Corporate Strategy and Business Plan - Essay Example

?Outline of Presentation I. Explanation of the method known as the SWOT Analysis. II. Purpose of the SWOT III. Assess the definitions of weaknesses. Are they complete to meet Objective # 2 - To deliver quality homes, services, and neighborhoods that meet resident expectations and future aspirations ? IV. Roles of the CHA Board ? What skills will they need ? How many Board Members should there be ? Introduction The CHA completed its Corporate Strategy and Business Plan utilizing the SWOT Analysis Technique. In order to learn from the SWOT Analysis done by the CHA, research and review of the principles of that technique was actually performed. Corresponding findings are discussed prior to assessing the CHA Corporate Strategy and Business Plan.  Part I talks about the principles and procedures of SWOT Analysis, and how they should have been applied to CHA. Part 2 discusses the purpose of SWOT Analysis as it relates to CHA and why it was difficult for CHA to serve the purposes of a comprehensive and accurate strategy. Part 3 gives an assessment of the weaknesses based on the facts in CHA’s Corporate Strategy and Business Plan. And Part IV gives the Roles of the Board in order to have a comprehensive SWOT analysis and to successfully utilize results in preparing a more accurate strategy and set of plans. Part I An Explanation of the Method known as SWOT Analysis One of the alternative planning tools of management in different levels involves formulating pertinent questions to be included in a set of questionnaires that will identify the Strengths, Weaknesses, and Opportunities of the business organization, and Threats to its future performance. These questionnaires should be for the Stakeholders and/or their official representatives in the Board of Directors. From the response to questionnaires and also based on known information about the company and the industry, the management should be able to identify company strengths and weaknesses as well as the opportunities and threats. This is known as the SWOT Analysis. The main objective of such a tool is to be able to formulate clearly defined, effective strategies that will aim to achieve desired objectives. Strategic planning should therefore follow SWOT Analysis. A diagram below summarizes the interrelated processes. Questionnaires All Board Members representing Stakeholders should answer questions. Performance of SWOT Analysis Strategic Planning Achievement of Desired Objectives, Goals, Purposes, Mission, Vision Through Optimum Performance As can be seen from the diagram, management uses the findings gathered from questionnaires distributed to the Stakeholders, analyzes them, and develops a logical plan for the company to realize objectives. Contents of the questionnaires should consider all the External Factors that have an impact on the organization and all the Internal Factors (from within the organization). Value of Questionnaires Because the recipient and respondents to questionnaires will be the Stakeholders or the representatives in the Board, their views will be the key resources to be used in determining how the organization will go about achieving objectives and towards which direction. Questionnaires should ask Stakeholders about their awareness of the present status of the organization of which they are a part, an awareness of some history concerning how the company reached its present status, their description of the business (What is it ?) and what should it be, their insights about where the business should be headed, and how they think the business can become the way they want it to be. Sample questions about internal factors that would be related to the recent performance of the organization, are shown in the attached. One book entitled “Strategic Planning” by the Strategic Planning Society (2006) emphasized that “There are no magic formulas; each organization will be different. So getting the questions right is crucial to success.” The questionnaires should strive to be exhaustive in order to extract adequate and substantial information from the respondents. All internal variables should be included. They can be classified according to department and functions that are meant to contribute to the achievement of company objectives. It is for this reason why different levels of the organization will eventually be participating in the SWOT identification. Some writers consider the SWOT analysis to be supported by an Internal Audit and an External Audit. “For a SWOT analysis to yield the most complete profile, data collection techniques must be considered, and a representative range of stakeholders must be consulted, and their input analyzed. Tapping into a range of stakeholders and their perceptions is the key to a productive SWOT analysis, and a good place to start is with a full accounting of all stakeholders in the university community.”(Ortoleva, Matthew and Dyehouse, Jeremiah 2008) Utilizing Findings In CHA’s CSBP For SWOT Analysis In the case of CHA wherein nothing was said about results of questionnaires, we have to assume based on given details whatever findings had been gathered and see which important information did not have any basis. It says in the Corporate Strategy and Business Plan that the management had conducted a Market Study (p.4). Findings from such a market study should normally give substantial information about the External Environment. The description of CHA’s current position affords plenty of facts about Internal Factors of the company. To extract strengths and weaknesses based on given data, two tables are shown. Information contained is not identical with those listed in the Corporate Strategy and Business Plan. Strengths 1. CHA has 41 years of business experiences in the industry. 