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NYC Housing Agency Rapped On Paint, Buying, Backlog

Monday, August 20, 2012

More items for Maintenance + Renovation

Question: How much does the nation’s biggest landlord pay for a gallon of white paint: $8 or $28?

Answer: Both.

The New York City Housing Authority pays widely divergent prices for paint and other building materials, depending on which development is buying the products, according to a controversial new report.

The report, released Thursday (Aug. 16) by the Boston Consulting Group (BCG), found that some housing developments paid $8 a gallon for white paint, while others paid $28. The BCG classified the disparity as “sub-optimal” in terms of procurement and supply chain.

Jim.henderson / Wikimedia Commons

The report says the city’s housing authority overspends on building materials, including paint. Shown here are NYCHA’s Drew-Hamilton Houses in Harlem.

The paint bill wasn’t the only problem BCG found with the nation’s largest housing agency.

The report identified a plethora of areas in need of improvement and compiled recommendations that could save the agency $70 million annually.

The housing authority commissioned the $10 million evaluation and report in March 2011. The summary, key findings and recommendations are available on NYCHA’s website. 

Backlog: 330K Work Orders

Other significant management problems noted in the report include the backlog of 330,000 work orders, which could take as long as two years to clear.

BCG blamed the backlog on the agency’s vertically integrated property management and maintenance model.

The model “exacerbates efficiency issues and contributes to growing maintenance and repair backlog,” the report says.

The authority also faces a “vicious cycle” in which underfunded capital improvements drive higher unmet demands, causing increasing structural deficits and maintenance and repair needs, BCG said.

Further, the agency’s “highly rigid/bureaucratic” practices were called out as being inconsistent with best practices, while its underleveraged computer system and low workforce engagement were deemed in need of improvement.

Restructuring Urged

BCG proposed a number of tools and methods to improve the problem-ridden agency and preserve public housing in New York City.

Among the recommendations:

• Restructuring the enterprise operating model;

• Better management of its network of warehouses and storerooms;

• Streamlining the bidding process; and

• Hiring more skilled workers for maintenance.

The consultant firm noted that other public housing agencies have addressed similar challenges by shifting more responsibility for property management from central offices to the property level, focusing on core activities and outsourcing non-core activities, and leveraging spending volumes and centralizing when appropriate (i.e., procurement).

Reaction: ‘Fixes Would Not Be Easy’

Mayor Michael Bloomberg told local news outlets that some of the recommendations could be implemented quickly, while others will take more time. He also stressed that the city was not moving away from public housing.

NYCHA Chairman John Rhea also told members of the media that the housing authority was moving forward on several of the most important recommendations.

Rhea said, “The work that we did with BCG was management’s acknowledgement that things were broken, they needed to be fixed, and the fixes would not be easy.”

Reports said the public housing agency was in the “process of hiring a chief procurement officer and is working to make sure supplies are delivered on time so skilled workers are able to make repairs more efficiently.”

Comment from John Fauth, (8/21/2012, 9:07 AM)

I'm surprised that an article in a magazine with as much emphasis on the paint industry would simply accept the premise that all "white paint" is the same.

Comment from Mary Chollet, (8/21/2012, 9:20 AM)

Thanks, John. To clarify: That wasn't our conclusion. It was the architectural consultant's. You may want to read their report.

Comment from Tom Schwerdt, (8/22/2012, 8:48 AM)

Paying a range of $8 to $28/gallon for architectural paint probably is sub-optimal. The housing authority should probably set minimum quality standards and end up with something like $18-$22/gal. You can hardly get chalk + water for $8/gal (NYC prices)

Comment from John Fauth, (8/22/2012, 2:32 PM)

Mary, I understood that the conclusion was not D&D's. What I was disappointed in was that D&D would simply regurgitate the consultant's conclusion, without qualifying it. In other words, we have no idea whether the consultant endeavored to distinguish if "white paint" was a catch-all category for anything colored white (latex house paint, high performance urethane paint, etc), whether the Housing Authority's records would indicate a distinction, or even if the consultant was qualified to understand there might be a difference. It's the extra questions a reporter asks that puts meat on the bones of an article.