q&A
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People
Wingspan Consulting
• Sandy Armstrong – CSAC Recruitment and Retention Officer
• Mike Farren - CCC Senior Procurement And Contracts Manager
• Sheila Gregory – CEO Carlisle Mencap
• Guy Huxtable – Wingspan Consulting
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Introductions
Wingspan Consulting
• Who are you?
• Why are you here?
• Competition and confidentiality
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Content and purpose of a business plan
Wingspan Consulting
1. What is it? And what would you expect it to contain?
2. Why bother? What’s it for?
3. Should every business have one?
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Plans andPlanning
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Wingspan Consulting
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Recruitment and Retention
Wingspan Consulting
• Service industries – staff the most important element
• Particular challenge for domiciliary care?
• Needs to be addressed in business plans
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Sandy Armstrong – CSAC Recruitment and Retention Officer
Wingspan Consulting
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Costings – how much to charge?
Wingspan Consulting
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Costings exercise
Wingspan Consulting
• Handout with information on:– Staff roles, numbers, salaries etc
– Capital items
– Maintenance contracts
– Other costs
• VAT does not exist
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Questions to answer
Wingspan Consulting
1. (Using the costs stated) what are your total annual costs for running the business before you make any sales at all?
2. Can you think of other costs not mentioned on the form which should be taken into account when producing costings?
3. Realistically, what is the maximum annual number of chargeable hours you might be able to ‘sell’?
4. If your drivers are busy (charging clients) for 75% of the maximum number of chargeable hours, what price should you set to break even?
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Costs of running the business
Wingspan Consulting
• Staff is largest
Job SalaryPension
contribution NI costCost per person
No of people Total cost
5% 13.80%
Driver £
20,000 £
1,000 £ 1,662 £
22,662 10 £
226,621
Manager £
30,000 £
1,500 £ 3,042 £
34,542 1 £ 34,542
Admin £
15,000 £
750 £ 972 £
16,722 3 £ 50,166
£ 311,329
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Costs of running the business
Wingspan Consulting
Rent 15,600
Stationery 1,000
Depreciation 2,000
ICT 1,500
Radio 500
Phone 750
Accountancy 1,000
HR advice 300
Insurance 1,200
Total 23,850
Total costs for running the business 335,179
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Other costs• Training courses• Signwriting• Lawyers• Management
consultants• Repairs• Refunds• No shows• Correcting errors
• Business cards/ flyers
• One off advertising opportunities
• Membership of trade organisations
• Software costs• Bad debts• And…….add a %?
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Costs of running the business
Wingspan Consulting
Other costsRent 15,600 Stationery 1,000 Depreciation 2,000 ICT 1,500 Radio 500 Phone 750 Accountancy 1,000 HR advice 300 Insurance 1,200
Other (@ 2% of total costs)
6,704
Total 23,850
30,554
Total costs for running the business 335,179
341,883
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Maximum numbers of chargeable hours
Wingspan Consulting
• Travelling to the client plus….what else?
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Numbers of chargeable hours
Wingspan Consulting
Drivers hoursWeeks 52Hours per week 40Number of drivers 10
Total available hours 20,800 LeaveWeeks 4Hours 40Number of drivers 10
Total 1,600 Bank holidaysDays 8Hours 8Number of drivers 10
Total 640 Lunch breaksNo of days per week 5 Number of drivers 10 Number of lunch breaks 50 Duration of lunchbreak (hours) 0.5 Lunchbreaks per week 25
Lunchbreak time per year (hours) 1,300 Hours after holidays and breaks 17,260
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Other things that reduce chargeable hours
Wingspan Consulting
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Numbers of chargeable hours
Wingspan Consulting
Drivers hoursWeeks 52Hours per week 40Number of drivers 10
Total available hours 20,800 LeaveWeeks 4Hours 40Number of drivers 10
Total 1,600 Bank holidaysDays 8Hours 8Number of drivers 10
Total 640 Lunch breaksNo of days per week 5 Number of drivers 10 Number of lunch breaks 50 Duration of lunchbreak (hours) 0.5 Lunchbreaks per week 25
Lunchbreak time per year (hours) 1,300 Hours after holidays and breaks 17,260
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Numbers of chargeable hours
Wingspan Consulting
Contingency for:Pregnancy 1.5%Sickness 3.0%Absenteeism 1.0%Gaps between employment 1.0%Strikes 0.5%Training 1.5%Paternity leave 0.5%Compassionate leave 0.5%Other 1.0%
Total 10.5%
Hours when drivers can be driving 15,448 Hours when drivers can be charging (taking travel to
client into account) 10,298
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How much to charge?
