Should construction companies learn from their in-house data?

The construction industry involves a lot of data, from pre to post-construction. This involves construction data revolving around the planning stages, construction site information, accounting, workflow, job cost management, project management and much more.

However, while a lot of information exists that contractors could use to save time and money, this information remains underutilized because of the lack of the right tools to collect and analyze data in ways that would have significant project results. Fortunately, this is now all about to change.

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How to get the best out of your construction data

Contractors are now discussing and considering different solutions and visiting construction software conferences, with the entire industry  looking for more efficient ways to get smart about data. So what factors are necessary for subcontractors to get involved in construction data analytics technology and software?
A better overview about your project will naturally save you both time and money on current projects. But it will also help in terms of your future projects. Here are some of the major advantages:

  • Contractors can obtain a comprehensive suite of solutions for the entire company, allowing you to control every step of the process. You can imagine how many project movements take place during the day. But you can reduce these moves to a minimum, saving yourself and others a lot of time in the process.
  • All contractors can benefit from data tracking analysis. True data analytics is more than simply tracking down job costs and cash flow. Data analysis can also prevent future problems and risks to your business, as it allows for far more accuracy in future projects with increased efficiencies. Analyzing data results in better plans and predictive analyses, and being on time and in total control over your budget lends you a good reputation, which in turn leads to a higher number of clients. In other words, while
  • data analytics can solve your project tasks and problems on a current project, it will likewise help to make predictive analyses with more and better insight for the same kind of projects in the future.

To take full advantage of data analytics software, you need to understand the right tools for the job as well as your bottleneck.

A construction management software or ERP solution could be essential in order to stream your data across the company.

From project management to accounting, all processes need to be in order. A software solution or internal ERP system can help to communicate with different parts of company units, thereby using collected and stored data more efficiently. From that data analysis, everyone can work with higher success and provide good values for business models. An ERP system and construction data analytics solution can demonstrate hidden values that remained previously unseen.

One important question remains: what can be done with that data and what can be done to improve overall effectiveness, saving your company time and money? This question is being answered by firms who are hiring professionals to get the most out of the business intelligence process.

These new and highly efficient software solutions and tools link all units with different, often complex operations into one integrated system. The solutions provide excellent support, from small building projects to large, with such an innovative approach ushering in a new era for the construction data industry.

Source: oilvoice.com

Japan: Construction sector tries to defy demographics with data

Blue-collar workers can afford to be picky when considering job prospects thanks to Japan’s historically tight labor market. That means few enter construction, where the hours are long and the pay is relatively low.

The Fund for Construction Industry Promotion, a trade association, has a plan to draw more laborers to the business. In April it will roll out a new database that will aggregate workers’ experience and qualifications to help match them with employers. In addition to smoothing out personnel transactions, the system’s creators believe it will lead to better pay and working conditions.

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Construction has been particularly hard-hit by Japan’s labor shortage. Manufacturing, which offers higher pay and shorter working hours, attracts more workers.

The construction sector’s problem will only worsen as Japan’s population ages. A government study projects the country’s workforce to shrink 20% by 2040, and few young people are eager to join the trade.

The new database is expected to help workers employed by low-level subcontractors who are stuck with low pay and few benefits.

These laborers often sign up for temporary, irregular work, making it difficult for other employers to evaluate their expertise. With all of their experience accumulated in one place, companies will be able to actively recruit talented workers at higher pay. Better wages may also help attract younger recruits.

“This system is a great opportunity to get more young workers into the industry,” said Takashi Ueda, who overseas the construction site of an office building in Tokyo.

55 different specialties will be recorded in the system, so if there is a regional shortage of scaffolders, specialists from another area could look for jobs there.

“If we can gather a lot of data, benefits may emerge that we hadn’t even thought of,” said a manager of the database at the trade association.

The system, which is currently operating on a trial basis, has already registered about 17,000 workers. The association hopes to have 1 million registered within the first year of operation, and all of the industry’s roughly 3.3 million workers within 5 years.

Source: asia.nikkei.com

Is virtual reality the future of building construction?

40% of architects and designers say technology will have biggest impact on the  industry in next 18 months.In fact, technology was identified by 40% of research respondents as having the biggest impact on the design process in the next 18 months, followed by a renewed focus on fire safety (28%) and new regulations (23%).

The study surveyed 250 architects and designers across the UK to gauge their opinions on the use of technology in the design process, their use of flame in projects, and the overall challenges faced.

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Three quarters (74%) of architects and designers are already using digital technology to visualise projects during the building process, while a further 20% don’t currently use it but seek to do so in future.

Just more than one-third (34%) believe smart technologies are already influencing the industry, 23% said they believed trends like virtual reality would impact in the next six months, and 24% said augmented reality would make its mark in the next 18 months.

