Maintenance firms can save social landlords £1.8bn a year

Aaron Morby 14 years ago
Share

More than £1.8bn is being wasted each year because social housing landlords are failing to fully outsource housing maintenance.

A new study by strategy consultants Credo found that housing associations and local authorities are outsourcing just 60% of their housing maintenance. This saves the sector an estimated £1.1bn, according to the report.

But, if the sector fully embraced outsourcing, extra savings would top £1.8bn, which could be ploughed into building new homes.

The research, which was commissioned by contractor Morrison, also found that the collapse of Connaught and Rok has hit confidence.

This year has seen a sharp fall in contract sizes in both large and mid-sized contracts. Credo said the reasons for this was likely to be a lack of confidence in the economic outlook and providers’ preference for spreading risk amongst a larger number of suppliers.

Dineshi Ramesh, principal consultant for Credo, said: “The untapped £2bn opportunity in outsourcing social housing is undeniable.

“But in recent times local authorities and housing associations have shown greater caution in moving to bolder forms of outsourcing, this is an understandable but, we think, temporary effect.

“As their financial situation becomes clearer, housing managers and chief executives can turn their attention to how they can get a slice of the savings offered by outsourcing.”

Guy Wakeley, chief executive of Morrison, said: “While social housing has remained relatively untouched by cost cutting to date, largely as a result of some expenditure such as reactive maintenance being considered non-discretionary, there remains a considerable need to drive for savings from housing providers.

“The sector has to respond to this demand but it must be done in the right way, squeezing prices is not a sustainable option and will only lead to poor quality services which are likely to fail.”

Housing maintenance strategies

But there are signs that more collaborative contracts are on the increase according to the findings of the research, which found that this type of model formed 40% of the contracts starting in 2011.

This suggests that social housing providers after negotiating lower prices are now looking at more collaborative methods to drive further cost savings.

Guy Wakeley added: “Landlords are quite understandably looking to protect themselves from risk and the reduction in contracts’ sizes and the increased use of extensions are two examples of this.

“I believe this is a positive change for the sector, as it will help drive increased creativity by service providers who are looking to secure new contracts and extensions, and ultimately drive service levels for clients and residents.

“The social housing sector can no longer afford to use the same old methods it must become more flexible if it is to make the savings it needs whilst meeting increased demand.”

Latest news

13-year-old becomes UK’s youngest qualified digger driver

Grandson of Gallagher Group chairman sets industry record
5 hours ago

Cubby reborn in £12m Svella-backed takeover

£50m revenue target set as 14 firms combine under new Cubby Group banner
20 hours ago

North East NHS trusts plot £3bn health estate overhaul

Market engagement begins for major construction push across four trusts
20 hours ago

HG goes green on cranes in £1.2m switch to battery power

Diesel-free crane drive cuts fuel bills by 94%
21 hours ago

Developer fined £165,000 for fire safety failings

Firm ignored fire safety orders on apartment job in Preston
21 hours ago

Bidding to start for £1.8bn North West framework

Contractors invited to bid for latest Procure Partnerships deal
21 hours ago

Hill hits record £90m profit as homes pipeline swells

Build-to-rent push and £4.8bn contracting book to fuel next growth phase
2 days ago

Rayner unveils £39bn plan to build 300,000 social homes

Council building revival and rent reform feature in social and affordable homes plan
2 days ago

Keltbray bounces back with £3.2m profit

Tighter controls and smarter project selection fuel strong turnaround
2 days ago

VINCI JV wins 500-home twin town centre revamps

Chester Northgate phase 2 and Northwich Weaver Square schemes move to delivery stage
2 days ago

80 energy projects unlocked as Ofgem backs grid expansion

£24bn energy networks deal gets green light from regulator
3 days ago

How to see your stories on the Enquirer

Join our Suppliers and Buyers directory to get your news published
2 days ago

Henley lands Midland Mill revamp on Leeds tower scheme

Restoration of 18th-century mill kicks off on South Bank regeneration project
2 days ago

New boss at Eric Wright Civil Engineering

Gavin Hulme takes top job as Diane Bourne moves to group role
2 days ago

Pinewood submits £1bn data centre plan

Studio giant adds green and learning spaces to tech hub blueprint
3 days ago

Record results after TClarke goes private

Britain's biggest M&E contractor flourishes after de-listing
3 days ago

Dalkia lands £200m nuclear maintenance deal

1,000 nuclear FM staff to join M&E contractor
3 days ago

Construction comeback to outpace wider economy

Arcadis forecast fueled by spending review optimism
4 days ago

First steel goes up on giant car battery site

Severfield gets to work on McAlpine Somerset site
4 days ago

Permasteelisa wins cladding deal on Bovis city tower

Facade specialist lands package at 60 Gracechurch Street
3 days ago

Fox buys recycled asphalt specialist Fisher

Acquisition adds major recycled asphalt capacity in north west
4 days ago

Major Building Safety Regulator shake-up to end tower delays

HSE stripped of control and top fire chiefs brought in to fast-track stalled schemes
4 days ago

Hinkley trio sign Sizewell civils deal

Balfour,Bouygues and Laing O'Rourke form Civil Works Alliance for new power station
4 days ago

£3.9bn data centre plan for Ravenscraig steelworks

Green energy to power massive new steel to silicon AI campus
4 days ago

Breakthrough on HS2’s second longest tunnel

8.4 mile Northolt to Old Oak Common drive completes
4 days ago

Neilcott on fast-track to debt-free employee ownership

£22.5m loan nearly paid down after big profit year
4 days ago

TfL kicks off race for £700m Tube station upgrade

South Kensington and Elephant & Castle top the pipeline list
4 days ago

Corbyn Plant Hire fleet goes under the hammer

Kit to be sold off by sister firm to collapsed groundworks contractor
4 days ago

Government wields procurement stick on late payment

New rules would block slow payers from bidding on big public jobs
7 days ago

Hercules buys power line labour firm for £15.7m

Labour supply specialist snaps up Advantage NRG to tap booming electricity upgrade market
7 days ago