If you’ve ever wondered what it would be like to attend our viability workshop, carry on reading as we take you through what a typical day participating is like.
The workshop takes you through the full range of appraisal dynamics – not just the financial – that need to be considered when you’re assessing a housing scheme. Below is an account of what happened at a session held at a well-known affordable housing provider.
The day starts with a group of enthusiastic attendees from Development, Asset, Planning and Regeneration departments, all eager to take part in the flipchart discussions, games and training modules that were planned for the day. By the end of the day, a host of topics and activities had been covered, with lively discussions on both affordable and private housing.
To start, the group are split into two teams ready for the first task:
1. Development Table Task
Designed to find out what development actually means to them, both competitive and lively teams had a good range of knowledge and terminology and were confident in expressing ideas.
2. The Tale of Two Cashflows and introducing Whitney Houston
Moving onto the good old flipchart, referencing affordable housing development viability as ‘The Tale of Two Cashflows’ was very well received and led to discussions about NPV and IRR.
Why Whitney Houston??
The answer – ‘One Moment in Time’, which focused on how results from different points in time can be compared on the same basis (apples with apples). The ‘Business Plan Basket’ diagram highlighted the wider picture of multiple projects that make up a viable programme, combined with the responsibilities of the Board/Cabinet, leading to discussions about the importance of the Development Strategy.
3. ProVal Place - Phase 1
This sample site proved valuable for new and existing Proval users. The teams discussed 14 mixed tenure units using the development input from the ‘Tale of Two Cashflows’ diagram, with useful hints and tips given on quick scheme input.
4. Development Risk
The teams demonstrated a good level of awareness on a range of potential development risks and appreciated how a ‘Risk Matrix’ is important in gauging and managing risk through appropriate actions and controls.
5. The Identity Game
This brought out the competitive edge in both teams and highlighted the importance of good branding, which in turn lead to discussions on marketing by housebuilders and the future profile of both local authorities and housing associations as they engage in more commercial tenures.
6. Private Development
Here we discussed why private housebuilders have a different approach to development. We refer to private developers as ‘Traders’ as they deal with short term cashflow, whilst local authorities and housing associations are ‘Investors’, engaging in long term cash flow and ultimately long term reputation. However, these distinctions are becoming subtler as we see wider ranges of tenures being engaged by both sides.
7. ProVal Place - Phase 2 & 3
By using some observations and ideas raised in ProVal Place 1, the potential private sector areas of the scheme were reviewed and suggestions made on how a private developer may reassess opportunities and take the scheme forward.
8. The Gearing Trap
Here we evaluated the importance of gaining maximum sales on the high risk area of private development, with links to profitability and the opportunity to maximise land offers. The gearing effect of a small change in sales value having a disproportionate effect on the residual land price or profit margin was demonstrated and discussed.
9. Mix Optimisation
The concept of plot density for different house types and understanding profitability per type resulted in some great discussions. This, in turn, led to an evaluation of ‘Mix Optimisation’ for a one-acre site and a range of residual land offers to demonstrate the benefits of early evaluation and understanding house types and their costs.
Participants gain a wider appreciation of Development Strategy, Viability, the role of the Business Plan and Board/Cabinet, and the importance of understanding development risk.
To book your own workshop email firstname.lastname@example.org or call 01483 27844
More From SDS
Over the past 10 weeks, we have brought to you a series of webinars covering topics from Viability through to
John Stevens and Andrew Markham will take you through a deeper dive into how the private sector calculates their Residue
We all know that when your scheme was first appraised, it was under very different circumstances. How viable are those
With everything that has been thrown at us, such as Brexit and now Covid19, it’s not surprising that we are