Schools Cut Utilities Bills by $620,000

20 February 2012

At a time when every sector in New Zealand is feeling the pinch, 102 schools across New Zealand have found a way of making their money go further. 

Part of the solution for a large number of primary, intermediate and high school business managers has been to bring in specialist services to negotiate their power, gas and waste services contracts to make sure that their schools are not paying over the odds.

According to school business managers, bringing in third parties makes sense on a number of levels.  Having to deal with a wide range of different tasks is one of the challenges managers face on a daily basis, this makes it impossible to be an expert across the board.  Buying in expertise and handing over the more specialist jobs seems to be a logical step.

Business Manager at Pakuranga College, Graeme Brown is an advocate of this approach.  “Over the 11 years that I’ve been in this job, I’ve come to realise that it makes sense to leave utilities contract negotiation to the experts.  I don’t even think about our contracts now, TUMG notify us when they are due for renewal – it’s great to have something taken off my list of priorities.”

The opportunity to join forces with other schools and go out to market in bulk tenders is another plus point for bringing in a specialist.  Richard Gardiner at Total Utilities Management Group (TUMG) has been putting together power, gas and waste services bulk tenders for  ten years and sees them bringing real advantage to his clients.

“When we put out a bulk Request for Proposal to suppliers, the bigger the piece of business, the sharper the pricing tends to be.”

But Mr Gardiner is quick to stress that it’s not all about the price.  The terms of the contract have to be right and considerations like security of supply and quality of service are crucial.

With the increased administrative burden on schools taking its toll, the time saved by using external experts is often the factor that wins business managers over.  TUMG analysts assess each school’s utilities usage and needs before taking their supply requirements out to market in a tender. TUMG then provides a comparison of all supplier contract offers and presents them to the school along with a recommendation.

According to Bob Davies, Business Manager at Glendowie College this makes the decision-making process simple.

“TUMG produces a detailed report allowing us to compare the contracts and pricing on the table from various suppliers.  It’s very easy.  All I have to do is supply some utility accounts at the beginning of the process for benchmarking purposes and sign the best contract at the end.”

With savings of over $620,000 delivered to 102 schools in 2011, it’s hard to argue against handing utilities negotiations over to the experts.  Richard Gardiner at TUMG says, “We have spent the last ten years working with schools and have built up a detailed knowledge of the education sector’s particular requirements.  Some clients just want us to handle the negotiation process for them, others want more regular input scrutinising billing and checking for compliance with the original contract.  At the end of the day, whatever role we play, our promise to clients is: If we can’t deliver savings, clients don’t have to pay a cent for our services.”