Managing properties, managing risks – good practice

Background

Throughout the entire life of the project, HS2 Ltd will acquire a large portfolio of residential and commercial properties. As of the start of 2021, the total number of properties already in the portfolio was circa 1400 with more being acquired year on year.

The majority of these properties will, in some degree, be affected and impacted upon during the main works construction phases. The project has a substantial construction timescale and depending upon the location of the property, the date as to when these impacts occur may not be seen for a number of years.

Eventually, some of these properties will be put back onto the housing market once the relevant construction phases have been completed. A large proportion of the properties have been privately rented and leased, which not only produces a level of income but by being occupied prevents the properties from falling into a state of disrepair and maintains their value.

HS2 Ltd has become the legally positioned Landlord to these properties. Whilst a specialist property management supply chain partner (known as the Managing Agent) has been engaged to undertake the management and maintenance of the portfolio, HS2 Ltd remains ultimately responsible for ensuring and assuring that the properties are in a legally compliant condition which minimises any risks of harm to tenants, visitors, members of the public and the environment.

Health, Safety and Environment Management – the baseline

When initially establishing the Property Management contract, basic legal compliance was set as the baseline for the standards to be applied to the portfolio with regards to health, safety and environmental management. In some cases, legislation makes clear obligations of compliance test periods, regimes, and document management. However, other legislation and guidance places the onus on a responsible party to establish controls and systems, based upon the outcomes from their own risk assessments.

Once the contract commenced, the incoming Managing Agent was requested to apply a set of standards based upon its experience of managing similar portfolios. The Managing Agent applying the same arrangements it had agreed with Highways England for the management of their property portfolio. The hazards and risks to be managed included, but were not limited to:

• Construction and maintenance (including implementation of the CDM Regulations)
• Habitability and living standards
• Gas safety
• Electrical safety (wiring and appliances)
• Oil and solid fuel
• Asbestos
• Legionella
• Fire, smoke and carbon monoxide detection
• Energy Performance of buildings
• Sewerage discharge

A review of the approach was undertaken in 2019. This identified that whilst the Managing Agent had a good understanding of the standards, there were concerns in that:

• Some standards and deliverables were open to a level of interpretation
• Assurance requirements and activities were not defined and as such oversight was not providing HS2 Ltd with effective decision-making information
• The way in which the standards were communicated was hindering effective change management
• The format of the document was not user friendly, resulting in a reluctance to use and review it regularly

Improving property management standards

A decision was made between the HS2 Property Management and Safety and Assurance team members, to develop a document to be the next natural step in defining the property management standards expected by HS2 Ltd and address the identified concerns.

The first step was to undertake a benchmarking exercise with other property portfolios. Contacts were made again with Highways England and also with Birmingham City Council. Research was undertaken online.

Internal reviews of current performance, including incidents and assurance results, were used as to establish risk-based decisions on compliance regimes, which would then form part of the new standards document.

Workshops were undertaken with the Managing Agent as to what information would be needed to improve implementation, identification of potential barriers, solutions, and clarifications. All of this feedback was incorporated into the document. Progress and updates were also discussed and communicated at regular Health and Safety meetings with the Managing Agent.

End Result & Publication

The completed document, the “Land and Property Legal Compliance Register & Hazard Log” was published via the HS2 Document Management system, which meant that the content was change controlled, and distributed to the Managing Agent. A full briefing of the revised document was undertaken with staff members and partners within the supply chain, who were given the opportunity to raise any further questions. The new document is tabulated for ease of use, with an index page containing hyperlinks to each page for quick access. (see Figure 1)

Figure 2 shows the page layout, each of which is dedicated to a particular hazard or safety management risk, the contents providing:

• An overview of requirements including responsibilities, deliverables and references to applicable legislation and industry standards
• The standards established HS2 Ltd detailing how the various requirements etc will be met
• The minimum actions taken by the Managing Agent to meet the requirements
• The levels to which the Managing Agent must assure the deliverables
• Details of the deliverables to be provided by the Managing Agent that will then be assured
• The assurance activities to be undertaken by HS2 Ltd

Having assurance activities clearly defined demonstrates HS2 Ltd’s “eyes on, hands off” approach to contract management and helps to establish from the start, an open approach to assurance.

The document also acts as the evidence to demonstrate that HS2 Ltd has performed and documented those risk assessments identified within applicable legislation and that these risk assessments have been reviewed at regular periods.