Wingspan Consulting
Hours when drivers can be charging
10,298
Actual hours drivers are charging 75%
7,724
Total business costs £ 335,179
Fixed costs per driven hour £ 43.40
Miles driven per hour 20
Mileage costs per hour £ 0.45 £ 9.00
Total cost per hour (break even) £ 52.40
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Costing models
Wingspan Consulting
• UKHCA - http://www.ukhca.co.uk/costingmodelperhour.aspx
• Department of Health – more residential http://www.laingbuisson.co.uk/portals/1/media_packs/Fact_Sheets/Illustrative_Costs_PLD.pdf
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Financials
Wingspan Consulting
• Financial information is a translation• Every statement in the business plan may have
financial implications• Projections over a period so inflation (or
deflation??) may be relevant
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Profit and loss
Wingspan Consulting
The profit & loss account summarises the income and expenses generated by a company over an entire reporting period.
The basic equation on which a profit & loss statement is based is Income – Expenses = Profit.
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Cashflow
Wingspan Consulting
Nobody goes bust because they make a loss – they go bust when they run out of money
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Cashflow
Wingspan Consulting
• Cash flow is the movement of money into or out of a business. It is usually measured during a specified, limited period of time
• Usually done on a spreadsheet (and can be linked to P&L)
• Opening and closing balances• Shows if you are going to run out of cash• Payment terms critical
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Balance sheet
Wingspan Consulting
A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point in time. These three balance sheet segments give investors an idea
as to what the company owns and owes, as well as the amount invested by the shareholders
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Balance sheet
Wingspan Consulting
• Debts/ liabilities– Invoices owed– Bank loans– Provision for bad
debts
•Assets:– Cash– Invoices
outstanding– Capital equipment– Stock
Assets = Liabilities + Shareholders' Equity
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Sensitivity analysisWingspan Consulting
• Linked to risk management (later)• Sensitivity of the business to changes in inputs – what if:
– Minimum wage changes– Petrol costs– Reduction of 10% in demand– Increase in demand
• Often use an Excel spreadsheet for this – but can do this simply, or as a thought experiment
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Expenditure/Income -10.0% -5.0% 0% 5% 10%
10.0% 42,933
34,823
26,714
18,605
10,495
5.0% 34,346
26,237
18,128
10,018
1,909
0.0% 25,760
17,651
9,541
1,432
- 6,677
-5.0% 17,174
9,064
955
- 7,154
- 15,264
-10.0%
8,587
478 -
7,631 - 15,741
- 23,850
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What is marketing?
Wingspan Consulting
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Wingspan Consulting
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MarketingWingspan Consulting
• The action or business of promoting and selling products or services, including market research and advertising (OED)
• Applies across an organisation – from securing resources (such as staff) to offering services and products to customers
• Understanding markets is just as/more important than selling• Lots of acronyms and models (SWOT, PEST(s), 4Ps)• Can split into analysis and action
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AnalysisWingspan Consulting
• How big is the market?• What products and services are sold?• What are the changes?• What are the trends?• What are customers going to do next?• What are competitors up to?• What factors are going to influence it?
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Analysis
http://www.cumbriaobservatory.org.uk/instantatlas/Cumbria_Atlas_Single_Map_Electoral_Wards/atlas.html
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Exercise
Wingspan Consulting
• PEST – focus on trends and changes• Political, Economic, Social and Technological• Important to define the question….so
In the next five years, what are the significant changes and trends that are likely to have a significant effect on the domiciliary care market in the UK? Classify these using the PEST model
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PromotionWingspan Consulting
• Who do you promote your business to?
• What methods do you use?
• Do they work?
