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Nation Building Economic Stimulus Plan - Social Housing Initiative
Department of Human Services - Housing NSW
Australia

The Problem

The NSW Government Economic Stimulus Program – Social Housing Initiative has demonstrated how its public servants can rise to the challenge of the effects of the global financial crisis, working with the private sector using initiative and innovation to address one of the most pressing social issues – that of providing homes for the needy in this time of crisis.
In early 2009 the Council of Australian Governments (COAG) met to ensure the rapid delivery of economic stimulus measures to support employment and growth and to foster a more resilient Australia. Throughout 2008, the GFC engulfed financial systems across the world. While the global economy had been slowing for some time, the global economic outlook had deteriorated sharply and it was clear that the world economy was facing a deeper and more protracted slowdown than previously anticipated. It was generally accepted that the world would experience a global recession in 2009.
The initiative was designed to contribute to the overarching Objective of the National Affordable Housing Agreement: “All Australians have access to affordable, safe and sustainable housing that contributes to social and economic participation”. It forms part of the $42 billion Australian Government Nation Building Economic Stimulus Plan announced in February 2009, with specific objectives to:
1. Increase the supply of social housing through:
(i) New construction;
(ii) The refurbishment of existing stock that would otherwise be unavailable for occupancy.
2. Provide increased opportunities for the homeless or those at risk of homelessness to gain secure long term accommodation,
3. Stimulate the building and construction industry, through funding additional dwellings and increasing expenditure on repairs and maintenance to stimulate business.

The initiative was designed to cushion the impact of the GFC by supporting jobs in the construction sector, a major employer in the Australian economy, and associated industries such as building manufacturers and suppliers. Australia was facing a predicted 10% unemployment rate as a result of the crisis, with an associated increase in the number of homeless people, before the Stimulus Plan was implemented.
On the night of the 2006 Census, there were more than 27,000 homeless people in NSW, a significant proportion being people of Aboriginal or Torres Strait Islander descent. Key causes of homelessness are domestic and family violence, relationship and family breakdown, alcohol and substance use and financial difficulty. Research underlying the NSW Government Homelessness Action Plan 2009-2014 shows that one of the most effective ways to resolve homelessness is to offer people long-term housing with support systems to resolve problems and sustain their housing into the future.
Strong population growth in the Sydney metropolitan and coastal areas is also contributing to rising demand for social and affordable housing, increasingly from people with complex needs. The number of older people needing public housing is projected to grow by 35% over the next 10 years and today, nearly a third of social housing household heads are over 65 years of age. The initiative is also designed to address the needs of these people.

Solution and Key Benefits

 What is the initiative about? (the solution)
The initiative’s three key objectives have been met. An open procurement process has engaged large, medium and small private construction firms for the construction of new homes and community housing providers for ongoing property and tenancy management. The initiative was geared to seek broad input from community and industry, maximize innovation and value, promote local employment and Australian products and ensure accountability through strict probity.
In achieving the objective of increasing the supply of social housing, the initiative has enabled NSW to complete and exceed the NSW Government target of 4,408 homes, completed by 31 December 2010. All projects in the program are worth more than $1.8 billion, the highest of any State participating in the stimulus program.
To provide increased opportunities for persons who are homeless or at risk of homelessness, as of 8 December 2010 2,461 dwellings were handed over to Community Housing Providers who were tasked with allocating these to house people in high need of modern, affordable and secure housing. The initiative has enabled the Community Housing sector to provide 1,884 new tenancies; 76.6% of the 2,461 completed projects are tenanted, taking an average of only 13 days to tenant these homes. Of these new tenancies: 50.5% were homeless or at risk of homelessness, exceeding the Commonwealth target of 40%, 4.8% are escaping domestic violence, 12.6% are of Aboriginal origin, exceeding the Commonwealth target of 5%, 61.2% are seniors, exceeding the Commonwealth target of 50%, and 49.3% have a disability, exceeding the Commonwealth target of 23%.

The initiative has also succeeded in stimulating the building and construction industry in NSW. In terms of generating employment and training opportunities in the construction and associated industries, over 136 building firms are constructing over 500 projects comprising of small, medium and large construction firms, and as of November 2010, the initiative has created an estimated 5,127 full time jobs, 513 apprenticeships and 32 jobs for Aboriginal people.

