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Purchasing and pricing model for core components

The purchasing model

The way we fund Building Financial Capability (BFC) was considered and built in 2016 following the re-design process.

Prior to then, historic influences had led to a range of rates for each unit for the existing budget services purchasing model, with no transparency to enable confidence that these rates are fair and equitable across the providers in the sector.

Feedback from the sector revealed that the rate paid ‘per unit of client’ did not capture a fair cost of the service as some clients require one hour of support, while others could require up to ten hours. Historically, this has led to providers often being significantly over or under funded, per client.

Furthermore the sector feedback revealed the importance of acknowledging both the contact time spent with clients, and the time spent completing non-contact back-office functions on behalf of clients, when purchasing the new service. Research and recommendations from sector representatives advised that for every face to face hour, between one to two hours of non-contact time was required.

The purchase unit

We have developed a purchasing model using 'a session' as the purchase unit. The session is defined as an indicative three hour unit of time that can be applied to financial mentor sessions with clients and MoneyMates group/peer-led sessions.

Each time a client has a substantial[1] face to face meeting with a financial mentor this will be counted as a session regardless of the varying non-contact time required for each of the clients. This session purchase unit has greater flexibility to allow for variability than the old model.

Each MoneyMates group is counted as one session, regardless of the number of clients who attend. If the group requires two or more facilitators, this can be counted as two or more sessions.

The following table illustrates examples of how sessions can be used.

Sessions Explanation
1

One session is indicatively 3 hours of time.

1 hour, more or less, of client facing + 2 hours, more or less, of non-contact work

4 Individual client on average expected to use 4 sessions = 12 Hours
8 Group programme with one facilitator running for 8 weeks = 8 sessions

The unit price

Sessions (the purchase unit) are funded at a universal rate to ensure consistency and fairness across the sector.

The session rate is primarily based on benchmarked salaries for budget advisors, which was sourced from a commercial supplier. Other costs such as direct employee oncosts like ACC and superannuation, other direct costs of service delivery, and overheads were calculated based on research and consultation to create a Full Time Equivalent (FTE) rate[1]. The rate calculated is $95.23 per session.

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