Maximizing Value From Your Current Model
The sympathetic words, the slightly pitying gaze, and the feelings of understanding which passes from one officer to the other. That’s how most conversations go on Home to School (HTS) transport these days, with services under huge pressure from a combination of both demand and inflationary increases, and pushing Councils to significant changes to their model, including their commissioning approach.
In the first of two blogs we consider that initial investment question – should a Council stick or twist, can we make the current contract work through some TLC, or start looking at Rightmove for alternatives?
A recent report released by the County Council Network (CCN) highlighted that spend on HTS had increased by c50% over the 4 years from 2019 to 2023, rising from c£1.08bn to c£1.5bn. The report itself is a useful account of the ‘state of play’ for HTS, but was limited in its suggestions on how Councils could manage the market. Indeed, the section relating to ‘Sharper Commissioning’ included only 4 bullets, some of which we would question, disagree with or caveat at the very least. This included:
- Constantly reviewing routes – Whilst we would agree with the principle, it is not always possible to review all routes on a year-by-year basis with stretched internal teams. So how could this be better targeted?
- Engaging proactively to shape the market; trialing different forms of commissioning to suit different market conditions including, but not limited to, dynamic purchasing systems and reverse auctions. – As covered in our second blog, at Peopletoo we do not believe that reverse auctions instill the right type of behaviors. However, we would fully support a blend between internal/external, with greater flexibility/ability to deliver more challenging routes if maintaining an internal fleet.
- Investing in new software to have better real time information on transport usage – Again, whilst we would agree with the principle of this, consideration needs to be given to your Suppliers and who you are working with. Smaller ‘one-man-bands’ which may be delivering routes which are essential in rural locations may struggle to have the infrastructure to support this.
- Retendering the highest cost routes – Whilst this does have some merit, you may find that your high-cost routes are actually good value for money, despite their cost. Rather, we would suggest that routes which are ‘higher-cost’ comparable to similar routes are retendered.
From our own experience working with Councils, the key to sharper commissioning is understanding your routes. Including the key actions below:
- Prioritised reviews – Yes, identify your benchmarks, but crucially, how do these differ throughout the authority, and why is that?
- Supplier Engagement – Where dealing with a high volume of suppliers we would encourage a tiered approach, where you engage more regularly (monthly) with the suppliers delivering a higher proportion of your routes.
- Types of conversations – When meeting suppliers have a clear agenda. The outcomes of the benchmarking above should be used to inform conversations.
- Distance variations – Routes change, this is a dynamic service and pupils will be added in/out of routes frequently. Given this, it is key to have a fair model for managing price variations
- Bidding – This is touched on more fully in the second blog, but what type of behaviours are we trying to encourage with the market?
- Contract Term – In the current environment, consideration should be given to inflationary uplifts to avoid routes unnecessarily being handed back, and risk being priced in up-front.
Once the above has been maximised within the constraints of the current contract, you could then consider re-evaluating the overall model/specification and whether it is time to change. Ultimately, this should consider the range of commissioning options available to you including, Joint Ventures (JVs), in-house, Local Authority Trading Companies (LATCOs) etc. But in our next blog we specifically consider the external model, and whether a DPS or Framework allows for the better solution.
Check out Danny’s LinkedIn page
danny.marsden@peopletoo.co.uk