it’s a whole new ballgame PDFs/Repairs and...1. Broadening horizons – getting everyone engaged...

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Asset Management; it’s a whole new ballgame

12 May 2015

Richard Medley, Director, CIH Consultancy

Learn with us. Improve with us. Influence with us | www.cih.org 2

Asset management…

It’s a

whole

new

ballgame


The pendulum has swung…

Delivering for: • Asset performance

• Asset value

• Neighbourhoods

Delivering against: • Decent Homes

SHQS/WHQS

• Audit & inspection

• KPIs


Working together… to redefine Asset Management

North England & Scotland

• Dumfries & Galloway Housing Partnership

• Thirteen Group

• Magenta Living

• First Choice Homes Oldham

• Weaver Vale Housing Trust

• Incommunities Group

Midlands & Wales

• City of Lincoln

• Midland Heart HA

• Mears Group

• Charter Housing

• Two Rivers Housing

London & South

• Dacorum Council

• Spectrum Housing Group

• Network Housing Group

• London Borough of Newham

• London Borough of Barking & Dagenham

• Willmott Dixon

17 organisations

from across the

UK


The project & its outputs

Individual

• An enriching project experience that informs and inspires participants

• Professional development, knowledge boosting and profile raising

• Practical debates & discussions to help arm participants with the tips and tools to help do the job better

Organisation

• A catalyst for pushing forward asset management service development

• Developing specific, tailored outputs for each organisation

• Profiling and promotion at CIH events during 2014 & 2015

Wider Housing Sector

• The delivery of a new asset management ‘model’ (a Charter?)

• Strengthening of the profile of asset management by taking the initiative

• Production of project Learning Report for promotion of the project and participants


Asset Management - the key drivers

Demand & Supply

• Demographic changes, including ageing population

• Fluctuations in demand for particular locations and property types (impact of welfare reform)

• Growing emphasis on choice & increasing customer demands/expectations

Stock Condition & Sustainability

• An ageing stock profile & ‘fit for purpose issues’ with some property types

• The pressure to a deliver higher, local determined standard (Decent Homes +)

• Neighbourhood & economic sustainability

Funding, Financing & VfM

• The imperative for assets & asset planning to support the Business Plan

• The need to optimise value & use of assets (economic regulation)

• The need for proactive solutions to improve stock portfolios & their performance


So what’s expected of asset managers today?

Irrespective of organisation type or operating location:

• A robust approach to use of resources

• A clear understanding of the return on assets

• Use of assets in the round, seeking the best strategy for delivering value from them, whilst meeting organisational objectives

• Use of information on return on assets to underpin strategic decisions (e.g. hold stock in current form, dispose, convert tenure etc.)

HCA & VfM

Statements

“In the last set of

statements it was

on the return on

assets

requirement

where people

struggled most”

Jonathan Walters, Deputy

Director Strategy &

Performance, HCA


So asset management in the social housing context is to…

Ensure that current and future assets (houses, land, garages, shops etc.) fully support the organisation’s objectives – working towards having the right assets, of the right quality, in the right place, at the right time generating appropriate value to the business plan and 30 year cashflows.

Scottish Housing Regulator, Strategic Asset Management, Aug 2012, Recommended Practice


And the ultimate objective?

To manage assets in a way that contributes to neighbourhood sustainability, creating the optimum balance between cost, quality and utilisation in the organisation’s own context.

With the combination of regulatory requirements and the economic climate, the imperative for all social landlords to take a more ‘intelligent’ approach to asset management has never been greater.

Learn with us. Improve with us. Influence with us | www.cih.org

Kerb appeal -

external areas and

environmental quality


The challenge of

unpopular difficult

to manage

schemes


Fit for purpose

issues of many

sheltered housing

schemes


Non-trad housing –

significant

investment costs but

huge redevelopment

opportunity?


Disposal

strategy?


Challenges

presented by poor

quality estate design


Supply and demand

issues – housing

market and private

sector competition


Garage sites!!


So, Asset Management is about much more than you might think!

Strategy

Performance

appraisal

Stock

condition

survey

Stock

condition

data

Neighbourhood

performance

NPV analysis Procurement

Energy Efficiency

& fuel poverty

Redevelopment

New build

Yield

Housing need &

demand


The key ingredients of sound asset management

The Asset Management Strategy as the essential framework

Designed to unlock the potential of the housing stock

Delivering for the business & the customer

Built around a set of clear strategic priorities

Shaped & informed by sound stock condition survey data, supplemented by other data on housing need/demand, socio-economic data etc.

1. A comprehensive, strategic approach



• The Asset Management Plan as the delivery vehicle

What you’re going to do

How you’re going to do it

How much it’s going to cost

When you’re going to do it by

Who’s going to do it

• Demonstrably delivering against the strategic objectives

• Shaped by and shared with residents

2. A clear delivery plan



• The use of Asset Performance Tools – but what is ‘performance’, what does it mean?

Financial performance measures

• Net Present Value (NPV)

• Yield?