“There’s little doubt that technology is making the lives of architects and interior designers easier. But what the research shows is that technology adoption isn’t slowing down, with respondents placing a strong focus on virtual reality, augmented reality, and other technologies such as robotics, 3D printing and modelling and even the use of drones in the short and longer-term future”

“This focus on technology, and indeed the appetite for it, is reflected in our own business, with a lot of demand for flame technology and flame effects as an alternative to real flame installations.”

The majority of respondents (78%) said they had concerns over including flame in their projects, but 53% noted if safer technology was available, they would reconsider.

Source: pbctoday.co.uk

Just 9.1% of America’s construction workers are women— Report

Sinade Caroll was on her way home from nursing school one evening six years ago when she saw an ad on the New York City subway for Non traditional Employment for Women(NEW), an organization that trains women for careers in construction, utility and maintenance trades.

“I didn’t know that women were construction workers, or that women were actually in these fields where there are mostly men,” the 26-year-old says. “I didn’t experience that growing up and something told me to call the program.”

Caroll had earned her GED in 2011 and was hoping to find work as a medical assistant after nursing school. But she called NEW to learn more, and says she realized immediately that she had found the right career path for her. She quit nursing school and enrolled in the organization’s eight-week apprenticeship program, where she learned everything from how to accurately read a measuring tape to how to lift heavy materials without getting hurt.When her apprenticeship was done, Caroll joined the New York City District Council Carpenters Union and found a full-time, paid job as a construction worker within two weeks. At her current job, she says, her role is “putting up the sheetrock and framing hardware ceilings.”

The construction industry is expected to see 12 percent employment growth between 2016 and 2026, according to the Bureau of Labor Statistics, and as the industry continues to face a worker shortage, many state legislators and professional organizations are doing all they can to bring more women like Caroll into an industry packed with diverse opportunities and the potential to earn strong wages.

Currently, women make up 9.1 percent of the U.S. construction workforce, and earn an average 95.7 percent of what their male counterparts make, according to The National Association of Women in Construction (compared with the average 82 percent  women earn of what their male counterparts make across industries.)

The average annual salary for construction workers in the U.S. in 2017 was $38,890 according to the Bureau of Labor Statistics (BLS), though pay varies based on experience, job title and location. U.S. News & World Report found that in other construction roles, including structural iron and steel workers and construction managers, average salaries climbed as high as $101,000.

Of the women currently employed in the construction industry, 45 percent are in sales and office roles, 31 percent are in professional management roles, 21 percent are in natural resource, construction and maintenance roles, 1.5 percent are in service occupation roles (including cleaning and maintenance jobs) and 1.4 percent are in production, transportation and material moving roles.

Schillivia Baptiste, who owns the construction firm Laland Baptiste, says that as a kid who loved STEM classes, she had no idea that she could find a career in construction as an engineer. Her introduction to the industry came in high school when she attended a summer program at Manhattan College and learned about the different type of jobs you could get with an engineering degree.

She earned her bachelor’s degree in civil engineering from New York University Tandon School of Engineering (formerly the Brooklyn Collegiate and Polytechnic Institute). In college, Baptiste interned for the New York State Department of Transportation as a transportation construction inspector and at the Port Authority of New York & New Jersey as a traffic engineer. When she graduated, she worked at a private civil engineering firm in Huntington, New York, for 13 years, doing site development work.

“I think there is not enough introduction at the elementary and middle school grade age of what young girls can be,” says Baptiste, who links the industry’s scant female workforce to a lack of early exposure. “I think it starts there, and before you get to high school you’re choosing a high school that has something you want to study and then by the time you get to college you’re able to make a decision and say, ‘OK, this is what I want to do.’”
Bringing more women into the industry

Professional organizations, vocational training programs and lawmakers all have vital roles to play in bringing more women into industries like construction that have historically been predominantly male.

NEW, the workforce development program that helped Carrol launch her career in construction, was founded 1978 and works primarily with low-income women from the five New York City boroughs. Through partnerships with labor unions, contractors and the government, NEW has helped more than 1,300 graduates find stable employment as electricians, carpenters, plumbers, painters and iron-workers since 2005.

In Massachusetts, the state Gaming Commission has been proactive about the opportunity to build gender diversity on new casino construction projects, passing a legislative mandate for casinos to increase workforce diversity. The mandate requires licensees to put women in 6.9 percent of the construction jobs.

“In order to make this work, you have to have a kicka– champion, and you’ve got to kick these doors down,” Steve Crosby, then-chairman of the commission,said.

The commission has been tough about enforcing the mandate. Crosby said that enforcing the mandate hadn’t been easy, but the commission followed a strict protocol to ensure that organizations were complying.

“We go union by union, contractor by contractor — ‘Do you have that? Have you met the target?’” he says. “If you are an outlier — somebody else is doing 8 percent women and you’re doing zero percent women — we call you out.”

