tenders, business planning and partnership wingspan consulting
TRANSCRIPT
Tenders, business planning and partnership
Wingspan Consulting
About this course – approach
Wingspan Consulting
• Building on your knowledge
• Tools and tips
• Exercises
• Presentations
Background and Purpose
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• 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
Background and Purpose
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• 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
Outline – Day One
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• Business planning – Purpose
– People (Sandy)
– Costings
– Financial information
– Management information
– Marketing
– Putting this into action
Outline – Day Two
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• 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
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
Introductions
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• Who are you?
• Why are you here?
• Competition and confidentiality
Content and purpose of a business plan
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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?
Plans andPlanning
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Recruitment and Retention
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• Service industries – staff the most important element
• Particular challenge for domiciliary care?
• Needs to be addressed in business plans
Sandy Armstrong – CSAC Recruitment and Retention Officer
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Costings – how much to charge?
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Costings exercise
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• Handout with information on:– Staff roles, numbers, salaries etc
– Capital items
– Maintenance contracts
– Other costs
• VAT does not exist
Questions to answer
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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?
Costs of running the business
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• 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
Costs of running the business
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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
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 %?
Costs of running the business
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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
Maximum numbers of chargeable hours
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• Travelling to the client plus….what else?
Numbers of chargeable hours
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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
Other things that reduce chargeable hours
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Numbers of chargeable hours
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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
Numbers of chargeable hours
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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
How much to charge?
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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
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
Financials
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• 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
Profit and loss
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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.
Cashflow
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Nobody goes bust because they make a loss – they go bust when they run out of money
Cashflow
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• 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
Balance sheet
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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
Balance sheet
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• Debts/ liabilities– Invoices owed– Bank loans– Provision for bad
debts
•Assets:– Cash– Invoices
outstanding– Capital equipment– Stock
Assets = Liabilities + Shareholders' Equity
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
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
What is marketing?
Wingspan Consulting
Wingspan Consulting
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
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?
Analysis
http://www.cumbriaobservatory.org.uk/instantatlas/Cumbria_Atlas_Single_Map_Electoral_Wards/atlas.html
Exercise
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• 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
PromotionWingspan Consulting
• Who do you promote your business to?
• What methods do you use?
• Do they work?
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)?
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
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!
ActionsWingspan Consulting
Audience and actionsWingspan Consulting
• So what?
• Who cares?
ActionsWingspan Consulting
• Task• Quality – what’s good enough• Timescale• Resources• Responsibility• Review
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Revising the plan
Partnership working
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• 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?
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
Types of ‘partnership’ used in delivering contracts
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• Informal• Sub-contracting• Consortium• Merger/ takeover/ vertical integration• Joint venture
Experience of partnership working – Sheila Gregory
CEO Carlisle Mencap
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Exercise - What difference would partnership working make to your
plans?
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• Products and services
• Aims and objectives
• People• Other resources
• Marketing • Regulation• Finance• Management and
control• Risk (later!)
Risk
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The chance of exposure to the adverse consequences of
future events
Risk Management
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• Identify• Quantify• Allocate to owners to manage• Report and review
Identifying risksWingspan Consulting
• All assumptions involve a risk
• Types of risk:– Operational
– Employee
– Technological
– Compliance
– Financial
– Environmental
– Political
– Other (partnership?)
Risk Analysis
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• 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
Which Risks to Manage?
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Consulting
Potential impact
Prob. 5 4 3 2 1
5 25
4
3 6
2
1
Managing Risks
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• Prevent
• Reduce
• Accept
• Contingency
• Transfer
• And build (and cost) these actions back into your plans
Risk Exercise
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• 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
Managing Risks
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• How much resource to allocate?
• Cost of management vs [cost of occurrence x probability of occurrence]
• Record and review (risk log?)
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
Exercise
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• 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!
Scenarios
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• 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?
Wrapping Up
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• Questions and comments
• Revisit original objectives
• Evaluation (SurveyMonkey)
