Implementing an Asset Management
Approach to PHA Planning &
Operations: The “New Normal”:
MDStrum Housing Services, Inc.
Indianapolis, IN
June 7, 2010
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Effective Planning for Managing the PHA’s
Assets
New operating reality can be viewed as the
asset mgmt approach to managing PHA
operations:
Physical resources
The Properties
Equipment
Human resources
Financial resources
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New Operating Reality
Central to this precept is the need to re-think:
Organizational structure
Decentralized structure vs. traditional centralized structure
Defining the Work flow
Bottom-up vs. Top-down
Business and Management approach:
Requires changes to way PHA• Conducts its administrative affairs
 i.e., “asset management approach”
• Delivers housing mgmt services
 i.e., project based management & maintenance
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What is Asset Management ?
There are so many different things that can
be defined as “assets”, thus there are so many
different meanings of “asset management”
It often depends on what type of asset is involved.
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Defining “Asset Management” (vs. asset-based mgmt)
 Asset Management is a term getting a lot of
press recently.
Implies many things to many people;
No industry standard for application
There are, however, some implied basic
concepts:
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Asset Mgmt- Basic Concepts
 In “asset management”…
 Business goals drive decisions regarding use and care of “assets”
 E.g., pvt. Mgmt of public housing stock v. implementing asset
mgmt with PHA staff
 Asset strategy is determined by operational considerations
 staffing requirements, financial limitations, competitive position of
properties
 Maintenance and reliability are means to a defined goal, not
an end in themselves
 E.g., end-game is not a “good maintenance program” but rather
a good maintenance program that provides competitive
properties
 Intent is to optimize all resources
 Physical, financial, human
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A.M. Has been Defined as…
…a global management process through
which one consistently makes and executes
the highest value decisions about the use and
care of the assets
(ii)
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What is Asset Management ?
 Asset management is a broad term
(1).
It can be defined as a process that guides the gaining of
assets, along with their use (and disposal) in order to
make the most of the assets and their potential
throughout the life of the assets.
While doing this, it also manages and maintains any
costs and risks associated with the assets.
It is not something you can “buy”, but rather a
discipline you must follow in order to maintain your
assets.
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What is Asset
Management ?
 In the broadest construct, “Asset
management” can be thought of as the set of
business practices that join financial, human and
inventory (e.g., properties and equipment)
functions to support life cycle management and
strategic decision making for the targeted business
environment.
 Assets include all elements that are found in the
typical business (i.e., PHA) environment.
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The Asset Management System
Regardless of the form or nature of the “assets”, there are many similar things that
your asset manager system should entail, and in the context of the PHA we
should plan to:
 1. Optimize asset use(s) and manage all related maintenance/cost efforts
involved by making assets as accurate, reliable, and efficient as possible.
 Example: Deployment of human resources including contracted services
 2. Reduce the demand for new assets and thus save money by using
demand management techniques and maintaining current assets.
 Example: Plans for recurring preventive maintenance of the equipment
and systems (e.g. HVAC)
 3. Use a form of asset tracking: know where the asset is at all times, how
much the asset is worth, and how much the asset cost you to begin with.
 Example: Systems for periodic review of the performance of assets (e.g.
Rent collection, budget planning & management)
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The Asset Management System
 4. Always try to achieve greater value for money through
evaluating the asset options; i.e., the cost of maintaining, producing, the
use of it, etc.
 Example: Establishing marketability; Conducting Physical Needs
Assessments
 5. Always provide for a report on the value of the assets, along
with any costs involved in maintaining the assets.
 Example: Producing monthly management and financial reports to
assess the continuing viability of the asset(s)
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What is Asset
Based Management (ABM)?
Asset Based Management is…
..the theory in property management requiring each individual property
to act as a self contained entity responsible for managing all aspect of
operations including Project-Specific
 Marketing
 Leasing
 Resident Services
 Routine and Preventative Maintenance
 Lease Enforcement
 Protective Services
 Focuses on Operation & Management of Project
 Day-to-Day Responsibilities & Decision-Making at Project Level—
 not Central Office
 Addressed Project Needs With Project Resources
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ABM
 ABM = PBM + PBB + PBA
 PHA-Wide Policy & Direction
 Long-Term Capital & Administrative Planning
 Property Management Performance
 Review of Entity-wide Financial Information
 Long-Term Viability of Properties
 Risk Management
 Property Repositioning & Replacement
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What is Asset
Based Management ?
The goal of Asset Based Management is to
create a property which operates in the black
while at the same time is responsive to the
needs of its customers by delivering quality
service and maintaining an attractive
property which effectively competes on the
market with similar properties.
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PHA – Asset Based Management
Definitions
 24 CFR 990.115:
 Asset Based Management “is a management model that emphasizes
project (property) based management, as well as long term
strategic planning.”
 Project Based Management “is the provision of property management
services that is tailored to the unique needs of each property, given the
resources available to that property.”
