Monthly Archives: January 2020

BTR – A Data Driven Check-Up

Consistently attracting and retaining customers is the core requirement for the financial success of the BTR business model. Although the BTR sector has shown promise at attracting new customers, the ongoing challenge faced by providers is the requirement to continually evolve their housing services to repeatedly position themselves ahead of the market as the most attractive accommodation option in the customer's eye. This is no small challenge. Providers are tasked with continually out-innovating more traditional housing alternatives such as private rentals, other BTR accommodation providers and even against the British dream of homeownership, to provide more appealing housing services for the marketplace.

 

The best way for BTR providers to stay ahead of competitors and ensure long term financial success is to focus efforts on providing home environments that are designed and operated specifically to improve occupants quality of life, so the longer occupants reside, the happier, healthier and better wellbeing they experience.

 

By focusing on designing and operating homes for a better quality of life, the outcomes ensure prospective occupants are more likely to be attracted to and reside for a longer period; resulting in greater market demand and happier long term residents that lead to better operational and financial portfolio performance.

 

How Can Homes Be Designed and Operated to Improve Occupant Quality of Life?

 

The answer is Data.

 

Most BTR providers actively capture portfolio data which is a fantastic first step. However, through the application of Data Science Analysis, BTR providers can further capitalise on these efforts with a far deeper understanding of how the design and operation of their properties directly influence the health, wellbeing and quality of life of their occupants over time.

 

When empowered with higher quality Data evidence, BTR providers can better leverage information from their existing properties, extracting aspects most positively associated with better customer health and wellbeing so every future new build development is scientifically proven to perform better than the last.

 

Why is Data Science needed in Property?

 

Because Data Science is one of the most accurate forms of scientific methodologies available, it provides high quality, low bias evidence that enable better portfolio decisions to be made. Due to the reliability of the information, Data Science is the process used by evidence-based professions such as the medical, fitness and nutritional industries whereby every decision, recommendation or intervention made is based on a robust body of evidence, derived from Data Science Analysis.

 

The consistently accurate decision making in these industries is reliant on the quality of the data supporting it, therefore having the highest quality evidence base possible is critical to their long term success. As the operational and financial success of BTR providers is also reliant on consistently accurate decision making, having the highest quality evidence base available to support decision-makers is vital to continually attract new customers by outpacing competitor housing alternatives.

 

Why is it important to measure the correlation between homes and occupant quality of life?

 

The true performance of any product or service is how does the product or service (variable 1)  influence the health and wellbeing (variable 2) of the consumer over time. In the evidence-based medical, fitness and nutritional industries, the success of every prescription, exercise or diet plan is measured against how it influences the patient’s health and wellbeing.

 

The true performance of the property is no different. Having an accurate identifier for the exact design and operational aspects which provide the greatest positive and negative impacts on occupant quality of life is incredibly powerful. This not only provides a better understanding of what benefits the customer but identifies the exact service aspects which improve operational performance so money can be better invested for greater returns.

 

 

But what does Data Science Analysis identify that normal data capture does not?

 

Data science is the process of measuring the strong correlation between 2 variables to identify a relationship, therefore it is possible to quantify how any portfolio aspect influences another.

 

For example, accurately identifying the specific building, property type, size, layout or location of properties that have the best quality of life outcomes. Understanding how specification levels, window sizes, storage or security in homes influences anxiety, stress, relaxation or calmness. Or even how the housing management team relations, building communal spaces, community feel and neighbourly interactions impact occupant health and wellbeing over time.

 

This evidence is powerful but becomes truly transformative for BTR providers when analysed alongside the operational and financial portfolio performance data, quantifying how the positive and negative health impacts, directly influence the financial performance over 1, 2, 10 or even a 30 year period.

 

Therefore, Data Science provides complete portfolio clarity as to what delivers best value and benefit to occupants and what doesn’t, so operational spending and new build investment can be streamlined for greater operational and financial benefit.

 

 

Geraghty Taylor and LifeProven have recently collaborated to use Data Science Analysis to deliver Evidence-Based Property Consultancy Services (architecture, cost and project management) to help BTR providers deliver better homes with greater accuracy and confidence.

 

 

Create Differently

 

#BTR  #BuildtoRent  #Brand  #Brandbeforebuilding

Will BTR Deliver on Latham’s 1994 Report?

Delivering BTR Through Collaborative Procurement

 

A successful BTR scheme is more than its asset or income value. As important as these business values are, they are not a complete value picture. To ensure revenue and value is optimised and sustainable what needs to be added is a strong value proposition for BTR customers. The characteristics of this offer will differentiate you from your competitors and also provide you with ‘tools’ to evolve your offer to meet changing customer needs.

 

At Geraghty Taylor we use brand as a dynamic collaboration and communication model (partly inspired by Latham) that accurately captures all the inputs that need to be part of well thought through BTR offer. As a methodology ‘brand before building’ describes the important drivers, relationships and outcomes which underpin all design, development and operational decisions for a project. In this context the brand is an ‘interactive detailed briefing document’ that moves the proposition from a business to business dynamic, to a business to customer relationship. In doing so it goes well beyond the usual parameters of a traditional development brief to include current and future operational requirements, how technology will be deployed, the customer experience evolution, design flexibility and futureproofing requirements, revenue and exit strategies, through to marketing and sales collateral.  It calls for a new approach to development, where the building is a derivative of the brand (and not the other way round) and it is created through curated collaboration between key stake holders from the onset.