The initiative has stimulated the NSW economy as planned and provided new knowledge about how this is best achieved. It has created a new generation of apprentices, and strengthened the construction and associated industries. It has driven reforms to fast track the planning system without risking quality and environmental outcomes. It has integrated private sector rigour to public sector expenditure programs. It is building new, architecturally designed, accessible and energy efficient homes for thousands of people and families in need. In just two years, Housing NSW in partnership with the construction industry – from small family building firms to large national companies – will build approximately enough houses for a town of over 10,000 people with an asset life of over 50 years.

Actors and Stakeholders

 Who proposed the solution, who implemented it and who were the stakeholders?
The initiative forms part of the $42 billion Australian Government’s Economic Stimulus Plan announced in February 2009. The Social Housing Initiative was established by the Council of Australian Governments’ National Partnership Agreement signed in February 2009.
Design, implementation and governance of the initiative were devolved to each individual State. In NSW, the Nation Building and Jobs Plan (State Infrastructure Delivery) Act 2009 created the new position of the NSW Infrastructure Coordinator General (ICG) to plan and oversee the program, report and ensure timely delivery of infrastructure through special and transparent planning powers and consultation with local government and NSW Government agencies.
Housing NSW’s Chief Executive reports to the Australian Government’s Housing Coordinator and Coordinator General. Within Housing NSW, a Program Management Office (PMO) was established to focus delivery and streamline decision making. It brought together a unique blend of public and private sector professionals to form an effective leadership and management structure.
A majority of PMO personnel were sourced from private project management firms to minimize impact upon business-as-usual resourcing and to access highly skilled current practitioners in construction project delivery services. Key staff were also sourced from within Housing NSW to ensure leadership and integration with business-as-usual, retain corporate ownership, provide policy based guidance and exercise delegated authority. A balance of public and private sector involvement was sought – and achieved – in commercial experience, industry knowledge, innovation and technical skills with leadership, governance, stakeholder engagement and accountability.
The scale of the initiative afforded it the potential to lead improvement in industry practices. Commitment to program delivery best practice was extended to design, construction, site management (environmental and safety) and a determination to fully achieve corporate design asset management objectives by turning guidelines into requirements. Housing NSW’s Technical Services team and recognized industry experts were engaged to review practices to resolve construction issues, resulting in improved quality and safety outcomes across the program.

A significant risk in the initiative was obtaining Development Consent for the projects in a timely manner to suit the necessary pace of the program. Seventeen independent Consultant Planners were engaged to work alongside the development teams and to engage with local government and the community to assist in submitting planning applications and to ensure that due process was followed in their preparation.

Successful partnerships with community and industry were the foundation of the initiative’s success in meeting the ambitious delivery targets. Housing NSW is working with 12 private project management firms and three head contractors, and with Landcom (NSW Government Development Corporation), to deliver all Stage 2 homes relying heavily on private sector firms with a variety of expertise.

Of course our key stakeholders are people needing housing assistance, in particular homeless people and those at risk of homelessness, people with complex needs including older people, people with disabilities, people with mental health issues and Aboriginal people. Effective and close working relationships were established with the Community Housing Providers, Aboriginal Housing Office and Housing NSW regions which proved successful in handing over the projects to these end-users.

(a) Strategies

 Describe how and when the initiative was implemented by answering these questions
 a.      What were the strategies used to implement the initiative? In no more than 500 words, provide a summary of the main objectives and strategies of the initiative, how they were established and by whom.
Several interdependent strategies have been devised and deployed in the implementation of this initiative:

A flexible delivery model devised by the PMO and geared to ramp up quickly and to meet the short timeframes were central to Housing NSW’s success in achieving the initiative’s ambitious objectives and delivery targets. This model encompassed engagement of wholly outsourced project management with innovation in function and outcome / incentive-based contracts, an acquisition and procurement strategy that addressed both requirements of early construction and the need to provide opportunity to all tiers of the construction industry in NSW.
Housing NSW selected twelve private project management firms and three head contractors through staged tender processes, engaged through contracts that specified outcomes rather than process, affording each company a high degree of autonomy in methods to achieve the specified outcomes.
The acquisition and procurement strategy identified several “streams” for delivery of projects, such as pipeline projects already owned by Housing NSW that could be identified as viable for refurbishment. Expression of Interest and Request for Tender process was operated to seek private sector suitable development sites, house and land packages that could be purchased by Housing NSW to relocate tenants from properties to be redeveloped.
This mix of acquisitions provided a wide range of projects for the construction market, providing opportunity for small building companies through to top tier contractors and a competitive tendering regime to secure best value for money.
In establishing the PMO, new governance structures were implemented which clearly defined roles, authority and delegations and promoted rapid decision making through integrated teams. Effective systems for the capture, storage, measurement and reporting of program and project performance information were established, providing PMO management with up to date information enabling informed decision making.
Stakeholder engagement was achieved through engaging with the construction industry via briefings and issue based program information via industry bodies (Housing Industry Association and Master Builders Association).

