As tenants gain greater understanding and involvement, more detailed questions may emerge around the governance of their landlord’s asset management processes.
Every social landlord wants a materials agreement that delivers top quality, at the best price, for the life of the contract. Yet few manage to tick all three boxes, all the time.
Here, Jeff Edginton – materials category manager at PfH – discusses the foundations of a strong materials deal – and offers six tips on how to get the basics right.
Stress-test your current agreement
When was the last time you procured your materials contract? If it was more than three or four years ago then your housing organisation, like many, may have evolved and your existing agreement might not be entirely fit for purpose.
Maybe your organisation is now part of a group structure with new corporate standards. Perhaps you are using a materials contract inherited from a recent merger.
Reviewing the terms of your deal might help to remove conditions that are no longer needed. For example, your housing association could be paying for a service such as Call & Collect, yet raw materials or parts are now delivered straight to site.
You may have recently set up an electrical repairs team. Are you procuring the products they require at the best price? If your operatives are driving around to pick up parts and struggling with availability, would it be better for them to get everything from one, large central merchant that stocks hundreds of different lines?
Review your KPIs
KPIs are essential to effective contract management. They ensure your supplier knows what must be achieved and what you’re going to measure their success or failure against. But setting KPIs isn’t enough – it’s the monitoring of them that tells the real story. Get this scrutiny wrong and you may miss problems or negative trends early on before they develop into more major service failures.
If you do uncover issues, then just presenting a supplier with the results and saying, ‘you need to do better’, won’t work. You also need a clear system for acting on findings and rectifying issues.
Remember to review your KPIs regularly so you have exactly the right ones in place. Perhaps you have a set of indicators that measure cost and performance, but since you last put gauges in place, social value has become more of a priority for your housing association. Do KPIs need to shift so they consider a commitment to local suppliers, the creation of apprenticeships or other wider community benefits?
Build trust and equality with suppliers
Your relationship with suppliers is paramount to a contract’s overall success. Acting in partnership with your supply chain, explaining issues and seeking joint solutions will get better results.
Occasionally, a new supplier may take time to ‘bed-in’ to delivering a new service as conditions may be ones they are not used to. It’s vital that you don’t immediately go into confrontation mode, thinking that a muscular response will solve everything. This can set a relationship off on the wrong foot, creating a combative culture that makes it more difficult to resolve issues in future. Instead, if you work with a supplier, rather than against them, then, from experience, they will settle in faster and work with you even harder to achieve your goals.
Manage your product lists
PfH achieves value for money for its members through a core list that covers the most popular materials goods, identified via spend volume. However, it isn’t unusual to see ‘product drift’, whereby less of an organisation’s spend goes on the core products for which PfH has negotiated preferential rates.
To avoid costs creeping up via product drift, check spend with your suppliers at regular intervals. Ensure that staff are buying from the core list and periodically refresh the items on this list so they reflect your housing association’s current needs. At PfH we achieve this via regular review meetings and ongoing dialogue with suppliers.
Rationalise product lines
Members often focus on the savings they can achieve when initially negotiating contracts, but further savings can often be made by looking at how materials contracts are managed on the ground.
Product rationalisation is one way to do this. For example, a housing provider might buy several types of one particular building material, product or part. By working with the supplier to refine the number of lines; they benefit from reduced stock requirements. The housing provider’s operatives benefit as it’s more likely that the product will be in stock and the social landlord benefits from cost savings.
Review new goods
New products come to market all the time, including a supplier’s own-brand goods and leading edge, innovative products that may work quite differently from existing lines. To help members navigate the latest releases, PfH looks at how products work in practice and, where advantageous, works with members and suppliers to embed them into core lists at discounted rates.
Your suppliers should keep you informed of new products that may improve service delivery, reduce cost, require lower maintenance, be easier or quicker to install and have longer guarantees – particularly relevant when considering life cycle costing.
It takes time to get the fundamentals of a materials contract right. But these six tips will help you to start building a cost effective, high quality agreement that delivers a wide range of benefits for your organisation and its tenants throughout its life time.
Materials and Associated Managed Services: The materials framework helps asset managers deliver their strategic objectives with access to a wide range of products across 10 lots including electrical, building materials, plumbing & heating and renewables.
