An Auditel team in Leeds is nominated as a finalist for the SME: Most Trusted Consultancy Award

After five months of build-up, promotion and industry chatter, the shortlist for the prestigious Energy Live Consultancy Awards was released on 7th May. David Powell from an Auditel office in Leeds, has been nominated for the category ‘SME: Most Trusted Consultancy’ sponsored by Gazprom Energy UK.

David says: “With such strong competition, we are honoured to be a finalist in this category. The trust of our customers and partners is integral to the success of our business and is at the very heart of everything we do here.”
The criteria for this award included the need to ensure that they have a set of values to which they adhere, embed those values in the dealings they have with both customers and suppliers, are able to communicate these and can demonstrate examples of it working in practice.

Transparency, accuracy, fairness and clarity of terms and conditions are all key components upon which the judges will base their final decision. Auditel’s strength in these areas is one of the things which impressed the judges so far. The focus on cost management, not cost cutting is what David Powell’s Team hope will stand them in good stead with the judges.

The shortlist of finalists will now be sent to the judging panel. This will be made up of Angela Knight, CEO of Energy UK, Louise Kingham, CEO of the Energy Institute, David Porter, ex-CEO of AEP and the former editor of Utility Week, Janet Wood. They will be joined by Chair of Judges Mervyn Bowden on June 12th, to whittle down the nominees to find the winners. They will be announced at the awards ceremony on June 27th.

David Powell’s team of five specialists is based in the centre of Leeds. He qualified as a Chartered Accountant in 2001 and post qualification, worked for a FTSE250 Logistics Firm and a Global Management Consultancy before joining Auditel, an award winning national consultancy network.

The Auditel Supplier Conference and Exhibition 2013

The 13th Auditel Supplier Conference and Exhibition is due to take place on 7th June 2013 at Trent Vineyard, Nottingham.

This annual event is an invaluable opportunity designed specifically for our many Auditel consultants and top quality suppliers to meet face-to-face and enhance knowledge and understanding of each others’ services in a way that adds real value to our client offering. Whilst independence is central to the Auditel offering, experience has proven that establishing the right relationships with the right kind of suppliers means our clients really do benefit from great deals and service.

We anticipate this to be the biggest and best Auditel Supplier Exhibition ever. Up to 40 market leaders will present their unique offerings to our largest ever gathering of cost and purchase management specialists under one roof.

Our partner companies for the event include, as always, major energy companies, telecoms providers, office supplies, and a wide range of business services from insurance to finance, and just about everything the modern business needs. Companies attending recognise the value of meeting with our large network of specialists who together represent over 3500 businesses in the UK.

Use the Auditel Supplier Exhibition hashtag: #AuditelSE for tweets.

How Auditel balances the books for schools and colleges

Cost Management Solutions for the Education Sector

The Guardian headlined recently, ‘Balancing the books. In coming years state school finances will be affected by funding changes, the end of a staff pay freeze and a rise in the pupil premium.  With the economy continuing to flatline and the government struggling to control a growing national deficit, these are tough times for schools.’

The same is true for the independent sector. The Telegraph reported: ‘Everywhere, efforts are being made to keep costs down to make schools as attractive as possible. Some have gone so far as to advertise discounted fees.’

Chris Allison is Managing Director of Auditel, the UK and Ireland’s leading independent cost management consultancy. He explains: ‘For schools and colleges, managing costs is an uphill task without dedicated, professional help. These can be as diverse as utilities, catering and stationery, let alone finding the time to keep on top of contract renewals and seek out innovative cost management solutions for education ’

Since 1994, Auditel has built a reputation for delivering ethical and sustainable solutions for the educational sector through their Total Cost of Purchase®. This approach is now widely regarded as the most effective approach to cost management and Auditel regularly delivers results that not only meet, but exceed clients’ expectations.

Allison says that all educational establishments can be helped. He provides examples of savings for a pre-school day care provider, a secondary school and a college.