New Planning legislation was introduced at the time to enable Housing NSW to self - assess submissions. The legislation which established the NSW Taskforce enabled the Coordinator General to also determine development approvals. The PMO worked closely with Housing NSW Development Assessment Review Team and the Taskforce Planning Team through a rigorous assessment process that has withstood scrutiny from third parties to obtain Development Consent where appropriate in time for projects to proceed in the program.

Housing NSW has established a coaching and feedback approach engendering continuous improvement in development and construction teams. In addition to checklist and monitoring, the program scale is being used to raise standards for construction and site management to new levels through education programs as well as performance specification.
Effective December 2010, over 40 audits on the PMO activities to test compliance and effectiveness were carried out - all with excellent results. Housing NSW, from the outset instigated an effective regime for the identification and management of risk to ensure that processes were developed to mitigate risks and risk owners were accountable for the operation of these processes.

(b) Implementation

 b.      What were the key development and implementation steps and the chronology? No more than 500 words
The entire program was calibrated to meet the unprecedented delivery targets set by the Commonwealth Government to meet the economic stimulus aims of the initiative and create jobs to offset the global financial crisis. The program started in May 2009 and:

• 850 homes were required to be completed in just 14 months, by June 2010 – this target was met and exceeded
• 75% or 4,400 homes were to be completed in 20 months, by December 2010 - this target was met and exceeded
• The remaining homes (25% of the total dwellings or 1,900 homes) are to be completed by June 2012 – this is on track.

To achieve these objectives the following key development and implementation steps were taken and devised (dates given are approximate):

Establishment of the PMO (March – April 2009)
• Recruitment and establishment of initial working methods and procedures.

Program establishment phase (April – September 2009)
• Identifying and securing locations, engaging architects and construction firms.

Design phase (April – December 2009)
A design development and approval regime was devised and implemented for each project that would allow Housing NSW to monitor progress, control key elements and instigate corrective actions promptly. To pass through each “gate” certain standards and completeness of design was to be achieved, with all stakeholders satisfied, project risks addressed and costs approved:
• Gate 1 - Concept design, stakeholder engagement, cost plan and peer review (2-3 weeks)
• Gate 2 - Detailed design, cost management, public consultation (4 weeks)
• Gate 3 - Planning submission and approval, tender action and tender approval (4-5 weeks)
Planning approval for projects not approved prior to tender settlement (December 2009 – March 2010)
Valid community objections on planning grounds were resolved, leading to design changes in many instances and consequent re-work on tenders and costs.
Construction phase (November 2009 – June 2012)
Key milestones were set for each project, for reporting and monitoring purposes. These were:
• First slab;
• Last Frame erected;
• Last dwelling lock-up;
• Practical completion.
Rigorous inspection and monitoring regimes were implemented involving project managers, Superintendents, and Principal Certifying Authorities. To promote highest standards of quality and safety on sites, this was supported by coaching and information bulletins from the PMO Technical Services team and specialist consultants.
In addition, a formal inspection regime involving Community Housing Providers and other stakeholders was established requiring inspections and commitments to be given at 10 weeks and one week prior to forecast practical completion.
Handover to community housing sector (June 2010 – June 2012)
Community Housing Providers have been successful in tenanting new dwellings within a very short period (average 13 days). Defects management has been simplified due to the stringent quality control program.

