The question that keeps surfacing across social housing is a deceptively simple one: are Direct Labour Organisations actually cheaper than contractors?
It is a question that boards regularly return to, often framed in binary terms. Yet when Executive leaders responsible for repairs and asset services came together to explore this topic, it quickly became clear that cost alone is an incomplete and often misleading way of understanding how services really perform.
From the outset, the discussion exposed a fundamental issue. Organisations are not benchmarking in the same way. Some calculate a fully loaded internal hourly rate by taking the total cost of the service and spreading it across productive hours. Others still rely on schedule of rates, often inherited from historic contractor arrangements. A smaller number operate hybrid models, raising jobs on SOR while tracking real delivery cost separately. One participant summed up the frustration succinctly, noting that schedule of rates “isn’t how much it costs me to deliver a repair”, but remains embedded because it is familiar and system‑friendly.
Even where more sophisticated approaches are in place, leaders were candid about the effort involved. Fully loaded costing requires difficult assumptions about non‑productive time, management overheads, fleet, training, and central support. Several acknowledged that while this gives a truer picture of cost, it also makes DLOs appear more expensive on paper. As one leader explained, they include everything and then “adjust monthly” once real productivity is understood.
Contractor benchmarking, by contrast, was described as simpler but far less complete. Average cost per job or cost per property is commonly used, often informed by published sector data. Yet many in the room were clear that this approach rarely captures the full system cost of outsourcing. Client‑side contract management, variations, rework, aborted visits, and service recovery are seldom attributed back to contractor models in a meaningful way. As one participant put it, while invoices are clear, allocating the true overhead of managing contractors remains “a judgement call”.
When the conversation turned to whether DLOs are cheaper than contractors, there was no single answer. Some organisations reported that in‑house delivery was clearly cheaper, particularly where geography was tight, retention was strong, and work was high‑volume and repeatable. Others described costs as broadly comparable. A number were open that their DLO appeared more expensive on paper. What mattered was not the variation itself, but the transparency with which it was understood.
Crucially, cost was rarely where the discussion ended. The most consistent theme was value. Leaders repeatedly spoke about control under regulatory pressure, particularly in the context of emerging safety and compliance requirements. Having the ability to flex priorities, redeploy resource quickly, and intervene without renegotiating contracts was seen as a significant advantage of internal teams. One participant described the ability to “chop and change whatever we need to do” as central to why their organisation continues to invest in a DLO.
Customer outcomes featured just as strongly. Several leaders reported improved satisfaction where services were delivered in‑house, not only because of response times, but because operatives were seen as part of the organisation rather than a third party. As one leader observed, tenants do not talk about the contractor. They see it as their service, and the feedback they provide is often more constructive as a result. Others highlighted the less visible benefits of operatives acting as eyes and ears on estates, identifying safeguarding concerns, damp, hoarding, and wider tenancy issues that rarely appear in cost models.
Productivity was another area where the conversation moved beyond traditional measures. Many organisations have deliberately stepped away from blunt metrics such as jobs per day, recognising the increasing complexity of repairs and rising customer expectations. Instead, leaders described a shift towards measures that better reflect value, including recalls, quality, first‑time fix, and satisfaction. In some cases, structured productivity and incentive frameworks are used to align behaviour with outcomes. One participant described a model where productivity and customer satisfaction have a direct and material impact on pay, noting that poor service is the quickest way for incentives to fall away.
Alongside productivity, inefficiency was openly acknowledged. No access was consistently described as a growing cost driver rather than a minor operational issue. Rates varied significantly across organisations, and while no one claimed to have solved the problem, many shared incremental improvements through better communication, automated reminders, dynamic scheduling, and clearer consequences after repeated failed appointments. The consensus was that no access now represents a material drag on value for money that is rarely reflected in benchmarking.
Supply chain pressure was another shared concern. Rising material costs, significant uplifts in national schedules of rates, and the impact of re‑procurement cycles are eroding assumed savings across both DLO and contractor models. Leaders spoke about a range of responses, from tighter van stock control and automated replenishment to renegotiated supplier relationships and more localised branch models. Yet even here, behaviour was seen as just as important as systems. One participant remarked, only half‑jokingly, that trips to suppliers are sometimes as much about habit as necessity.
Towards the end of the discussion, attention turned to the future workforce. An ageing trade base, long‑standing skills shortages, and increased competition from other sectors are now shaping delivery decisions as much as cost. Several leaders described growing investment in apprenticeships, often with a clear commitment to long‑term employment rather than short‑term pipeline building. One participant captured the sentiment clearly, explaining that they would not start an apprenticeship unless there was a job at the end of it.
What emerged from the conversation was not a defence of DLOs at all costs, nor a rejection of contractor models. Instead, it was a recognition that benchmarking is not broken because the sector lacks data, but because the data being used rarely reflects the full system cost or the value leaders are actually managing.
As one participant reflected, they could not match contractor prices on paper, but once the real cost of delivery was understood, the position looked very different. The ability to control service quality, respond flexibly, and deliver better outcomes for customers was ultimately seen as worth paying for.
The challenge now is not deciding whether DLOs have a place. It is developing clearer, more credible ways to evidence their value so that boards and executives can make decisions based on what truly matters, rather than what is easiest to count.
Many organisations are making long term decisions about delivery models using benchmarking that was never designed to reflect the full system cost, regulatory pressure, or the outcomes customers now expect. The leaders in this discussion were not looking for a single right answer. They were looking for better questions, clearer evidence, and more honest conversations.
If you are currently reviewing your repairs delivery model, questioning how your DLO is measured, or trying to articulate value beyond headline cost, we are keen to continue the conversation. We regularly bring executive leaders together to share what is really happening across the sector, away from simplified comparisons and inherited assumptions.
Get in touch if you would like to be part of a future roundtable or want to explore how others are approaching this challenge.