Non-financial performance measures

• Responding to market conditions - housing need & demand

• Meeting social & political objectives

• Economic/regeneration objectives

• The right approach and the right value measures to use will depend on your operating context

3. Understanding the ‘performance’ of the assets


Net Present Value Analysis

(£10,000) (£5,000) £0 £5,000 £10,000 £15,000 £20,000 £25,000 £30,000 £35,000

GLEBE ROAD

TRINITY DRIVE SHU

DRYLEAZE COURT SHU

HAMFALLOW COURT

UPPER PARK ROAD

RINGFIELD CLOSE

TANNERS PIECE

ASHCROFT HOUSE

WILLOW ROAD SHU

SHERBORNE HOUSE

HAZELWOOD

DRYLEAZE HOUSE

GLEBELANDS

ASHWELL HOUSE

DRAYCOTT

JENNER COURT

CHAPEL LANE

WALTER PRESTON COURT

THE CORRIETT

VIZARD CLOSE

CAMBRIDGE HOUSE

ST NICHOLAS COURT

GROVE PARK ROAD SHU

ARCHWAY GARDENS SHU

SPRINGFIELDS COURT

CONCORD

THE LONG GROUND

MALVERN GARDENS

GEORGE PEARCE HOUSE

THE BEECHES

BURDETT HOUSE

BROADFIELD ROAD SHU

GRANGE VIEW

Per unit

NPVs can

vary

dramatically

within a

property

group,

ranging from

+£32k here

down to -£5k



• Using performance information to inform option appraisal Identifying the actions that will generate more value or

fresh potential

Continue to invest & retain in current use

Change of use

Redevelopment

Disposal

• Identifying where the potential lies to unlock asset potential, release value, provide for reinvestment

• Balancing economic motives against social responsibilities

4. Options Appraisal (Optimising cost, quality & utilisation)



• Evaluating the approach being taken

• Monitoring its impact/return

Increase in average NPV

Increase in average yield

Meeting tenant needs/demands

Impact on neighbourhood sustainability

Local economic impact

• Providing clear information and assurance to boards, elected members, residents & other stakeholders

5. Accountability – providing assurance



• Using approaches that add real value to the asset

• Balancing of costs/risk between the organisation, contractors & manufacturers

• Genuine partnership working – trust, confidence and securing long term gain

• Lifecycle considerations

Landlords – long lifecycle, reduced maintenance, lower carbon and improved NPV

Residents – safety, great performance, good looks and reduced call outs

Contractors – easy to fit, reliable and offer savings and predictability when taking on long term liabilities

6. Effective, efficient procurement

“Lifecycle isn’t taken seriously by the sector and is not considered a critical component of procurement” Steve Coleman,

TakeParts



• The contribution & value the assets bring needs to extend beyond the building envelope:

Strong, sustainable neighbourhoods help protect asset investment/spend

Investing for broader objectives (e.g. energy efficiency works also reduce fuel poverty)

Delivery of local training & employment

The regenerative benefits of asset approaches – communal area quality & kerb appeal

Stronger neighbourhoods/communities where people choose to live and want to stay

• The importance of measuring and monitoring progress in these areas and demonstrating VfM.

7. A strong link to neighbourhood sustainability


5 key Asset Management challenges facing the social housing sector

1. Broadening horizons – getting everyone engaged and bringing Asset Management to the heart of the organisation

2. Ensuring a fit for purpose Asset Management Strategy and delivery plan that aligns with the organisation’s corporate objectives & local context

3. Delivery of quality, accurate and maintained data on asset and non-asset aspects (e.g. housing need/demand) that is used intelligently to inform decision making

4. Genuinely understanding asset performance through approaches that are embedded into the day job

5. Equipping the organisation - developing the knowledge and skill base within Wheatley Group

Question:

How is your organisation tackling these issues?

“…the stock exists to deliver the

objectives of the organisation: the

organisation doesn’t exist to

service and maintain the stock”


5 key ‘Hallmarks’of a successful approach

1. Asset Management has a strong corporate status (e.g. Incommunities has a DCE, Asset Management)

2. Responsive repairs activity is seen as part of asset management with teams being truly aligned (Dacorum TAM approach?)

3. Data is king – collection, management & use of high quality, robust data on property and non-asset aspects (e.g. need/demand) is pivotal to informing decision making (e.g. Affinity Sutton)

4. Effective use of IT and ‘tools’ to help aid understanding of stock performance (e.g. Midland Heart SAMS model)

5. In-house skills and knowledge are developed and nurtured (Affinity Sutton & Midland Heart)

Question:

What can your organisation learn from any of these approaches?

“Asset

Maintenance is

just a facet of

Asset

Management” Jeremy Kape, Affinity Sutton


Asset Management – 5 thoughts on what the future holds

1. Responsive repairs will be delivering much more for the asset and seen as delivering asset value (rather than just being seen as a service for tenants)

2. Asset management activities will be driven by data management and asset intelligence teams rather than surveyor and contract management teams

3. ‘Soft’ or low/no demand issues will lead to far more tough decisions being taken on the future of some schemes/stock

4. Organisations will be far more active in ‘churning’ their stock – flexible assets rather than fixed assets

5. Asset management will involve an ever greater variety of elements and solutions will be much more broad ranging (asset management will be as much about use as bricks & mortar investment)

Question:

What preparations does your organisation need to make to get ready for the future?

Using a strong

commercial

core to deliver

wide ranging

social value

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