(c) Overcoming Obstacles

 c.      What were the main obstacles encountered? How were they overcome? No more than 500 words
Housing NSW recognised at the outset that a program of such magnitude could not be delivered through business as usual resources or processes. The initiative’s timeframe, scale and collaborative model presented Housing NSW with an unprecedented program management challenge.
Delivery model
Success was dependent upon accessing key resources available in the private sector and the application of the most effective processes. A unique delivery model was developed which entailed:
• Development of a series of approval gates involving detailed processes to integrate diverse working methods into consistent checks and balances
• Strong Technical Services team engaged with delivery teams and tasked with upholding design standards
• Cost planning and management guiding project planning rather than the reverse
• Innovative, strong and close working relationships with the entire supply chain, including sub-trades and product manufacturers
• Delivery Managers managing the performance of external development and project managers
• A monitoring and analysis team collecting project data via Delivery Managers, to develop and maintain a master schedule linking all activities and continuously analyse the data to identify trends and inform decision making.
Private sector engagement
The strategy of engaging private industry to deliver the development management and project management services increased total resource availability and maximised the diversity of skills and experience in the private sector, in partnership with government, which retained responsibility for outcomes and expenditure. Willingness to set aside normal processes meant that any unfamiliarity with these was more than offset by the potential for innovation from a broad and diverse resource base. Housing NSW was able to concentrate on the strategic direction of project management, integration of all the projects into a cohesive program and a focus on program level controls over time, cost and quality.
Streamlined planning
Rapid and streamlined project delivery was critical to meeting the extraordinary delivery targets and stringent governance requirements. In just 8 months, 333 separate planning approvals were required. Given that local councils usually take an average of 6-9 months to approve planning proposals, a brand new planning regime was crafted to meet the truncated timeframes. The robust and transparent planning approval framework used new and untested legislation and planning instruments, and local government and community consultation mechanisms were critical to the process.
Cost and quality
Cost management has been a major success. With such a vast and multi-layered statewide program – with triple bottom line objectives and accountabilities - containing cost to the imposed upper limit was one of the major challenges. The keys to success have been accurate budget setting, designing to budgets and confirmation of forecast cost against budget at every project approval gate. The budget accuracy across the entire program has exceeded expectations – and it has proven to be achievable without compromising quality of design.
Construction quality
Continuous improvement and learning organization principles were applied to deal with poor detailing and workmanship issues on site. Technical Services and specialist consultants provided coaching and information bulletins dealing with specific issues.

(d) Use of Resources

 d.      What resources were used for the initiative and what were its key benefits? In no more than 500 words, specify what were the financial, technical and human resources’ costs associated with this initiative. Describe how resources were mobilized
The NSW Government’s Economic Stimulus Program - Social Housing Initiative is delivering on the $1.9 billion investment by the Australian Government to build over 6,300 new social housing homes in NSW by June 2012. The initiative forms a part of the $42 billion Australian Government Nation Building Economic Stimulus Plan announced in February 2009. These funds were supplemented by a further $1 billion from the NSW Government to build an additional 3000 homes.
The Program Management Office was established within Housing NSW to focus specifically on delivery of the Social Housing Initiative. Effective leadership and streamlined decision making underpinned by high calibre public and private sector professionals, working to robust program management methodologies, were essential to meet the unprecedented timeframes and delivery targets.

A significant proportion of the Program Management Office personnel were sourced from private project management and consulting firms to minimise impact upon business as usual resourcing and to access highly skilled and competent current practitioners in construction project delivery services. Key personnel were also sourced from within Housing NSW to ensure integration with business as usual, retain corporate ownership, provide policy based guidance and exercise delegated authority, and business units across Housing NSW contributed specialist support.

The PMO is comprised of 11 teams:
1. Executive: oversight and leadership of new, customised management processes
2. Relocations: successfully relocated 1248 residents without appeal or Consumer, Trader and Tenancy tribunal actions
3. Acquisitions
4. Requests for Tenders
5. Planning
6. Handover
7. Administrative & Finance
8. Programming, Analysis and Reporting
9. Media and Communications
10. Technical Services
11. Gateway Processes.

The project delivery role (Technical Services team) was offered to the market through a two stage expression of interest and request for tender process. Nine major project management firms were engaged together with Landcom.
Delivery resourcing was completed with the competitive procurement of three major builders to undertake delivery and project management and construction of a selection of larger scale projects.
A Procurement and Probity Strategy established an open and flexible procurement process (widely advertised competitive tenders, pre-selected panels and transparent reporting) to attract large, medium and small enterprises and individuals with the expertise and capacity to provide the services and products for project delivery. It was geared to seek broad input from industry, as well as maximising innovation and value, promote local employment and Australian products and ensure accountability through strict probity.
The delivery strategy and program development guided by the Program Management Office have enabled Housing NSW to lead Australia in the delivery of the Social Housing Initiative. Resourcing (which was a potential threat) became a strength, as the project mix supported priorities for housing demand while satisfying the Commonwealth requirement that total cost including land not exceed $300,000 per dwelling. Achievability was enhanced through the project selection process.

Sustainability and Transferability

  Is the initiative sustainable and transferable?
Replication or adaptation of the systems used in the initiative is expected and is being planned for through the “lessons learnt” program already instigated by Housing NSW in the initiative. In addition:
Institutional
A robust management system has been established and evolves with program progress ensuring a positive legacy for Housing NSW after the delivery of the initiative concludes.