During the COVID 19 pandemic, the “Land and Property Legal Compliance Register & Hazard Log” greatly assisted decisions that had to be made regarding the compliance regime when access to properties has been restricted (e.g. lock down and tenant protection) resulting in risk based decisions such as temporarily reduce the frequency of testing whilst still meeting legal requirements.

Lessons learned and successes

The 2019 benchmarking exercise quickly identified that very little similar information was available and no best practice approaches could be identified for use. Information that was used by some portfolio owners was not made publicly available or deemed commercially sensitive and could not be shared. There was also a reluctance to share health, safety and environmental performance information and data (e.g. accident / incident statistics) that could be used as a baseline for risk assessments.

When the Property Management contract was reissued for competitive tender in 2020, the HS2 “Land and Property Legal Compliance Register & Hazard Log” was included as part of the suite of contract documents, with the intention of clearly defining expectations, deliverables and assurance requirements through the procurement process, into contract mobilisation and delivery. All parties involved had a clear set of standards to work to.

With all misconceptions and interpretations resolved since the documents publication and implementation, Property Management Assurance result have improved and remain high, with all compliance sampling results achieving greater than 90% pass rates at initial checks, moving to 100% compliance when followed up over a 2 month review.

Following on from the confidence of the compliance regime, a review of the risk-based elements has been recently undertaken. This has identified potential cost savings by altering the frequency of some health, safety and environmental monitoring and amending the specification of others, whilst still ensuring that legal requirements are still met. For example, there is a requirement that all properties constructed prior to the year 2000 are subject to an appropriate asbestos survey. As part of the requirement to “manage identified asbestos”, HS2 Ltd stipulates an annual inspection on the condition of the asbestos must be conducted. The review identified that currently there are 115 properties within the HS2 portfolio that only have “presumed” asbestos – this being in areas of the building that are inaccessible or would require making considerable damage to the property to gain access to the materials for testing (e.g. under flooring, within chimney breasts or electrical cabling). Due to inaccessibility and the low risk of exposure, these properties could be inspected less frequently, with potential cost savings of £40k per annum. (See Figure 3)

The “Land and Property Legal Compliance Register & Hazard Log” has received positive feedback from those using it, both internally and within the supply chain.

“Having a single reference point for all of the property management team to refer to has been an incredibly useful aid to ensure that no hazards have been missed and all relevant legislation has been implemented across the complex and diverse portfolio. I also would consider the Log and Register to be an excellent training tool for anyone new to working on your portfolio or even new to the whole Property Management sector.” (Alex Ness, Health and Safety Director, Savills UK)

“The Property Management Hazard Log and Legal Register has been an invaluable tool, providing both HS2 and its suppliers with a central and consistent point of reference which informs and records how we proactively manage risk throughout the estate… we are able to ensure the platform remains relevant, develops with important lessons learnt and accurately sets out the roles for all stakeholders in the management of risk to the portfolio and consequentially the wider HS2 project.” (Chris Hodson, Head of Property Management, HS2 Ltd)

Recommendations

The HS2 Ltd “Land and Property Legal Compliance Register & Hazard Log” could be used to assist in any future benchmarking being undertaken by others or as the basis for new portfolio management.

Due to the lack of available information for property management compliance regimes, there is a tendency to apply generic controls and frequencies that have been used historically. Whilst this is a “quick fix”, this approach fails to recognise the performance of implemented controls, either positive or negative, and decisions made on risk may not be accurate. This is further compounded when compliance information (e.g. surveys, inspection and test records) produced by specialist contractors include a “recommended review” date. This date is also often applied generically. Where a risk-based approach is available, there is nothing wrong with determining a portfolio specific baseline, assessing performance and establishing specific compliance frequencies and arrangements. Failure to do so undermines continual improvement. Opportunities to embrace changing technologies, advanced solutions and innovations can be quickly lost.

Acknowledgements

Richard Ball (Senior Corporate Health, Safety and Environment Manager, HS2 Ltd)

Chris Hodson (Head of Property Management, HS2 Ltd)

Diane Morrison (Senior Property Management Surveyor, HS2 Ltd)

Alex Ness (H&S Director, Savills)

John Bird (Director – Property Management, Lambert Smith Hampton)

Harriet Ramsay (Director – Rural, Savills)

Laura Lucas (Senior Community Event Manager, HS2 Ltd)