Everything in a property has a shelf life – the important thing is to know when, where and how to replace it.

Mike Williams explains why understanding the lifecycle of components should be part of a comprehensive asset management strategy

Why are lifecycles so important to a landlord’s business? Having accurate component lifecycle data enables you to plan strategically and encourages efficiency savings, allowing you to manage your properties and costs appropriately.

The importance of lifecycles

There are a number of reasons why it’s crucial to have a firm grasp of component lifecycles:

  1. It reduces risks – preventing over/under estimation of component costs and life expectancy helps to more accurately assess costs, financial planning, forecast budgets/expenditure and increase efficiency
  1. It’s an integral aspect of sound property management –helping to provide a long-term property lifecycle approach helps you to cost appropriately over the life of the property. It’s a key element of active asset management, identifying high cost properties for further evaluation and action
  1. It nurtures a strategic approach – helping to plan and embed long-term decision making to support the efficiency of a property
  1. It boosts tenant satisfaction– providing data to support decisions that will best meet the needs/performance goals of your tenants. Communication of the lifecycles to tenants assists in their understanding of work programmes and renewals within their homes
  1. It reduces costs – by reviewing the lifecycle of components as part of your overall asset management strategy.

 

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Are you adopting the right approach?

A number of different approaches are employed across the social housing sector; from having replacement programmes framed around set timescales through survey based methods to renewing when necessary (thereby sweating the asset).

Due to budget cuts I am also aware of landlords who have arbitrarily extended lifecycles of components to achieve savings. This can be a risky strategy without supportive evidence that the item will last the extended period.

Each approach has pros and cons. But I would argue that if they are not an intrinsic part of your organisation’s approach to asset management, ultimately they all suffer the same flaws.

As an example, let’s consider the replacement of kitchens.

With a set lifecycle approach, a landlord replaces the kitchen every X number of years. This can be quite a blunt method because it will result in one of the most expensive parts of a property being changed regardless of whether it’s actually required.

Imagine you have three houses together on a street and all have kitchens that are 20 years old. One is occupied by a family with four kids, another is home to a couple and the third houses a pensioner living alone.

The amount of use each kitchen will have had over that period will vary enormously. A nuanced approach would be more cost-effective.

Others may take the resurveying route. This tends to be based on a sample survey of properties rather than 100% of stock. You are therefore making assumptions without having all the facts and could be over-estimating or under-estimating the current state of each property’s kitchen. That could also result in spending more on repairs and maintenance in the long run.

Adopting a ‘renew only when required’ approach means that you will not benefit from the economies of scale which result from large-scale planned maintenance. You may also incur additional repair costs during the extended life of the product. However, you will extend the life of the unit and sweat the asset.

Making it part of the bigger picture

The only way to mitigate these risks is to make component lifecycles part your wider approach to asset management.

Those with an active asset management programme will have comprehensive data on every property that enables them to make informed decisions that will not only reduce costs but also improve customer satisfaction.

While it’s initially more time-consuming and expensive to survey every property, it will pay dividends in the long run.

For example, by establishing that a property doesn’t need a new kitchen, you may have extended its life by 10 years and effectively halved the cost of replacing it.

Ask the experts

Suppliers should be your expert advisers on the best solutions for each property. Build relationships with suppliers so they can give you advice and be partners in your asset management. They should be aware of new products coming onto the market and whether they are suitable for your needs.

For example, are you buying a kitchen that’s repairable?

PfH can carry out an asset management review and recommend the best way forward for your business. Also, our category experts are on hand to offer advice on new products and when existing components should be reviewed, provide assistance with specifying and enable you to get the best out of your suppliers.

Mike Williams is relationship manager for asset management at PfH.