Details are available on the PfH website or contact our category expert Jeff Edginton on 01925 286377 or JEdginton@inprovagroup.com
A Which? report published last month (15th February 2018) has highlighted the safety risk that faulty domestic household appliances can pose to residents. The investigation reveals that appliances such as fridges, freezers and ovens are responsible for over 60 per cent of household fires, with washing machines and dryers highlighted as the biggest culprits, causing over a third.
The number of household fires has stayed at a similar level for five years, causing close to 16,000 life threatening blazes since 2012 and demonstrating that little improvement is being made year-on-year to this worrying statistic. As a result, Which? is calling for government action via the new Office for Product Safety and Standards, which launched last month, to ensure unsafe goods are kept out of homes.
Ensuring tenants’ safety in their own homes is always a number one priority for landlords and choosing the right appliances and white goods is a critical consideration given the latest findings. Without updated guidance from the government this can be a difficult responsibility and JLA believes that suppliers need to support housing organisations in finding alternative solutions when domestic options are currently failing them.
When it comes to communal laundries and kitchens or even within the home itself, JLA stresses that it’s important for landlords to remember that domestic equipment isn’t the only option available. Commercial appliances that have been designed specifically for social housing can significantly reduce the safety risk, providing all the robustness and longevity of an industrial machine, while still retaining the key benefits of a domestic appliance including the size and ease-of-use which is so important in promoting independence amongst residents.
From compact washers and tumble dryers to under-counter dishwashers and fridges, there is a range of commercial products to suit all social housing needs. In addition, JLA has been at the forefront of developing unique innovations in the fight against appliance fires such as its Sensor-Activated Fire Extinguishing (S.A.F.E) technology which automatically dispenses water vapour into the dryer drum if higher than normal temperatures are detected, preventing a fire starting.
As the market-leader for commercial laundry and catering equipment, JLA is committed to supporting social housing landlords meet and exceed standards for their tenants and prompted by the latest Which? report, JLA is offering free consultations to all social housing organisations to ensure the equipment they are providing is fit for purpose and provide guidance and advice on improvements or upgrades.
The full Which? report can be viewed here: https://www.which.co.uk/news/2018/02/revealed-the-brands-linked-to-the-most-appliance-fires/
Housing Division at JLA
Established over 40 years ago, JLA is the market-leader in the supply and maintenance of commercial laundry, catering and heating equipment and works closely with Housing partners to provide all-inclusive solutions that meet every need.
Tel: 0800 591 903
When Rehman Akhtar began working for Whitefriars Housing as a building surveyor, one
of his first roles was to review asset management procurement.
As a procurement professional in the housing sector I have heard those rasping statements on many an occasion from long serving asset managers – ‘we are more than capable of defining our requirements and negotiating with our suppliers, therefore there is no need for procurements involvement. Procurement participation proves to be time consuming, costly and, due to a lack of understanding of asset management, does not always generate the correct solution.’
In this highly stressful environment we are often seen as an unnecessary bureaucracy, adding little value and creating barriers or slowing the process down.
To a sensitive soul this may be disheartening, but to a world class procurement professional it is merely the fact that they have not experienced your collaborative, value focussed tenacity yet!
So how can that enthusiastic, tough skinned, value ninja hurl down the gauntlet and convince the asset team to let them in.
Walk in their shoes
The asset management world is a decidedly complex, results driven, high risk, customer challenging environment. Often there is daily fires to put out, reputational risk to manage, supply chain challenges all of which mean asset managers are extremely sensitive towards any potential disruption or change. With this as a setting it is understandable that asset managers can lose sight of the overall commercial impact of the current supplier set-up.
Immersing yourself in their work is crucial to understand their critical requirements, the daily challenges they face and the performance of existing suppliers. Speak the same language and listen to their experience and detailed technical knowledge. Pick up on the key measures and targets they have and address these in any solutions proposed. Learn from their past experiences, the impact of lead times, the impact of stock issues, the impact the contractor has on tenant satisfaction, the resource constraints they have, the total cost of ownership or the challenge of training a workforce in new product installation.
Only from this level of understanding can you create the opportunity to bring together a bottom up strategic commercial analysis.