Pre-school day care:

Established in 1983, Busy Bees are the UK’s largest provider of pre-school daycare, offering more than 11,500 children’s nursery places in 129 unique locations nationwide. Their FD, although sceptical about the Auditel proposition, agreed a trial project to review water charges across all the sites. Over a six-month period, Auditel were able to recoup over £45,000 worth of rebates and identified ongoing annual savings in excess of £14,000.

As a result of this exercise, Auditel were invited to investigate the existing contracts with their telephone supplier and a shorter 2-year agreement was negotiated to deliver a common end date. The annual additional saving is estimated at £18,000.

Auditel was also asked to assist with a disputed final electricity bill. The result was a 90% reduction in the charge and a refund cheque from the supplier. As their IT Manager reveals ‘Having strong control of our costs going forward is essential. Outsourcing expert advice has paid off, both in terms of savings and providing the in-house team with additional management support. I would be happy to recommend Auditel to any company wanting expert help to review their expenditure.’

Secondary education:

Founded in 1864, Framlingham College is a co-educational boarding and day school for pupils aged 13-18 in Suffolk and has approximately 425 pupils. Dissatisfied with their previous consultants, their Finance Director saw in Auditel the opportunity to have their complex cost management handled professionally. This saved them a considerable amount of time and money. ‘I invited Auditel to look at our utilities costs. We knew we had not been getting best value from the previous firm of cost consultants and that there were better deals out there. We simply didn’t have the time, knowledge or buying power required to access them.’

On utilities, Auditel delivered savings of over £95,000 and refunds for VAT and Climate Change Levy of over £60,000. A detailed lighting survey promised annual savings of £72,000, bringing total savings of £156,100. Their Finance Director concedes: ‘I hate to think where we would have been now, if it had not been for Auditel!’

Colleges:

St. Clare’s is an international residential college, which specialises in teaching the International Baccalaureate Diploma in Oxford. Based in 26 sites, the college presents an interesting challenge when it comes to cost and purchase management. Auditel was engaged initially by their Bursar to investigate the College’s spend on electricity, gas, water and fixed line communications.

In the first year, Auditel delivered savings which totalled over £42,000. Of these, electricity amounted to £31,250, including a rebate for past overcharges of £24,100. Gas amounted to £6,400 from historical overcharges going back three years and £4,200 (21%) on fixed line communications. Auditel have also provided significant levels of day-to-day management support in these areas.

Their Bursar concedes: ‘We didn’t have the time or the necessary expertise to sort them out. It was a huge relief to give these tasks to Auditel.’

Chris Allison adds: ‘There’s no doubt, our clients value the huge time-saving. In-house resources are freed up to concentrate on core activities. Budgets now contain up-to-date, accurate cost management information and we have become a trusted, outsourced member of their executive team. For any organisation wishing to have peace of mind amid spiralling costs, our Auditel Business Health Check can be an enormous benefit!’

An Introductory Guide to Electricity Generation from Solar Panels

There has become a general increase in awareness with regards to renewable energy, especially as energy suppliers are passing through the costs of subsidizing installations through government schemes to end users’ bills.

Last month in my article, Lean and Mean Before You Go Green, I described how you should, before embarking on any renewable energy scheme, first ensure that you have followed the hierarchy of reducing your energy costs. This month, we look at electricity generation from Solar PV.

The Financial Case for Solar PV

Clearly, if this is not attractive enough, there is no point in reading the remainder of this article as this addresses the more technical issues. Basically, there are three options available and we will typically offer to evaluate each one:

• Self funded – in which case the ROI is typically about 7 years
• Financed – still an outright purchase but with a loan which can be sourced via the Carbon Trust
• ‘Free’ System (funded by investors)

Option 3 offers the least financial risk but may require an assignable lease agreement to be put in place and an agreement to purchase electricity. This will of course be at a significantly lower unit price than your current unit price but the days of ‘free’ electricity have gone for new installations since the Feed In Tariff was stepped down.

