Building a More Persuasive Business Case for Social Housing
We all know that the nation desperately needs more social housing – yet still we aren’t building enough. In fact, during 2018-19 the number of homes for social rent in England went down by over 17,000. Even before the impact of Covid-19, social housing completions were not keeping pace with demolitions and sales.
Establishing a solid business case for new homes may be part of the problem. Procurement tends to be organised on a project-by-project basis and awarded mostly on cost. This can produce a highly marginal business case when the risks of cost and timing overruns are factored in.
Quality and Whole-Life Costs Change the Maths
The procurement process is based on a business case that overlooks the potential impact of improved product quality and reliability on future maintenance costs. It also offers minimal opportunities to explore cost savings through greater standardisation across projects. Historically, these were not realistic opportunities and didn’t need to feature too heavily in the procurement process.
But times have changed. Modern Methods of Construction (MMC) offer opportunities to develop a more favourable business case based on better productivity, speed and quality. This is down to a number of factors:
- Standardised products and repeatable processes can bring significant cost savings if procurement is managed on a multi-project basis.
- Consistent product quality reduces the whole-life costs of new housing through reduced repair and maintenance budgets.
- Build times and costs are reliable, which takes significant risks related to the weather or shortages of labour and materials out of the equation.
- Rental income is brought forward through completion times that are up to 50% quicker than conventional builds. This brings important cash flow advantages and can reduce borrowing costs, particularly for mixed tenure schemes.
Construction of housing for social rent doesn’t have to be in the doldrums. Building a persuasive business case is perfectly possible. If you want to explore these opportunities in more detail we’ll be happy to talk to you.
