Effective Asset Management

John Holdsworth

&

Sue Philpott

Effective asset management

• What is it?

• Why is it important?

• What is an Asset Management Strategy (AMS)

• What it is not

• An effective AMS should….

• Key considerations

• So what does this all mean?

• Taking a comprehensive approach to managing the physical assets in order to achieve – best use of these and

– value for money.

• Understanding and managing the condition, performance (heat efficiency etc.) of, and risks presented by your homes and other buildings.

• It covers the construction, operation, maintenance, modification, replacement and disposal of homes and other buildings.

• It includes ensuring that your co-op embraces energy efficiency and promotes environmental sustainability.

What is it?

• It is a key Management Committee responsibility

• Part of a planned, rather then reactive approach to managing an organisation

• Directly links to financial plans and rent setting strategies, approaches to contract procurement and aids and adaptations

• Maintenance priorities can be set on a fair and transparent basis

• Should lead to improved value for money

• Clear priorities for annual budget setting

Why is it important?

What is an asset managementstrategy?• It actively manages the assets of the co-op

• It sets out your understanding of and approach to long term ‘financial value management’ and the overall performance of your homes and other property.

• It helps you to make strategic decisions on stock investment, retention or disposal, and rent levels - and perhaps your involvement in neighbourhood wide activity.

• It provides a framework by which you have:– Effective and transparent stock investment

– Active asset management

– Support for wider objectives

What it is not……

• It is not just about delivering works programmes

• It does not mean that all your properties should remain in your co-op

• It does not mean that your co-op is always the best landlord to manage all your assets

An effective assetmanagement strategy should…

• Define your values and strategies and how these relate to the service and standards of repairs and maintenance and tenancy management you and your members have set

• Understand and take account of the policy environment in which we live and work

• Understand and assess the performance of your homes and other property, your residents needs and expectations, and the potential risks involved

• Embrace social and environmental sustainability

• Be based on option appraisal and financial modelling

• Provide an affordable strategy that links to the business planning process

Key considerations

• Are the properties fit for purpose e.g. – are they inefficient and / or costly to maintain?

– are they what the members and community want?

– are they too far away to manage well?

• Could the equity released be used for other, higher priorities?

• Is the local neighbourhood sustainable?

• The balance between investing in existing and new homes

• Cushioning against risk

So what does this all mean?

• Planning and delivery of a successful repairs and maintenance service– Responsive versus planned

– Effective and appropriate procurement

– Deciding on the service standards and priorities e.g. fixing fast to last

– Monitoring and management

– Having the right data e.g. SAP, costs of repairs and maintenance, expected life of key components etc.

• Meeting your equality and diversity obligations– Take account of the diverse needs of existing and future members

– Promote positive attitudes and approaches and encourage participation and access to homes and services

So what does this all mean? (2)

• Measuring performance – Actual delivery against the AMS and plans e.g. void turnaround and costs

– Appointments kept

– Completion times

– Resident satisfaction and feedback

– Ask – what does success look like?

• Managing risk – know your housing stock, what you can afford to do and your current and future members’ needs and aspirations– Understand current and projected demand for the properties, current and

projected cost of maintaining your homes at current standards, current and projected income,

– Consider energy ratings and efficiency measures, void standards, approaches to renewing fixtures and fittings, shared accommodation v. self contained, green v. traditional etc.

So what does this all mean? (3)

• Essential that MC members:– have the knowledge to provide an effective strategic

overview of the management of the co-op’s assets and the repairs service

– ensure the asset management strategy, business planning process, other associated strategies e.g. your contract procurement, and your approach to risk management and decision making across the co-op are aligned

– scrutinise performance in delivering contracts and services to meet the asset management strategy

– consider issues such as maintaining sustainable assets, delivery of quality, timely repairs and achieving value for money.

So what does this all mean? (4)

• Members value:– The MC being clear what the co-op can

and will do, when it will do it and what it will not do

– The MC keeps its promises and does what it says it will do when it says it will.

– Members are consulted on key issues and kept fully informed throughout the process – including when not much is happening.

Case Studies

Case Study 1Financial Model and Asset

Management Plan ANO Housing Co-op

Background information

• 23 Unit Co-op, social rents

• No plans to change activities

• History of low rent increases

• As properties age component replacement requirements increasing each year

• Committee needed robust information for longer term financial plans, rent setting strategy and asset management

Available Information

• 11 year old condition survey, not updated

• Historic maintenance records

• 2009 Decent Homes survey summaries

• Report from gas service contractor

• Annual accounts and financial records

Key issues

• Condition of properties was the key issue for members

• Independent view of priorities needed

• All loans repaid by 2022, freeing up cash flow

• Condition data supplemented by selected site visits

• Small Co-op, committee had good knowledge of the properties

Project findings

• Keeping the Co-op’s properties in acceptable condition achievable but finances would remain tight

• Annual rent increases above inflation needed for at least the next 10 years

Case Studies

Case Study 2Financial Model and Asset Management Plan

XYZ Housing Co-op

Background information (1)

• 45 Unit Co-op, 40 tenants and 5 leaseholders

• Long lease for 35% of Co-op units expiring and substantial premium needed to renew

• Older properties with increasing maintenance needs

• HHSRS issues identified in communal areas

• Potential solar panel project at a block of flats needing substantial investment

Background Information (2)

• Empty property which could be sold on a long lease

• Previous condition survey, not regularly updated.

• Historic maintenance records, particularly on boilers and kitchens

• Reports from gas service contractor

• Annual accounts and financial records

Key issues (1)

• Condition of properties was the key issue for members

• Need to balance different priorities:

* Renewal of long lease

* Investment in solar panel project

* Keeping properties up to standard

* Whether to sell the vacant flat

Key issues (2)

• Condition data supplemented by selected site visits

• Committee needed robust financial and asset management plans so the available options could be properly considered

Project findings

• Solar panel project not achievable in view of initial investment needed

• Loan finance needed to be able to keep planned maintenance at the required level

• Sale of the empty property would reduce the level of loan needed

• Annual rent increases above inflation needed for at least the next 5 years

General points for AssetManagement Plans

• Keep it simple, broad categories not too much detail

• Not an exact science, needs to be accurate enough to make competent decisions

• Plan should be regularly updated as new information becomes available, reviewed at least annually

Q&A

Q&A