Surviving and thriving under the DCSP Policy
1
1
AGENDA Overview Why is this procurement reform happening? What are the changes?
Where are we up to? Key areas to be discussed: • Client Outcomes & the funding of services • Costing & Pricing Closing • Q&A with consultants • Who’s there to help • Further information
Overview Share your experiences with the DCSP Policy so farWhat’s been positive? What’s been not so positive?
State Funding Contracts by Agency 200
DOC
DCP 183
180
DAO
DFC 165
Health 162
160
DoCS DFC
140
Mental Health 120
120 100
DSC 96
DAO 87
DIA DLG DoTAG
DSC DTWD
80
DoCS 57
60
DoE Health
40 20
DCP
DOC 15
DIA 13 DLG DoTAG 8 3
DTWD 30 DoE 23
Housing Housing 18 Legal Aid 14
0 Contracted Service Agreements = 995
Legal Aid WA Police
Mental Health
1
WA Police
WHY IS THIS PROCUREMENT REFORM HAPPENING?
Context • Economic Audit Report October 2009
• Partnership Forum July 2010
•State Budget May 2011 •DCSP Policy July 2011
Partnership Forum Mission: To improve outcomes for all Western Australians through a genuine partnership in the policy, planning and delivery of community services in Western Australia. WACOSS & other PEAKS
Partnership Forum Community Service Organisation leaders
Heads of Govt Central and Line Agencies
Key Objectives Partnership between public & NFP sectors focused on outcomes Develop sustainable funding & contracting Promote social innovation Reduce the admin burden Shift to outcomes based accountability
Changing the Way We Do Things A conceptual framework for human services reform in WA Understanding the external forces for change
Strategic Direction
Population Level results WA is achieving below average outcomes in many areas.
The EAC’s Final Report are the foundation for a new strategic direction for human services delivery in WA.
Service and Program Design
Supporting Delivery
Demonstrating results
Program level results Meeting the diverse needs of our communities requires ongoing assessment of service design.
Ensuring sustainable and effective services will be critical to meeting the needs of the WA community.
“Is anyone better off?� Outcomes can be demonstrated through key indicators.
State Budget The 2011-12 WA State Budget delivered:
• 25% increase in funding spread over 4 years • Fairer and more just wages for NFP employees • NGHSS Indexation Policy to index payments • Procurement reforms • Delivering Community Services in Partnership (DCSP) Policy • More collaborative relationship with government
Delivering Community Services in Partnership Policy
WHAT ARE THE CHANGES?
Change 1: Rebalancing of the nature of the relationship between the public and not-for-profit sectors
Change 2: Focusing on the achievement of outcomes and improving services and support for vulnerable and disadvantaged Western Australians;
Change 3: Acknowledging the importance of partnering with the not-for-profit sector in the planning, design and delivery of human services
Change 4: Acknowledging the importance of partnering with the not-for-profit sector in the planning, design and delivery of human services
Change 5: Funding and Contracting Reform
Change 6: Reducing the Administrative Burden
Monetary value guidelines MONETARY VALUE OF AGREEMENT
MINIMUM PROCUREMENT PROCESS
Below $5000
Direct Purchase
$5000 - $20,000
Verbal Quotes (2-5)
$20,000 - $150,000
Written Quotes (2-5)
Above $150,000
Open Tender
Where are we up to? • Partnership Forum encourages feedback (Departments are looking at new ways of engaging with CSOs and the reforms are viewed Nature of the positively) relationship
• Component I funding increase implemented (for eligible services) • Component II Funding • Agency Implementation Plans to be completed by end June. Funding and Contracting • Extra 10% to be rolled out July 2013 – 30 June 2014 as contracts are Options re-negotiated • Not clear yet but the DCSP provides opportunities • Many contracts are being rolled over, only just beginning down this path Reducing the Administrative • No government consensus on a particular form of outcomes based Burden measurement and reporting
AGENDA Overview Why is this procurement reform happening? What are the changes? Where are we up to? Key areas to be discussed: • Client Outcomes & the funding of services • Costing & Pricing Closing • Q&A with consultants • Who’s there to help • Further information
Client Outcomes & the Funding of Services Paul Flatau Centre for Social Impact (UWA)
Context • The Delivering Community Services in Partnership (DCSP) Policy has as a focus on the achievement of improved client outcomes for people assisted by community services • Implication for procurement - Funders will contract with services that can demonstrate a capability of achieving improved outcomes for their clients.