2. Flexibility & adaptability to changes, developments, securing funding 3. Credibility & reliability in delivering the building services needed 4. Owns and Manages 2,500 homes 5. Close working relationships with Local Authorities 6. Strong Asset base; strong financial position 7. Partnership with Mass House Builders keeps CHA relatively stronger during economic downturns. 8. Strong funding Partnerships. 9. Effective Risk Management 10. Good relationship with customers 11. Diversified 12. Management is concerned about quality services, good rapport with customers, planning ahead. 13. Good Risk Management Strategy 14. Performance-oriented; believes in performance indicators 15. Aware of Decent Homes Standards set by government 16. Aims for a satisfaction level exceeding 90 % 17. Wants to provide support and assistance to residents 18. Wants to offer opportunities for residents 19. Wants residents to be involved in strategy formulation ( p. 31 ) Weaknesses 1. Broad range of client groups and diversified roles required 2. Many partners and stakeholders in each area, have to be satisfied. 3. Multiple background of Stakeholders: Residents (core customers), Registered Providers & Local Authorities, Regulators, Developers, Lenders, Contractors, and Staff 4. Multiple and variety of services to manage 5. Multiple Tenant Profiles 6. Medium sized provider of Social Housing ; relatively reduced size due to Mergers and Large-scale Stock Transfers 7. Reduced influence in recent years 8. Lack of awareness about its customers 9. Service delivery issues in the outsourcing maintenance 10. Communication problems; unable to inform customers about company advantages 11. Lack of strategy (admitted in the CHA report) 12. Does not have a clear definition of what service quality means 13. Does not know if customers are aware of what they should be satisfied about; lack of customer education about government standards 14. Not aware about customer response to the financial climate and government housing regulation; CHA is still planning to gather info from residents after preparing the strategy ( See Objective # 1, p.31 of CSBP 2010-2015 Opportunities 1. Improved housing market 2. Accessible and more readily available mortgage finance; more loan approvals 3. Strong demand 4. Low and stable interest rate at 0.5 % 5. Better employment level 6. Lower prices ( more not listed…) Threats 1. Economy not so good; poor growth rate 2. Planned government spending cuts will result in less affordable houses to be built 3. Higher deposits and income requirements for first time buyers 4. Rising repossession of houses 5. Increased competition in recent years 6. Rapid house price falls 7. Social Housing is subject to extensive regulation and monitoring. ( more not listed ) Since the focus of this paper is about weaknesses, the other parts of the SWOT Analysis for CHA were not fully covered due to lack of space for all that. Identifying weaknesses will enable management to find ways and means to check those problems before the performance of the organization is affected negatively as a result of not attending to such weaknesses. If we suppose that the general feedback from the survey questionnaires is that employees lack the skills to meet the demand for high quality services, management can implement a strategy that will gradually train and develop its employees to obtain the desirable qualifications. A series of seminar can be conducted during the year for purposes of upgrading the skills of employees. Opportunities can be based on external data and not necessarily from the results of survey questionnaires. Some agencies may already be monitoring the comparison of Sales Performance of business entities within the industry, in which case, it is possible that some of the respondents have yet to be informed about the actual performance of the organization. If there are answers not consistent with available statistics, it will disclose the level of awareness of Stakeholders at the very least. However, there are opportunities that may be known to some Stakeholders while management is not aware of them. These are the more important feedback. Every opportunity should be evaluated against the strengths and weaknesses of the organization. Not all of them will be within reach at a given time. Some opportunities can be accessible to the capabilities of the organization in the immediate term or short-term. Others may be for the long term. If, for example, a contract requires a budget not within the means of the company, then it was cited by the Stakeholders without knowing whether or not the company can actually handle such a big contract. Opportunities require the preparedness of an organization. Some may appear to be within reach. But after carefully considering detailed requirements to be able to take advantage of those opportunities, it is possible that some requirements cannot be met immediately. One example is about technologies. Decent Homes Standards encourages households to utilize Solar Power Panels. CHA does have partnerships with technology providers. However, when it comes to maintenance of those Solar Power devices, the cost of availing the services of technology providers can be too expensive for households. Although CHA can plan to takeover the maintenance, the question is whether or not CHA has the skilled personnel to tinker around with the new technologies. In the immediate term, CHA will need to first train some personnel to perform the regular maintenance of 2,500 homes. The idea of immediately advising residents to invest