What is Asset Management Strategy?

What is the point of an asset management strategy for social landlords? when they have little choice but to comply with contractual repairing obligations and health and safety legislation.

And why, when it’s really just property maintenance, call it “asset management” anyway?

For many years, best practice in social housing asset management was considered to be periodic stock condition surveys predicting component life-times, to shape planned maintenance programmes. It was also widely espoused that responsive repair costs should be kept to a minimum; that component-based programmes should account for the majority of spend, because they offer economies of scale.

Coupled with Government directives to achieve the Decent Homes Standard and carry out repairs within prescribed timescales, not much strategic-thinking was required. So Housing Associations might be forgiven for producing so-called ‘strategies’ that were little more than ‘do-it-by-numbers’ maintenance plans.

Who Decides?

With less top-down regulation, replaced by pressure to ‘sweat assets’ and ensure value for money, Housing Associations now have more freedom to choose how they invest in their properties. Customer-orientation, and systems-thinking, suggest that there is better service, and better long-term value, in carrying out responsive repairs properly, once, rather than repeatedly patching and returning.

Fixed 3-, or 5-year ‘strategies’, based on survey information that is getter older by the day, don’t allow for future changes in housing policy, economic and environmental conditions, interest rates, customer expectations, etc, etc. Surely it’s better to take a continuous improvement approach, with clear, prioritised goals to achieve outcomes, rather than defining inputs – such as how many roofs, windows, or heating systems will be replaced every year.

New Challenges

It’s not just about stock condition – replacing an outworn roof is not value for money, if the property is in low demand and making a loss because it doesn’t meet customer expectations. Nor, if it’s not an affordable home because it isn’t energy-efficient and can’t economically be improved or remodelled. Social housing faces some massive challenges to adapt properties to meet the needs of an ageing population, strive towards a zero-carbon standard, and respond to predicted rising water levels. We need a new approach to asset management that will meet these challenges.

In the past, the presumption may have been to hold onto all the properties we owned. This policy was propped up by public funding for major repairs and improvement schemes, and meant that we weren’t really doing asset management in any way that the business world would recognise.

Asset Management means maintaining asset value over the long-term, by understanding what performs well, what does not add value, disposing of poor performing assets and investing in homes that provide a return, so we can continue to provide more and better homes, not waste money on inferior products. And no, I don’t just mean from a financial point of view – being a social landlord also means understanding and optimising the social value of our assets.

We need to consider a range of customer, social, environmental and economic issues in order to inform investment decisions – a seemingly impossible task until recently, if you own and manage a portfolio of tens of 1000s of homes, of multiple types and tenures, across a wide geography. The current trend is towards “active asset management”, using advances in IT capability to to understand “asset performance” by analysing real-time data on a wide range of factors.

Asset Management = Optimising Performance (Financial and Social Value)

The new strategic approach won’t necessarily mean an overnight change in what we actually do. Asset Management will still be primarily about keeping our properties safe and in good repair. We will still do 1000s of roof replacements, bathroom upgrades, rewires and kitchen installations, every year. The real step change, I suggest, lies in our decision-making and in the systems we use.

In very simple terms, asset management means moving beyond replacing a roof because it is old and worn-out, and doing so because we understand why this investment is good value for money.

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