Direct Labour Organisations, or DLOs, were once thought to be a disappearing breed. Seen as outdated and less effective than their more commercially minded peers (third party contractors), their prevalence diminished. But as social housing providers have increasingly been looking for new ways to improve services, reduce operating costs and mitigate risk, they have been making a comeback.
So is there a place for a new kind of DLO in the current social housing market? Let’s take a closer look…
What is a DLO?
First introduced in the 1980s, a DLO is typically a unit of a local authority or housing association that delivers building and maintenance works. The term ‘Direct Labour Organisation’ is somewhat archaic and not necessarily used by everyone these days, and some people may also use the term Direct Service Organisation. In principle it just represents bringing property repairs and maintenance services back in-house, under direct control of the social housing provider.
The rise of the commercial DLO
In the past DLO’s suffered from a negative reputation of being somewhat clunky and ineffective but a new kind of slick, commercially minded DLO is emerging that shakes off this historic image.
Our white paper, Getting It Right First Time: How to build an effective in-house repairs and maintenance service, looks at the example of One Vision Housing (OVH) who are using a modern DLO. Now known as Sovini Property Services, they describe themselves as “a commercial, profit making, maintenance and construction company”. Instead of profit going to shareholders, however, the money generated is reinvested back into improvement works and the creation of new homes.
Calling Sovini Property Services a DLO is perhaps somewhat misleading, as they are much more than that. But this clearly demonstrates how the concept and makeup of DLOs has changed in recent years.
The challenge of creating a DLO
Setting up a DLO is not something you’re likely to take lightly. Indeed, when OVH first looked at the possibility of creating a DLO, the size of the challenge that faced them was obvious. They carried out around 40,000 repairs and maintenance jobs per year and bringing these jobs in-house was no small feat.
OVH recognised the need for a modern system to manage the jobs. As Paul Broadbent, Operational Director, said, “It is extremely difficult to track and monitor [40,000 jobs] in a paper-based or spreadsheet form…we recognised the need to implement an IT system to manage workflows and produce the data we needed.”
They needed a system that would bring everything together in one place, provide processes and workflows to help deliver a better service, and improve communication between the call centre, their field workers and customers.
A successful DLO
The creation of Sovini Property Services has been a resounding success for OVH and its parent, the Sovini Group. Although commercially focused, the company has been able to reinvest its profits in worthwhile causes. For example, in its first six months it gift-aided £2.2m back to OVH which was subsequently reinvested in improvement works and the creation of 15 new homes.
The performance achieved by Sovini Property Services while working with Oneserve has been impressive. 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.
Is a DLO the right choice for your organisation?
Social landlords could have a number of reasons for bringing work in-house in the form of a DLO. For example:
- To gain more control over the repairs and maintenance of their properties
- To improve service delivery to tenants
- To reduce costs (especially expenditure relating to labour, as by employing operatives through a DLO they would avoid paying VAT on labour costs)
As with anything though, circumstance will dictate whether creating a DLO is the right choice. Doing so is no mean feat and requires a lot of investment in terms of both time and money. It’s certainly not a project that can be undertaken half-heartedly; you’ll need buy-in and complete support from senior management and the board. For smaller organisations, the economics may not stack up, as they may not have enough work for a DLO to provide any real cost savings.
If you’re considering setting up a DLO, you’ll want to read our whitepaper, Getting It Right First Time: How to build an effective in-house repairs and maintenance service. It takes a detailed look at what is involved in the process and can help you assess whether doing so makes sense for your organisation.