Cardiff Metropolitan University’s Nick Rich looks at how lean thinking can help meet the challenges of social housing in the United Kingdom, by introducing a new model for streamlining building maintenance.
Investing in “bricks and mortar” to get on the first rung of the property ladder was always a mantra for parents of young adults.
Today, there are many more complexities that make owning your first house extremely difficult. Even though current house prices are depressed in comparative terms, the multipliers that are applied for the purpose of a mortgage loan by lenders vastly exceed the average annual income. Add to this the fear of employer insolvency/redundancy and there can be little wonder that people are looking at alternative forms of “owning” or renting the home they live in.
The problems do not just affect those starting out either. Those individuals near retirement also have their problems. Endowments are falling short of paying off mortgages and intermediate care for citizens is becoming increasingly expensive. It comes as no surprise, then, that the world of social housing and mega-landlords represents a fantastic sector to study. It is a melting pot of innovation, creativity, experimentation, and change.
Council houses were once the answer to the problem of affordable rental housing but the majority of these were sold to private individuals during the Thatcher era. Demand for affordable housing did not go away and Social Housing Associations (SHA) have emerged to fill this void in the housing market holding vast estates of thousands of houses and other accommodation units (these include living space above shops, communal facilities with many individual tenants in their own internal accommodation, protected housing for citizens who suffer from medical conditions and other types of housing).
For the customer of the housing association – the tenant – the processes that surround them are also personal and trigger significant emotional distress when things go wrong. In that sense, the social housing sector has many similarities with healthcare provision (complexity, process waste and personalisation of service).
Recent government reforms and regulations have combined with the high importance that most housing associations place on corporate social responsibility to add volume to the “voice of the customer” and greater tenant involvement in corporate decision-making. Tenants now populate the board of directors and surveys provide increased transparency/scrutiny of performance between SHAs.
The sector is proactive to these changes – it is vibrant and has a fascinating diversity of improvement methodologies. Indeed, where manufacturers had often forgotten the voice of the customer (the first lean principle) preferring instead to map processes, everything for SHAs begins and ends with the tenant.
This article presents an overview of the changes in the sector and proposes there is much to learn from the lean/systems thinking learning occurring in businesses where tenant satisfaction must be managed whilst minimising rental costs.
The traditional system of managing tenants is a cartoon of a silo-based management approach to processing what managers thought tenants wanted – the classical features of command and control that John Seddon has waged war against for many years.
Waste added costs to the rents charged to tenants and SHAs have reacted to combat this in a number of ways. SHAs have embraced leaner ways of working, systems approaches, six sigma. The most progressive are now adopting a form of productive maintenance for properties.
THE PRIMARY PROCESS OF SOCIAL HOUSING ASSOCIATIONS
- The acquisition process of a building or street to join the housing portfolio of the housing association;
- The recruitment of the first tenant;
- The “voiding” of one tenancy agreement (as an individual or family leaves the agreement and house) so that another tenant may move in;
- On-going planned maintenance and refurbishment of major “systems” within each property (such as the large-scale replacement of windows, kitchens, bathrooms, etc);
- Regulatory servicing to comply with British laws concerning the rights of tenants and the obligation of landlords;
- Reactive repairs to the building following a catastrophe;
- The process of evicting tenants who breech their responsibilities to their social housing association landlord and legal agreement (such as breeches to the care of the property or anti-social behaviour);
- The disposal and sale of the property.
Major improvements have been made in focusing on value and re-designing the flow of work through each process for tenants. Experimentation and the learning process of following robust A3 planning documents that are derived from reliable process maps have eliminated waste, reduced errors, speeded up tasks and reduced the “failure demand” where tenants would repeatedly call the tenant service centres to progress their issues.
Of the few vital processes, the voiding handover process and the maintenance of the tenant property represent the most significant volumes of work and expenditure. The voiding process is a classic case in hand – the tenant declares an interest to leave the property and terminate the legal contract with the association. Typically there is an excess of demand over supply so another team has to find a suitable new family for the property. Delays in handover cost significant loss of earnings as each day a property stands idle it is not earning an income. Learning and experimenting with these has resulted in solutions that resemble the quick changeover methods associated with the manufacturing sector and Formula 1 pit stops: the new tenant being brought into the process before the existing tenant leaves, all materials to upgrade the property being made ready and the idle time reduced to a fraction of its pre-improved state. In five of our case studies we found the improvement to be an average of a 73% reduction in time to handover the property and with additional scope for improvement beyond this.
TYPICAL IMPROVEMENT METHODOLOGIES
- Understand the voice of the tenant – enlist tenant support for process improvement;
- Map process (often swim lane mapping) and understand demand (including failure demand);
- Develop A3 or project improvement documentations for project and learning management;
- Enact improvements;
- Build new projects into a future sequencing of change initiatives using policy deployment.
Improved “voiding” assists cash flow – better maintenance, however, helps keep rents low and this is a major source of value for tenants. The improvement of maintenance systems is one of the lessons that many manufacturers did not truly understand on their improvement journeys so reduced buffer stocks without effective planned maintenance exposed the manufacturer/customer to disruption. Houses are complex assets and for a tenant catastrophic failure through unplanned “run to fail” (RTF) maintenance is costly and traumatic.