 Project Based Budgeting is a list of all planned expenses for a
particular project grouping.
 Project “means each PHA project under an ACC to which the operating
fund is applicable”.
 However, under asset management, projects may be identified under the
ACC or may be a reasonable grouping or portions of a project or projects
under the ACC.
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PHAs & Asset Based Management
2oth C PHA Model: largely organized along
the traditional “centralized bureaucracy”
21st C PHA Model: requires transition to a
decentralized agency with a “program (e.g.
Capital Fund/HCV); property/AMP; and
performance budget system.”
 budgets are still line item and must flow into the existing HUD
financial data schedules
 PHA “decisions” must reflect what is in the best interest of the AMP
(see PIH 2007-17)
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ABM…Applicability
 All PHAs
Project-Based Budgeting & Accounting
 Small PHAs (Less Than 250 PH Units)
Single AMPs
Multiple AMPs
 Large PHAs (250+ PH Units)
Multiple AMPs
Decliners Accelerate AM Implementation for Stop-Loss
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Applicability- cont’d
 PBB & PBA Required for All PHAs
FYBs 7/1/07 & Later
 PBM & AM Required FY 11
PHAs With 250 or More PH Units
Accelerate AM Implementation for Stop Loss
PBM & AM Optional
PHAs With Less Than 250 PH Units & 1 AMP
Elect AM Implementation for Stop Loss
Incentive
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Asset Management
Asset
Management
(AM)
Project-Based
Management
(PBM)
Project-Based
Budgeting
(PBB)
Project-Based
Accounting
(PBA)
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Typical Transition Steps
 Creation of Project Groupings and Asset Management
Plans for each property/grouping
 Creation of an Agency Budget tied to individual Project
Groupings and Program and Performance Budgets
 Self Evaluation employing S.W.O.T.
 Development of an Agency Strategic Plan
 Assessment & Marketing Studies for Project Groups
 Implementation/confirmation of Asset Based
Management
 Project based management
 Pvt mgt or proj-based PHA mgmt.
 Site based waiting lists
 Project based budgeting
 Project based accounting
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Agency Budgets and Project Groupings Program and
Performance Budgets
 PHAs developed an overall Agency wide Budget based on
the use of a Program/ Performance Model
Within that Budget are separate budgets for each project
grouping detailing annual operations
Agency Central Office Cost Centers budgets (COCC) will be
financed through allowable management fees and fee for
service charges to the appropriate project groupings or
program based on use of the cost center.
Asset mgt fee
Proj-mgt fee
Bookkeeping fee
• Can be other income streams from non-HUD sources
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Performance Budgets…
 Overarching financial goal is for the COCC to be
viable based upon fees that HUD allows to be chgd
to the AMPs
If PHA cannot live w/in the allowable fees there must
be a “plan to adjust”
 PHA cannot “just spread the cost”
E.g., in-house legal staff
Attorneys must establish an actual rate that will be chgd to
an AMP they work on and only when they perform work
for the AMP
Skilled Trades, such as electrician—
• If the AMP does not use their services the AMP cannot be
charged a portion of the salary
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Creating A Strategic Plan
PHA Vision, Mission & Goals
Where You Are
Where You
need to be
Mission and Mandates
Structure & Systems
Communications
Programs & Services
People & Skills
Budget
Support
Mission and Mandates
Structure & Systems
Communications
Programs & Services
People & Skills
Budget
Support
How to get there
Strategy Formulation
Strategic Facilities Plan
IT & HR Plans
Communications
Hiring & Training
Restructuring & Reengineering
Budget Allocations
Strategy Implementation
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Strategic Planning for Improved and Cost
Effective Operations
Major Considerations in defining the Plan-
Forward
Redefining the HA’s Mission:
“Who” are we in the context of a 21st C. housing provider?
• Public housing caretakers?
• Local affordable housing developer?
• Entrepreneurial PHA?
“What” does our local community need us to be?
• Emergency housing?
• Homeless or HOPWA provider?
“Where” do we best fit in when assessing the range of
other local housing providers?
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Strategic Planning for Improved and Cost
Effective Operations
 Major Elements for defining the Plan-Forward
- Resource Identification & Resource Acquisition
What are our traditional income sources?
• How reliable are they?
How much and what kind of “new” income is needed?
• Potential sources? (grants, entrepreneurial activity,
development partners, sell existing assets, other?)
 Capital Fund (formula & competitive-ARRA)
 Replacement Housing Factor (RHF)
 CDBG, NSP, HOME, LIHTC
 Foundations, Pvt. Financing
• Duration? (start-up, gap, ongoing)
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Strategic Planning…
What are my human resource needs?
• Can I rely on existing personnel to meet our
needs/requirements?
 Can we/have we successfully train our 20th C
workforce to become “asset managers” with
new and different duties:
 E.g., Budget development/budget mgt,
procurement, maintenance supervision, capital
improvements, etc.