The ROI in the case of options 1 and 2 will be based on a number of assumptions. These are:

• the FIT rate in place at the time of becoming eligible;
• the percentage increase per annum in electricity prices from the supplier;
• the percentage increase in the RPI as the Export Tariff and Feed In Tariff (FIT), (after eligibility), are indexed to this;
• that the building has an EPC (Energy Performance Certificate) energy efficiency rating of A to D, qualifying it for higher FIT;
• that the percentage of unused electricity exported back to the grid has not been under-estimated;
• that the correct electricity unit prices are known as some suppliers will assume a figure and a 2 or 3 year contract might be in place;
• whether climate change levy is applicable;
• what rate of VAT is applicable to energy costs if not reclaimable

It can be seen that there are some fairly complex calculations involved and a number of variables. One of Auditel’s key roles in this situation can include (as independent advisors) to challenge some of the assumptions being made, especially as over-estimated energy price rises can result in an over optimistic ROI.

What is Solar PV and How Does It Work?

Photovoltaic (PV) modules are panels of solar cells, which convert sunlight into DC electricity. This is then converted into the AC electricity used in buildings using an inverter.

PV cells are made from layers of semi-conducting material, usually silicon. When light shines on the cell it creates an electric field across the layers. The stronger the sunshine, the more electricity is produced. Groups of cells are mounted together in panels or modules that can be mounted on your roof.

The power of a PV cell is measured in kilowatts peak (kWp). That’s the rate at which it generates energy at peak performance in full direct sunlight during the summer. PV cells come in a variety of shapes and sizes. Most PV systems are made up of panels that fit on top of an existing roof, but you can also fit solar tiles.

Solar PV needs little maintenance – the panels just need to be kept relatively clean and trees must not begin to overshadow them. In the UK panels that are tilted at 15° or more have the additional benefit of being cleaned by rainfall to ensure optimal performance. Debris is more likely to accumulate if you have ground mounted panels.

Financial Benefits and Incentives

Electricity generated reduces the quantity of electricity purchased from the grid. As generated electricity cannot be stored, any unused electricity can be fed back into the grid and will attract income from the electricity supplier based on the Export Tariff. In addition, payment is received in the form of the Feed-in Tariff (FIT).

FITs were introduced to encourage the use of small-scale electricity generation from renewables to help meet the Government’s renewable energy generation targets.

When calculating financial benefits, 20 year projections are made as this is the guaranteed number of years for which the FIT will be paid. The life of a PV system is estimated as 25 years, (although the inverter may need replacing during this time).

The FIT for any given installation will depend on the size of the installation and the eligibility date. The eligibility date is the date from which an installation becomes eligible for FITs payments. FIT rates are reviewed every quarter and depending on the level of take up and how close the government is to meeting its targets, degression is applied to rates. If take up targets are not met, degression may be skipped for up to two quarters but then in the third quarter, default degression of 3.5% will be applied. The cost of solar panels has reduced over time and the expectation is that degressions will encourage costs to reduce further.

Once the FIT has been locked in, rates are guaranteed for 20 years and are index linked. Further information can be found on the Energy Saving Trust Site

The Feed In Tariff is paid on all electricity generated, regardless of whether it is used or fed back to the grid.

Supplier Selection

It is essential to use an installer who is certified through the Microgeneration Certification Scheme (MCS). MCS regulations govern how MCS-certified installers must install solar PV. This will cover, for example bracketry and how roof penetrations are sealed; pretty essential as no one wants to introduce roof leak problems, either now or in the next 20 years!

Other Issues to be Addressed

Survey – a desktop survey is usually undertaken which takes into account location, roof angle and direction but a detailed site survey may reveal that the roof is not suitable without reinforcement.

Planning Approval – may be required

DNO Application (normally obtained by the supplier) – this is to ensure that the grid has the capacity to handle the installation.

If opting for a funded system, legal advice should be sought before signing an assignable lease agreement or power purchase agreement.