in Solar Panels might not yet be workable. CHA must be prepared for the maintenance of new technologies, or the residents should be willing to pay for a higher cost of maintenance to the technology providers. There should be a survey as well as a plan prior to implementations. Or the residents will complain about high cost of maintenance. On the part of CHA, will the company have the budget to employ additional personnel for the maintenance of new technologies? Can CHA send the regular maintenance crew to upgrade their knowledge about Energy Savings Technologies? If one of these (the survey of residents concerning their willingness to pay for new technology maintenance, or the hiring of skilled personnel to offer lower cost of maintenance, or the additional training of maintenance crew) cannot be attended to by CHA, then the opportunity can be considered later on in the future Threats usually refer to any factor that can weaken or damage the performance of the business organization. It can mean the entry of a competitor in the industry. It can mean financial problems ahead because of a double-dip recession. Preparations have to be made for such threats by formulating a strategy that can weaken the effects of such threats. If it is to prevent the competitors from penetrating the market that is supposed to belong to the business, management can decide to implement a public relations campaign capable of maintaining customer loyalty. Having identified the internal and external factors, there will be a need to rank the factors according to value or importance. Part II. Purpose of SWOT Analysis Apparently, according to the reading materials in p. 31, CHA is still aiming to gain information from its customers, the residents. That makes the available Strategic Plan to serve them with quality services, very inaccurate or vague. How will people’s priorities and preferences be served if nobody really knows what their priorities and preferences are ? How can quality be defined under such a condition ? As a management tool, SWOT analysis has the purpose of collating important information about the organization from the Stakeholders themselves or their Official Representatives, in terms of its multiple capabilities to perform the necessary functions needed to get things done in such a way that the outcome will be the best possible given available resources. It taps the knowledge and wisdom of Stakeholders who are presumed to be concerned about their investments. The other purpose is to bring to the awareness of management whatever improvements have to done and whatever pending problems have to be given attention before they cause a failure. In the aspect of identifying opportunities and threats, SWOT Analysis has the purpose of making the planners aware of alternative directions to take so that they can evaluate which one will derive the highest value for the organization from the short-term to the long-term. Once aware, they can allocate the scarce resources to arrive at best results. Strategies aim at minimization of costs and maximization of profits, stabilization of core business, and if necessary, diversification to facilitate future higher growth. The purpose of SWOT Analysis is to also allow the planners to answer critical questions, namely, “(1)What can we do? (2) What do we want to do? (3) What might we do? (4) What do others expect us to do?” (Simmering, M., 2011) After a thorough coverage of important information gathered from the representatives of Stakeholders in the Board, the purpose of SWOT Analysis will be for use of such critical feedback to match with alternative strategies. There will be 4 Quadrants with alternative strategies. See the diagram (Figure 1) lifted from a book on SWOT Analysis. Furthermore, the management has to prioritize those alternative strategies according to importance, so that it will be clear as to which strategies will need more attention, more budget and which ones can be eliminated or set aside for future consideration. This can be done by classifying strengths and weaknesses according to importance. A diagram (Figure 3) below shows how the strengths and weaknesses can be classified. The outcome will facilitate the development of priority strategies. (Source for both Figures 1 & 3: Simmering, Marcia (2011). “SWOT Analysis”. Encyclopedia of Business, 2nd Edition. Available online @ http://www.referenceforbusiness.com/management/Pr-Sa/SWOT-Analysis.html ) Part III An Assessment of the Weaknesses Defined by CHA In the case of CHA, Cosmopolitan Housing Association, the Stakeholders are the Residents, Registered Providers and Local Authorities, Regulators, Developers, Lenders, Contractors, and Staff. Because there are many and they have different orientations, they should be represented by Board Members. How many members will depend on the proportionate size of the business of each classification of Stakeholders. Let us make some assumptions in the absence of data concerning the proportion and profitability of each business classification. Assume that the proportion of business for Stakeholders is as follows: Residents 60 % Regulators 5 % Lenders 10 % Staff 2 % RPLA 10 % Developers 10 % Contractors 3 % There should be at least 9 Board Members representing Residents and 1 Board Member for each of the other Stakeholders, for a total of 15 members of the board. 