Transcript PowerPoint Presentation - Greenwich Options Studies

NFTMO Annual Conference
June 2011
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Management and maintenance allowances
Council pays allowance to the TMO to enable it to
provide the services that the TMO will/has taken over
◦ As set out in the management agreement
Principle – TMO receives what it would have cost the
council to provide the services
◦ No more/no less
If TMO is efficient providing cost effective services – it
makes a saving
Savings = surplus which can be reinvested into
community (in accordance with TMO rules)
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Based on Council’s costs for services TMO wants to
provide
a)
Supervision and management and running costs –actual
b)
Responsive repairs and planned maintenance – historic
c)
d)
e)
f)
costs
costs
Exceptional repairs- estimated costs
Programmed repairs and improvements – estimated and
actual costs
Committee administration and training – set formula
Leaseholder allowance – advance on L/H service charges
adjusted annually
Page 11 of Good Practice Guide
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Annual review
◦ Inflation or other mutually agreed index
◦ Overall changes in HRA expenditure
 If significant then should be a full periodic review
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Periodic review
◦ Where there has been significant change to Council/TMO
expenditure
◦ Use Council costs on directly managed properties as basis
for calculation
 Comparator area identified and agreed with TMO
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Significant variation (over 5%) phased in over 3 years
TMO must be notified of allowances 3 months before
year start
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Developing TMOs
◦ Indicative allowances at Exploring the Options 2 stage
◦ Detailed allowances in Feasibility/Development using workbooks in
Calculating Allowances guide
◦ Evidence of negotiations/discussions for competence assessment
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Council must clearly present the figures keeping it simple with
full explanations – appropriate officers involved
Use workbooks provided in statutory guidance
Need for transparency and a clear audit trail back to the
council’s actual costs
Encouraging a negotiation process and full understanding of
how the allowances have been calculated
Council to provide all background info requested by the TMO
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Some councils pay little attention to statutory
guidance
Easy to lose sight of the wood for the trees
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Get caught up in fine detail and lose sight of bigger picture
Need to focus on the bottom line and then work
backwards if budget seems unreasonable
Need to understand where/how figures calculated
Some cross checks
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Leaseholders and tenant service charges (if estate based)
Salaries/no. of staff being transferred (TUPE) to TMO
TMO business plan must stack up financially
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Allowances need to cover cost of services to be provided by
TMO now and for life of BP
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Council A - several TMOs – review of allowances with
new MAs
◦ R & M allowances provided did not include identified element for voids.
Subsequent detailed analysis by TMO indicated voids element £200 to £300 per
void. Council actually spending average £1200 per void. Further negotiations
resulted in agreement by TMOs to receive £1100 per void adjusted annually for
actual no. of voids.
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Council B – several TMOs – review of allowances with
new MAs
◦ Council adamant wanted to follow good practice . Set up TMO working group
and employed accountant to extract info. But soon got lost in detail with
lengthy debates about some overhead costs which would have minimum impact
on overall allowances. Needed to refocus on getting bottom line figures to TMOs
once they had understanding of how allowances were being calculated.
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Council C – developing TMO
◦ Council provided figures with reference to where figures extracted from.
On analysis TMO identified that certain budgets like cleaning and
grounds maintenance were not enough to accommodate the number of
posts being transferred by council/contractor. In addition leaseholders
costs indicated a higher cost for these services. Further negotiations
and Council increased budgets significantly.
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Council D – operational TMO – allowance review
◦ Council reviewed allowances and ‘informed’ TMO – significant
reduction. 2 years later TMO renegotiated MA and looked again at the
allowances. Found out that Council had used a comparator are that
bore no resemblance to their estate. Comparator had pitched roofs and
UPVC double glazing, mostly leaseholders. TMO had flat roofs, wooden
windows which both caused problems. TMO complained and new
comparator identified which TMO visited to make sure similar structure
and problems. Allowances increased.
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Council E – developing TMO
◦ Council provided breakdown of repairs figures. TMO knew they had
real drainage problems 2 years previous but not reflected in figures.
TMO pressed council who insisted no works with a cost had taken place.
TMO obtained leaseholder service charge bill for relevant period which
included cost for works. Council investigated and revised allowances.
Drainage works had been coded elsewhere.
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Council F – operational TMO – allowance review
◦ Council/ALMO reviewed allowance. TMO unhappy with grounds
maintenance element and challenged ALMO/council who refused to
budge. TMO looked at finance report to ALMO Board which included
much higher grounds maintenance figures. ALMO/council subsequently
increased allowance.
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Make sure you understand how allowances have been calculated
– what are base figures for each element based on
In TMO development - press the council to provide allowance
info in bite sized chunks e.g. repairs allowance when you are
negotiating chapter 2 of MA Repairs and Maintenance
Cross reference where you can (service charges/TUPE
costs/local knowledge/published council & ALMO info)
Do not get lost in the detail especially on overhead costs
◦ You can end up spending days when it may only make a difference of a few
pounds either way
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Get to the bottom line for each budget head and then work
backwards if you need to
If an allowance review, make sure the comparator area has
similar structure, tenure mix, issues
Use your local knowledge – if you know there is a big repair
issue then look for it to be reflected in the allowances
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