Become an adopted team member
Make sure you take every opportunity to collaborate, work as one team and align goals. Continuously and evangelically reassert that you want to help them achieve their objectives and goals and show that, not only through words but actions. Add value in their eyes as well as the wider organisation and never stop challenging yourself about this. Show your commercial and analytical capability to enable them to understand and challenge the existing status quo and recognise the need for change.
Know the housing market better than your colleagues
As a procurement professional you should have a unique position that you understand and know the suppliers in the market, their capabilities, emerging innovation, technological developments – anything less and you will have no credibility. Knowing the daily challenges that the asset team faces from ‘walking in their shoes’ gives you the opportunity to engage with the broader market, probe incumbent suppliers, engage with prospective suppliers or new entrants on how to overcome these challenges. Identify from your network how other organisations are dealing with these challenges and improving service delivery. Look at how innovation is driving continuous quality and cost improvements. Try to encourage the asset team to explore a broader view of the supply chain and facilitate learning opportunities for them that will shift their mind set that ‘only one supplier can deliver their needs.’
Shine a light on your commercial capability
As a procurement professional make sure you do your job properly. If you only accept invitations to manage an EU procurement process or manage the sourcing and implementation process as an extra pair of hands then you will not be able to influence and change the mind set of the asset management team. You need to become part of the team, know the market and walk in their shoes but you also need to be relentless in ‘doing your job’. Complete your bottom up commercial analysis as part of your continuous supplier relationship and contract management process. Analyse spend, identify opportunities, measure performance, create benchmarks and assess against external information, obtain data and interpret it. Spend the time educating the asset management team on this so that they can assess the capability, innovation, risk, commercial models of both the incumbent suppliers and prospective suppliers. Spend time educating and agreeing with the asset team what they require, the negotiation strategy to be deployed, the risk profile they are prepared to adopt, the key measures of performance that will drive quality, value for money and ultimately tenant satisfaction. Show your commercial prowess and wait for the moment when your true value is recognised!
Procurement and asset management can and must become a complementary pairing if housing organisations are going to deliver on their business plans. Both have critical roles to play and value to add – it is imperative that you understand the effort required to achieve your organisations goals – now make it happen!
As the dedicated procurement services provider to the housing sector, PfH works with you to assess procurement and asset management effectiveness – enabling us to identify opportunities for short-term as well as sustainable efficiencies and improvements.
Many of our Members achieve step-change improvements through our combined approach of delivering immediate cost savings at the same time as driving insightful long-term benefit through smart and strategic procurement.
If you’d like to discover how you can reconcile procurement with asset management within your organisation, contact our Consultancy team for a no obligation discussion:
Over the past 30 years I’ve worked in property services for seven social housing providers in England and Wales. My early days were spent on-the-ground in quantity surveying and property maintenance. I went on to lead the property services teams for Shrewsbury, South Shropshire Housing Association, Merthyr Valleys Homes and Wrexham Council.
Everywhere I’ve worked, I’ve conducted an asset management review where applicable. It’s something that property services directors often do when they first come into post and should then review annually. It gives you an initial idea of what’s being covered, how your housing association is approaching it, what’s not covered and the risks.
Later down the line, an asset management review can show – to both the board and tenants – the value for money your team is providing. It can clarify why you have revised your strategy; for example, introducing longer life cycles or disposing of (or refurbishing) properties that weren’t returning a profit.
Throughout my career, I’ve honed the asset management review process. There are four main areas that I recommend focusing on when conducting an assessment. I’m keen to share my knowledge with members and hopefully this will help you focus your own evaluation.
If you don’t comply with statutory asset regulations, then you or your colleagues could end up in court. It’s that simple. Do you have systems in place to check and monitor compliance; is gas servicing being done correctly, are records being kept in the right way? What about fire risk assessments? Have the appropriate electrical tests been carried out? What about measures to prevent Legionnaires’ disease? Do property alterations comply with Construction Design Management (CDM) regulations? For example, if you are building an atrium, what methods are being used to lift the glass? How do you repair glass that breaks? What about safe cleaning techniques?
Spending money unnecessarily on stock maintenance is an issue for social housing. If a property is hard to rent and costing a lot to maintain then your asset management review should flag this up as one to investigate further.
A resident might not want to live in the property because it is on a hill and is too draughty. Even if you pay for insulation, the resident may still not want to travel up the hill and you’ve wasted money.