Regulatory
The new, streamlined planning process has enabled achievement of the Social Housing Initiative’s extraordinary outcomes, under budget and ahead of time and is being extended to the delivery of other significant social infrastructure.
Financial
The keys to success have been accurate budget setting, designing to budgets and confirmation of forecast cost against budget at every project approval gate. The budget accuracy across the entire program has exceeded expectations – and it has proven to be achievable without compromising quality of design.
Social
The social housing asset base of NSW has been rapidly expanded, improved and redesigned to align with emerging client needs. Thousands of people with complex needs have new homes and a new stability in their lives. Title transfers of most of the homes built under the Initiative will enable the vast majority of properties built under the Stimulus Plan to be owned by community housing organisations. These organisations now have the capacity to borrow more funds against their equity to build and buy more homes.
Environmental
Energy efficiency has been elevated in importance, with the Initiative driving procurement reforms in energy, accessibility and water. All dwellings comply with the NSW Government’s Business Sustainability Index (BASIX), with the majority achieving a 6 star Nationwide House Energy Rating Scheme (NatHERS) energy rating. Design features include rain water harvesting tanks connected to WCs and laundries and water saving devices, energy efficient lighting, gas or electric boosted solar water systems and cross-flow ventilation.
Replication
The recent independent Review of the Implementation of the Nation Building and Jobs Plan (NBJP) in NSW and Potential Applications for Other Projects concluded that:
“Housing NSW, supported strongly by the Infrastructure Coordinator General (ICG), has produced an outstanding result against the NBJP objectives. The objectives have been met in terms of timelines and exceeded in terms of units constructed for the allocated funds…
“The delivery model – a specialised Program Management Office within Housing NSW containing private and public sector personnel – worked effectively. Overall use by Housing NSW of the available planning, assessment and approval pathways ensured that NBJP projects were commenced on time. Compelling evidence was provided to the Review that this would not have been possible if local councils had been responsible for approving all projects that were unable to be self approved by Housing NSW.”
The review recommended that:

• Housing NSW should undertake its proposed review of the PMO model to determine what additional features could be utilised effectively in business-as-usual capital procurement.

• Consideration is given to establishing a Coordinator-General model based on the NBJP legislative principles to be used for improved coordination and/or delivery of a limited range of critical state projects.

Lessons Learned

 What are the impact of your initiative and the lessons learned?
In achieving the objectives set by the Federal Government, the Initiative has made a significant impact on reducing the effects of the global financial crisis on NSW and in sustaining the NSW construction industry throughout this period.

The scale of the initiative afforded it the potential to lead improvement in industry practices. The commitment to best practice in project and program delivery was extended to a similar concern for design, construction, site management (environmental and safety) and a determination to more fully achieve corporate design asset management objectives by turning guidelines into requirements. Recognised industry experts were engaged in reviewing practices in the light of their experience resolving in post construction issues. The declared aim was to avoid problems rather than repair them later. The imposition of raised standards for environmental sustainability meant new solutions had to be devised and translated into construction practice for thermal insulation and water management. These were introduced with educational programs followed by enforcement.

Fostering continuous improvement and learning organisation principles is one of the Initiative’s key guiding principles. Fifteen functions within Housing NSW have been identified, and for each one a thorough Lessons Learned process is being articulated as the improvements in service delivery and Government leadership are integrated into Business as Usual processes.

This innovative program has elucidated five key lessons for Government in the provision of critical social infrastructure:

1. the benefits and challenges of bringing the private sector into the heart of government
2. forecasting needs expertise – generic project management is not enough
3. Rigorous cost control at the design phase makes cost control easier throughout
4. New planning systems can be designed without sacrificing community engagement or design principles
5. Spreading the construction risk over a large number of suppliers entails risks but an overall economic and program management benefit.

The Nation Building and Jobs Plan Act has streamlined the provision of housing infrastructure by aligning the strategic interests of the Government and the private sector. A joint strategic interest has been central to the success of the program, maximising the benefits to the community.
The NSW Infrastructure Coordinator General has stated that the initiative has established a precedent from which NSW can begin to secure future infrastructure investment, and has restored confidence in the Government’s ability to deliver project certainty.

Contact Information

Institution Name:   Department of Human Services - Housing NSW
Institution Type:   Government Agency  
Contact Person:   Anne Zammit
Title:   Program & Technical Services Director  
Telephone/ Fax:   (02) 87538000
Institution's / Project's Website:   (02) 85538888
E-mail:   anne.zammit@dhs.nsw.gov.au  
Address:   223-239 Liverpool Rd
Postal Code:   2131
City:   Ashfield
State/Province:   NSW
Country:   Australia

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