Building Community Housing Capacity:

Insights into the role of Procurement and Partnerships

Dr Tony GilmourKinetic Information Systems Launch, Sydney

13 December 2010

Strength does not come from physical capacity. It comes from an indomitable will

Presentation Overview

• Background – the White Papers

• International reflections on procurement and partnerships

• Conclusion – opportunities and challenges for housing providers

White Papers - Background

• Reports orientated toward a particular technical problem or issue, increasing knowledge and helping managers make better decisions

• Approach based on initiatives by Housing Quality Network, HQN (‘the largest stand-alone housing training and consultancy company in the UK’).

• Up to six ‘Network Briefings’ per month

• HQN a closed network, requiring annual membership payment of just over £1,000 ($1,600)

White Papers – Aussie Version

• Circulated for free by Kinetic Information Systems to build capacity within the housing sector

• Focus on practical topics and an ‘executive summary’ approach – not 200 page AHURI reports!

• Will seek a variety of authors although initial series prepared by Tony Gilmour on following topics:

Raising Bank Finance

Innovative uses of IT systems

Pointers on NSW Regulation

Building capacity through collaboration

Understanding tenant needs

Over-coming NIMBY opposition

International Perspectives: Procurement and

Partnerships

Reflections on Growing Sector Capacity• Community housing just like any other industry sector in

terms of relationships between players, concentration, competition, roles of industry associations (peak bodies) and support organisations

• Australian sector a relatively late starter:

UK – 1974 growth, 1988 private finance, 1990s stock transfers

US – 1960s CDC growth, 1986 tax credits, 1990s estate renewal

Australia – 1990s pilot projects, 2007 tax credits, 2008 transfers

• Chance to understand issues based on overseas experience

• Need to see ‘capacity’ not just in terms of housing providers (organisational capacity) but also in terms of other support and service organisations in the sector (network capacity)

Overseas Changes I: Trade Associations• Only Australia retains ‘peak bodies’: never existed in the

US, England’s NHF changed from this role in 1970s

• Common trend is fragmentation of trade associations:

Growths providers – London G15, Housing Partnership Network

Regional – NHC Northern England, NPHANC Bay Area

Service providers – HQN perform capacity building role

Traditional trade associations morph into more hybrid role as service providers, increasing commercial income – NHF and CIH

All the above happily co-exist

• Note the use of fees for service as a model to fund capacity building, enabling greater distance from Government

Overseas Changes II: Service Providers• Increased sector funding provides resources to employ

more specialist assistance, often needed as complexity increases (UK: 1988 private finance, US: 1986 tax credits)

Consultants – big growth. Firms in UK, individuals in US

Contractors – specialised temporary staff, project managers

IT – new entrants, provide bespoke and off-the-shelf solutions

Input suppliers – building materials, insurance, finance

Agents – finance packagers, insurance brokers

• Prices initially high, then fall as market becomes commodified

• Role of above as ‘change agents’, sharing best practice

• Importance of staff transfers between network players

Overseas Changes III: Competition• Introduction of private finance and government tenders

reduces cooperation, increases competition between providers

• Less information sharing, though local and personal networks still strong and trade associations help reduce tensions

• Growth of mergers, especially UK and Netherlands, leads to growth of larger providers. Often driven by complexities, scale economies

• Countries retain their share of smaller housing providers. In England 18 providers > 20,000 stock, but 1,307 small (<1,000 stock)

• Other options to mergers – group structures and partnerships popular in both UK and US

Overseas Changes IV: Partnerships• Despite competition, partnerships thrive:

Development – joint working on property development with public, private and non-profit organisations. Sometimes specialist consortia established (BlueCHP use this model)

Procurement – joining with other providers to achieve scale economies through better buying power. Popular in UK

Services – establishing joint business to carry out IT, HR or reporting tasks. Good for smaller providers

• Often development partnerships used for early projects, then the provider builds capacity and can go it alone later (US examples)

• Partnerships over specific projects or services allow providers to retain their independence, avoiding mergers

Opportunities and Challenges for Australian Housing

Providers

Australia 2010: Our Scorecard

• Policy focus has been on building organisational capacity, with little support of networks. Peak bodies under-funded

• Welcome arrival of new organisations – consultancies, IT providers, finance packagers. However, service price points unclear

• Evidence of weakness in core organisations such as banks and peak bodies though both are catching-up fast

• Lack of contractors a major problem. Confusion between use of contractors and consultants

• Australian success stories:

Intermediaries – AHS, QAHC

Procurement – PowerHousing Australia

Consortia – BlueCHP, Bonnyrigg PPP

Opportunities and Risks

• Learning from overseas experience can help us avoid the same mistakes, though hard to ‘cut and paste’ between countries

• Next decade likely to see major shift in role of intermediaries and service providers, perhaps more than for housing providers

• Larger housing providers need clear guidelines for a Procurement Policy such as need to use tenders, evaluate risks

• Perhaps an underestimation of level of risk in procurement

Operational – especially IT systems, compliance/reporting

Financial – possibility of being ‘fleeced’

Complexity – are solutions over complicated?

• Prominence of new players – Kinetic, Elton, Impact Group etc. a sign of broader changes within the sector

Building Community Housing Capacity:

Insights into the role of Procurement and Partnerships

Dr Tony Gilmourtony@elton.com.au

www.tonygilmour.com