Mortgage Valuations

This case study focusses on a Building Society client that had a significant spend on property valuations as part of their mortgage application process.  The client hadn’t reviewed this spend in recent times and were looking to engage with the market to ensure they were receiving value for money and were keeping pace with any innovations which their competitors had implemented. In addition, the client wanted to ensure that they were working with a ‘best-in-class’ partner with leading edge technology solutions and a committed and focussed account management team.

The Challenge

The client was a mid-sized Building Society with a Head Office and branch network.  The client engaged us to undertake a society wide cost review on all areas of expenditure and once we had demonstrated our capability across a number of areas of spend the society entrusted us with their mortgage valuations review.

The client was utilising the services of a ‘top 6’ provider who was generally providing a good, solid service but the society wanted to ensure that they were receiving value in this area of spend which was one of their largest expenditure categories.  In addition, it was absolutely key for the client to ensure that any potential new provider:

  • Had strong case studies where they had innovated their clients’ accounts.
  • Could demonstrate an approach to challenge and improve processes.
  • Had extremely responsive turnaround times for valuations and the subsequent submission of the report.
  • Could demonstrate a leading-edge IT system and a road map of continued investment.
  • Had a robust surveyor audit programme.
  • Could provide comprehensive pre and post valuation support.
  • Had comprehensive professional indemnity cover in place.

A comprehensive category review was required to conclude with a market leading mortgage valuations company being appointed that could take the client forward in terms of meeting their long-term strategic aims and objectives.

The Challenges

  • Lack of relationship between the supplier and the C-Suite level at the client.
  • Service was deemed to be solid, but account not continually developed and little in the way of strategic objectives focussing on continuous improvement.
  • Market hadn’t been approached in recent times and the client was unsure whether they were receiving value for money.
  • The supplier market is relatively small in terms of who could provide a single source solution to the client and there isn’t a huge amount of capacity to take on new clients with some suppliers.

Our Strategy

Key to the development of the category strategy was bringing together the thoughts of the client, our thoughts, the view of the incumbent supplier and the wider experience of suppliers from the mortgage valuations marketplace.  With this in mind, we facilitated a number of meetings to develop a conceptual way of thinking with the emphasis on understanding further value which the supply chain could bring to the client.

Once the general approach to the review had been agreed, we initially focussed on gaining a full and clear understanding of the current position in terms of the annual volumes of valuations by valuation type (e.g. buy to let, desktop, AVM, re-mortgage, etc),  the response times being achieved, the wider service provided and associated performance levels and the  associated costs of the service.  This involved a fairly extensive amount of data analysis to understand the ‘current position’ but this proved a vital step in the process.

Once we had a clear understanding of how the supply chain could add more value through very open and productive discussions, we were in a great position to understand the high level capabilities of each supplier and the evolvement roadmap that the society could go on to improve their service to their customer base.

In terms of the tender itself, we embarked upon an extremely rigorous review which involved us engaging with 5 market leading providers in addition to the incumbent supplier.

This tender process directed suppliers to provide a day 1 solution in terms of how they would initially on-board the client and then a future solution with clear indications of what suggested changes they would, when they would make the change and what the benefits of the change would be.

Upon receipt of the tender responses a detailed category report was drafted by ourselves for the project team and sponsor which led to subsequent presentations being held which we fully facilitated to ensure the client have every opportunity to explore all key components of the suppliers proposals.  Once a short list of 2 suppliers had been agreed further presentations were held at the client’s site which allowed for the introduction of key client stakeholders and allowed the client to undertake further due diligence.

The Strategy

  • Appoint a leading mortgage valuations provider that was capable of providing the full range of services, was ‘best-in-class’ and had the capacity to either retain/on-board new clients.
  • Develop a detailed understanding of the enhanced value that the supply chain could provide ahead of any tender process.
  • Comprehensive data gathering process to ensure the service and cost baseline was fully understood.
  • Encourage the suppliers to challenge the current approach to focus on what value they could if they were to be successful.
  • Maximise value for money.

Our Solution

Following a comprehensive tender process the category solution agreed with the client was to award a 3-year contract to a leading mortgage valuations provider who the client felt could deliver a much more comprehensive and responsive service.  The client saw significant benefit in undertaking this review and believed they had a partner that they could work for mutual, sustainable and long-term benefits.

From a cost savings perspective the savings to the clients were in the region of 10% on like-for-like basis but more significant savings were available by incorporating different ways of working which will be reviewed through the evolvement of the account.

The Solution

  • Award a 3-year contract to a leading mortgage valuations provider.
  • Award to a provider who could deliver a more comprehensive and responsive service.
  • Day 1 costs savings achieved (10%) with potentially more significant savings through the change of current approach in the short-medium term.

Business Benefits

One of the key success factors for this review was the commitment from the client from the outset and their determination to source the most suitable provider that was fit for purpose for the long-term.  This level of commitment and senior sponsorship was complimented by our approach of conducting a rigorous and robust market review which concluded with the client being left in no doubt in terms of who the right supply partner was for them.

The client was very pleased with the results that had been delivered and in terms of the approach of how we have worked so well with their team with the team providing the ‘what to buy’ and us providing the ‘how to buy’.

Aside from the significant benefits mentioned in this case study we also worked very closely with the supplier’s legal team in terms agreeing the supplier contract to ensure that all commitments made by the supplier were captured including the service specification, the service level agreement and the key performance indicators.

The Business Benefits

  • Sustainable and significant cost savings with prices fixed for the contract period.
  • Highly capable and highly committed suppliers.
  • Comprehensive supplier IT platforms which are continually being invested in.
  • Comprehensive pre and post valuation support service.
  • Improved valuation report and valuation query response times.
  • Improved customer mortgage application experience.

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