• Must we identify and acquire a “different kind” of
workforce
e.g., IREM-certified property managers
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Strategic Planning…
 Major Elements for defining the Plan-Forward
Building PHA capacity to Establish and Maintain “AssetBased Mgt”
 MIS/IT: Improving upon existing or acquiring new IT system to
accommodate project-based:
• Budgeting, Accounting, Maintenance, Waiting Lists, HUD-required
reporting data
 Staff: Defining skill sets required; train-up? Or hire “ready to go”?
 Mission Critical Plans & Systems:
• HR: recruitment, retention, evaluation, personal
accountability, effective job descriptions & corresponding
performance appraisal system,
• Financial Mgmt: timely & accurate record-keeping, reporting,
analysis, financial adjustments, supporting documentation,
GAAP, audits, operational adjustments
• Compliance Monitoring: “minding the shop” w/spot audits,
internal/external customer feedback, regular meetings and 27
pointed questions
Strategic Planning…
 Major Elements for defining the Plan-Forward
Achieving Broad Support & Mission-Critical Input
 Board training & board outreach
 Staff training
 Resident training & resident outreach
 Partner briefings-partner input
•
•
•
•
•
•
Local gov’t
Area/adjacent businesses
Civic organizations
Human service providers
Development partners
Financing sources
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Periodic Evaluation
In order for a PHA to successfully maintain an Asset
Based Approach to its property and organizational
operations, there must be periodic self-evaluations of
the current capacity of the organization (S.W.O.T.) to
better define the current or emerging needs.
A scan of the internal and external environment is an
important part of the strategic planning process.
Environmental factors internal to the organization can usually
be classified as:
 strengths (S);
 weaknesses (W),
and those external to the organization can be classified as:
 opportunities (O) or
 threats (T).
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The SWOT Analysis
 A strategic analysis of the environment is referred to
as a SWOT analysis.
The SWOT analysis provides information that is helpful in
matching the organization ‘s resources and capabilities to
the competitive environment in which it operates.
As such, executing the SWOT analysis is instrumental in
strategy formulation and selection.
The following diagram shows how a SWOT analysis fits
into an environmental scan:
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The SWOT Framework
SWOT Analysis Framework
Environmental Scan
/\
Internal Analysis
External
Analysis
/\
/\
Strengths
Opportunities
Weaknesses Threats
|
SWOT Matrix
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Planned Outcomes of a PHA Strategic Plan
Comprehensive
Cuts across departments of the PHA
Considers all factors by dept. (e.g., human,
financial, technological)
Incorporates
Outcome/conclusions from integrated physical
needs assessment to include:
Review of prior PNAs/conclusions
Energy audits
Environmental assessments
Maintenance reports
Onsite review of current physical condition of property
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Ten-Step Strategic Planning Process*
1.
Initiate and agree upon a strategic planning process.
• Who will lead? Participate? (?)
• Logistics
• Scope: internal at first? involve others right away?
Internal only.?
2. Identify organizational mandates.
• What are the rules and regulations?
• What do we know we absolutely have to do?
3. Review/revise organizational mission and values.
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* Note: This process is discussed in detail in the following book:
Bryson, JM. Strategic Planning for Public and Nonprofit Organizations. Jossey-Bass, 1995.
10 Step Process- cont’d
4.
Assess the organization’s external and internal
environments to identify strengths, weaknesses,
opportunities and threats.
•
•
•
5.
Internal assessment with all Agency personnel and contractors?
External assessment with other systems with which this system
interacts
Customers, families, advocates and any other stakeholders
Identify the strategic issues facing the
organization.
•
•
•
How do we capitalize on strengths and opportunities?
How do we resolve weaknesses and mitigate threats?
What forces are driving these issues? What are the
barriers?
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10 Step Process- cont’d
6.
Formulate specific-strategies to manage or remediate “the” issues, such
as.
o Workforce w/out basic skill sets or background to succeed at asset
mgmt (i.e., PBB, PBA, procurement, construction mgmt)
o GI/GO: “bad data” in the MIS/IT system
o Deficit-spending
7.
Review and adopt the (draft) strategic plan or plans.
• Internal review with all Agency personnel and contractors
• External review with other systems with which this system interacts
• E.g., pvt. Property mgmt companies
• Resident families, vendors, advocates and any other stakeholders
Establish an effective organizational vision using the information
gathered.
8.
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10 Step Process- cont’d
9.
Develop an effective implementation process.
•
How to operationalize these strategies?
•
•
•
•
•

i.e., major tasks & related sub-tasks
Responsible person(s)
Start/end dates
Resources required
Forms of confirmation
New programs or redesign of existing programs and contract
expectations?
•
•
Timetable for achieving implementation
What resources do we need?



Human
Financial
Technological
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10 Step Process- cont’d
10. Reassess strategies and the strategic
planning process.
•
•
•
How do we know if our strategies are working?
How do we measure our performance at implementing
the strategies?
How do we continually revisit the plan to ensure that it
remains a living, working document?
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