Insurance – the presence of PV panels should be disclosed to your insurers as a material fact.

Philips LED – A major energy-saving breakthrough

Philips is the world’s first to present a lamp prototype that produces a record 200 lumen per watt (lm/W) of high quality warm white light. This Philips LED technology breakthrough introduces tremendous potential for lowering energy consumption for lighting by half. Given that lighting accounts for c.15% of energy consumption worldwide, this innovation could drive massive cost and energy savings.

Until now, the relative energy efficiency of fluorescent lighting (100lm/W) has seen it dominate in office and industrial environments. Homes and shops, meanwhile, have tended to stick with the gentler, warmer light produced by conventional bulbs (operating at around 15lm/W) or halogen lights (25lm/W). Philips’ new 200lm/W LED, however, leaves all three technologies in the shade. Vastly more energy efficient than incandescent and halogen lighting, LED can drive down energy bills

As an added benefit, the new LED’s generate less heat, so they can be made without heat sinks. This means they are less bulky, give greater design freedom, use less material and can be produced more cheaply. It will be interesting to see how much they cost though and if there are any technical challenges to replace existing lighting systems and the costs associated with this.

The 200lm/W LED is expected to hit the market in 2015 and will ultimately be used in a wide range of applications.

Source: Philips – more information on their website here

What is LED lighting?

Light-emitting diodes (LEDs)have been around for years.

Traditionally, they have been used as indicators on electrical devices, such as standby lights on TVs. This was because LEDs were available only in red, but recent advances mean that other colours are now available, and the light emitted is much brighter.

White light (used for general lighting) using LEDs can be created via a number of techniques. One example is mixing red, green and blue LEDs.

It is suggested that LEDs can last for up to 100,000 hours, compared with the 1,000 hours of traditional incandescent light bulbs and compact fluorescent lamps’ (CFLs) 15,000 hours.

The long lifespan and low energy use make LEDs economically attractive because even though the fittings cost more, the running and maintenance bills are lower.

Effective Cost Management from Denis and Rhys Brennan

Auditel Cost Management Consultant, Denis Brennan, says: “I am really a ‘solutions provider’ to my clients, a ‘solutions consultant’ if you like. Most clients have problems with the time that it takes to deal with issues that are not their core competencies or core business interests. We take that pressure away and do the work for them.”

Denis joined Auditel in September 2008. He had a distinguished career with the Arjowiggins Group, the multi-national paper manufacturing company, for many years. Latterly he held the key role of ITC Performance Director, where he was involved in controlling telecoms services and business costs. This gave him extensive experience of overseeing projects and programmes within challenging schedules and budgets.

Opening his Auditel business allowed him to focus this experience on his clients’ behalf. Denis says: “I really enjoy the situation that Auditel has provided for me, to work within a variety of business sectors. While my goal is obviously to help my clients, I have been pleasantly surprised by the opportunities to learn new ideas and concepts.”

Denis is a Project Manager for one of Auditel’s Business Development Teams responsible for identifying new categories of overheads for investigation. “While we look at the essential overheads of energy and telecom costs, I have a special interest in what we call ‘other business costs’. These include office and janitorial supplies, stationery and R & D Tax Credits, depending on the nature of the business. I am also an Auditel network trainer and mentor, coaching new franchisees in how to work in those areas.

“Our varied client base includes charities, schools, restaurants, hotels and manufacturing companies. We also provide our service to many leading accountancy practices, Chambers of Commerce and other organisations through our unique Partnership Programme.”

One of Denis’s clients is Christ College in Brecon, a foremost co-educational boarding school, founded by Henry VIII under Royal Charter in 1541. Denis achieved savings of 34% in their telecommunications, 56% in their gas bill in Year 1 and 21% in Year 2, 16% in their electricity bill in Year 1 and 16% in Year 2. Ongoing projects are Office Consumables and Janitorial Supplies.

Christ College’s Bursar reported: “Auditel understood our business needs quickly and identified what we wanted. They provided all the assistance we needed to get the best possible deal in a number of areas. We are delighted with the results!”