 

Collaboration is not new, but it continually evolves. BTR is uniquely placed to oversee the next iteration of collaborative procurement and to harness its powerful outputs to make decisions that improve value and reduce risk.

 

What is collaborative procurement?

 

Sir Michael Latham, in his seminal 1994 report ‘Constructing the Team’[1] set out 5 key principles for collaborative procurement as follows: -

 

  1. ‘A specific duty for all parties to deal fairly with each other, and with their subcontractors,

specialists and suppliers, in an atmosphere of mutual cooperation’ [2]

 

  1. ‘Clearly defined work stages, including milestones or other forms of activity schedule’[3]

 

  1. ‘Integration of the work of designers and specialists’[4]

 

  1. ‘A ‘specific and formal partnering agreement’ that is ‘not limited to a particular project’[5]

 

  1. ‘Partnering arrangements that ‘include mutually agreed and measurable targets for

productivity improvements’ [6]

 

How is collaborative procurement relevant to BTR projects?

 

By analysing the specific characteristics of a BTR project against the criteria above it is possible to deduce whether collaborative procurement could be of benefit as follows: -

 

What are the next steps for using collaborative procurement for BTR projects?

 

  1. The delivery phase a BTR development represents a comparatively small portion of the overall expenditure by the BTR developer on the scheme over the lifetime that it holds the asset; typically 30 years. It is therefore important that the design and construction teams work closely together to avoid short-sighted cost savings which may cause the BTR developer to incur increased operational or maintenance costs throughout the life of the asset. Moreover, there is a need for the design and construction teams to work closely with the BTR operator who will manage the development on a day-to-day basis to ensure that scheme is optimized for the efficient operation of the development. Collaborative procurement could help create obligations for the design, construction and operations teams to work together for the long-term benefit of the asset. The BTR developer may also consider that they would not have realised all of their profit from the scheme by the end of the limitation period, typically 12 years after practical completion, of the designers’ and constructors’ appointments so a situation may arise where there is a defect detected in the scheme that affects profitability but the BTR developer has more limited options for recourse. Consequently, it is important that all members of the delivery team work together collaboratively in the BTR developer’s interest to avoid issues occurring.

 

  1. It is important that all stakeholders in the project review and sign-off the proposals as they progress at relevant milestones in the knowledge that rather than the asset being sold at completion it will instead be retained. It is consequently especially important that the proposals are tested that they will deliver expected returns over an extended lifespan. This review process would benefit from the input of the wider design and construction team as well as the BTR developer and their advisers so that it can occur in an atmosphere where the priorities of the overall project and business priorities of the individual contributing organisations are aligned.

 

  1. BTR developers as experienced commercial clients are likely to have specific products that they favour through their own first-hand experience in operating BTR schemes. There will be a desire that the design team works with these specialists through the design process to ensure the design meets client requirements and also to minimize re-design at a later stage. However, there will be little incentive aside from the potential promise of an order for the specialist to help the designers in a typical lump sum contracting scenario. This is particularly relevant where off-site and modern methods of construction is being contemplated where the input of the specialist at an early stage is crucially important.

 

  1. It is likely that a BTR developer will not have only one project in mind and their business model will likely involve a programme of projects. Consequently, there can be benefits of lessons learnt on one project being fed into the next with consistent design and delivery teams selected from a pool that have been determined to possess the necessary qualities and have an established working relationship.

 

  1. As BTR projects generally involve the long-term retention of an asset then how this asset performs over time with respect to maintenance and operational efficiency can be measured and fed back to the original design and construction team. A clear incentive for providing an asset that meets the BTR developers aspirations for annual operating costs for example which be the offer to contribute to future projects.

 

What are the next steps for using collaborative procurement for BTR projects?

 

The BTR developer should assess the different contract forms available and how these support the aims set out above. For example the BTR developer could set up a framework of suppliers which it uses to build up knowledge of BTR delivery and drive best practice from which individual projects are called off. There could be a case for a multi-party contract where all members of the team have obligations to each other to meet the overall project goal with governance structures to suit.

 

Create Differently

 

#BTR  #BuildtoRent #Brand  #Brandbeforebuilding

 

 

[1]Latham, M. (1994). Constructing The Team; Joint Review of Procurement and Contractual Arrangements in the United Kingdom Construction Industry; Final Report (London: Department of the Environment)

[2]Latham, M. (1994), Section 5.18.1.

[3]Latham, M. (1994), Section 5.17, 4.a.

[4]Latham, M. (1994), Section 4.3.

[5]Latham, M. (1994), Section 6.43.

[6]Latham, M. (1994), Section 6.47.

 

With thanks to Daniel Sharp, Senior Quantity Surveyor at Kier Construction, for collaborating in writing this article.