Do you have a system in place that helps you evaluate this information? Every time you repair a property, the data should be recorded and analysed. Are you repairing a door regularly because materials don’t stand up to the heavy wear and tear of a family home? Or perhaps the door is being damaged by the tenant and a re-charging process is required. Your review should identify these issues.
Programmes of work
An asset management review should assess why and how work programmes are being carried out. Are you exchanging a kitchen, not because it is no longer functioning, but because your replacement programme happens every 20 years? Could you extend it to 22 years? It might be more cost effective to buy a product with a higher price tag but a longer lifecycle. What about different products to suit different client bases? A family home may need a tougher kitchen than a property for older age groups.
This reasoning should be communicated in your asset management strategy, so your tenants, staff and suppliers understand key decisions and can be involved if necessary. Communication between departments around asset management can also drive down costs. For example, if you are putting up scaffolding to repair roofs, it will be financially beneficial to install solar panels or replace soffits at the same time.
Repairs and maintenance
A review should help you understand what repairs are being done, by who, your approach to emergency, urgent and planned maintenance work and how you communicate with tenants. If a tenant phones up about their fallen front fence, when can they expect a repair? If they haven’t got children and the fence doesn’t pose a risk, then the repair might not be planned for weeks or months.
Disrepair claims brought by tenants against housing associations for defective properties are on the rise, but landlords must have compliant systems in place, so they don’t financially cripple themselves by simply sending a team out every time any repair is requested.
And what about your DLO? What percentage of work are they being given? Do they have trading accounts to help you understand if they are profitable in certain areas and not others? Has action been taken to address it or do you get a sub-contractor in to cover those less profitable areas?
Well communicated, well connected approaches to managing housing stock, all driven by data, are crucial to boosting value for money. A thorough asset management review can offer a unique vista across a housing provider, helping to drive down costs and improve quality for years to come.
To help you manage your assets compliantly and effectively, PfH have a range of services and frameworks that have a proven to deliver value for our Members.
Follow the links to discover more:
Social housing landlords face constant government pressure to meet and improve on sustainability targets. The added strain of rising energy prices has seen centralised boilers and district heating schemes become increasingly popular in multi-dwelling residences. A highly efficient, centralised heat source helps buildings meet sustainability initiatives, such as the GLA’s ‘Be Lean, Be Clean, Be Green’, and other building regulations. The integration of Combined Heat and Power (CHP) plant within the system further improves the building’s energy efficiency.
Heat Interface Units (HIUs), located within apartments, are integral to the centralised boiler approach. They connect the space heating and domestic hot-water systems to the central boiler network and provide control functions, control devices and measure heat consumption.
Sales of HIUs have grown 85% between 2012 and 2017, from under 25,000 units in 2012 to nearly 45,000 in 2017. This is still only a small proportion of the 1.6 million domestic boilers sold annually in the UK. With the Zero Carbon Policy coming into force in 2020, district heating and HIUs could be seen in up to 20% of all new build residences in the UK, with forecasts for 100% in multi-dwelling high rise buildings.
There are several benefits to landlords and property managers.
- Centralised systems do not require gas distribution to each flat. This means easier maintenance, less safety checks and lower fire risk.
- One boiler is contained in a single plantroom not in each dwelling. Engineers and facilities management can carry out maintenance and gas safety checks more easily.
- The heat distribution system is more efficient compared to individual boilers in each apartment.
- Energy efficient CHP units can be easily integrated.
The landlord, rather than the utility company, bills the tenant. Third party operators offer landlords a site-wide billing solution. Billing systems must be identified by the design team and included early, as changing the billing provider may require infrastructure changes. The HIU and internal controls chosen will need to interface correctly with the billing system.
Uncontrolled Heat Dissipation
Pipework distributed through communal areas can overheat. Pipework distribution and corridor ventilation require careful planning during the design to limit overheating in common areas.
Not all HIUs are made equal. Some are less intelligent and harder to control, which can affect performance. Simple models are easier to maintain and most of the internal consumables are readily available to a good plumber. More sophisticated units give the user greater control and can be remotely operated and faults diagnosed via a data link. However, these units require a manufacturer’s approved engineer to maintain them, and use more specialist consumables.
