When supporting a school through the academy conversion process, it is critical that sponsors quickly get to grips with the finances of the school. In our experience, one of the most commonly overlooked areas is non-staff spend. This is why we have put together our top five benefits for conducting a benchmark as part of the academy conversion process.
1 Identify opportunities for the school to be more efficient
The single most valuable reason to conduct a benchmark is to identify areas where the school can be more efficient. This could be through improved processes that save time, or through more effective buying strategies that lead to improved quality and reduced price. Every school has the opportunity to become more efficient but identifying these opportunities can be tough. A detailed benchmark using pricing level data can help you to spot the areas where improvements can be made and create an action plan to address them.
2 Identify and prevent the use of illegal or bad procurement practices
The public procurement regulations are complex and often prone to misinterpretation. Some of the most common errors we see involve not calculating the value of the contract correctly, extending contracts illegally, failing to tender for items that are caught by the aggregation rules and running group procurements without running EU tender procedures.
Aside from the EU regulations there are other bad procurement practices that should be identified as early as possible. These range from fraudulent transactions to poor negotiation strategies or an overreliance on particular suppliers.
3 Ensure that the nature of the school’s commitments financial or otherwise are known
It is not unusual for schools (especially those which are struggling) to not know what contracts they have, the terms and conditions of those contracts and therefore what the school has been committed to. The potential risk of being unaware of contracts should not be underestimated. For example, it is not uncommon to find photocopier leases that work out far more expensive than the value of the photocopier. It is also not uncommon to discover that contracts can retain auto-renewals that can tie the school into unnecessarily expensive contracts for years to come.
4 Make use of the sponsor and the converting school’s buying power to generate savings for both schools
The principle of improving buying power by buying in groups is well-known but is not commonly practiced. Many schools consider the process of group purchasing to be good in principle but hard in practice. Whilst this is somewhat true, procurement professionals manage this task on a daily basis and prove that it is possible. Although there is a time or monetary cost to either completing the work in house or asking external professionals to support the schools through the process, the savings over the next few years are often worth many times the initial expense. It is important to take a long-term outlook, especially with further budget cuts on the horizon.
5 Create an initial snapshot of non-staff spend to demonstrate and measure the impact of improvements
Without getting an up-to-date snapshot it is impossible to accurately quantify the improvements that new financial management and procurement procedures have created. By using a detailed benchmark and then repeating the exercise six months or a year later it will be possible to compare the benchmarks and identify improvement. Therefore, it is important to benchmark as early as possible in the process to ensure that the improvements can be tracked before they begin to take effect.
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