You are the management accountant for Paradise Housing Association. The housing association has been undertaking a recent Value for Money $($VFM$)$ review of its maintenance service. As part of this work data have been collected from two other housing maintenance providers who are similar to Paradise in terms of the service provided and size of operations.

Indicator Eden Heaven

$1.$ Average annual maintenance cost$*$ per property K$200$ K$215$

$2.$ Average salary per maintenance employee K$19,000$ K$22,000$

$3.$ Number of properties per maintenance staff $185180$

$4.$ Number of maintenance requests per property $0\mathrm{.}951\mathrm{.}1$

$5.$ Number of maintenance requests per staff $185198$

$6.$ Number of reorders $**117$

$7.$ Average time to complete a maintenance order $1$ day $1\mathrm{.}5$ days

$8.$ Average age of housing stock $25$ years $23$ years

$*$ Maintenance cost is determined as the materials and staff costs

$**$ A reorder occurs when the original completed maintenance request requires fixing within one month of the job completion date.

The following data have been collected in respect of Paradise for the past two years.

Data $2010/112011/12$

Pay costs $($maintenance staff$)$ K$100,000$ K$105,000$

Maintenance costs $($parts$)$ K$65,000$ K$60,000$

Number of properties $1,0001,100$

Number of staff $55$

Number of maintenance requests $1,3001,600$

Number of reorders $1320$

Average time to complete an order $1\mathrm{.}4$ days $3$ days

Average age of housing stock $24$ years $27$ years

The maintenance department has a new manager who has previously worked in the private sector. She is interested in understanding the findings of the service review and would like to see Paradise$$s performance clearly presented so that she can discuss this at an upcoming management team meeting.

$($a$)$ Explain what the three elements of VFM are. You should provide examples of how the above indicators can be used to assess the VFM of the maintenance service. $(6$ Marks$)$

$($b$)$ Explain why a VFM review is more appropriate than ratio analysis in this scenario. $(2$ Marks$)$

$($c$)$ Compare the performance of Paradise with Eden and Heaven, making recommendations where appropriate. $(10$ Marks$)$

$($d$)$ Identify any other two $(2)$ factors that might need to be considered in your interpretation of the performance indicators. $(2$ Marks$)$