Consultus created this Public Sector Consortium in response to client demand: various organisations in the education sector wanted new opportunities to buy energy and other utilities as a group, to achieve cost benefits and reduce administrative overheads. A ‘Discovery Workshop’ for a group of Universities was organised to discuss a business case, developed by the Consultus team, aimed at improving the group’s buying power, contract management, strategy complexity and volume tolerances while enabling them to take credit for collaborative purchasing within the public sector.
The consortium comprised Loughborough University, University of Leicester, Northumbria University, LDEC (Leicester District Energy Company), Oxford Brookes University, University of Derby, Salisbury NHS Trust and Leicester College.
“A major challenge was the fact we were moving many participants away from a traditional method of purchasing to a more dynamic and flexible approach,” says Michael Savage, Senior Consultant. “We presented to the members and ranked all purchasing strategies based on risk, and agreed on a strategy to meet key client criteria, ensuring a Risk Policy for all entrants.” In the case of Salisbury NHS Trust, the organisation was unhappy with the performance of the mainstream purchasing bodies and was looking for a broader service offering. After the detailed analysis and risk workshop phase, Salisbury opted for an innovative fix/unfix flexible strategy.
Once details were agreed with the entrants, the Consultus team went to market under a fully OJEU compliant process, ultimately negotiating a deal that enabled all parties to have their own contracts for autonomy purposes while sharing and benefiting from negotiated elements of the contract along with a highly robust and flexible energy buying and risk strategy. The consortium was designed in such a way that a new entrant could join at any point; membership grew by 100% in just 18 months.
Services provided include Tender Negotiation, Bill Validation, Risk Management, Risk Workshops and Risk Policy, Account Management, Financial and Consumption Reporting, and Data Management and Market Intelligence through the secure myEnergy client portal. The Consultus solution introduced most members to more complex and effective ways of purchasing while successfully managing all stakeholder expectations.
The strategy allows the market to fall as far as possible while enabling complete budget certainty to be maintained through upper risk limits, and only locked out when the market starts to fundamentally rise. In the event, some members locked out earlier at a level they felt comfortable with. This showcases the autonomy retained by each member.
The consortium performed extremely well, with many members receiving benefit-against-budget of up to 20%. In its first 18 months, this approach delivered a total cost saving against benchmarks of £1.7m in electricity and £3.3m in gas.
Greg Watts, Energy Manager at Loughborough University, said Consultus helped his organisation “to enhance our energy purchasing performance significantly without relinquishing our need for budget certainty. They guided us through a change in purchasing mentality with empathy to our risk profile and managed our internal stakeholders.” Indeed, he says Consultus expertise and its proactive approach not only helped the university to save up to 25% on its utility costs but that its open and transparent approach meant the company became “a genuine energy partner.”
At Salisbury NHS Trust, the effective price delivered was some 16% below that of products used by neighbouring trusts, with the organisation opting for additional Consultus support including Bureau Services, Monitoring and Carbon Reduction Commitment (CRC) services, and actively recommending Consultus to other NHS bodies.
“The added flexibility enabled us to save over 20% on utility costs and provided improved service delivery through the financial reporting and market intelligence available.”