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As a follow up to our recent blog, the return and rise of the DLO, we decided to share some tips for social landlords considering creating their own DLO (Direct Labour Organisation).
In 2010, Oneserve worked with One Vision Housing when they decided to set up a DLO to bring repairs, maintenance and investment works back in-house. Doing this allowed them to regain control of works, increase productivity and customer satisfaction, and reduce operating costs.
By working with Oneserve they were able to take advantage of our cloud-based field service management technology to create a DLO suited to the 21st Century. Since then a number of other housing associations (including One Housing Group) have made use of our software to support the creation of their own DLOs.
One Vision learnt a lot during the process of setting up their DLO. The five-point plan below is based on their experience and summarises the important steps other organisations should take if they are considering a similar move. You can find out more about their experience with our white paper, Getting It Right First Time: How to build an effective in-house repairs and maintenance service.
1) Define your strategy
Make sure you have a clearly defined strategy and are sure of the reasons for creating a DLO. Our whitepaper, Getting It Right First Time: How to build an effective in-house repairs and maintenance service, looks at the reasons for One Vision Housing setting up their own in-house team. They include:
Create efficiencies – the cost efficiencies in delivering services through an in-house team could be significant. For a start, there are VAT savings to be made (VAT isn’t paid when works are carried out by your in-house team). Of course, VAT savings alone will probably not be enough to justify creating an in-house team but they could certainly provide an incentive to do so.
Generate surplus to reinvest – it’s possible to create a commercial DLO that can not only provide in-house works but also act as a standalone business, the profits of which can be reinvested. For example, when One Vision Housing created a DLO, they structured the new business as a standalone public limited company which would be able to make a profit, and that this profit would be gift-aided back to One Vision Housing to reinvest in their properties.
Ensure growth – an in-house service delivery team could facilitate growth for organisations looking to expand. For One Vision Housing, this was a major driving factor, and the organisation recognised their longer-term ambition to bring in a greater amount of turnover from outside of the company, and outside of the sector itself. With the potential risk able to be taken on by the standalone company, if the venture failed it wouldn’t unduly risk the rest of One Vision Housing.
Improve performance and service delivery – bringing services in-house was as an opportunity to communicate a message of intent to customers that One Vision Housing recognised performance and service as central to the tenant/landlord relationship and extremely on their agenda
2) Carry out the necessary legal due diligence
Structure your company appropriately, and so it fits with your longer-term strategy. One Vision Housing created a subsidiary public limited company, which could gift-aid profit back to the social housing parent company. In the first six months £2.2m was gift-aided, with the money reinvested into improvement works to communal areas, the creation of 15 new homes and improvements to compliance processes such as asbestos management. With tenders for other housing sector work always planned for, as well as that from the private sector, the company has been set up to succeed.
3) Develop and implement a clear business plan
Have a reasoned business plan. This must be a clear and structured plan – and one which incorporates all of the processes you will have to go through, such as resourcing, the supply chain, and operational & IT infrastructures, as well as work streams such as day to day repairs, responsive repairs, voids, and compliance (including planned, cyclical and aids & adaptations).
4) Recognise the need for a high performance IT system
Choose a system that will grow with you as a business. In this day and age, you need a system that is aligned with your organisation’s goals and can help you achieve them.
Don’t underestimate the importance of getting the right IT system in place at the beginning. If done right, it will tie everything together and allow your organisation to be a high performing one from the outset. Leaving this step until later could prove a mistake and make the integration process more difficult.
5) Checklist other considerations
Consider all of the issues. A simple checklist would include:
- Make recruitment a priority – begin drives to recruit staff in the very early stages
- Agree terms and conditions – essential as your recruitment drive begins
- Highlighting training needs – get new staff trained and up to speed quickly
- Consider OJEU rules – create a legally approved contractor list upfront and make use of existing frameworks
- Obtain accreditations – reputation and credibility is enhanced by having these in place, such as NICE electrical accreditation, gas safe and CHAS
Since One Vision Housing created their DLO, the results have been impressive. Now called Sovini Property Services, and part of the Sovini Group which also includes One Vision, the company continues to use Oneserve’s service management solution to help it offer a great service. By taking advantage of the latest innovative technology, they have managed to achieve:
- 98% of appointments made at first contact (as a result of call centre diagnostics and intelligent scheduling)
- 95% job resolution on first visit (by ensuring the right field worker is sent to each job, with the right information and materials on board)
- 20% increase in productivity (as the system has made the workforce more productive)
- 30% saving on fuel costs (due to improved scheduling which sends the nearest and most appropriate field worker to each job)
You can read more about our partnership with Sovini here.