Even as CEO of a company she founded, Baptiste says she’s had several encounters where she had to prove herself as a leader at work.

“Graduating as one of five females in my class, it was the beginning of a world where some males only see you as an assistant to someone, or the secretary to someone else,” she says. “It’s always interesting going into a meeting where they are like, ‘Who’s Baptiste?’ and I’m like, ‘It’s me.’”

“I’ve had opportunities where I’ve had to manage males, and you can sense them being uncomfortable with my authority or sense of knowledge,” she explains. “But my goal stays the same, and that is to train them, share that knowledge and help them be able to function in their position and overall on their team.”

Amanda Gray is a national architectural and commercial account manager for The Dow Chemical Company. She says that as an executive in construction, it’s not uncommon for male colleagues to doubt her credibility.

She recalls a time when she was leading a meeting, the only woman in a group of 14 people at a job site. Gray started talking about the technical details for an upcoming project when a male consultant stopped her and asked, “Ma’am do you even know what the cut section of a building is?”

Gray says she started laughing, because he was challenging her knowledge of one of the most basic aspects of construction. “Everyone around us started laughing as well,” she says. “The good thing is, you know, I had built credibility with these people in the past and someone stepped in and said, ‘I can’t believe you would ask her that question.’”

Though these attitudes about women in construction persist in some corners, Gray, Baptiste and Caroll all say that overall, the industry is becoming more diverse and more welcoming to women. In fact, Caroll says that in her experience in the field, she’s seen a 2:1 male-to-female ratio on some of the construction sites where she’s worked — a significant jump from previous years.

Baptiste says that for women who are interested in entering the field today, there are many organizations that can offer them assistance and mentorship. She notes the support she’s received from the national organization Professional Women in Construction. She says she’s been part of the group for several years, and it’s been an important source of industry contacts and potential clients.

“There are a lot of organizations like Professional Women in Construction that provide mentorship, networking and opportunities for growth and business development to women in the industry,” she says. She advises anyone interested in construction to find a local support group to join. ”[These organizations] are not only for you if you’re an owner, but even if you’re just an intern in college, in high school or just starting out in the industry.”

Source: cnbc.com

Uzbekistan Introduce New Reforms For Construction Industry

The construction industry in Uzbekistan is undergoing significant changes following the enactment of Presidential Decree from November 14, 2018 No. UP – 55771 (“Decree”). The Decree introduces new procedures for project appraisal, construction and commissioning processes, and covers issues concerning licenses, certification, land allocation, tax benefits and modification principles of current norms. Some changes have been in force since December 1, 2018. Others will take effect in the nearest future.

Allocation of land

From January 1, 2019, expenses incurred as a result of tardy or undue allocation of land for construction are subject to reimbursement at the expense of local budgets, with subsequent recovery from the person responsible in recourse. Such responsible parties are relevant khokims (heads of local municipality offices). Their personal responsibility is being introduced for the timely and proper allocation of land for construction, as well as for the prevention of construction and installation of objects without reference to the approved master plans for districts (cities) or land allocation schemes (in the absence of master plans). These changes aim to eliminate the cases when objects are demolished and their owners are left with no compensation after the land is regarded as being unlawfully allocated by state organs.

Certification and Licenses

From January 1, 2019, certificates and licenses for engineering and construction activities issued by authorized agencies of member-states of the Organization for Economic Co-operation and Development (OECD) will be recognized in Uzbekistan.

From March 1, 2019, the Association of Consulting Engineers of Uzbekistan (the “Association”) will carry out the certification of specialists in the field of design and construction. For legal entities to render engineering services, they need to have at least two in-house certified engineers in their staff. This requirement does not apply to members of the Association. Moreover, author supervision, technical supervision and construction inspection of buildings will be carried out only by specialists certified in the prescribed manner.

From July 1, 2019, the licensing procedure in the sphere of engineering and construction will exclude the need to sign a license agreement, as an effective mechanism for verifying the compliance of the licensee applicant with the license requirements and conditions prescribed in the law will be formed.

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Tax benefits

After the enactment of the Decree, subcontractors, including foreign ones, and investors fall within the category of entities that are exempted from payment of value added tax on works (services) performed by non-residents (VAT) until January 1, 2021. They are eligible for tax benefits when (i) investors are involved in the implementation of “Business city” projects, including “Tashkent city” project and (ii) subcontractors implement “Business city” projects, including “Tashkent city” project, on EPC basis utilizing “fast-track” method. The Decree expands the existed list of entities enjoying VAT exemption and now, the exhaustive list comprises general contractor, general engineering organization, subcontractors, including foreign subcontractors, and investors

“Fast-track” method

EPC-projects (Engineering Procurement Construction) may be implemented through “fast-track” method since December 1, 2018. This method infers the creation of consortium3 of engineering and construction organizations (where each participant retains its separate legal status) that implements the project by simultaneous engineering, procurement and construction rather than splitting the named processes on subsequent steps. Consortium members share responsibility for the high standard and timely realization of projects. Shared responsibility allows creditors to claim all damages from any consortium member.