Rhys, 26, joined his father’s business in January 2011, following graduation from Cass Business School, where he achieved a Merit for his MSc in Business. “One of the most enjoyable aspects of my job is the wide variety of people I meet. I also relish the challenges thrown up by the everyday running of a small business and the potential for personal development that this provides.”

Denis adds: “He brings academic rigour and discipline and heads up the Business Development arm.”

Being conveniently based in two major commercial centres, Denis and Rhys Brennan are able to offer effective cost management services to a UK-wide client base. Last year, Denis was recognised for his services to the network and his progress in the field. At Auditel’s National Conference, he received the prestigious ‘Franchisee of the Year’ Award.

Does the SSE fine affect me?

Since the news broke last week about the record £10.5M fine imposed by OFGEM on energy supplier SSE for mis-selling, we have been asked by a number of our clients how this will affect their contract with SSE.

The first thing to be clear of is that the mis-selling this fine related to is for pre-dominantly domestic customers who have been sold a contract either in-store, by phone or on their doorstep.

Most business customers will not have bought their energy contract this way and will instead have agreed a fix price for their energy supply over a pre-detemined duration, often 12 months (if you have not agreed a contract within the last 9 months we would recommend you contact Auditel for an informal discussion to see if better value can be obtained for you). As a safeguard, if you have agreed a contract (with SSE or any other supplier) we would recommend that you check your current invoices agree with the rates you originally contracted to ensure they are correct.

Some customers have questioned whether the size of the fine may affect the customer service experience provided by SSE in the future. SSE posted half yearly profits of £398M last November and the fine, although it may seem enormous to most of us, represents less than 3% of the half yearly profits.

Finally, it was interesting to read that one of the main reasons given for the mis-selling was that customers did not understand the products they had purchased. Perhaps a good reasons to seek professional independent advice when renewing your energy contracts ?

Highly effective cost management for the hotel and leisure industry

Auditel, the UK’s leading independent cost management consultancy, have found savings of many thousands of pounds on business costs for the hotel and leisure industry.

Over the last four years this industry, which is of substantial importance to the UK economy, has faced increasing headwinds. Household disposable income has declined and the Government imposed additional costs of £3.5bn per year since 2010. Thus trade remains far below the pre-2007 growth trend in revenues and jobs. Operating costs are also rising as energy inflation has averaged 4.7% per year since 2008.

The influential Hotel Business Review suggested that there are a number of low-cost measures that should be taken when it comes to optimising energy management. However, Chris Allison, Auditel’s Managing Director, advises: “This is only one of over 100 typical business expenses. Few in the industry have the time or market experience to manage them all properly. Many acknowledge that cost management today is a vital function. There are numerous benefits in outsourcing this mission-critical task to specialist consultants, instead of diverting in-house resources from strategic roles.”

The National Motorcycle Museum Group has the world’s largest motorcycle museum, award-winning conference and banqueting facilities and two 100-bedroom hotels. It offers accommodation and a range of leisure facilities. Their Group General Manager appointed Auditel to carry out an audit on their essential business costs. Savings achieved were £39,386 on electricity, £7,760 on gas, £2,000 on fixed line call charges, £1,750 on fixed line service charges and £3,600 on PBX maintenance – a total of £54,496.

Besides these lower overheads, a major benefit to NMM with Auditel is the ability to call on their experience and expertise as they require. With Auditel as an outsourced, additional member of the team, staff can focus on their core business objectives. They will be confident in not having to pay more than necessary for their essential overheads.

As their Group General Manager confirms, “Auditel’s professional and thorough approach steered us through this period of sky-rocketing energy prices and helped to ensure that our costs are controlled and managed. We operate a lean head office team. Without their help, we wouldn’t have time to focus on this aspect of our finances on a regular basis. Engaging Auditel means that the cost of our energy, water and communications are constantly monitored and reviewed without having to divert resources away from our principal business or increase staff.”