Context Activities
Outcomes
Value Proposition
Costs
Prices
Context
Client Outcomes
Services
• Achieving the best outcomes for program participants
• Choosing services that will achieve the best possible outcomes for clients given the available funds
Three Steps to Contract
• What would success look like for our clients
Client Outcomes
Service Delivery Model • How will we achieve success for our clients
• Why we should be funded to deliver services
The Value Proposition
Three Steps to Contract
Step 1: Define Your Intended Client Outcomes Step 2 Develop Your Service Delivery Model Step 3 Establish Your Value Proposition
Step 1: Define your intended client outcomes
What would success look like for your clients?
Step 1: Outcomes • Step 1: Define Your Intended Client Outcomes • First: Understand the distinction between outcomes and outputs • Second: Establish what you are trying to achieve Ground for your service? What outcomes for clients are your you trying to achieve? What would success look service like for your clients? How do they define success?
Step 1: Outcomes • Third: What do funders want? What client outcomes are they after? • There may be differences between what you are after and what funders state they want. Work through the implications of this. Remember it’s a partnership model.
Step 1: Outcomes • Your Planned Work • Inputs – Resources required or available to undertake or achieve the objectives of the service • Activities – What is delivered to participants. • Outputs – The volume of products of the service which reflects both the offer of activities and the take-up of activities by clients
• Your Intended Result Don’t get too caught up in language
• Outcomes – The immediate initial effects and intermediate effects or outcomes (behavioural changes that are believed to eventually produce changes in long-term outcomes) • Impacts – The longer term and fundamental outcomes from the initiative (often linked to the vision of the initiative)
Step 1: Outcomes • W.K. Kellogg Foundation Logic Model Development Guide 2001 ‘A logic model is a systematic and visual way to present and share your understanding of the relationships among the resources you have to operate your program, the activities you plan, and the changes or results you hope to achieve’. Two great sites http://www.uwex.edu/ces/pdande/evaluation/evallogicmodel.html (University of Wisconsin Extension Program Development and Evaluation) http://www.wkkf.org/knowledge-center/publications-and-resources.aspx (the Kellogg Foundation)
Step 1: Outcomes The focus of the WA Government’s procurement reform
Inputs 1
Activities 2
Your Planned Work
Outputs 3
Outcomes
Impacts
4 Your Intended Results
5
Step 1: Outcomes
Resources needed to operate your program
IF you have resources THEN you can use them to run your planned activities
Inputs
Activities
1
2 Your Planned Work
IF you IF you implement accomplish your activities your activities and match to in the way and prospective extent participants THEN you will have intended THEN clients undertaking your clients will benefit in a your planned variety of ways activities
Outputs 3
Outcomes
IF your clients benefit from your services THEN there may be longterm impacts for them and for organisations, communities and systems
Impacts
4 5 Your Intended Results
Step 1: Outcomes Impact Impact
Outcomes
Actions Learning
Engagement
Outputs
• Changes in knowledge, skill and attitude
• Changes in behaviour and practices
• Long-term effects for the individual, community and systems
• By clients and staff
Participation • Number of participants reached, number of contacts and intensity of contact
Change relative to baseline and the counterfactual Understand the needs and histories of clients. Outcomes should be judged relative to needs
First lets check Logic Model lingo (Appendix A) • 1 Input • 2 Output • 3a Outcome (learning) – Short-term
• 3b Outcome (action) – Medium-term
• 3c Impact
• A new curriculum was developed • Teenagers learned leadership skills • Books were distributed to children • Sessions were held in 10 locations • Parents increased their employment skills • The unemployment rate in the region fell
First lets check Logic Model lingo (Activity 1)
Step 2: Develop Your Service Delivery Model
How will we achieve success for our clients?
Step 2: The Service Delivery Model • Establish HOW and WHY your service will achieve intended outcomes and impacts • What links the activities you are undertaking to the intended short-term and medium-term outcomes and final impacts for clients and communities? • How will your service model achieve the ends you are after?
Step 2: The Service Delivery Model • Logic models establish the relationship between inputs, outputs and outcomes and impacts • The theory of change logic model goes one step further providing a representation of the causal theory linking • Inputs & activities to outputs; and • Outputs to outcomes and impacts
• Understand the role of partnerships and of leveraging extra resources to increase delivery impact
Step 2: The Service Delivery Model We want to achieve these outcomes and impacts what must we do to reach our goal?
Inputs
Activities
Outputs
Outcomes
Impacts
IF we have ….. THEN we can do …. IF we do this ….. THEN …..will occur [BUT WHY do I do this…..]
