All organisations of significant size maintain forecasts; whether they be one year, five year or long-range projections. These can derive from historical actuals, collective bargaining for financial resources, incremental budget allocation or even simple allocation of available funds to operational activities.
What can Asprey add to this seemingly comprehensive coverage?
For a social landlord, the housing portfolio generates and consumes a substantial amount of cash. Refining the planning and management of this cash demands more than a budget for costs & revenues.
I keep six honest serving men (They taught me all I knew) Their names are What and Where and When And How and Why and Who (Rudyard Kipling)
It requires a more detailed understanding of the underlying drivers of costs and revenues i.e. the dynamics of condition, standards, investments, voids incidence & duration, planned maintenance, cyclical & day to day repairs. These expenses need to be commensurate with and assessed against rents, hopefully down to asset level.
In addition to understanding and managing these drivers, the organisation’s strategic values must be furthered during these daily investment activities. Budgetary control alone will neither reveal nor optimise these activities.
Our BI modelling and asset management experience combine to build asset level models of the housing portfolio down to the asset level.
We do this by building a model around an imported register of assets and asset analysis types (age, structure, locations, bedrooms, purpose – any electronically held categorisation) and importing rents from the housing system, planned maintenance from the asset management system (sometimes spreadsheets), year zero estimates from analysed historical records of voids costs and losses, day to day repairs, cyclical repairs, etc, plus contracted investment and an overview of all data sources by our asset management specialists to ensure reliability of the model.
Our model identifies the required investment to maintain the stock in its intended condition over its life. Whilst investment can be smoothed by budgeting, this would not reveal the underlying dynamics of an asset’s condition and cash needs, which are critical to each asset’s value compared to its peers. Only by capturing the costs and revenues that an asset creates, can its net revenue capability (or value) be assessed against its peers. Without this facility, expenditure is regularly being made without regard to its opportunity cost: a critical investment measure.
In addition to financial levers of asset value and investment, our BI team assist with measuring the strategic values that should or do influence or drive investment in assets, business streams and portfolios. This much-abused area is simplified and together with all imported financial information, properly used, to remove its mystique and allow all parties responsible for the investment of cash or resources to understand its impact as clearly as financial values – value consensus across the organisation.
All in all, Kipling’s poem resolves the asset investment questions that social housing stock custodianship poses, with the answers to What and Where and When, and How and Why and Who; the answers that create immediate payback for users of our BI products and services.
Comments