BIM technology

From July 1, 2019, the usage of BIM (Building Information Modeling) technology for all participants (customer, engineer, and general contractor/subcontractors) of the construction process will be obligatory. BIM is an intelligent 3D model-based process that gives architecture, engineering, and construction professionals the insight and tools to more efficiently plan, design, construct, and manage buildings and infrastructure.

Expert appraisal

Since December 1, 2018, the cost estimates for construction projects involving objects being built at the expense of direct investments or foreign direct investments are no longer subject to mandatory expert appraisal.

Current legislation provides for two types of examination: comprehensive examination and examination of town-planning documentation. Comprehensive one is a more complex examination and mandatory only in particular cases of investment and infrastructure projects, while examination of town-planning documentation is the essential part of all construction projects. The Decree alters the examination process in the part of cost estimates expert appraisal. Now, the source of funding becomes the main criterion when deciding whether to apply expert appraisal of the cost estimates. If the construction is financed by the state budget or through a legal entity that has a state shareholding (centralized investments), then expert appraisal of cost estimates is required. On the other hand, the presence of direct private or foreign direct investments excludes such a requirement.

The comprehensive examination is mandatory to projects financed by direct investments or foreign direct investments when:

  • the project is implemented on the basis of Presidential Decree of Uzbekistan that provides for certain tax benefits without the involvement of international financial institution or foreign state financial organization;
  • the project includes the extraction and/or processing of strategic minerals (precious, non-ferrous, rare and rare earth metals, hydrocarbons, coal, uranium).

As the legislation does not explicitly specify the type of examination that shall adopt altered requirements for cost estimates expert appraisal, the supplementary regulations may clarify this issue. If the new regulation extends the application of these changes to the comprehensive examination, the above-mentioned projects will not be obliged to apply expert appraisal for cost estimates.

Commissioning

Prior to the December 1, 2018, the commissioning procedure was exercised in two steps: firstly, by working committee and then, by the state committee that comprised of a number of representatives. Starting with changes, the two-stage procedure is now transformed into single-step and the number of participants in the state committee has been significantly reduced. Now, the following entities are the only participants of the state commissioning: construction verification inspection under the Ministry of Construction, cadaster authorities, the employer (customer) and general contractor.

The commissioning procedure of objects that are built at the expense of entities involved in public procurement is not subject to these changes.

From January 1, 2020, projects for residential objects must foresee the installation of energy-efficient and energy-saving equipment at the engineering (designing) stage. After the construction is complete and objects are equipped, an energy audit passport must be received prior to the commissioning. In order to acquire an energy audit passport, independent private company providing professional energy audit services must be hired. This requirement is not applied to the buildings certified by international BREEAM4 (Building Research Establishment Environmental Assessment Method) and LEED5 (The Leadership in Energy & Environmental Design) standards.

Delegation of Authority

From the beginning of 2019, some powers of the National Agency of Project Management (NAPM) have been transferred to other State authorities:

  • authority for regulating issues concerning the public procurement – to the Ministry of Finance;
  • authority for licensing the activities of the project organizations and for accreditation of individuals performing the examination of construction projects – to the Ministry of Construction;
  • authority for exercising state regulation of the valuation activities and standardization processes concerning property evaluation practice – to the State Competition Committee;
  • authority for implementing comprehensive type of examination – to the Ministry of Economy and Industry.

Further modification of legislation

The Decree also covers issues concerning modification of current norms and standards in the construction industry and stipulates that by 2028 the legislation will be fully changed and modified by the gradual adoption of the foreign experience. Starting from January 1, 2019, the Ministry of Construction initiates development and improvement of building regulatory and technical documents based on the foreign experience. The local and foreign legal entities together with public and international organizations are encouraged to participate in the above mentioned processes. All newly adopted legislation will be published on the official web-site of Uzstandard Agency, which will be responsible for making all construction standards, technical regulations and norms available for public access.

Source: mondaq.com

Vancouver now ranked ‘second-least affordable’ global housing market

The widely reported annual Demographia Housing Affordability Survey  has been released – and despite Vancouver’s real estate market slowdown, the city has moved back up in the rankings of the world’s least-affordable housing markets.

Having been ranked in third place for three years running (after Hong Kong and Sydney, Australia), Vancouver has the dubious honour of displacing Sydney to return to second place in the 2019 chart. Hong Kong remains top of the list for the ninth year in a row.