60 % of 15 = 9. These representatives should be given separate questionnaires with relevant questions about the business of CHA. Each business segment might require Board Members to conduct their own survey about feedback from the Stakeholders themselves, so as to allow the representative Board Member to be more accurate with a summary feedback. CHA said that it has made up its mind to make 25 % of the Board Members fully represented by Residents. Please see page 56 of CSBP 2010-15. But it also says that it wants to give Residents “first and foremost importance (p.4)”and “to place residents at the heart of services ( p. 5), and goes on to say it recognizes Residents “as its core customers (p. 10)”. Add the fact that CHA manages 2,500 homes. If they are indeed the core customers and the focus will be for residents, then there must be a reason for that. The profitability of CHA must be mostly coming from residents. A management bases decisions on the major interest of an organization. At CHA, it appears that residents should be given the major concern. 25 % representation in the Board is probably not sufficient because the 75 % vote will overrule residents in the final resolutions. Residents should be given a stronger voice (over 50 %) in the board to be sure their concerns are the priority. Otherwise, there is a high probability that the resident’s priorities will actually not become the priority. If, however, CHA simply wants 25 % Board Representation, it should be communicated and justified to the Residents, because that too is possible. What CHA should have done was to perform SWOT Analysis for a diverse set of businesses. Was there a separate set of comprehensive questionnaires for each group of Stakeholders? Is every Stakeholder aware about the various services being rendered in the different categories? If not, CHA must first produce separate questionnaires that would be meaningful to corresponding Stakeholders. They should in fact be furnished with performance reports related to their interest so they can be guided about how well operations has been delivering for them the value of their investments. As mentioned earlier, the questions are important to arrive at a meaningful basis for planning. The weaknesses seen in the box (CHA Corporate Strategy & Business Plan, p. 22 ) are too broadly defined. On p. 10 of the same plan, it mentions that CHA recognizes residents as core customers who should be empowered to define the services that should be provided consistent with their aspirations. Yet in the SWOT Analysis, it does not even say whether or not Residents are aware of what are the desirable services, and if they actually see those desirable services being rendered. There should have been feedback about the weaknesses of specific services, if any. If they don’t see the weaknesses, what strengths do they see ? Are the services timely ? Do the services meet the requirements of Decent Home Standards ( see Appendix )? Are the residents aware of the need to comply that government regulation ? Does CHA have sufficient manpower to meet the requirements for quality services ? Does CHA have access to technologies that can definitely improve the outcome of improvements ? Let us take the weaknesses one by one. Dispersed Stock / Profile of Stocks refers to which business segment and who are the Stakeholders affected ? Do the Stocks have equal profitability ? If not, why are some more profitable and some have less profitability ? What are the weaknesses and strengths of each type of Stocks ? How aware are the Residents about the problems of the CHA ? In the first place, how many members of the Board actually represent the Residents who are said to be the core customers ? This should be identified because a strategy would be need to find a way to improve the value of each Stock. If a Stock cannot be made to earn more, the Board Members should be made aware of it so that available resources can be channelled to investments wherein CHA can earn a relatively higher ROI. CHA offers the following services: A. Core Housing Services 1. Housing Management including Rent Income 2. Estate Management 3. Property Management including repairs 4. Social housing development for rent and for shared ownership B. Other Housing Services 5. Special accommodations for asylum seekers 6. Student Accommodation ( managed by Cosmopolitan Student Homes ) 7. Non-grant funding housing developments including intermediate rented housing and supported housing It is not clear what weaknesses were actually identified from questionnaires answered by representatives of Stakeholders classified as Residents, precisely because CHA is still planning to conduct that data gathering activity. Instead, what can be seen as listed among the weaknesses are those from the point of view of probably the Staff. And it could be that the Staff themselves are not aware about what the Residents know concerning government standards that houses have to follow. Are the houses of residents already in accordance with the required standards ? Do all homes have Energy Performance Certificates ? The performance of a house will be inspected for its energy efficiency. The scoring can range from A to G. It was initiated in Dec. 2007. If a homeowner is buying or selling his house, or renting it out, the law requires the house to be certified with EPC. Are the Residents aware about the costs to renovate in order to comply with government regulations ? What percentage of the housing stocks have passed the Decent Homes Standards ? BBC News dated Jan. 27, 2011 that said 90 % of the houses in UK do not meet the standard for insulation. Houses also do not comply with the recommendation to use devices which have the ability to improve efficiency of energy use. 70 % of these houses are privately owned. 