Although i no longer work for a housing association, I still often work with them now as clients and its an area that still interests me and obviously its something thats very current with ‘interesting’ government policy picking up post-election where IDS’s pre-election Oveton windowing left off.
So I thought i’d try using the wonderful Wardley map technique to help me think about affordable housing. The model below is just a sketch, i go by the E.P. Box quote of ‘All models are wrong, but some are useful’ as a motto. My intention is to develop this model over time, but even this sketch sparks some interesting thoughts.
The map is a value chain (starting with user need at the top and then moving down the Y axis to its dependent parts. The X axis moves from Genesis->Customer Built->Product->Commodity, the phases of which each of the components will go through over time. I’ll leave the explanation of Wardley maps there, Simon’s blog has some great material doing a much better job than i could.
So looking at the limited number of components that i’ve mapped so far we have:
The user need for affordable housing, I’ve placed that within Product on the X axis as its a reasonably well-defined Product category.
Flowing from that need is the need for accommodation, the actual dwelling that would be occupied. I’ve placed this further to the left on the Product phase to denote the myriad of ‘product’ that could be classed as accommodation.
Next is Construction, the actual creation of the accommodation, i’ve placed this in Custom Built, ok there are plenty of building companies (even a conglomerate of housing associations) that are developing/have developed off-the-peg house products and factories, but this isn’t standard construction (in the UK) yet.
From construction the value chain splits off into 3 prongs:
Prong 1: Land, is placed in the commodity space, Assuming i have the money i can just buy land, its not infinite, but then neither are other commodities e.g. gold.
From Land flows Planning, i’ve placed this in Custom Built on the X axis, I can’t just buy some planning (although some conspiracy theorist-type people might say you can :)), its a ritualistic and prevaricatory process.
Construction also flows to Architecture, the generic term i’ve given to the design of the accommodation. I’ve placed this to the right edge of Custom Built as its rarely an off the peg process (see my description of Construction).
From Architecture flows Labour, the actual implementation of the design and the creation of the accommodation. I’ve placed this within Product, construction is performed by defined trades, brickie, chippie, plumber, etc, for the purposes of this analysis they are defined products that you can buy (hire).
From Labour flows the Materials needed to construct the house, these are Commodities, wood, slate, etc etc.
(This prong i’m not too sure about the placement, maybe those with a better understanding of housing finance can help me improve this bit?)
Construction also flows to Finance, the Money to pay for the development of new accommodation. I’ve put Finance in the commodity phase.
Finance flows to two forms of money that Housing associations traditionally use to get capital to build homes 1) Grants (although not so much now) and 2) Bonds (and similar vehicles) secured against existing housing stock. I’ve placed grants in Customer Built because of their often tailored (and elusive) nature. I’ve placed Bonds within the Product phase (although maybe they should be a commodity?) as whilst the actual issued bonds themselves may be bought/sold as commodities the actual issuance of bonds is a process more akin to a product development (or maybe its even custom built?)
So thats my explanation of this intial sketch of a map. but the interesting and important question is, ok so we’ve mapped the value chain but…
Where are the opportunities?
Starting at the bottom of the value chain and working up we have Grants and Bonds occupying the Customer Built and Product phases. Assuming these positions are correct it highlights two things to me:
1) that there are probably other sources of finance that could be accessed
2) There is no commodity form of Finance, maybe there is an opportunity here to explore around re-thinking how HAs finance house-building
Similarly near the bottom of the value chain Materials are commodity, but Labour and Architecture are not. As mentioned above many small scale house builders are building what you might call commodity housing (factory built components, prefabricated compents etc), but this isn’t how the majority of new HA stock is built. Why not? I don’t know the answer to this question (maybe its to do with the commercial relationships we have with developers, something i should map on the next iteration of this map), but surely this must be a huge area of focus. It seems obvious (because it is) that if we move Architecture and Labour towards commodity then we can build more, cheaper and faster. It will be interesting to see if the HA house factory metioned above is a success and becomes a model adopted by more HAs.
Further up the value chain is Planning and Land. Land is a commodity, but depends on Planning which i’ve put in Customer Built. The focus for HAs should be to move Planning towards a commodity. The current government have made moves in this area but i think its for HAs to push/lobby further in this area.
So this is my initial and no doubt naive initial analysis using Wardley maps. I’d really appreciate any feedback, suggestions on improvements, particularly:
1) Additional components of the value chain
2) Placement of components on the X and Y axes.
Feel free to comment on this post and/or contact me on twitter