Finally, the summer is upon is. And I don’t just mean the weather. Children and teachers from all over the country are welcoming the start of the summer holidays. But it’s not fun for everyone involved; caretakers and estates managers are about to embark on one of the busiest periods of the year. The traditional 6-week break is the perfect time to get all the necessary maintenance work done, both from a practical aspect and a safety point of view.
All manner of trades will be busy over the next month and a half, desperately trying to get finished on time for the return of the academic year in September. Electrical work will be completed by electricians, commercial decorators will paint miles of walls and get through tens of thousands of litres of paint; but who will do the school PAT testing? The past decade has seen a rise in the amount of companies and organisations ‘in-sourcing’ – that is, no longer using a contractor and starting to perform certain tasks internally. But is this still a cost-effective method?
It boils down to the age-old theory of supply & demand. Organisations in-source = reduced demand. However this increased the demand for PAT training companies, which has left us with more people than ever who are deemed competent to provide PAT testing services. This increased supply coupled to the reduced demand lowered prices dramatically across the nation. Many companies are now paying less than half of what they were paying 5 or 6 years ago. Many companies we talk to who haven’t renegotiated their rates with their current provider for some time, are shocked at how much lower the rates are.
In-House PAT Testing Costs
Let’s run through an example and at the end hopefully you’ve got enough information to use your own figures and see if it’s a cost-effective solution for your school.
1. Fixed costs (one-off)
Training for 1 person – £300*
PAT Tester, tools & accessories – £400
*Please bare in mind that if the trained member of staff was to leave for another job, you may have to re-train another person.
2. Fixed costs (annual)
PAT Tester annual calibration – £40
3. Variable costs (per item)
Test label – £0.02
Fuses – £0.01**
**Based on a wholesale price of 10p per fuse. Approximately 1 in 10 replaced. Expect this to be higher for new IT equipment.
4. Labour costs
Per item, this will be your biggest variant. It depends on a number of factors:
- Staff member salary – Average caretaker salary is believed to be £17-20,000 per annum, although some earn much more.
- Overtime rate – If the staff member cannot perform PAT testing within their regular working week, you may be contracted to pay overtime rate.
- Speed of staff member – An infrequent PAT tester would be expected to average around 12 items per hour, which could drop as low as 10 or rise as high as 15 with regular practice.
£18,500 ÷ 52 (weeks) ÷ 40 (hours per week) = £8.894 per hour (assuming no overtime or enhancements are payable)
£8.894 ÷ 12 (items per hour) = £0.74 per item (Labour only)
5. Total cost per item
Without overtime: Labour + Variable = £0.74 + £0.03 = £0.77 per item
With overtime (at time & 1/3rd): (Labour x 1 1/3) + Variable = £0.99 + £0.03 = £1.02 per item
Please bare in mind these are just examples, based on a salary of £18,500 per annum and an overtime rate of time & 1/3rd. Substitute these for your own figures and work out your own estimate. We’ve provided a handy calculator within an excel document you can download at the end of this article.
So, lets put these prices into context as they are a little meaningless at the minute. Are they cheaper or not?
Well, they are both much cheaper than what you would have paid in the previous decade, which explains the sudden increase of in-house PAT testing, but aren’t necessarily cheaper than you would pay now. For anything over 200 items (which is what most schools would be, some into the thousands of items) we would comfortably be able to beat the £1.02 estimate nationwide. As for the cheaper quote, with a large number of items, we could certainly get very close, maybe even beat it on a multi-year contract, but let’s consider if it is cheaper first. Let’s compare it with a quote of £0.84. It’s 7p cheaper on face-value, but we need to now consider the fixed costs, firstly the annual PAT tester calibration.
£40 ÷ £0.07 = 571
This means you would need to perform a minimum of 571 tests per annum to cover the cost of calibration. Every 571 tests after this you would save £40. Is this worth burdening your staff with the extra responsibility & workload? To hit your £40 saving it would require you testing 1,142 items, which many schools will have, but that’s approximately an extra 95 man-hours of work! Let us not forget the other one-off fixed costs – you need to make sure that you are making enough of a saving each year to cover your initial capital expenditure.
£700 ÷ £0.07 = 10,000!
This means, that you would need to perform a total of 10,571 tests before you hit your break even point with an extra 571 items added for every year it takes you to get there! For many schools this isn’t realistic as it would take years to reach that figure.
In-Source or Out-source PAT?
Each school will be different as each has different costs to consider. If you are looking at bringing PAT testing in-house now, in 2013, my advice would be don’t bother. As you can see from the example above and your own calculations that you’ve hopefully done, it will take years to break even and if you are constantly paying to retrain new staff you may never hit your break even point. If you are a very large school and able to hit 10,000 items in a couple of years, re-negotiate your rates with your current provider or get a quote from others.
If you currently in-source then it’s worth re-evaluating based on 2013 quotes and salaries. You may find that as your labour costs have gone up, the newer PAT quotes are significantly less that when you first decided to in-source and it is no longer viable to continue. Then it would be beneficial to enlist the services of a contractor.
It maybe that your one-off fixed costs have been covered over the previous years, so you don’t have to take that into account and it runs at a similar cost to a contractor, in which case you have a couple of options; it maybe that you can better utilise the expertise of the staff member elsewhere, so a PAT contractor would free up the time to do this, without having to pay staff overtime or, you could happily leave the arrangement as it is currently, to again re-evaluate the costs should your trained staff member leave the organisation, in which case re-training may not be worth it.
To perform your own calculations, you can use our handy excel based calculator here.