- Door security and window fit/alignment;
- Blocked sanitation pipe work and toilets;
- Guttering, roof tiles and wind damage;
- Condensation issues;
- Leaking radiator valves;
- Bathroom leaks.
Aging properties, the requirement for a very wide skill base, material variety and long supply chains make managing the reactive repair process difficult and, when a total cost of ownership approach is used, reactive costs can amount to over £400/property, with a high percentage of that cost being avoidable. Even simple repairs that are missed can end up costing many thousands of pounds to repair, due to both the length of time to respond/restore and the number of visits needed to solve the problem.
REPAIR PROCESS FAILURE DEMAND
When systems are poorly designed it is typical to find:
- Tenant Service Centres facing calls chasing the same issue by the same tenant;
- Call centre teams must relay information to repair teams;
- Repair teams will visit the property only to find no one there to let them in. They will return later and fail again;
- Visits to assess properties need materials, which must be ordered and then collected and additional skills may be needed to complete the job. A house can be visited on average four times before work can be completed.
The classic RFT is that of the shower tray that leaks. The leak continues to deposit water into the floorboards and runs along until it penetrates the ceiling if the floor below. The room below is typically the kitchen (the bathroom and kitchen share water pipes) and the ceiling starts to absorb water. Staining appears and inevitably the ceiling sags as the weight of the water is absorbed. After a number of days there is a noticeable smell and the stain has grown in size, the ceiling sags further until it eventually collapses and sends the ceiling onto the kitchen floor.
The initial cost to repair is fractional – to renew the shower tray seal – but the eventual damage is measured in thousands of pounds as crafts persons and plasterers, materials and job cards have to be issued and work conducted. The cost to the tenant is also huge: no showers and an inoperable kitchen. No wonder delays in the repair process generate failure demand for SHAs.
NEW MODELS OF MAINTENANCE
- One-stops and vans – the reallocation of stocks in vans and multi-skilling of trades people to respond quickly to minor repairs;
- Cyclical post code maintenance – using the logistical performance of suppliers to deliver goods to a street so that all minor repairs can be undertaken on a regular basis. The temporary street depot serves as a hub for the local area. The system is operated every number of weeks to “close” minor repairs. This system supports the annual check approach;
- The standardisation of houses including the use of “flat pack” social housing for the quick building of homes for new tenants that meet new environmental standards;
- The annual check – the servicing of gas equipment requires a regulatory annual check and this opportunity to access the house allows the gas check to be conducted whilst a full house audit is undertaken for a condition appraisal. The home owner is then presented with a report similar to an annual car service and this is matched with any planned maintenance when large systems will be replaced;
- New training programmes for tenant-maintainers and rewards for up-keeping properties through the conduct of simple cleaning and inspection activities conducted on a regular basis and submitted on-line.
Reactive maintenance budgets run into millions of pounds and add significant problems to managing the estates. Planned maintenance does exist and this concerns larger systems within a house (such as doors, windows, roofs, kitchens and bathroom) and these have fixed replacements cycles (say every 3, 5 or 10 years). But reactive maintenance remains – buildings deteriorate and unfortunately tenants can be the cause! Learning in the sector has been rapid, however, and lean initiatives have identified many models of maintenance that are moving from reactive to a new level of predictive control. Early indications show around a 25% saving per house and half the visits are needed to respond to a reactive repair request.
The penalties of getting maintenance processes wrong for tenants is huge – especially for “the vulnerable” or families with children. What many lean practitioners have forgotten is an operating system without maintenance can often become anorexic, lacking robust control and the resilience needed to bounce back from a catastrophe. Toyota understood this lesson decades ago, when Denso and Aisin (key suppliers) created a study group of suppliers to promote maintenance capabilities to make the just-in-time system work effectively and efficiently.
These studies did not lead to blind emulation by all suppliers but to experimentation, and each business answered one critical question: what problem are we trying to solve? For social housing associations, the question is how to achieve the lowest lifecycle costs of owning a home whilst delivering the highest service to the tenant. The questions, debates and new models emerging from this sector are really pushing the boundaries of lean thinking while at the same time returning to lean basics such as the definition of value. No dominant model for operating an SHA exists yet, and this means new solutions are emerging.
But further still, with predictions that we will now live beyond our 100th birthday, the social housing sector faces some fascinating challenges and will evolve again. As UK levels of dementia, arthritis and obesity rise, the house of today is not suitable for the tenant of tomorrow. The next generation of tenants will find mobility difficult and immobility a hazard to health. The solutions will be fascinating to see how bricks and mortar are replaced with a whole-life approach to housing solutions and probably the first real example and learning model of “lean consumption”.
This article draws from research with a number of SHAs and was initially supported by the EPSRC with the aim of transferring knowledge from one sector to another. The author would like to thank the EPSRC for their kind and generous support to Cardiff Metropolitan University.