2 Supply, rules of the game, and tools for analysis
3.7 A framework for purchasing
In contrast to the building of new housing, purchasing of maintenance servic- es demands attention to aspects such as customer-friendliness, communica- tion with residents, flexibility towards residents, and the cleanliness of both workers and the workplace. Thus, the extent to which maintenance activities have an impact on residential satisfaction differs from the impact of build- ing new houses. In addition, many differences exist with respect to residen- tial satisfaction relating to diverse maintenance activities, such as paintwork, planned or reactive lift maintenance, and roofing maintenance. This issue will be explored further in Chapter 5.
As suggested above, dwellings owned by housing associations have a num- ber of core functions: providing housing services to tenants, contributing to liveability in a neighbourhood, and providing financial revenues to housing associations through cost-effective exploitation of real estate and value-en- hancing maintenance solutions. Each building component contributes to these functions to a different extent. Maintenance services relating to each 2.
of these components and the customers ‘using’ these components thus also contribute to these functions:
revenues on real estate; residential satisfaction;
liveability of the neighbourhood.
1. Revenues on real estate
Revenues can be earned through making maintenance choices that increase the market value of real estate, and through cost-effective purchasing of maintenance (e.g. using the principles of Total Costs of Ownership, TCO). Ap- propriate maintenance work has the potential to lengthen the service life of buildings by curbing the progressive increase in their maintenance costs, and by curbing the decrease in their present market value (Skifter Andersen, 1995; OECD, 2005). All construction maintenance, such as exterior paintwork, main- tenance of balconies, maintenance of porches, galleries, common passage- ways and stairways, but also (to a lesser extent) maintenance to kitchens and bathrooms, influences a building’s aesthetic, technical and functional perfor- mance, and thus the revenues on real estate.
2. Residential satisfaction
The residential satisfaction of housing associations’ customers can be en- hanced through attention to a customer-friendly maintenance process and to the quality of the output of maintenance on building components, instal- lations and surrounding grounds of buildings. Maintenance is a service that aims to preserve or improve the housing situation of tenants (Dogge, 2002). All maintenance services contribute to this aim, to a greater or lesser degree. Dissatisfaction with maintenance services will lead to complaints, particu- larly when the functional performance, or functionality, of installations and building components is damaged.
3. Liveability of the neighbourhood
The visual and functional quality of the surrounding grounds of buildings and external building components (e.g. paintwork) can have a positive (or negative) influence on the liveability of a neighbourhood. Whether this effect is direct or indirect is disputed in literature. The so-called environmentalist approach assumes a direct relationship between physical-spatial attributes and social problems (Newman, 1972; Coleman, 1985). Others, such as Nieboer (2005), argue that physical housing characteristics determine the rent paid by tenants, which can subsequently affect the socio-economic position of the population. The composition of the population may influence the liveability, and may be linked to social problems. Maintenance services to external build- ing components, such as (slope) roofing, paving, and the building façade may directly affect liveability. All maintenance services that somehow affect the 1.
2. 3.
aesthetic and functional performance of a building may have indirect effects on liveability, including maintenance to kitchens and bathrooms.
Finally, although sustainability as such is not a public task of housing associa- tions, it might be defined as one of their maintenance objectives. As sustain- ability is not a public task according to BBSH, however, and as maintenance is still not usually conducted for sustainability reasons, sustainability will not be given further attention in this chapter.
Housing associations should know what contribution maintenance makes to their strategic goals and, by extension, to the fulfilment of their public tasks, and should use this information to purchase maintenance services ef- fectively. Table 3.2 presents the different maintenance services and their im- pact on a housing association’s goals.
The results of the maintenance services fulfil certain functions, which sub- sequently contribute to the housing association’s goals. The elaboration of the maintenance works determines the extent to which these goals are reached.
The choices in the commodity strategy should be made on the basis of these goals, such as the choice of performance criteria for suppliers. In prac- tice, this may mean that for maintenance services with a relatively high im- pact on residential satisfaction, criteria that are directed towards a high level of service to customers will be prioritised. On the other hand, criteria for ser- vices that are important for maintaining the market value of the building may cover more ‘traditional’ process and product-related issues.