IF we do this ….. THEN …..will occur IF clients achieve this ….. THEN …..will occur
Step 3: Establish Your Value Proposition
Why we should be funded to deliver services?
Step 3: The Value Proposition • Why your service represents value for money ……Because you can demonstrate that your service delivery model produces (or has the capacity to produce) positive benefits for your clients and long-term positive impacts for the community … and you can do this at the right price
Step 3: The Value Proposition • Demonstration of impact • Use of existing soundly-based evidence and research in service delivery design • Stakeholder engagement, partnerships and the leveraging of resources
Step 3: The Value Proposition • Data collection systems that generate qualitative and quantitative data on the needs of clients, on what you do as a service and what you will achieve for clients – unit record data is critical • Established evaluation and research processes so that you are in a position to analyse existing evidence for improved service delivery Understand the role of external influences and the counterfactual so as to get a better understanding of closer to appropriate attribution of impact
Step 3: The Value Proposition • There are some tools currently being trialled by some organisations in WA that assist in planning to create impact with services and demonstrate that impact. • The tools are complements rather than substitutes (ie they do somewhat different things). Some investment is required to implement these tools appropriately – SROI – Social Return on Investment (quantifying in dollars the value created from resources – stakeholder engagement and logic model frameworks built in to the process) http://www.thesroinetwork.org/ – RBA – Results-Based Accountability (population and program based tool based around a program logic and theory of change approach with built in evaluation) http://www.fiscalpolicystudies.com/
An Extended Logic Model
Now its your turn ……
Activity 2 Inputs
List 5 inputs 1. _____________ 2. _____________ 3. _____________ 4. _____________ 5. _____________
Activities List 5 activities 1. _____________ 2. _____________ 3. _____________ 4. _____________ 5. _____________
Outputs
Outcomes
List 5 outputs List 5 intended outcome 1. _____________ 1. ______________ 2. _____________ 2.______________ 3. _____________ 3. ______________ 4. _____________ 4. ______________ 5. _____________ 5. ______________
For each outcome listed, state how outcomes are to be measured: 1. _________________ 2. _________________ 3. _________________ 4. _________________ 5. _________________
Impacts List 5 possible impacts 1._____________ 2. _____________ 3. _____________ 4. _____________ 5. _____________
Activity 3 Inputs
Activities
Outputs
Shortterm outcomes
Mediumterm outcomes
Long-term outcomes
IF you have resources THEN you can provide …….activities. What resources? What activities? …………………………….. …………………………….. …………………………….
………………………………… ………………………………… …………………………………
IF participants engage in the activities listed THEN what outcomes do you expect and why? (choose at least 1 short-term, medium-term and long-term outcome) …………………………………………………. …………………………………………………. ……………………………………………….... How are outcomes currently measured? …………………………………………………. ………………………………………………….. ………………………………………………….. HOW will the activities create the outcomes listed? Through what mechanisms? ………………………………………………………………………………………………..
Impacts
AGENDA
Overview Why is this procurement reform happening? What are the changes? Where are we up to? Key areas to be discussed: • Client Outcomes & the funding of services • Costing & Pricing Closing • Q&A with consultants • Who’s there to help • Further information
Costing and Pricing Jeff Simper
Context Activities
Outcomes
Value Proposition
Costs
Prices
Three Steps to Contract
Step 1: Define Your Intended Client Outcomes Step 2: Develop Your Service Delivery Model Step 3: Establish Your Value Proposition
Recognising the full cost of Services
• Concept of Full Cost • Concept of Efficient price
Recognising the full cost of services Leave Entitlements • Annual Leave • • • • • •
Annual Leave Loading Long Service Leave Sick Leave Public holidays Parental Leave Compassionate, Family, Study and other Leave entitlements
Other Salary On costs – Workers Compensation – Training and development – Superannuation – Recruitment costs – Other
Recognising the full cost of services Developing Unit Prices • Preparation time
• Travel time • Contract administration • Factoring in Cancellations • Professional supervision
Recognising the full cost of services Allocation of Overheads • Often not well understood
• Terminology is important • Need to have robust methodology • Need to understand impact of changing level of activities
Recognising the full cost of services Direct Costs • Program Costs • Direct Administration
Notional Costs • Value of Volunteers • Free or concessional rent • Other