Depending on the controls of the unit the time taken to deliver hot water to the tap from the HIU may differ significantly between units. The delay may not meet the customers’ expectations for instant hot water.
In conclusion, HIUs and centralised boiler systems provide energy efficiency to multi-dwelling buildings. However, models, manufacturers, third-party billing options and pipework distribution must all be determined as part of the new building’s design. The sooner the kit has been identified and integrated into the design, the greater the benefits to the landlord, building manager and residents.
Steven Norwood is Associate Director at Crofton. He leads a team of building services engineers from our London Bridge office.
Crofton offers electrical, mechanical, structural and civil engineering design consultancy. Our multi-disciplinary teams have experience across sectors. Our offices in London, Kent and Sussex serve clients across the South-East.
Discover more about our Technical Support Services framework
The Grenfell Tower tragedy has brought fire safety to the fore in the social housing sector. In this blog, leading experts at suppliers on the Technical Support Services framework give their advice on how best to approach fire risk assessments
- Understand what type of fire risk assessment you require
It’s absolutely vital for a social landlord to develop an understanding of what type of fire risk assessment they should be specifying.
Commissioning something detailed and intrusive when it’s unnecessary represents poor value for money, while a basic assessment may not give you the coverage and depth required.
There are four types of fire risk assessment:
Type 1 – common parts only (non-destructive)
Type 2- common parts only (destructive)
Type 3- common parts and flats (non-destructive)
Type 4- common parts and flats (destructive)
Types 1 and 3 are the most commonly requested, while 2 and 4 are more in depth and require a degree destructive investigation to examine the fabric of the building.
The type of assessment to be undertaken depends on both the building and its occupants, with higher-risk blocks demanding a more in depth assessment (a high-rise block with over 50s accommodation for example; if of LPS construction will need to be a Type 4).
As a general rule, intrusive assessments don’t need to be repeated if good records are kept, whereas programmed repeat non-destructive inspections are essential to flag up any potential hazards. Either way, your consultant should be able to offer advice on the best way forward.
The initial assessment will determine the subsequent frequency of future assessments by looking at the hazards and risks associated with a particular property, the type of occupancy and its use. An FRA should specify when a review is due.
- Don’t treat a fire risk assessment as an end in itself
A fire risk assessment is not a tick box exercise. Commissioning fire risk assessments and then failing to act on their findings not only puts lives at risk, it’s also a waste of money. Recommendations need to be converted into action where appropriate.
Too often, consultants revisit clients’ properties only to find issues flagged up in previous assessments haven’t been addressed.
There are numerous reasons for this – for larger landlords the sheer volume of properties involved may appear overwhelming and difficult to stay on top of, particularly when budgets are already stretched. Internal issues such as changes of personnel or merger with another landlord can also lead to work being sidelined. Obviously, none of these would be viewed as a ‘reasonable excuse’ if disaster were to strike.
Work with your consultant to ensure you understand the report’s findings and if action is required take advice on the areas to prioritise.
- Get the fire safety message across to residents and staff – they are part of the solution
Gaining access to properties is an issue for landlords that comes up time and time again. It’s an essential part of the fire risk assessment process and also ensures landlords can carry out their own checks.
Importantly, in a recent test case a Croydon Council took a leaseholder to court over her refusal to allow access to a property. She had replaced the flat door with a uPVC one, a combustible material, and the landlord needed to change it back to a fire door. The council won.
In addition, there’s a reason why fire doors are sold as a door set that includes the frame. A quality manufacturer will not supply a door without its accompanying frame because the two have been tested together to ensure compliance. Replacing the door and leaving the frame risks compromising its effectiveness in the event of a fire and invalidates its safety certificate.
Another common issue is the storage of items in communal areas that could represent a fire risk.
It really comes down to communication and education – people often don’t realise what can contribute to increased fire risk.
Does your organisation make residents and staff aware of what to look for and things not to do? If not, one solution is to work with your consultant to produce a list of dos and don’ts that can be distributed.
- Make fire safety an integral part of your asset management strategy
What approach have you taken to date? Are all of your FRAs complete, of the right type, and up-to-date? Have all actions been completed?
A sensible starting point would be to carry out a full stock condition survey to assess the state of the stock. This can be used to inform your asset management strategy and flag up any issues requiring attention, including the general safety of buildings.