10 % are owned by private landlords. (Kinver, Mark, 2011, Web) Does CHA have alternative models for renovations that Residents are aware of ? The weakness might in fact be lack of awareness of government regulations because this is what the news had reported. And are the Residents willing to start refurbishing homes in order to have their Energy Performance Certificates which will give value to their houses ? What percentage of them have the means to pay the price of innovation ? How many are entitled to grants ? All the missing information pointing to weaknesses of CHA will be discovered if a questionnaire containing the right questions reaches Residents or the Official Representatives of Residents in the Board will be answered and evaluated. Note that these are only for one group of Stakeholders. What about the other Stakeholders ? They should also be surveyed using questionnaires. All services offered by the organization should have feedback from the Stakeholders through their representatives in the Board. What are the weaknesses of CHA in connection with each service ? What are the strengths in connection with each service ? What opportunities do they see ? What threats do they see ? Without the facts and feedback, whatever strategies will be developed can only be “superficial” . Specific actions plans might not be what the Stakeholders really need. Or strategies cannot possibly become effective if the basis for creating them would be the guess work of the Staff instead of the real feedback from the Stakeholders. Part IV Roles of the CHA Board Aside from representing the Stakeholders, the CHA Board must be aware of the industry characteristics and developments, and should keep abreast with both internal variables and external variables. One way they can be on top of the data and feedback from the constituents they represent is by conducting a survey of the Stakeholders’ concern. Another is by socializing with them. By being aware of the internal and external factors of the business affecting the Stakeholders, they can then provide the answers to questionnaires in preparation of the Strategic Planning that should be done annually. Once the alternative strategies are prioritized and presented to the board members, they will be able to understand as well as participate in refining and then approving desirable strategies. What skills will they need ? Depending on the contents of the CHA Charter, Board Members will have to carry out their governance roles. This would partly be to make policies and to monitor it. A Board Member should have good interpersonal relationship in order to deal with the people they represent. After a survey, he should be able to stay aware and abreast with developments, especially the implementations of plans intended to benefit the Stakeholders he represents. Another skill that a Board Member should have is analytical thinking. If he is to protect the interest of the Stakeholders in the Board, he should be accurate in thinking about approving or disapproving recommendations to the Board of Directors because resolutions can diminish allocation of resources in favor of the Stakeholders he represents or they can boost progress in favor of Stakeholders. For example, in the case of CHA wherein the core business is supposed to be involving the Residents, whoever represents the Residents should be able to maintain the priorities in favor of the core business. A weak Board Member can lose a substantial part of the allocated resources supposed to be for the core business if there is a Board Member who is smart enough to derail projects of CHA in order to prioritize other businesses. In order to control the situation within Board Meetings, a good board member also has to be a convincing negotiator. Leadership will also be an important characteristic of a Board Member. In order to take the organization towards a direction where Stakeholders want the business to be and what the organization should do, a good leader should be present in the Board. He ought to have initiatives in order to have accurate feedback and important information from the Stakeholders he represents. One of those things he should initiate is the preparation of a meaningful survey, perhaps annually, to check if the people he represents are getting what the organization planned to give for them. Another is the initiative to keep the Stakeholders informed about developments within the CHA. There are actually many things to communicate to Stakeholders, so that when they provide feedback, they would be aware about what to communicate and why. Finally, a Board Member must also be good at planning. Specially at this time in the Housing Industry, wherein the funding for refurbishments of houses is limited while those who need renovations for the proper valuation of their houses are in the millions, solutions have to be discovered for the purpose of expediting the progress of Residents. If CHA is properly advised to give priority to finding the right connections ( e.g. well funded contractors ) who can easily ask for more budget to finance more construction innovations, Residents will surely appreciate the progress in that direction. In fact, a Board Member should know what SWOT Analysis and Strategic Planning is all about, since they are the ultimate beneficiaries.If they arrive at the best plan, and the company’s value increases because of consisten good performance, Stakeholders’ investments will realize growth in the value of their properties. How many Board Members should there be? There should be adequate representation from each group of Stakeholders. The bigger the share of business that a group provides, the more they should have a proportionate number of Board Members. In the SWOT analysis, their participation will make the findings more comprehensive, because there are more thinkers. A Board of Directors should have members