Cost of Closing Services • Provision for redundancy • Accommodation Costs – make good etc • Run off insurance
Recognising the full cost of services Other considerations • Reviewing depreciation • Reviewing Debtors
• Managing Grants-in-Advance • Other
Pricing Policy Developing a pricing policy • Sustainability of Services • Aligning with Organisation’s Objectives • Reliability and Quality of Services
Pricing to develop sustainability Cost of Risk - Things don’t always go as planned! • Organisational Risks • Natural Disasters, legal action, etc • Service Delivery Risks • Cost of high resource individual clients - outliers • Will be affected of contract provision for additional funding for special circumstances • • • • •
Unexpected cost increases – especially for longer term contracts Fair work case and implications for flow on Accommodation costs Energy costs Other Costs
Pricing to develop sustainability Value of Capital Employed • Finance Cost on Assets employed - ROI • Fixed Assets
• Working Capital Employed
Pricing to develop sustainability Cost of Innovation and New Services • Role of not-for-profit sector to provide innovative and relevant services. • Organisations need to allocate time needs to provided to research, evaluate, obtain licences and approvals, get funding, employ staff and more before implementing new services • Time for a new service to becoming established before becoming viable
Developing Services through Surplus Funding Fixed Assets – Providing for new assets (not replacement assets)
– Obtaining Finance – Making Loan Repayments
Pricing to develop sustainability Meeting Contracts Requirements – Funders aim to reduce their risk through viable organisations – Often Require Strong Financial Statements – State Government wants to strengthen sector
Pricing to develop sustainability Providing for Under Funded or Non Funded Services – Philosophical Reasons for Undertaking Service
– Mission of Organisation – Being able to Care for High Demand Clients – Providing a social dividend
YourTown Activity Salary On Costs per FTE Annual Leave Cost per Year Long Service Leave Cost per Year Public Holidays Cost Per Year Sick Leave per Year Training and development Other Leave Entitlement per year Superannuation Workers Comp per year Total Salary On Costs per year
Salary Parameters Full time Hours per week
38
Annual Leave Days Accrual per year
20
LSL Weeks Accrual per 10 Years Service
8.67
LSL Days Accrual per year
4.335
Sick Leave Days per year
10
Public Holidays Per Year
10
Training and development
3
Other Leave days per year (if applicable) Workers comp rate (% of Salary)
2 3.5%
Superannuation Guarantee Levy
9%
Shift Penalty
50%
Salary Rate Annual Salary FTE
50000
Weekly Rate
961.54
Daily rate
192.31
Hourly Rate
25.30
3846 834 1923 1923 577 385 4500 1750 15738
Direct Administration Costs Recruitment Cost Telephone and communications IT Travel Rent Consumables Total Other Direct Costs
5000 2000 2000 3000 4000 2000 18000
Salary On Costs per FTE Annual Leave Cost per Year
3846
Long Service Leave Cost per Year
834
Public Holidays Cost Per Year
1923
Sick Leave per Year
1923
Training and development
577
Other Leave Entitlement per year
385
Superannuation
4500
Workers Comp per year
1750
Total Salary On Costs per year
15738
Salary Parameters Full time Hours per week Annual Leave Days Accrual per year
38 20
LSL Weeks Accrual per 10 Years Service
8.67
LSL Days Accrual per year
4.335
Sick Leave Days per year
10
Public Holidays Per Year
10
Training and development
3
Other Leave days per year (if applicable) Workers comp rate (% of Salary)
2 9%
Shift Penalty
50%
Notional Costs per year Direct Notional Services Indirect Notional Services Total Notional cost Overhead allocation General overhead Allocation and Specific Overhead Allocation Governance IT other Sustainability Allocation Cost of Risk Cost of finance Cost of Innovation Cost of new assets Total Organisational Overhead Allocation
3.5%
Superannuation Guarantee Levy
Total Non Wage Costs
Surplus for social dividend
Salary Rate Annual Salary FTE
50000
Weekly Rate
961.54
Daily rate
192.31
Hourly Rate
25.30
Price of Service Per Year Per Week Per Day Per Hour
10200 5000 15200
%
% % %
% % % %
Other Matters Australian Charities and Not-for-profits Commission • Need to register and lodge annual return • Increasing move to transparency • acnctaskforce.treasury.gov.au
Productivity Commission Disability Care and support Inquiry Report • Consumer Directed Care
AGENDA
Overview Why is this procurement reform happening? What are the changes? Where are we up to? Key areas to be discussed: • Client Outcomes & the funding of services • Costing & Pricing Closing • Q&A with consultants • Who’s there to help • Further information
Who’s there to help? Partnership Forum
Community Service Organisations
Providing guidance and direction
PEAKS in collaboration with WACOSS
Govt Agencies and FaCS
• Resources & Tools • Consultancy • Training/workshops
• •
Fostering Partnerships Program Training/workshops