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The report ranks 309 cities in eight countries using a method called the median multiple, which is calculated by comparing the city’s median home price (in 2018’s third quarter) with the median local household income. The countries in the survey are Canada, the U.S., China (Hong Kong only), Singapore, Australia, New Zealand, the U.K. and Ireland.

Vancouver is deemed to have a median multiple of 12.6, which is the same as in 2018, and means that the median Vancouver home price is 12.6 times the city’s median household income. Hong Kong’s median multiple is slightly up from last year, now at 20.9, and Sydney’s has dropped to 11.7 from 12.9 last year.

The report authors wrote, “Vancouver has experienced significant housing affordability deterioration among major markets, with its Median Multiple deteriorating from 5.3 to 12.6 [since the first survey in 2004], equivalent to 7.3 years of pre-tax median household income.”

The report acknowledged Vancouver’s recent price slowdown, but said this had not improved affordability, as most of the price drops have been at the high end of the market. “While a British Columbia foreign buyer tax has been associated with a moderation of house prices in Vancouver, reductions have been concentrated in higher cost houses, with middle market housing affordability having continued some deterioration.”

Demographia’s annual survey is extensively reported each year, but has been widely criticized for not being consistent with broad-reported data, only studying cities in eight countries (or nine, in previous years) and failing to take into account a wide range of other variables. The 2019 study does not include pricey housing markets in China, other than Hong Kong, or European markets, other than U.K. and Ireland.

Source: timescolonist.com

 

Survey Reveals Indian Women Take Bigger Home loans

Indian women are borrowing higher amounts for home loans as compared to men. According to a survey by online marketplace for financial products, BankBazaar, the average home loan ticket size with women as primary applicants was Rs 27.57 lakh, as compared to Rs 22.97 lakh with men as primary applicants.

One reason could be that when a woman is the primary applicant, chances of the family being a two-income household are higher, as compared to when the man is the primary applicant. So, in the first case, the family is able to take a bigger loan, said Adhil Shetty, co-founder & CEO, BankBazaar. Another reason is the lower rates offered by banks and housing finance companies for women borrowers, prompting more women to take home loans, he added.

‘BankBazaar Moneymood 2019’, a report based on data from 169 million users who used BankBazaar’s website, also said that the the demand for credit cards was quite high among women.

In 2018, the increase in women consumers applying for various kinds of credit cards was 89% for fuel credit cards. Similarly, women applicants for travel credit cards increased by 73%, as compared to 71.5% men.

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More youngsters want lifestyle credit cards

The demand for lifestyle credit cards has seen tremendous growth, especially among those under 25 years and non-metro applicants. Attractive discounts and deals have fuelled the demand for cards from first-time and non-metro users, the report said. There has been a 64.5% year-on-year increase in lifestyle credit card applications from non-metros and a 53.67% y-o-year increase in lifestyle credit card applications from users under the age of 25.

Fuel credit cards saw a massive spurt in demand, with a 104% rise in card applications from people under 25 years of age. Metros witnessed a 62% y-o-y increase in fuel credit card applications compared with an 85% increase from non-metros. Young indians with wanderlust are aware of the benefits of travel credit cards and an increasing number of people are applying for them. There was a massive 195% growth in travel credit card applications from those under 25 years of age. Non-metros saw a whopping 309% y-o-y rise in travel credit card applications compared to a 59% increase from metro cities, the report said.

Non-metros avail more personal loans

The report also said that demand for unsecured credit in non-metros outpaced that of the metros in 2018, and this trend could continue in 2019 as well. The average personal loan ticket size in non-metros is Rs 2.80 lakh, while it is only Rs 2.55 lakh in metros. However, the highest personal loan ticket size of Rs. 47.23 lakh came from Bangalore, while the highest non-metro personal loan ticket size from Vapi was of Rs. 25 lakh.

“One reason could be that people in metros have better access to credit cards while those in non-metros may not. So, there could be a higher demand for personal loans from non-metros,” Shetty said.

Paperless finance gaining popularity

The report also said that paperless finance is gaining popularity, as incidated by a 198% y-o-y growth in paperless approval of personal loans, an 11% y-o-y increase in paperless approval of credit cards and a 38.3% y-o-y rise in paperless approval of car loans.

In 2018, there was a 42% increase in the highest car loan ticket size compared to the previous year. The average car loan ticket size for metros (Rs 5.72 lakh) marginally outperformed the average car loan ticket size for non-metros (Rs 5.21 lakh), the report said.

Source: dnaindia.com

South Africans care more about their cars than their home loans-Report

In a study believed to be the first of its kind in South Africa, TransUnion, a leading global risk and information solutions provider, today revealed which debts consumers prioritise during times of financial stress. 
Contrary to conventional wisdom, people don’t always look to safeguard home loans; rather, they look to protect their automobiles, paying vehicle loans in preference over other forms of credit.
The research, which observed the payment behaviour of approximately 325 000 South African consumers, looked at borrowers with at least one of each of the three primary credit products: a credit card, a vehicle loan and a housing loan.

