Attrition rates of new housing projects in London need improvement

09 March 2017

New analysis commissioned by Fifty Thousand Homes, supplied by Grant Thornton, shows that to meet the campaign pledge of 50,000 new homes to the city per year, the attrition rates between planning permission granted and those that are actually built – currently at 36% – will need to be tackled. As it stands, larger projects – those with between 100 and 149 homes – are the most likely to get off the ground.

The housing crisis in London continues, with analysis from Fifty Thousand Homes campaign finding that current construction trends are unlikely to see relief, particularly for young people and businesses, across the region. Net migration for 30-somethings into London continues to be negative, with around 30,000 more leaving than arriving each year. The average cost of a house in the capital is now more than 14 times average earnings, while three-times average household income is seen as a marker for affordable housing.

Recent analysis for the Fifty Thousand Homes campaign, supplied by Grant Thornton (one of the partners of the pledge), finds that even while planning permission has been granted to around 50,000 new homes since 2014, more than a third of the projects end not being built – the rate of project attrition has risen since 2010, from 28% to 36%. The analysis further finds that on average it takes thirteen months to move from planning permission to ground breaking, and a further 20 months to complete the project – noting a considerable lag time that will further slow implementation efforts as well as demanding higher numbers of projects – or a reduction in attrition rates – in the pipeline to meet the campaign’s target to bolster stock.

Grant Thornton and Fifty Thousand Homes

“This performance data is essential in informing our shared mission to tackle the shortage of housing in London. There is a desperate need to increase supply across the capital, and our analysis identifies those areas that need attention,” says, Sacha Romanovitch, Chief Executive of Grant Thornton in the UK.

According to the accounting and consulting firm, housing projects with between 100-149 homes are the most likely to rise from the ground, with the rate of attrition for the category at 22%.

Around 30% of the projects that are being built are considered ‘affordable’ housing, which includes including social housing, affordable rent, shared rent and shared ownership. This highlights further challenges faced by the Fifty Thousand Homes campaign's goal to make the capital more affordable for people from a broad array of backgrounds.

Jasmine Whitbread, Chief Executive of London First, who launched the Fifty Thousand Homes campaign, remarks, “The Mayor rightly said the election was a referendum on housing but it’s a huge job ahead. We’ll update these ‘scores on the doors’ every six months, tracking London’s progress and working with planners and developers to get to the bottom of what’s holding up housebuilding in the capital. A huge number of businesses are worried about their staff being priced out of the city, we have to act now to keep hold of the people that make London work.”

Romanovitch adds that solving London’s housing crisis would also strongly benefit the capital's future growth at a time when the economic outlook has weakened. "Additional house building projects in themselves will help to create jobs and stimulate growth and pivotal to achieving this is working collaboratively with the 32 London Boroughs and the City of London Corporation.”

On the business side of London's real estate market, a recent report from Deloitte found that new office construction in Central London has returned to pre crisis heights.


Ensuring data quality imperative for smart asset management

25 March 2019

By implementing innovative Asset Performance Management systems, utilities firms can maximise their utilisation of assets and minimise maintenance costs across their portfolio. However, according to Louis Morgan of Smart Grid Forums, without securing quality management systems for the data which smart grids rely upon, companies risk missing out on the benefits of asset performance grids.

Smart asset management presents a major opportunity to professionals across the business spectrum. In this context, a new event hosted in London is looking to help smart-grid asset management professionals meet the needs of a changing energy industry with digital asset management. The first annual Grid Asset Management event is due to take place between the 14-16th of May 2019 at the Millennium Hotel in Knightsbridge, London.

The conference will bring together leaders and experts from across Europe, in order to benchmark their digitalisation roadmaps. In a piece posted on the Smart Grid Forums website ahead of the event, Louis Morgan, a Conference Producer at Smart Grid Forums, has outlined the importance of investing in innovative asset performance technology for utilities firms, which can help ensure long-term stability for assets management in the utility sector in the face of increased complexity  .

Ensuring data quality imperative for smart asset management

Traditionally, the decision to invest in a given asset was made on the basis of an expert’s judgement of the risks posed by its failure, having typically been assessed via a risk matrix or a similar qualitative method. After that, a decision would be taken as to whether it should be replaced. However, according to Morgan, as the pace of change and complexity increases, these methods can no longer provide the required level of certainty. Uncertainty about changes to consumption patterns and load profiles brought on by the energy transition produces a vast number of possible scenarios that investment planners must consider.

As a result, Morgan explained, “utilities are seeking to support their investment decisions with quantitative risk management methods, centralising expertise from across their operations into a consistent, numerical framework that accurately captures the risk posed by all kinds of asset failure to all stakeholders.”

Companies are doing this by turning to ‘smart grid’ utility management, or systems which work to invest in the maintenance and replacement of millions of assets spread across thousands of kilometres of network. However, this is by no means a silver bullet, and in the age of the smart grid, planning ahead is more complex than ever. To ensure the long-term stability of their grids, then, utilities must deploy standardised investment decision-making practises supported by advanced modelling capabilities.

Morgan elaborated that the best way of facing this problem is through the combination of condition, utilisation, reliability and demand data. In that case, risks can be quantified in financial terms and investment budgets can target the assets posing the highest total risk, thus deferring investment in lower risk assets and optimizing the long-term budget. However, decisions informed by these risk models “will only be as good as the data and the assumptions that support them”, meaning utilities must therefore find ways to improve the volume, variety, veracity and velocity of the data they employ in their investment planning models.

“This means digitalizing asset operations, rolling out sensors and implementing systems that integrate data from a range of internal and external sources in real-time,” Morgan expanded. “Utilities must also scour their business for expertise about different assets to ensure that their risk management frameworks accurately capture the true risks posed by asset failures.”

This is in keeping with a trend which goes well beyond utilities. Business leaders of all shapes and sizes are currently having to address how they manage data quality – as poor information being input into any automated system can essentially negate the efficiencies such systems bring to the table. To this end, robust data governance is critical.

Concluding his article, Morgan said, “It is clear that there is a great deal of opportunity for utilities to obtain significant business benefits from improving their investment planning capabilities. More accurate risk management, supported by a reliable data-driven method, will deliver better financial outcomes from investment activity... But to achieve these capabilities, a lot of work must be put in to establish the systems, processes and frameworks which underlie them. Utilities must also make difficult choices about how they quantify risk and the appropriate range of data to feed into their investment planning models.”

This topic will be tackled in-depth at this year’s Grid Asset Management 2019, a conference, exhibition and networking forum aimed solely at smart grid asset management professionals.