Developing an estimate

While benchmarking costs will provide an initial idea of potential costs, it will be necessary to develop a ‘ground-up’ budget reflecting local needs and expectations. Examples of budget lines for an AA scheme include: -

Direct staffing

  • AA scheme manager (lead member of staff)
  • AA officers (supporting members of staff)
  • Employed or sessional AAs (including on-call / out of hours payments)

Other staffing

  • Administative support

Other direct costs

  • Recruitment costs (e.g. advertising, promotional material)
  • Travel and subsistence (AAs and co-ordinator, e.g. mileage, taxis late at night)
  • Training and professional development (e.g. venues, accommodation, speaker expenses)
  • Accreditation (where AAs will be obtaining the national qualification in acting as an AA)
  • Vetting (i.e. DBS checks, note: police vetting is not appropriate as it bypasses the Rehabilitation of Offender Act 1972)
  • Printing (e.g. PACE recording forms, reporting)
  • Phone expenses (AAs and co-ordinator)

Overheads

  • IT, finance, human resources, legal, office management (this will be percentage of costs where an organisation delivers the scheme alongside other services)
  • Website (for recruitment, complaints, public information etc.)
  • Public liability insurance
  • Membership of infrastructure / standards body (NAAN)
on Monday December 11 by Chris Bath
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When developing an estimate of cost, developers may wish to consider:

  • the benefits of developing a multi-year budget (e.g. 3 to 5 years)
  • the importance of calculating on a full cost recovery basis, especially when moving from an internal model to a commissioned model (internal costs are often hard to identify as they are not reflected in distinct budget lines and this can give an inaccurate picture)
  • the impact of initial start-up costs such as IT and communications infrastructure and recruitment
  • the impact of TUPE[1] considerations, particularly on the ability of smaller organisations (e.g. local charities) to bid for contracts
  • the impact of managment information reporting requirements on admininstration and management time
  • the costs of complying with freedom of information requests from third parties.

[1] Transfer of Undertakings (Protection of Employment) Regulations 2006" as amended by the "Collective Redundancies and Transfer of Undertakings (Protection of Employment) (Amendment) Regulations 2014".

on Monday December 11 by Chris Bath
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Clearly a scheme that has high demands will have higher costs than one with low demands. 

Longer periods of support, wider geographical areas, and higher numbers of cases, all drive costs up in different ways.  Depending on the deliver model, this may be through hourly staff payments, travel expenses or recruitment and training costs. 

Research suggests that the very lowest volume schemes are less likely to be the most cost effective (as judged by a low unit cost per call out). However, efficiencies of scale do not seem to increase above around 2,000 call outs per year. This may be due to the following factors:

  • The continued requirement to for some level of local operation/co-ordination to enable the effective recruitment, training and operation of AAs necessary to achieve response times (and maintain the engagement of volunteers where they are used);
  • Significant on-going investment in management and administration (partnership development, performance management and other reporting requirements, information-sharing and any changes at the local level which impact the service;
  • Under a commissioning model, as the size of scheme increases there is a reduction in competition because the pool of potential providers decreases.

At the same time, some small schemes appear to be efficient, while and some larger ones are not. 

It should be noted that, while the costs of commissioned schemes are relatively transparent, data on in-house schemes is dependent on self-reporting and may not equate to full cost recovery. 

 

A thorough approach to assessing demand in the early stages of development will help developers to consider the impact on costs in the local context. 

 

 
on Monday December 11 by Chris Bath
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Although some broad observations can be made about how different models of provision affect cost, this should always be considered in the local context.

On the key decision between in-house and commissioned provision, a significant challenge is transparency. The cost to commissioners of existing outsourced schemes are relatively easy to identify, since they are based on a specified maximum contract value which is in the public domain. However, the costs of in-house schemes are less transparent. Local scheme leaders are often not aware of the true value of the work under full-cost recovery (i.e. including a share of overheads in addition to direct staff time and volunteer expenses). It would therefore be easy to underestimate the costs of an existing in-house scheme.

Another consideration is fixed-price contracting versus the spot-purchased or ‘pay as you go’ approach offered by some providers. The main advantage of paying only for those AAs that are needed is that there is a potential for savings if volumes are lower than expected – for example if fewer children are arrested. However, this approach also comes with risks for the commissioner: -

  • Volumes may be higher than expected due to changes in policy (e.g. the inclusion of 17 year olds from 2013)
  • Volumes may be higher than expected due to increases in identification (e.g. the development of liaison and diversion screening and assessment services)
  • If volumes increase significantly, the budget may be used up before the end of the funding period, leaving the area with no service
  • As only a limited number of providers will operate on this basis, the pool of potential bidders is smaller.

Scheme developers / commissioners may also wish to compare the cost of new schemes with that of improving or expanding existing schemes. Options include: -

  • Expanding services for one group to include the other (e.g. adding adults services to an existing YOT scheme)
  • Combining across two or more local authorities
  • Extending the operating hours of an existing scheme (e.g. by investing in an on-call sessional worker to cover out of hours)

When considering merging schemes, the costs, risks and disadvantages should also be considered in addition to the potential benefits. 

on Monday December 11 by Chris Bath
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Decisions about the quality of service which is to be provided will clearly have an impact on costs. Factors include: -

  • High quality leadership and supervision, with a dedicated co-ordinator role
  • Backup arrangements (e.g. paid staff where there is a gap in a volunteer rota)
  • Appropriate administrative support
  • Level of involvement in information sharing and other local partnership work
  • High quality training (both initially and ongoing professional development)
  • Investment in accredited qualifications for AAs
  • Extended hours of operation
  • Quick response times
  • Attendance for full custody episodes
  • High quality evaluation with a focus on outcome (not simply output data)
on Monday December 11 by Chris Bath
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Developers/commissioners will need to consider how high quality services and outcomes can achieved in the most effective way. This should include consideration of the potential for efficiencies of scale and the benefits of standardisation and co-ordination.

However, it should not be assumed that larger services are necessarily more efficient. Consideration should also be given to the efficiencies that can arise from smaller, local schemes which have strong interpersonal relationships with staff in other services.

 

on Monday December 11 by Chris Bath
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