with good business skills. They have to make good plans, good decisions. And so, if the various groups represented discover that the Board of Directors does not have a member with the background to help the other members understand a market, the directors should look for an additional talent who can provide enlightenment about a market not known to the other Board Members. Appendix A.Questionnaire Sample Contents (1) In your assessment, how well did the company perform in terms of profitability ? Please encircle the corresponding letter that gives your answer provided. Then briefly explain your view in the attached sheet of blank paper. Choose (a) Excellent, (b) Very well, (c) Good, (d) Fair, (e) Unsatisfactory, (f) Bad. (2) How well do you think the company was able to serve the customers in the last fiscal year ? Please encircle the answer of your choice. Then, in the attached blank sheet, you may add your explanation, if any. Choose (a) Excellent, (b) Commendable, (c) Improved, (d) I am not aware. (e) Needs improvements, (f) Poor. (3) Did the management give clear descriptions and guidelines to arrive at quality services ? Is there a handbook for residents to read to comprehend why things are being done the way they should be done ? Please encircle your choice. (a) Yes, (b) No, (4) In your awareness, are the employees presently enthusiastic about serving customers ? Choose your answer and encircle the letter of your choice. (a) Yes, (b) No, (c) Somewhat. (5) Do you consider the manpower of CHA adequate to meet the services you need ? (a) Yes. (b) No. (c)Not Sure. (d) I don’t have an idea. (6) Are you aware of the Decent Homes Standards of the government ? (a) Yes (b) No (7) Are you aware about government incentives for housing refurbishments ? (a) Yes (b) No (8) Have you been informed about the requirements of your home as of the latest ? (a) Yes (b) No (9) Is your residence well maintained by CHA ? (a) Yes (b) No (10)Do you feel you are duly represented in the CHA and that your voice is heard through your representative ? (a) Yes (b) No Sample questions of external variables would be those related to the industry. (1) What opportunities in the industry wherein the organization is a part, do you see are currently available for this business? Please choose or add the answer. (a) Opportunity coming from government incentives. (b) Opportunity to utilize higher technologies. (c) Opportunity to fill a niche that needs us. (Please identify the niche______________.) (d) Pther Opportunities. ( Please include more info in the attached blank sheet.) (2) What global or national trend are you aware of that will have a strong impact on the performance of the organization in the coming years ? Please choose and encircle the letter or add. (a) Climate Change (b) Government Economic Policy (c) Financial Stress worldwide due to Japan’s Calamities (d) Others ( Please specify._________________________________________________) (3) If you are aware of competitor strategies better than this organization, what strategies are these ? (a) Competitors’ production strategies (b) Competitors’marketing and promotions strategies (c) Competitors’management style (d) Competitors’stronger ties with government Other competitors’advantages (Please specify.______________________________) B.Decent Homes Standards “The Decent Homes Standard and the Housing Health and Safety Rating System – England” “1. Introduction The Decent Homes standard aims to ensure that all social housing meets standards of decency by 2010. In 2002 the Decent Homes standard was extended to include the private sector with the focus on reducing the proportion of vulnerable households living in non-decent homes. This document explains the energy efficiency elements of the Decent Homes standard. Separate documents are available on the Scottish Housing Quality Standard and the Welsh Housing Quality Standard. This document focuses on how housing providers can maximise the energy efficiency benefits of meeting the Decent Homes standard and minimise costs in the long term. The document explains: The energy efficiency related requirements of the Decent Homes standard and the Housing Health and Safety Rating System (HHSRS). ??How to assess the compliance of individual homes with those requirements. ??How to assess the stock-level implications, including costs, of meeting the energy efficiency requirements of the Decent Homes standard. ??How to identify opportunities to improve the overall energy efficiency of your housing stock when making improvements to meet the Decent Homes standard.” “2. Energy efficiency in the Decent Homes standard A decent home must satisfy four criteria. It must: ??Meet the current statutory minimum standard for housing. Dwellings which fail to meet this criterion are those containing one or more hazards assessed as serious (category 1) under the HHSRS. ??Be in a reasonable state of repair. ??Have reasonably modern facilities and services. ??Provide a reasonable degree of thermal comfort. Of these criteria, the statutory minimum standard and the thermal comfort criteria are the two that have an impact on the energy efficiency of properties. 