How have you managed to account for Living wage increases to your Service contracts without impacting your budgets?
Hi Karen, good question and it is difficult to prevent these cost increases. Rob has made some great suggestions.
Another way could be to run an open-book pricing model and to negotiate the % margin on top. Depending upon the current commercial offering there may be some opportunities to minimise price increases. We've seen a lot of success with eAuctions to negotiate the margin and ensure market value for a lot of service types.
Two simple answers... (1) look for productivity or efficiency improvements to mitigate the inflationary increases or (2) reduce the services required in order to remain within budget. Providing you are benchmarking and have a reasonable shadow cost assumption in place the organization cannot expect a zero % increase where there is labour units providing service.