Since the underlying goals for purchasing of maintenance are clear, a framework can be constructed linking the function of maintenance services to the related purchasing strategy, enabling a commodity strategy to be de- veloped. This framework is presented in Figure 3.3. According to this model, maintenance services affect the liveability of a neighbourhood, residential satisfaction and revenues on real estate. Strategic choices made with respect to these three tasks (which may in turn depend, for instance, on the service, the dwelling’s characteristics and the resident’s characteristics) determine the development of the commodity strategy.
The requirements for the service supplier and the offer can be set in differ- ent ways:
through execution requirements (specifications);
through suitability requirements (supplier selection criteria); through award criteria; and
through contract-related incentives.
In Sub-Section 2.3.2 above, the differences between suitability requirements and award criteria in the context of European tendering laws were outlined. Selection criteria allow contracting entities to verify the suitability of econom- ic operators pursuant to economic and financial capacity, and technical and/or
■ ■ ■ ■
professional capability. Award criteria are related to the offer itself. To what ex- tent will the offer be delivered according to the criteria set? The specification, or execution requirements, states the required level of service delivery in the amount of detail needed to secure service quality. Contract-related incentives imply a bonus system for higher performances than required in selected areas. Housing associations should apply an appropriate set of criteria and re- quirements in order to get the service they expect. The appropriate set of cri- teria and requirements are dependent on the building component or installa- tion in question, and on the strategic objectives.
With regard to the suitability requirements, there is usually no reason to abandon one of the financial economic and ethical criteria and the criteria related to the authorisation to conduct works, as mentioned in the applicable European Directive 2004/18/EG (European Union, 2004: 144-145). The amount of technical competence needed on the part of the maintenance service sup- plier depends on the specific maintenance service in hand. Naturally, a specif- ic maintenance problem may demand specific expertise. In addition, a main- tenance service supplier’s technical competence might be proven through quality or approval systems (e.g. ‘AF-erkenningsregeling’, ‘Dakmerk’, Concrete Repair Standard, see Straub and Van Mossel, 2007). Quality marks are not available for all requirements, however.
Table 3.2 Maintenance services and their functions
Maintenance service Functions of the results of the services
Goals to which the service contributes
Maintenance of roofs and gutters Technical performance
Aesthetical performance for slope roofing, and in case of a view of flat roofing Energic and acoustic comfort •
• •
Residential satisfaction Total costs of ownership (TCO), market value Liveability of the neighbourhood •
• • Exterior paintwork Aesthetical performance
Social safety Technical performance • • • Residential satisfaction TCO, market value Liveability of the neighbourhood •
• • Maintenance of balconies Functionality
Technical performance Aesthetical performance • • • Residential satisfaction TCO, market value Liveability of the neighbourhood •
• • Maintenance of hinges and locks of
windows and external doors
Functionality Social safety • • Residential satisfaction TCO • • Maintenance of entrance hall, gallery,
corridors and/or stairs Social safetyAesthetical performance Functionality
• • •
Residential satisfaction TCO, market value Liveability of the neighbourhood •
• • Maintenance of lifts Functionality
Technical performance Safety of use • • • Residential satisfaction TCO • • Cleaning of shared areas Social safety
Aesthetical performance • • Residential satisfaction TCO • •
Maintenance service Functions of the results of the services
Goals to which the service contributes
Maintenance of lighting in shared areas Social safety
Aesthetical performance Functionality • • • Residential satisfaction TCO • • Maintenance of ventilation systems Healthiness
Functionality • • Residential satisfaction TCO • • Maintenance of heating and water
systems Functionality Safety of use • • Residential satisfaction TCO • • Maintenance of kitchens Functionality
Aesthetical performance •
•
Residential satisfaction TCO, (market value) •
• Maintenance of toilets Functionality
Aesthetical performance •
• ••Residential satisfactionTCO, (market value) Maintenance of bathrooms Functionality
Aesthetical performance •
•
Residential satisfaction TCO, (market value) •
•
Maintenance of drains •Healthiness Residential satisfaction TCO
• • Communal greenery Aesthetical performance
Social safety •
•
Residential satisfaction TCO, (market value) Liveability of the neighbourhood •
• • Maintenance on paving around the
building Aesthetical performanceFunctionality Social safety Safety of use • • • • Residential satisfaction TCO, (market value) Liveability of the neighbourhood •
• •
For works that include end-customer contacts, it is advisable to ask for proof of expertise. In this case, the most logical proof may be prior, successful experience. In addition, a housing association may ask a potential supplier how it has dealt with customer complaints in the past. For complex works, the potential supplier may be asked to list previous successfully completed complex works.
