Tenders, business planning and partnership

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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

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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

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Outline Day One

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• Business planning
• Purpose
• People (Sandy)
• Costings
• Financial information
• Management information
• Marketing
• Putting this into action

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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
• QA

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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

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• Who are you?
• Why are you here?
• Competition and confidentiality

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Content and purpose of a business plan

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• What is it? And what would you expect it to
  contain?
• Why bother? Whats it for?
• Should every business have one?

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Plans andPlanning
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• Wingspan Consulting

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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

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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

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• (Using the costs stated) what are your total
  annual costs for running the business before you
  make any sales at all?
• Can you think of other costs not mentioned on the
  form which should be taken into account when
  producing costings?
• Realistically, what is the maximum annual number
  of chargeable hours you might be able to sell?
• 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

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• Staff is largest

Job Salary Pension contribution NI cost Cost 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

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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
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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

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Other costs
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
Other (_at_ 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

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• Travelling to the client plus.what else?

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Numbers of chargeable hours

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Drivers hours
Weeks 52
Hours per week 40
Number of drivers 10
Total available hours 20,800
Leave
Weeks 4
Hours 40
Number of drivers 10
Total 1,600
Bank holidays
Days 8
Hours 8
Number of drivers 10
Total 640
Lunch breaks
No 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

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Numbers of chargeable hours

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Drivers hours
Weeks 52
Hours per week 40
Number of drivers 10
Total available hours 20,800
Leave
Weeks 4
Hours 40
Number of drivers 10
Total 1,600
Bank holidays
Days 8
Hours 8
Number of drivers 10
Total 640
Lunch breaks
No 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

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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
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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_pack
  s/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

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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.
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Cashflow

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Nobody goes bust because they make a loss they
go bust when they run out of money
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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 PL)
• 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

 

• Assets
• Cash
• Invoices outstanding
• Capital equipment
• Stock

• Debts/ liabilities
• Invoices owed
• Bank loans
• Provision for bad debts

Assets Liabilities Shareholders' Equity
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Sensitivity analysis

• Wingspan 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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Marketing

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• 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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Analysis

• Wingspan 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.htm
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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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Promotion

• Wingspan Consulting

• Who do you promote your business to?
• What methods do you use?
• Do they work?

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Management and Control

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• 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 control

• Wingspan 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 features

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• 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 dont over rely!

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Actions

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Audience and actions

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• So what?
• Who cares?

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Actions

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• Task
• Quality whats good enough
• Timescale
• Resources
• Responsibility
• Review

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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 whats
  different about partnership?
• What are the pros and cons?
• What are the requirements for a good partnership?

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Partnership

• Pros

• Cons

Requirements

• Takes the opposition away increases competitive
  advantage
• Brings new
• capacity
• skills
• knowledge
• experience
• Risk sharing
• Cost reduction?

• Culture (yours/ theirs)
• Cost of running the partnership itself
• Have to continually seek agreements/ negotiate
• Longer lines of communication
• Shared liability

• 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 risks

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• 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 HS 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?

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Potential impact Potential impact Potential impact Potential impact Potential impact Potential impact
Prob. 5 4 3 2 1
Prob. 5 25
Prob. 4
Prob. 3 6
Prob. 2
Prob. 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

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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?)

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After the bid

• Wingspan Consulting

You were You are now You are now You are now 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

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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?

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Wrapping Up

• Wingspan Consulting

• Questions and comments
• Revisit original objectives
• Evaluation (SurveyMonkey)

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Guy Huxtable017687 80925guy_at_wingspan-consulting.
co.uk

• Wingspan Consulting