Why VFM needs great Asset Management Karen Heaney: Director of Asset - - PowerPoint PPT Presentation

Why VFM needs great Asset Management

Karen Heaney: Director of Asset Management Home Group

Who is Home Group?

Our Footprint

Our Asset Profile: General Needs

<1900 1900-1939 1940-1979 1980-1999 2000> Unknown Total Stock 3% 15% 28% 30% 16% 10%

Geographic split Units <SAP 60 SAP units Central

12.79% 5276 7% 369

North East

40.53% 13153 7% 932

North West

15.86% 9320 21% 1933

Scotland

13.25% 3317 8% 269

South

17.58% 9733 13% 1258

Number % 01: Solid 3077 7.5 02: Cavity 33339 81.4 03: Timber frame 570 1.4 04: Stone 60 0.1 05: Stone cavity 64 0.2 (blank) 3864 9.4

Ownership Count of buidings Leased in (over 2 years) 112 Leased in (under 2 years) 28 Managed by Stonham on behalf other 28 Owned Lease Over 21 Years 25 Owned Outright Freehold 533 Other 47 Grand Total 773

Existing property by ownership – Summary of existing arrangements

Our Strategy

Housing with Care Strategy Home Group’s mission (why we exist) is “to help our customers and clients to open doors to new opportunities and healthy lives.” Home Group’s target customers and clients include the most vulnerable or excluded in society. ….. through:

• improving the quality of their housing – through the provision of reliable and fit for

purpose housing and housing services;

• improving their access to affordable housing – by increasing the supply of housing

through building more homes; and

• providing accommodation-based interventions which support aspects of their mental

and physical health or welfare.

Value for Money: What does the Regulator Say?

England: main expectation on providers;

• Understand how they are using their assets and resources to deliver their
• bjectives, plan to optimise the return on assets (the income or result

divided by the asset value) and understand alternative options for use and delivery

• Understand the cost drivers and outcomes of specific services

In Scotland: consultation on the Charter Indicators;

Social landlords manage all aspects of their businesses so that: Tenants, owners and other customers receive services that provide continually improving value for the rent and other charges they pay.

Households lose £1,615 a year due to welfare reform Housing associations expect their rent arrears to increase by more than half as a result of the government’s welfare reforms. Empty y homes mes a 'disgr gracef ceful waste' e' Affordable rent could be introduced in Scotland Benefit cuts Benefit cuts may undo work may undo work to end to end homelessness homelessness Scottis ttish Gove vern rnment t releases fuel pover verty ty plan Co Code fo for sustainable homes co could be scrapped

£10m home sales a month for Scottish scheme

Business Drivers

Maintenance Review

 Outsourced national maintenance service to 5 contractors via 6 contracts  Contracts include responsive, servicing, voids and planned  Bonus/malas contract  TUPE transfer of 300 DWF  Full review of all processes involving CSC  Generating in excess £5M savings

Procurement and Supply Chain

£81M savings achieved since 2005  Consolidated components  e-tendering portal introduced  Regional procurement forums established  Component rate agreed  Material rebates  Purchase2pay

Procurement and Supply Chain

Footprint Disposal

Disposed of 2312 generating surplus of £60.7M Development programme requires to be in current footprint

Our Approach to Managing Assets

• Asset Management Plan approved December 2012
• Creation of Home Standard
• 100% stock surveys within 2 years
• Retain and Invest in Assets with a long term sustainable future
• Consider Alternative Options for remaining assets
• Regional asset panels to review options
• Consideration of Care and Support assets

Asset Management

 Development of Home Investment Standard  Minimum SAP 60  Install showers  Install security lights  Environmental improvements  EWI funded through ECO  Understand the productivity of our assets  Map out NPV  Data, data, data  100% stock condition surveys completed by 2015  Consistent design specifications  Deliver Home Investment Standard within 4 years

Footprint Efficiency

Current Position

Includes:

• DHS
• Rental Income
• Scheme level costs

Management Maintenance Overheads

Future Position

Will Include:

DHS+ Management Cost Variable by CSP

Example: Schemes

High NPV: Hylton Lane (NE) Douglas Bader (South) Low NPV: Langley Park (NE) Allerton Bywater (Mid)

Options Appraisal: Model

• 4 options including a ‘no change’ option
• Variable outputs model, I&E and Cashflow, to assess short and

long term commercial viability.

Main Highlights

• Graphical summary output
• Inflation and variable voids rates
• Maintenance including assumption for exclusions
• Consistent approach with Options and Foot print efficiency model
• Cashflow output to link with Treasury

Options Appraisal Process

 £20k cap for maintenance major works on voids  Apply Sustainability Indicators to Scheme  Consideration of demand and payback

Appraisal Process

Option Summary KPI Information NPV Per Scheme NPV Per Unit Year Option 1 NPV

• £36,912
• £36,912

Option 1 Maximum Negative Impact on I & E - Year 30

• £16,422

Do Nothing KPI's Cumulative Surplus/Deficit on I & E Year 1-5

• £10,665

Option 2 NPV £38,098 £38,098 Option 2 Maximum Negative Impact on I & E - Year 30 £3,211 Invest in Property KPI's Cumulative Surplus/Deficit on I & E Year 1-5 £26,253 Interest Cover 2.23 Debt Fully Repaid (Year) >30 Option 3 NPV £21,678 £21,678 Option 3 Maximum Negative Impact on I & E - Year 30 £1,530 Sell Property KPI's Cumulative Surplus/Deficit on I & E Year 1-5 £47,966 Option 4 NPV #VALUE! #VALUE! Option 4 Maximum Negative Impact on I & E - Year 30 #VALUE! Demolish Property KPI's Cumulative Surplus/Deficit on I & E Year 1-5 #VALUE!

• £100,000
• £50,000

£0 £50,000 £100,000 £150,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 £ Cumulative Year

Cumulative Cash Flow

Do Nothing Invest Sell Property Demolish

• £250,000
• £200,000
• £150,000
• £100,000
• £50,000

£0 £50,000 £100,000 £150,000 £200,000 £250,000 £300,000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 £ Cumulative Year Cumulative I & E

Do Nothing Invest Sell Property Demolish

Office Strategy

Home Group 30 Offices

– Mobile working allows colleagues to spend longer away from the

• ffice

– Colleagues can visit a number of customers in a single trip – Colleagues homes are already spread throughout the Homes Group housing stock – As the office is visited infrequently, journey times can afford to be longer

CSC

Mobile Working Assumptions

Colleague Customer Customer Customer Home Group Office

Development and Design

• Development Strategy approved July 2013
• 1200 units per annum
• Mainstream development and design;
• Work to align development and retrofit specification
• Gateway process to ensure transparency of decision making and

ensure linkages

• Customer Service involved at appraisal stage
• Design panel
• Component detail handovers

Thank you Questions and Discussion Karen.heaney@homegroup.org.uk