The application of supplier selection criteria, in combination with award criteria, will lead to a reduction in the number of suppliers that need to be evaluated. Selection criteria are thus often relatively generic in nature. The filtering process will reduce the time and effort required in collecting and an- alysing supplier data in the award procedure. See Section 3.3 for information about the application of supplier selection and award criteria in practice.
The use of award criteria for potential suppliers, and contract-related in- centives for existing contracts, can be combined with use of an incentive structure. The key performance requirements relating to the award criteria may be the same as those used in the performance measurement of existing contracts, so long as this does not lead to an insufficient number of potential suppliers. In this way, positive experiences from the past may be rewarded and lead to an increased chance of doing more business with the housing as- sociation. Concurrently, performance requirements (being contract-related in-
Table 3.2 Maintenance services and their functions
Maintenance service Functions of the results of the services
Goals to which the service contributes
Maintenance of roofs and gutters Technical performance
Aesthetical performance for slope roofing, and in case of a view of flat roofing Energic and acoustic comfort •
• •
Residential satisfaction Total costs of ownership (TCO), market value Liveability of the neighbourhood •
• • Exterior paintwork Aesthetical performance
Social safety Technical performance • • • Residential satisfaction TCO, market value Liveability of the neighbourhood •
• • Maintenance of balconies Functionality
Technical performance Aesthetical performance • • • Residential satisfaction TCO, market value Liveability of the neighbourhood •
• • Maintenance of hinges and locks of
windows and external doors
Functionality Social safety • • Residential satisfaction TCO • • Maintenance of entrance hall, gallery,
corridors and/or stairs Social safetyAesthetical performance Functionality
• • •
Residential satisfaction TCO, market value Liveability of the neighbourhood •
• • Maintenance of lifts Functionality
Technical performance Safety of use • • • Residential satisfaction TCO • • Cleaning of shared areas Social safety
Aesthetical performance • • Residential satisfaction TCO • •
Maintenance service Functions of the results of the services
Goals to which the service contributes
Maintenance of lighting in shared areas Social safety
Aesthetical performance Functionality • • • Residential satisfaction TCO • • Maintenance of ventilation systems Healthiness
Functionality • • Residential satisfaction TCO • • Maintenance of heating and water
systems Functionality Safety of use • • Residential satisfaction TCO • • Maintenance of kitchens Functionality
Aesthetical performance •
•
Residential satisfaction TCO, (market value) •
• Maintenance of toilets Functionality
Aesthetical performance •
• ••Residential satisfactionTCO, (market value) Maintenance of bathrooms Functionality
Aesthetical performance •
•
Residential satisfaction TCO, (market value) •
•
Maintenance of drains •Healthiness Residential satisfaction TCO
• • Communal greenery Aesthetical performance
Social safety •
•
Residential satisfaction TCO, (market value) Liveability of the neighbourhood •
• • Maintenance on paving around the
building Aesthetical performanceFunctionality Social safety Safety of use • • • • Residential satisfaction TCO, (market value) Liveability of the neighbourhood • • •
Table 3.2 Continued
centives) may be flexible enough to occasionally raise the requirements, and let suppliers submit continuous improvement plans on a regular basis.
Contracts may be awarded to the supplier that: satisfies all requirements;
gets the highest ratings for desired but non-essential service attributes. An attribute’s importance to the strategy determines its application and weight. An essential attribute may be made a requirement, whereas an im- portant but not essential attribute might become one of the weighted criteria. An attribute may be related to the result of the service but also to the process of service delivery. Due to the fact that this thesis focuses on how to promote tenant satisfaction using maintenance, the following chapters will focus on the importance of attributes of maintenance service delivery for meeting this objective. In other words, which elements have an on impact tenant satisfac- tion with regard to maintenance? This information serves as input for later chapters (7, 8 and 9), which look at how to optimise commodity strategies for tenant satisfaction regarding maintenance.