Bricks, Mortar & Social Value

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Bricks, Mortar & Social Value

Prof. Trevor Mole BSc(Hons) FRICS.

In the late 1980s I was a relatively young lecturer at Salford University and have happy memories of working with Professor Valarie Karn and Dr Patricia Garside on a government funded research project looking into the quality of newly built social housing. Valarie and Pat were social scientists and well-established researchers and academics, and I was trying to be one. As a Chartered Building Surveyor, my role in the team, because I knew about bricks and mortar, was to create and apply an assessment model to measure ‘build quality’. My contemporary, Alan Ashworth, a Chartered Quantity Surveyor who went on to become a rather prolific writer of construction books, had the job of producing a cost model based on my technical appraisal. Valerie and Pat were leading the research work looking at softer measures, such as resident satisfaction and societal benefits. What we were all trying to do with some success was to create, without the aid of the powerful computers of today, a multi-dimensional value model to assess the physical, financial and social qualities and character of the target dwellings. This output ranked, benchmarked and evaluated different new homes across the country.

I think Valarie and Pat, who sadly are no longer with us, and my good friend Alan, would all be pleased to see Property Tectonics’ ‘Lifespan PPT (Property Performance Tool)’ which provides a significant step forward along the same path. The benefit we have now of applying powerful modern computing makes the task much more achievable practically. Lifespan’s multi-dimensional value model creates new opportunities for asset managers and finance directors to evaluate worth and return on investment, including social value, which is most difficult to assess, but what is measurement in social housing about without it? We knew in developing Lifespan PPT that the challenge was complex but two fundamental issues became apparent; the analysis tool needed to be ‘flexible’ and ‘dynamic’. This was something difficult to do back in the days at Salford University, but is now in reach because of the advances in computer technology.

Like any model it needed to offer flexibility for the user to easily change the parameters of the model and to save and retrieve scenarios. This tool more than anything we had ever delivered before needed to provide a computer ‘sandbox’ or play area; creating an opportunity to ‘what if’ and experiment. Trying different parameters within the model to understand how the value assessment impacts on the results and having a facility to save and re-use previous models and option appraisals, as scenarios (scenario planning) was an imperative, especially in creating multi-property analysis for example, across an estate. There are many parameters which needed to be flexible within the model for example rents, loans, management and void costs, bad debt, discount rates, yield options etc. and a variety of other costs such as fees, backlog maintenance and potential modernisation.

The model needed to connect and use lots of outlying data especially from an asset database. We therefore created a seamless and dynamic connection between our own Lifespan Housing AMS and Lifespan PPT so that all the ongoing changes that happen in Lifespan Housing, would also change the values in PPT; for Lifespan Housing read any other good Asset Management System (AMS). For example, financial information relating to repairs, (life cycle) major repairs and cyclical works etc., marking off completed works. This also included other property information such as EPC, Decent Homes, HHSRS, Compliance etc. Lifespan PPT provides a ‘Property Details’ screen which provides key information on every dwelling and block, including photograph and mapping visuals. This information is available so that users can readily have an overview of the target property or properties whilst undertaking property appraisals. Users can also easily go into the AMS if they want to dig deeper into the main asset database.

Lifespan Housing did not contain all the information needed for the PPT analysis, for example, information on rents, property values, management costs, loans, void costs etc. We therefore created fields in Lifespan Housing to connect to other client databases where the information was held, for example within the Housing Management system. We considered linking Lifespan PPT directly with other databases but since the bulk of the applied data is stored in Lifespan Housing it was decided that this should be the place where all the data for Lifespan PPT should be stored and retrieved; it was the safest place for it. An important issue here is that Lifespan PPT is ostensibly a ‘sandbox’ which is isolated from the operational databases, allowing experimentation and analysis without any risk of corrupting the source data.

Whilst Lifespan PPT has been developed alongside Lifespan Housing as the AMS, we always intended that the product should interface with other Asset Management Systems and pt is currently developing a facility to do this by creating a database, rather like middleware software, to glue things together so that communication and inputs and outputs can focus on the required application.

Lifespan PPT was also designed to include a facility for measuring social value and to include this within the analysis; this proved difficult. The main problem is that social value is very much an immature science especially in this context and was a philosophical challenge from the outset. For example, what is the difference in value between a bungalow that is equipped with mobility and daily living aids to support independent living and one that is not? The rationale needs explaining but not here (for another day). However, the approach requires a combination of objective and subjective analysis which must be tailored to the views and aims of an organisation with maximum flexibility to reflect some order of importance. The ‘social value measure’ will need to result in a monetary value so that it can be factored into the final analysis. Put another way, the social value will have a Net Present Value (NPV) in the same way that a purely financial analysis does for the bricks and mortar, thus providing a common denominator so that the two can be combined to create a combined value.

We therefore set about creating maximum flexibility so that this area can develop and mature as social landlords experiment with applying social value within a multi-value analysis. We identified three evaluation areas ‘serviceability’, ‘desirability’ and ‘quality of accommodation’. Each area has a range of criteria which can be weighted in terms of priority and importance, to produce an overall score for each of the three areas. In addition, each of the three areas can in turn be weighted again to reflect the ambitions, culture, values and strategies of the organisation. The criteria and questions can be added to, changed to provide the required flexibility for social landlords, to tailor the software and to create their own analysis. The software also has the flexibility to interpret objective information from Lifespan Housing and give it a score. For example, under ‘quality of accommodation’ one might use energy efficiency as one of the evaluation criteria. In this case the software looks up the EPC rating in Lifespan Housing and generates a score based on a pre-determined set of rules. This score is then automatically included in the analysis as one of the objective measures.

Lifespan PPT uses our unique Lifespan address functionality enabling an individual property or several properties to be selected and included within a given value/scenario analysis. The clever arrangement allows users to easily select properties as a group and produce a multi-property analysis. Not only that, but users can replace an unlimited number of previously saved and stored analysis for individual properties and include this within the group analysis. The resulting multi-property analysis can also be saved as a file reference for re-use. To make life easier, especially for large property-owning landlords there are also bulk import sheets which will read in multi-property assessment criteria to avoid having to create thousands of individual analyses for each individual property. It is amazingly flexible, dynamic and easy to use.

I am going to make special appeal here to RSL finance directors to look at this software; it is a finance directors dream and could help change the way social housing is viewed and valued in the future. The pressures on social landlords to do more with less, to create efficiencies and re-examine their businesses, requires new tools to help evaluate their assets. Lifespan PPT provides new opportunities to design, analyse and view property performance using a multi-criterion, multi scenario, value analysis so that business decisions on, for example, which properties to sell and which to retain, where to make strategic investments, which properties are costly to maintain, which properties have high social worth and so on? What I want is to learn from customer experience using the Lifespan PPT and help us take this forward, improve it and refine it. With social value being identified, assessed and valued in this way then the cost of, for example, protecting the vulnerable, helping elderly people live independent lives, reducing energy and many other benefits being delivered by the social housing sector could create an argument for government making an additional contribution. All for another day.