The study tracked them over time to see what happened when they were unable to meet all their credit commitments, and how they prioritised which obligations to pay above others. This study is important in better understanding the consumer thought process and the choices they make regarding their debt obligations during times of financial stress. 
 
Understanding the ‘payment hierarchy’
 
The payment hierarchy is a common term used in consumer lending and refers to the priorities that consumers place on different credit products when they are facing financial stress and don’t have enough money to pay all their obligations. It looks at which payments people prioritise and pay first, and which they place a lower priority on and pay last.
 
When faced with the choice of which debts to pay and which to miss between a popular set of credit products — credit cards, vehicle loans and housing loans — conventional wisdom may suggest the first product type to enter delinquency (i.e. the one consumers would miss a payment on first) would be a credit card, followed by a vehicle loan. 
 
Further, it might be expected that only in the most dire of circumstances would consumers stop paying housing loans, prioritising those payments above all other debt types. The rationale, so the conventional wisdom goes, is that missed payments on a card do not put any important collateral at risk, automobiles are critical for efficiently getting to daily activities, and of course the home is the centre of one’s family life and the most important asset a consumer can own.
 
However, the TransUnion study revealed that the most commonly seen hierarchy among this set of products is in fact different than conventional wisdom would suggest. Consumers generally place vehicle loan payments first, prioritising those payments ahead of home loans. Credit cards, as expected, are the product in this set that consumers prioritise last and are most likely to miss. 
These study findings do not constitute a recommendation of what choices a consumer in financial distress should make, but rather are observations and insights into the decisions they do make. 
Delinquency rates (one month or more in arrears) after 12 months for consumers who possess and are current on all three credit products at the beginning of the respective performance measurement period.
 
“It might feel counterintuitive that, for most struggling consumers, vehicle loans are prioritised over other prominent credit products such as mortgages,” said Carmen Williams, Director of Research and Consulting for TransUnion South Africa. 
 
“However, there are a number of important factors to consider. It’s not always about protecting your home; it might be the size of the payment required, access to other forms of credit and even what you feel the perceived consequences might be. Consumers and lenders alike often have to wrestle with these problems, and our study looks to shed light on some of the difficult decisions consumers sometimes have to make.”
 
Key findings
 
Cards came last: There are numerous potential reasons for this lower priority on credit cards: lesser perceived consequence (i.e. not forfeiting ownership of a car unlike with a vehicle loan), the availability of substitutes for smaller everyday spends (such as cash or digital payments if still available) or even the access to other sources of liquidity (such as personal loans or retail finance).
 
Vehicle loans prioritised over home loan payments: There are a number of potential reasons why vehicle loans sit above home loan payments in the payment hierarchy. In the majority of cases, the average vehicle loan has a lower monthly payment compared to a housing loan. Missing a mortgage payment would generally give the consumer more cash flow relief and enable them to meet other obligations. As well, there are many viable rental alternatives to home ownership; in contrast, public transportation is usually not an efficient alternative to owning an automobile.
 
The timing of any perceived consequence might also be a factor. Consumers likely recognise that a vehicle could be repossessed relatively quickly after missing just two or three payments, whereas eviction because of default on a home can often take many more months or even years. Finally, a vehicle may be the primary transport to work, or even looking for work, if suitable public transport options aren’t available, making continued access to a car critical to preserving a consumer’s source of income.
 
As part of this study, TransUnion also explored the payment priority among popular unsecured credit products, specifically credit cards, personal loans and retail store accounts. Unsecured products are typically used to finance small purchases and day-to-day living expenses. When looking at roughly 375,000 consumers with this basket of popular unsecured credit products, conventional wisdom again proved wrong. The assumption historically has been that consumers would base their payment hierarchy on the concept of future utility, prioritising credit cards over other forms of popular unsecured credit as a credit card would still be available for further use across other purchases, potentially with multiple merchants. Retail store cards would be next—again, because future utility exists (although only with a single merchant). Finally, personal loans would be last because the funds have already been received and spent, and the loan would be perceived to have no future utility.
 
However, the TransUnion study revealed that the most common unsecured credit hierarchy saw personal loans given the highest priority amongst consumers during times of financial stress. Next came credit cards, with retail cards at the bottom of the hierarchy.
 
Key findings for popular unsecured credit products:
 
Personal loans prioritised over other products: This may, in-part, be due to the prevalence of debit orders for personal loans which are fixed and are often a non-negotiable condition of the loan. Thus, the consumer is less likely to “choose” to pay their personal loan or not, but instead has the loan payment automatically debited, leaving them to make their payment choices among the remaining products.
Credit cards are paid ahead of retail store cards: Here the concept of future utility may in fact influence consumer choice, as paying their credit cards allows them more flexibility to make future purchases from a wide range of merchants compared to their retail store cards.
 