2.1 Statutory minimum standard for housing In order to pass this criterion, the dwellings must be assessed using the HHSRS, which is a risk assessment procedure (it does not set a standard). When local authority officers inspect a dwelling they will look for any risk of harm to an actual or potential occupier of a dwelling, which results from any deficiency that can give rise to a hazard. They will judge the severity of the risk by thinking about the likelihood of an occurrence that could cause harm over the next twelve months and the range of harms that could result. The HHSRS assessment will highlight any potential hazards and the seriousness of the hazards. If any are classed as serious (ie they are a category 1 hazard), they will fail the criterion for Decent Homes. The specific hazards within the HHSRS that could be remedied by improving the energy efficiency of the dwelling include: ??Damp and mould growth. ??Excess cold. ??Excess heat. 2.2 Reasonable degree of thermal comfort For a property to pass this criterion, it must have both efficient heating and effective insulation. Efficient heating is defined as programmable central heating (ie systems with controls that enable the occupants to set both the timing and the temperature of the heating provided) or electric storage heaters. Homes that only have room heaters fail to meet the Decent Homes standard. Effective insulation is defined according to the heating fuel used. The more expensive the heating system is to run, the more stringent the insulation requirements are. The table below summarises the requirements: The standards are “trigger points” for action rather than the target to which the work should be carried out. The Energy Saving Trust is keen to promote and encourage the adoption of practical and achievable best practice standards that will minimise carbon dioxide emissions and achieve affordable warmth. Further information on best practice standards can be found on the Energy Saving Trust website1. At present, a lower standard of insulation is required in “hard to treat” homes; those without cavity wall construction and/or without loft space. It is also the case that you do not have to upgrade older central heating systems. The labour costs and disruption to tenants that are involved with many property improvements means that you should try to incorporate improvements to insulation levels at the same time as other improvements to the homes, even if this is not currently required to meet the Decent Homes standard. In particular, this should include: ??Improved insulation to flat roofs and sloping ceilings when roof coverings are being replaced. ??External wall insulation if walls are to be re-rendered. ??Internal wall insulation or installation of new heating systems if properties are to be fully refurbished internally. ??Floor insulation if ground floors are being replaced. 3. Assessing the compliance of individual homes The thermal comfort criterion of the Decent Homes standard is designed to make it relatively easy to confirm whether or not individual homes meet the standard. From a landlord’s perspective, the priority will be to identify those homes which do not meet the standard. Essentially, these will be the properties where the answer to at least one of the following questions is “Yes”: ??Is the home heated solely by individual room heaters? ??If the home is heated by LPG or solid fuel-fired central heating or by electric storage heaters, is there less than 200mm of loft insulation or no cavity wall insulation? ??If the home is heated by mains gas or oil-fired central heating, is there less than 50mm of loft insulation and no cavity wall insulation? Alternatively, the following matrix could be used to identify whether a home meets the standard: If you have a database of your housing stock’s energy characteristics, it should be easy to interrogate the data relating to heating system, fuel type, loft insulation thickness and wall insulation thickness and identify homes which do not meet the required standard. If you do not have an energy database of your stock, you will need to collate the information from other sources. These could include rent or servicing databases for heating system and fuel type and installation records for insulation. Gathering this data for comparison with the Decent Homes standard provides an ideal opportunity to establish a stock energy database (see the Housing stock assessment1 chapter for more information on the benefits and uses of a stock energy database). The date of construction of a home will also give you an indication of whether it is likely to meet the Decent Homes standard. The insulation requirements of the building regulations may mean that a home built at a certain time automatically meets the Decent Homes standard. The table on the following page can also help you to identify non-compliant homes. Many homes built between 1982 and 1985 are likely to have unfilled cavities that could be insulated effectively. However the thermal performance of these walls will have been as good as that of properties built at the same time with insulated cavity walls (in order to comply with building regulations). You may need to survey some of your housing stock, particularly to confirm whether uninsulated properties do have cavity walls and loft spaces. To maximise cost effectiveness you can combine this survey activity with other stock surveying or visits to the property (eg when servicing the heating systems). 