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Management and ControlWingspan Consulting
• Under contracts, some monitoring already done by CCC
• Other monitoring from CQC
• What other management systems do you have (formal or not)?
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Management and controlWingspan Consulting
• Formal (and often externally audited)– ISO9000s, ISO14000s and others
– BS5750
– IIP
– PQASSO
– EFQM
• Tools– The above adapted for your organisation
– Balanced scorecard
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Common featuresWingspan Consulting
• Clear and ‘public’ objectives
• Processes in place to monitor against objectives
• Reviews of systems and processes
• Reporting mechanisms
• Spread of measures looking across an organisation
• But don’t over rely!
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ActionsWingspan Consulting
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Audience and actionsWingspan Consulting
• So what?
• Who cares?
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ActionsWingspan Consulting
• Task• Quality – what’s good enough• Timescale• Resources• Responsibility• Review
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Wingspan Consulting
Revising the plan
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Partnership working
Wingspan Consulting
• We all work with other organisations all the time (for instance the supply chain) – so what’s different about ‘partnership’?
• What are the pros and cons?• What are the requirements for a good partnership?
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PartnershipPros
• Takes the opposition away – increases competitive advantage
• Brings new – capacity– skills– knowledge– experience
• Risk sharing• Cost reduction?
Cons
• Culture (yours/ theirs)
• Cost of running the partnership itself
• Have to continually seek agreements/ negotiate
• Longer lines of communication
• Shared liability
Requirements
• Trust• Honesty• Clarity• Fairness • Willingness to
adapt• Willingness to
compromise• Agreement on
systems, quality etc
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Types of ‘partnership’ used in delivering contracts
Wingspan Consulting
• Informal• Sub-contracting• Consortium• Merger/ takeover/ vertical integration• Joint venture
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Experience of partnership working – Sheila Gregory
CEO Carlisle Mencap
Wingspan Consulting
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Exercise - What difference would partnership working make to your
plans?
Wingspan Consulting
• Products and services
• Aims and objectives
• People• Other resources
• Marketing • Regulation• Finance• Management and
control• Risk (later!)
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Risk
Wingspan Consulting
The chance of exposure to the adverse consequences of
future events
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Risk Management
Wingspan Consulting
• Identify• Quantify• Allocate to owners to manage• Report and review
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Identifying risksWingspan Consulting
• All assumptions involve a risk
• Types of risk:– Operational
– Employee
– Technological
– Compliance
– Financial
– Environmental
– Political
– Other (partnership?)
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Risk Analysis
Wingspan Consulting
• Standard risk analysis – likelihood and impact – similar to H&S risk assessments
• Agree criteria for likelihood and impact
• Use more than one person
• Manage both likelihood and impact
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Which Risks to Manage?
Wingspan
Consulting
Potential impact
Prob. 5 4 3 2 1
5 25
4
3 6
2
1
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Managing Risks
Wingspan Consulting
• Prevent
• Reduce
• Accept
• Contingency
• Transfer
• And build (and cost) these actions back into your plans
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Risk Exercise
Wingspan Consulting
• Identify key risks for delivering your service
• Identify risk management actions and classify (PRACT)
• Build on your experience!
• Focus on service delivery rather than the broader business plan for this exercise
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Managing Risks
Wingspan Consulting
• How much resource to allocate?
• Cost of management vs [cost of occurrence x probability of occurrence]
• Record and review (risk log?)
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After the bid Wingspan Consulting
You were You are now
Existing A provider
Lead Sub-contractor Alone Failed
Existing B provider
Lead Sub-contractor Alone Failed
Neither Lead Sub-contractor Alone Failed
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Exercise
Wingspan Consulting
• Splits into groups of:– A providers– B providers– Neither of the above
• List up to 4 key issues for your business if you:– Become the lead contractor of a partnership– Become a sub-contractor– Become the sole contractor– Fail to get anything
And what you might do about them!
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Scenarios
Wingspan Consulting
• Need to build time/ resource to deal with these scenarios into your planning
• Early discussions with key stakeholders about the scenarios?
• What are the costs of the various options?
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Wrapping Up
Wingspan Consulting
• Questions and comments
• Revisit original objectives
• Evaluation (SurveyMonkey)