Part of the problem may be that information hasn’t been recorded, or updated properly. Some landlords have adopted database systems like Keystone and Qube to record information received from full stock condition surveys and fire risk assessments.
Robust data makes it simpler to keep on top of maintenance and to budget accordingly.
It also allows repairs and maintenance to be tendered on a schedule of rates basis with contractors so it isn’t necessary to go out to tender each time.
The computer database informs the landlord what needs to be done, the contractor carries out the work and it’s recorded on the database.
- A measured approach to fire safety assessments is a win-win
The recent upsurge in demand for fire risk assessments following Grenfell tells its own story. Many landlords are realising that they are not where they need to be and that’s led to a spike in demand.
It’s also created problems in the supply chain with manufacturers struggling to keep up with demand for fire doors. PfH is able to bring some certainty to that equation thanks to its members’ significant collective buying power, its sector expertise and strong relationships with suppliers.
A more measured approach that prioritises and plans works as part of an active asset management strategy offers the best solution for landlords and tenants and facilitates a responsive supply chain.
This means properties are maintained to the necessary standard in a managed manner that gives landlords certainty over their future expenditure and greater ability to secure value for money from their suppliers.
- PfH would like to thank Pennington Choices, Pellings, Michael Dyson Associates, Ridge & Partners and Rand Associates for their help in compiling this article. All five are on lot 1 of the Technical Support Services framework.
- To find out more go to the framework page
The way in which landlords approach the purchasing and installation of kitchens and bathrooms will have a major effect on the effectiveness of their asset management strategy.
As well as having significant cost implications, choices made can impact on your organisation’s wider environmental sustainability goals, the quality of life for tenants and customer satisfaction.
Narinder Chahal, head of procurement at East of England based Flagship Group, believes the key to success lies in ensuring this critical area of spend is part of a smarter approach to procurement…
Plan ahead – whether you have the capacity in-house and only require supply or require supply & installation, this is a major area of spend and one where a programme setting out a cycle of replacements should be in place. I’m always surprised at the number of organisations that are fairly reactive and do not have a contract register in place. You need to put contracts onto one document and review it on a monthly basis. That will certainly help you to forward plan your spend activities.
If procurement capacity is an issue, get help – many housing associations do not have dedicated procurement departments but they are very much geared up towards exercising some element of control and can therefore be reluctant to source outside support. But it should not be seen as relinquishing control. A good procurement consultancy will not only save you money, it will give you greater control in the long run, leading to enhanced efficiencies and better use of resources.
Don’t let suppliers take your custom for granted – I spent many years working in procurement and supply chain management in the private sector, including in the United States where I had clients that were multinational corporations such as Boeing, Lockheed and Chrysler. In the private sector, quality of service and delivery are taken as a given – the expectation is that suppliers will demonstrate how they want to work with you and your business to show they are striving for continuous improvement in order to provide better products and service.
The social housing sector is very different and compliance, quality and delivery seem to be the main concerns. I think there are lessons to be learned from the private sector. Don’t simply stick with the same suppliers because that’s what you’ve always done – question whether you are getting value for money and ensure those relationships are mutually beneficial.
There’s strength in numbers – I can’t stress enough the need to aggregate and leverage spend wherever possible, particularly around a high value, low volume category like kitchens and bathrooms. Flagship has a repairs and maintenance arm, RFT Services, which not only serves our own 22,500 homes but also housing associations, local authorities and businesses across the East of England. But even our relatively high volume of spend is a drop in the ocean compared with the leverage PfH can exercise through the combined spend of its members (which is one of the reasons why we’ll be using the new kitchens and bathrooms framework!).
I’ve been involved in developing the framework as a member of the PfH product group. As well as covering kitchens and bathrooms it offers a wider range of options: supply only, supply and install, and install only. I think that more defined scope will appeal to landlords of every shape and size.
Narinder Chahal is head of procurement at Flagship Group.
He is a member of the product group for PfH’s new kitchens and bathrooms framework, which is made up of representatives from the social housing sector. The group has helped to shape the framework to ensure it meets members’ needs.
Vehicle leasing companies are offering innovative solutions to housing associations keen to include electric vehicles in their fleets, says Lewis Cardwell at PfH