Moor Park Golf Club opened in 1923 and today has 1450 members. It features two championship golf courses. Savings for them, achieved by Auditel were 45.3% on mobile phone costs, 34.9% on fixed line telecoms, 17.3% on gas and 9.9% on catering costs. Over four sites, the savings on electricity varied from 5% to over 30%.

The Talacre Beach Leisure Group owns and operates six caravan, holiday home and leisure parks along the north Wales coast. In addition, two parks offer rental holidays, while the exclusive 5-star Plas Coch site also includes a number of luxury holiday lodges. Savings achieved by Auditel include £36,000 on energy, over £100,000 on electricity, with ongoing areas in water, merchant card fees and telecommunications.

When was your last check-up?

Chris Allison adds: “Since 1994, Auditel has built a reputation for going the extra mile to deliver ethical and sustainable cost management solutions. Solutions that, with our buying power and knowledge of the supplier market, pay for themselves many times over. The organisations mentioned gained access to a whole network of specialist consultants, who ensured that they received expert and effective cost management advice across all areas of expenditure – now and for the foreseeable future. So even if you think you’ve got all your essential business costs under control, it wouldn’t hurt to make sure. Contact us to book your Auditel Business Health Check.”

Energy Rationing Anyone?

Ofgem’s recent warning that the margin of spare capacity on the network will reduce from 14 per cent today to 5 per cent by 2015 has caused a stir in the energy industry. Talk of energy rationing and the “energy gap” are widespread.

As a business that helps organisations to manage energy more efficiently, this comes as no surprise. There are two tectonic plates clashing over the next few years, and predicting exactly what will happen is increasingly difficult – even National Grid has moved away from a single best estimate to a range of scenarios.

So what are these tectonic plates? The first is the Government’s target on climate change – namely: To produce 30% of electricity from renewable sources by 2020; to cut greenhouse gas emissions by 50% on 1990 levels by 2025 and to cut greenhouse gas emissions by 80% on 1990 levels by 2050. The second is the continued and steady decline in UK oil and gas, with ever increasing reliance on foreign imports of energy (the UK is already a net importer of energy).
Read more…

Procurement Outsourcing

Most companies outsource.

• New member of staff? Recruitment Consultant or Agency
• Legal advice? Solicitor
• Financial advice? Accountant
• Marketing advice? Marketing Consultant

But why outsource? Why not do it in-house? Consider the benefits of outsourcing:

• Immediate access to specialist knowledge and expertise
• No direct employment costs – salary, NI, holiday pay, employee benefits, pension costs, absence cover etc
• Flexible cost options on an ‘as-needs’ basis
• Huge time savings – concentrate on running the core business activity

Think about your business. What does it do best? Presumably you concentrate on how you can be the best ‘widget’ provider locally, nationally or internationally. But to be the best ‘widget’ provider, the whole needs to the sum of the very best parts. You need to have the best sales team, production team, financial team, marketing team etc.

You can justify employing some of these people directly because they will spend their whole time developing and refining the company’s offering. But when you need advice on employment contracts, do you turn to your ‘employment contract person’? When you need a new website, do you sit down with your full-time, in-house website designer? Probably not, because you cannot justify employing them in full-time positions.

The principle of  procurement outsourcing is exactly the same. You probably employ one or more people in a ‘Purchasing Department’. Because the company is (hopefully!) successful, they are probably very good at procuring the essential components involved in widget manufacture. But what about the more than 80 odd other categories of expenditure that feature in the nominal ledger – stationery, packaging, waste, electricity, mobiles, vehicle costs, insurances, water, print etc etc. Does your Purchasing Department have the individual specialist knowledge to procure ALL these items? The answer is likely to be no because these are all industries exactly like the widget industry – complex with many suppliers, good and bad. That is where the benefits of outsourcing to people who do have the experience, knowledge and expertise of these other industries in one consultancy can pay instant dividends.

For further information, please see our Corporate Brochure