Cost saving and budgeting in the current climate

There is increased pressure on schools and trusts to reduce costs, particularly when there is a rise in the cost of living. With this in mind, we've outlined several considerations you can take when looking to reduce spend.

Contract review

Even in challenging financial climates, schools and trusts are provided with an excellent opportunity to review existing contracts. Due to time constraints, procurement is often delayed or avoided entirely, leading to long-standing agreements. A simple glance at your list of providers will often reveal a number of contracts which need to deliver a better level of service or are no longer financially viable. Focus on these first to reduce spend whilst also improving service levels.

Reviewing your actual need

If a contract has not been reviewed for a number of years, compare the original specification against the school’s current needs. Each company's provision, like the school’s requirement, will have evolved over time. Review the limitations of each contract, in addition to elements that the school or trust no longer needs. If a contract is costly, can it be downgraded or adjusted to focus on the most vital elements? Savings don't always have to represent cuts, but efficiencies.

In-house provision doesn't always result in cost-savings

When looking to save costs, it can be tempting to bring these functions in-house. This can be beneficial for contracts that are under-utilised or where in-house expertise is available. However, consider why these services were originally outsourced. Once training, software and, most importantly, time are factored in, consider whether this will actually represent a cost-saving and how you will manage already high workloads to accommodate this. Consider also the cost for ad hoc support, should it be needed, and the implications of only seeking advice when situations escalate - situations which possibly could have been prevented should advice been given earlier.

Procurement and tenders

With increased pressure and competing priorities, a full tender process can be daunting. However, if the total contract value is less than £40,000 a full tender process is not necessary, unless otherwise stated within your finance policies. Instead, simply obtain quotes from three providers and choose the supplier who offers the best value for money.

Frameworks

For higher-value contracts, consider using a framework. Frameworks provide a shortlist of providers who will have already undergone a full tender process that complies with FTS and Public Sector regulations. Frameworks allow you to avoid lengthy tender processes and award via mini competition, or to bypass this entirely and award directly to pre-approved providers. Mini competition involves asking a small number of providers to submit costs, a brief overview of their service, and to answer a small number of simple questions, either via a proposal or presentations. Presentations can be limited to short, remote sessions, allowing minimal disruption to key stakeholders.

External financial reviews

When budgets are tight, the outlay of any additional cost may seem counterintuitive. However, an external review provides a huge opportunity for cost-saving: an unbiased, 'fresh pair of eyes' can often view potential savings yet to be identified. External Review Reports can also provide a clear business case for decisions, often providing the necessary distance between the schools or trust and any cuts.

While challenging climates place great value on financial responsibility, the security of external financial moderation can provide a welcome relief - along with the reassurance that you have the necessary systems to ensure everything is in hand.

If you’re looking for support with managing finances and budgets or would like to learn more about our finance briefings and relevant training, please talk to us.