There are other likely reasons for the priority of personal loans in the unsecured product payment hierarchy. For example, personal loans have a fixed end date, and consumers can see a ‘light at the end of the tunnel’ in the near-term if they continue to meet their obligations, giving them relief from this one debt obligation. This contrasts with credit cards and retail store cards, which tend to have no set end date and could potentially continue indefinitely if consumers make only minimum payments on these obligations, and then charge up the remaining available credit in the next month.
 
Difficult Choices During Difficult Times
Williams concluded: “This study is not about delinquency. Rather, it is about choice and the consumer thought process during times of financial stress. When people miss a payment it is often because of significant life events – loss of a job, a relationship breakdown, illness or even other unexpected bills. They are not choosing whether they want to pay or not, but rather are making choices to maximize the benefit of the scarce funds they have available. The choices people have to make are often difficult, and our research gives a glimpse into some of the factors that are potentially important. 
 
“Lenders need to understand the choices that consumers make across their wallets and the interaction effects between different product types in order to inform their underwriting and risk management strategies. Payment hierarchies are extraordinarily complex and dynamic, and can be impacted by external drivers such as unemployment rates, income levels and home prices. As these drivers shift, so can the hierarchy – and the recent economic headwinds could certainly alter consumer priorities regarding their financial obligations. Lenders should always be actively evaluating, refining—and when necessary, redeveloping—their consumer mindset models, in order to anticipate and be able to quickly react when borrower or economic conditions change.”
Source: .iol.co.za

 

How Big Data Can Prevent Homelessness

Professor Vania Sena believes the swathes of data that councils already hold on us could be used to prevent homelessness.

The University of Essex researcher is working with Suffolk and Essex County Councils to analyse large sets of citizen data, collectively known as Big Data, using algorithms that will be used to predict when people need help.

If data analysis and predictive algorithms sounds cutting-edge, Sena says the actual models being used are very basic. “We’re not talking here about sophisticated artificial intelligence,” she says.

But simple as they may be, the systems work much faster than any human and are better at spotting financial patterns than us mere mortals. No wonder then that so many councils in the UK and elsewhere, including San Francisco, are trialling the technology.

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Prevention is cheaper than cure

Councils are under increasing financial pressure due to the drastic cuts made by central government in the name of austerity. Local Government Association figures paint a gloomy picture of a 77 percent decrease in central government funding between 2015/16 and 2019/20, hacking the £9,927m local authorities received in 2015 down to £2,284m. With budgets feeling such an enormous squeeze, it is vital that preventative measures – which save money in the long run – can be put in place.

By the time someone becomes homeless, it’s harder to help them and costs more – a person sleeping rough for 12 months costs the public purse £20,128, according to crisis. When offset against the cost of a successful intervention – £1,426 – preventing 40,000 people from becoming homeless could save the taxpayer £370m per year.

That’s why the Essex University academic sees predictive analytics as so important. The predictions can be used to identify individual households who may require more support. But perhaps more importantly, they are also able to create a hotspot of communities that are under most pressure.

“The council can then work with the community on a comprehensive set of interventions, to try to reduce the risk that each individual could face,” says Sena.

No algorithm is perfect, however. And Sena accepts that their analysis is only as good as the data held by councils.

The good news for anyone worried about how their private records are being used is that it is all anonymous. Sena and the team receive no information as to who any of the individuals are. But the results they come up with can be mapped back on to our council records to predict who is most likely to need housing support based on their use of council services and financial standing with the council.

But there could be serious benefits for people and budgets if interventions happen sooner and are targeted more accurately. That’s why Luton Council, where Nikki Middleton is head of customer service, has also turned to the idea of Big Data and predictive analytics.

“We wanted to do some analysis around what the level of need was, as we suspected we could be working with people sooner,” explains Middleton.

The council worked with Policy in Practice, a social-focused software company, which analyses housing benefit and council tax records in a data dashboard, making it easier to identify specific households needing help and wider trends, such as how a specific policy change will affect citizens.

What if we could offer help earlier, before somebody is in crisis?

“We get a real clear picture of where they are now, and where they’re likely to be in the future,” says commercial director Jade Alsop. “It’s very different to how others do data, as government and others look at how one reform impacts many individuals. What they won’t get is all of them combined, and the knock-on effect that each of them have on each other.”

In Luton, an algorithm wasn’t necessary to assess need, as they found that everyone who came to the council for general services or support had as high or higher need for housing assistance than those specifically asking for it.

“If you’re coming in through the front doors, there’s a level of need that is not typical of the population in general,” Middleton says. “They’re probably on a trajectory to asking for help in the future. What if we could offer help earlier, before somebody is in crisis?”