4. Assessing the stock-level implications of meeting the Decent Homes standard Any of your stock which fails to meet the Decent Homes standard will have to be included in programmes to install loft insulation, cavity wall insulation and/or programmable central heating or storage heaters by 2010. The flow chart on the following page summarises the development of an investment programme to ensure that the energy efficiency requirements of the standard are met by 2010. Once you have defined your programme you should obtain an estimate of the total costs, so that the financial resources can be secured. It is probably easiest to consider the costs of the insulation and heating improvements separately. Once you have identified the stock under consideration, the estimation of costs for insulation is generally straightforward as costs are fairly standard according to the property type. The costs of insulation per dwelling from previous contracts can be used to help with these estimates. You should consider providing cavity wall and loft insulation to all properties where they are applicable because: ??Reducing the heat demand by installing insulation helps to reduce the capacity and costs of any new heating system installed in the property. ??Subsidies of 50-100 per cent for cavity wall and loft insulation are available from the energy suppliers (see The Energy Efficiency Commitment chapter from Energy efficiency the guide)1. ??Cheaper prices may be available for a bulk contract. Insulating all appropriate properties may increase the capital funding required in the short term. However, it avoids the complication of specifying different improvements to homes with different heating systems and reduces the risk that properties will need to be improved a second time. For heating system improvements you should appraise the options available for those homes without central heating before upgrading those homes with central heating. In terms of capital costs, the cheapest option is likely to be electric storage heaters. Unfortunately, this option will result in relatively high fuel costs for tenants and comparatively higher carbon dioxide emissions. Therefore, electric storage heaters are unlikely to contribute to the achievement of targets other than the Decent Homes standard (eg carbon reduction or affordable warmth targets). Again, there is the risk that higher standards after 2010 will be more difficult to meet for homes heated by electricity. It could well be a false economy to go for the cheapest capital cost option for the current Decent Homes standard. You should review the heating options for those properties without central heating (or storage heaters) taking into consideration factors such as: ??The availability of mains gas. ??Capital costs. ??Maintenance costs. ??Future replacement costs. ??Sustainability issues (eg flexibility to switch to renewable fuels, environmental impact). ??The provision of affordable warmth. 5. Opportunities for improving overall energy efficiency Housing management organisations have other obligations in addition to their requirement to meet the Decent Homes standard. This includes the provision of affordable warmth for tenants. There is a strong case for improving homes to meet an affordable warmth target, for example a target SAP rating of at least 70 or a target NHER of 8.0. Please see the Housing stock assessment1 chapter for more information about energy ratings. By setting yourself an energy target you can then carry out a strategic assessment of the energy efficiency and heating options to enable you to meet that target across your stock. Your strategic assessment would seek to answer: ??What options will we have for supplying heat, hot water and electric power for our homes in (for example) 2020? ??Which options are robust against rising fuel prices and uncertain availability? ??What are our preferred options? ??How do we get there from here? ??How much will it cost? An assessment could be carried out on a sample of typical property types that represent the range of properties in the stock. A programme of improvements could then be developed. This would achieve a significantly higher standard than the Decent Homes standard and would also help you to prioritise homes that fall below the Decent Homes standard for improvement before 2010.” ( Energy Saving Trust, 2008, pp. 1-6 ) References BRE (2006). “The Decent Homes Standard”. Rethinking Housing Refurbishment. http://www.rethinkinghousingrefurbishment.co.uk/filelibrary/projects/rethinking_housing_reburbishment/The_Decent_Homes_Standard.pdf ) . Accessed Feb. 26, 2011. Department of Energy and Climate Change (2010). “Paving the Way for Green Deal”. Carbon Emission Reduction Test. http://www.decc.gov.uk/en/content/cms/what_we_do/consumers/saving_energy/cert/cert.aspx , Accessed Feb. 26, 2011. Energy Saving Trust (2008). “The Decent Homes Standard and the Housing Health and Safety Rating System – England”. Jan. 2008. www.energysavingtrust.org.uk/housingbuildings/localauthorities/theguide/. Accessed Feb. 24, 2011. Kaiser, Stephen and Ringlstetter, Max Josef (2010). “Strategic Management of Professional Service Firms: Theory and Practice”. S-ger ISBN 13: 364216062X, November 29, 2010. Keating, M. (2005) The Government of Scotland: Public Policy Making after Devolution, Edinburgh: Edinburgh University Press. Killip, Gavin (2008). “Transforming the UK’s Existing Housing Stock”. Environmental Change Institute, University of Oxford, July 2008. Kinver, Mark (2011). “Energy House To Reveal Scale of UK Retrofit Challenge”. BBC News Jan 27, 2011. http://www.bbc.co.uk/news/science-environment-12297538 . Accessed Feb. 26, 2011. Hood, C. and Heald, D. Eds (2006) Transparency: The Key to Better Governance? Oxford, OUP 2006. Low Carbon Economy Ltd. (2009). “Policy Summary-United Kingdom: Key Targets”. http://www.lowcarboneconomy.com/Low_Carbon_World/Data/Country/FromMap/232). Accessed Feb. 26, 2011. Ortoleva, Matthew and Dyehouse, Jeremiah (2008). “SWOT analysis: an instrument for writing center strategic planning”. Center University of Rhode Island. The Rich Company, LLC, 2008. http://www.thefreelibrary.com/SWOT+analysis%3a+an+instrument+for+writing+center+strategic+planning.-a0198354665 Sim, D. (Ed.) (2004) Housing Policy in Post-Devolution in Scotland. Coventry: Chartered Institute of Housing. 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