Active Asset Management for Social Housing
Despite the extensive promotion of the concept of “Active Asset Management” in recent years, one might assume that it is now widely understood.
After all, isn’t it common knowledge that property performance analysis is essential? Well, the reality is a bit more nuanced. The understanding of Active Asset Management varies depending on the organisation and its adopted approach.
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For some, the focus is solely on financial performance, using Net Present Value calculations as their primary metric.
Others employ intricate scoring systems, relying on them rather than purely calculated approaches. Some use yield as a means of identifying properties that require in-depth assessment, while others either lack the necessary data for property valuation or simply do not consider it.
Consequently, the emphasis on different aspects of assessment leads to diverse perspectives on Active Asset Management. Organisations also tend to have different starting points for appraisals, and this has coloured their approach.
The most common data-based approaches have been:
- An in house developed spreadsheet/model
- Models with fixed input headings provided by third party consultants and generally spreadsheet based
- Many organisations use software tools for development appraisal and have adapted this approach
- Use of stand-alone specialist software
- Use of an integrated asset management system
Each approach has its own advantages and disadvantages, and as always, there’s a trade-off between user-friendliness and the ability to handle various scenarios.
Certain methods demand extensive data preparation before being fed into the model, while others offer automation or integration with data sources to streamline the process.
Rather than getting bogged down in extensive details, the primary consideration should not be solely about loading all the data and identifying underperforming properties. Instead, the focus should be on assessing whether the chosen model can effectively deliver the desired outcomes and functionalities.
The outcomes and functionality that an appraisal/modelling system can deliver are:
- Flexibility to load any individual or cycled costs into user defined categories to suit an organisation with NPV calculations, taking into account assumptions for inflation and discount rate.
- A points scoring system for user defined non-financial property characteristics such as demand, ease of management etc. Often called Social Impact scores, these enable a rounded view to be taken of performance.
- The ability to set up attributes and assign them to properties and then to identify groups of similar properties and evaluate performance on an average per property basis across these groups.
- The ability to plot individual or groups of properties onto maps.
- The ability to refresh the model from source data at any point.
- The ability to evaluate alternative scenarios for individual or groups of properties based on different inputs (costs, income, scoring factors, inflation, discount rate, time period, etc.).
- The ability to store cost and expense items at any level of an organisation’s property hierarchy from property level upwards.
When faced with the task of selecting your IT solutions for this challenge, you have numerous options at your disposal. Several consultancies offer standalone solutions tailored to your needs. On the other hand, you may consider turning to your core suppliers to explore whether they can offer an integrated, strategic response to the challenge.
Leveraging your core suppliers’ systems, which already hold crucial information such as properties, planned maintenance costs, and rent details, can help circumvent the risks of data errors and corruption often associated with spreadsheets. This way, you can ensure a more reliable and efficient solution for addressing the challenge.
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