Middleton adds that it “feels a little bit uncomfortable” to sift through data looking for struggling households, and added the information changes so quickly that it can go out of date. When Universal Credit was being rolled out, the Department for Work and Pensions provided a list of households impacted – but it was difficult to target support based on that data because it changed month to month, she adds.

The Big Issue has inspired the launch of 120 street papers globally, including sister titles in Australia, South Africa, Japan, Taiwan and Korea.

The council is analysing its data, but rather than proactively targeting individuals the aim is to build evidence proving that earlier interventions are helpful. While it seems clear to Middleton that prevention is the answer, that’s not so obvious to others – and having data helps confirm it.

“Particularly in this climate, it’s not enough to know that it’s the right thing to do – we have to be able to prove it,” she says.

When it comes to tackling homelessness, prevention is better and cheaper than cure. Essex, Suffolk and Luton are among those hoping to revolutionize support to prevent homelessness by using Big Data.

But they are not the only ones – the think tank Local Government Information Unit held an evidence session on data and prevention in October last year as part of its analysis of the Homelessness Reduction Act in its inaugural year.

At the session, Hackney Council told of its efforts with data while Bristol City Council presented its government-funded Trailblazer system used to identify at-risk households. Croydon Council also spoke of how its Gateway system has been used to reduce homelessness over the last three years.

Councils around the country are watching and waiting, because if Big Data has a big impact on homelessness numbers in these early-adopting areas then we can expect the data-led prevention revolution to sweep the country.

Source: bigissue.com

How Population In Nigeria Affects Housing and Real Estate

It is not news that man’s basic needs are food, clothing and shelter. It is, however, clear that in Nigeria today, adequate shelter is still a national headache. Urbanisation is taking over major cities in the world, and Nigerian cities are not left out. Rapid population growth in Nigeria and increasing urbanisation have made shelter one of the most critical problems currently facing the country. Apart from multi-storeyed buildings, traffic jams and street beggars, one of the central “faces” of Africa’s rapid urbanisation in most if not all of its large cities is “non-standard, poor-quality housing units” which the UN calls “urban slums”.

There is a shortage of houses in the Nigeria, the houses that are built cost too much or of poor quality, and are often in the wrong places. As Nigeria population continues to grow rapidly, it will place further pressure on housing and the environment. The birth rate in Nigeria is high and the rate of rural-urban migration is high. All these contributes to housing shortages and burgeoning prices.

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Nigeria’s Population over the years

Nigeria is located in western Africa on the Gulf of Guinea and has a total area of 923,768 km2 (356,669 sq mi), making it the world’s 32nd-largest country. The population of Nigeria represents 2.35 percent of the world’s total population which arguably means that one person in every 43 people on the planet is a resident of Nigeria. Looking back, in the year of 1960, Nigeria had a population of 45.2 million people, but now her population is estimated to be over 182 million people.

The level at which housing and infrastructure of urbanisation have been provided to encounter this rise has remained low, leading to the insufficient housing to the continuous increase in the population of the country.

The situation is quite the opposite in the largest state in the country. The largest state in Nigeria, Niger state, has over 4 million residents. The number of dwellers in the land cannot be compared to that of Lagos, which has a population density of over 20,000 persons per square kilometre

Unfortunately, despite this housing situation in the country, a certain minority are living a life of affluence while the rest of her members are living in a state of hardship. There are certain people who own more than one house in the country and these houses don’t have occupants. The available housing option is quite expensive as the average standard 3 bedroom apartment goes for N300,000.

The selling point of these urban dwellings are the economic opportunities and better infrastructures available. People consider migrating to the cities because of the hope of better living conditions, which unfortunately is not the case. When migration levels increase and more people come to an area, either from other states or regional areas or from other countries, then typically the demand for housing increases. This, in turn, tends to push property prices up in both capital value and in rental value. Affordability of housing becomes an issue, as most household won’t be able to afford this. The bottom 40% of income distribution spend more than 30% of their household income on housing, adjusted for household size.

This moves them to consider slum areas as options for affordable accommodation. These areas are overcrowded and lacking in standard conveniences such as electricity, water, drainage and health services.The overpopulated cities also have a large number of people who don’t even have any type of accommodation. These people sleep under the bridges and in “safe” places on the road.

People living in Kano state the commercial hub of the north are also experiencing housing difficulties. The number of people living in Kano state is estimated to be over 10 million. The urban low-income groups are experiencing housing difficulties because of their socioeconomic disadvantages.

The overpopulation problem in the country can’t be stopped, but it can be controlled and maintained. Addressing population growth does not tackle the housing crisis in the immediate future, but it has a vital role to play in long-term housing problems.

Source: propertypro.ng

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