Total Cost Indicators (TCI) - Summary
4.2 Background on TCI Area/Cost Bands - In 1998 DSD introduced ‘benchmark’ TCI area/cost bands for all social housing, including Design and Build by Competitive Tendering (CT) schemes, funded or part funded by HAG to optimise value for money within a limited budget.
TCI are used to achieve value for money in the provision of social housing by registered Housing Associations, and to ensure that the appropriate level of grant is paid.
4.3 Composition of TCI - TCI are 'all-in', forecast outturn unit costs and include three main cost elements:
- Acquisition (or land) element;
- Works cost element; and
- On-cost element
Table 1 Breakdown of TCI component cost elements
4.4 Setting of TCI Levels - TCI are based on a combination of information on land and property costs supplied by Land & Property Services in its Spring and Autumn reports and scheme cost data produced by monitoring approved schemes. Account is also taken of statutory requirements, including new forms of Government Tax levies and other costs that will increase the cost of construction works.
TCI are normally reviewed twice yearly by the Department for Social Development (DSD) and are subject to consultation with the Northern Ireland Federation of Housing Associations (NIFHA).
TCI form the basis of DSD’s capital funding approach, and are divided into unit types and Cost Group areas on a City/District Council basis. TCI represent the basis for a cost evaluation of HAG funded units. TCI are also used to calculate the maximum level of grant or other public subsidy payable. Further details on this inter-relationship between TCI and grant levels are given in the Grant Rate Guidance Notes.
4.5 Use of TCI Benchmark Floor Area Bands
(a) DSD always encourages Associations to provide as high a standard as possible; however, the ‘benchmark’ TCI area bands selected must provide satisfactory dwelling areas for a given (optimum) occupancy and at the same time ensure a more equitable distribution of HAG to all Associations.
(b) Associations must proceed on the basis that if a dwelling area falls within the stated ‘benchmark’ TCI area/cost band for the optimum occupancy (see above) the proposals will generally be acceptable to the NIHE (DPG).
Where an Association wishes to:
- Build to a higher TCI floor area band - a reasoned case for the HAG has to be provided at the earliest possible opportunity. NIHE (DPG) will look at each case on its merits and a delay in obtaining a decision should be expected. The Association may wish to confirm that it will be responsible for any additional HAG costs for an area band above the ‘benchmark’ TCI area band.
- Build to a lower TCI floor area band - NIHE (DPG) will need to be satisfied that the proposals will provide acceptable housing provision. If not, the proposals will be rejected. In acceptable cases, HAG will be based on the actual TCI area band achieved (Note: Area is to be measured in accordance with the Total Cost Indicators base table). The accommodation is normally provided in self-contained bungalow, house, flat or maisonette form, but for singles can be in ‘shared’ dwelling form.
For more guidance on space standards for units by dwelling type:
RESTRICTED USER ORGANISATIONS ONLY - Please refer to the TCI Floor Area Bands/ Cost Groups Tables applicable to self-contained and shared General Needs accommodation and any special design features.
To go direct to guidance on measuring floor area and space exclusions:
4.6 Key and Supplementary Multipliers Key and Supplementary Multipliers are applied to the base TCI figures to allow for scheme variations as outlined in the multiplier tables. Thus, there is a relationship between the base ‘norm’ cost of a unit and its unit type. A series of key multipliers adjust the costs for different types of procurement including new build, off-the-shelf, rehabilitation and existing satisfactory purchases. A series of supplementary multipliers further adjust the costs for the scheme type including housing for the elderly, supported housing, listed buildings, single storey, wheelchair etc.
4.7 Publication of Updates - Updates to TCI and accompanying Grant Rates are published as close as possible to the beginning of each Financial Year to have the benefit of the most up-to-date historic data on development costs. They include the 'average' or 'norm' unit cost of housing on a City/District Council Area basis.
4.8 Schemes Exceeding TCI - Where the unit cost exceeds TCI, those schemes are subject to additional scrutiny to identify the underlying reason and confirm that the proposals represent value for money. In such cases, the Association, must give detailed reasons why the unit cost exceeds TCI. This applies to both tariff & non-tariff funded schemes
Schemes may be approved up to 130% of TCI only where a strong case is presented with supporting evidence. Schemes over 130% do not normally represent value for money and will only be considered in the most exceptional circumstances. Where an Association is seeking approval for schemes that exceed TCI the Association is advised to contact NIHE (DPG) at the earliest possible opportunity.
4.9 Tariff Funding - From 1st April 2010 all Housing Associations will move to a Tariff funded arrangement (i.e. TCI times Grant Rate) and funding will be awarded on this basis. NIHE (DPG) reserves the right to recommend to DSD the removal from Tariff of any scheme or schemes, which in their opinion would impact adversely on the effective delivery of the Social Housing Development Programme.
4.10 Departmental Adjustments -
The principle of Tariff funding is that Associations gain financially on some schemes which in turn subsidises more expensive schemes. DSD funds and NIHE (DPG) manages the Social Housing Development programme on this basis. Each Association is expected to maximise its development activities utilising the Tariff funding model. In exceptional circumstances
, DSD at its discretion reserves the right to make adjustments amending applicable grant to reflect extraordinary scheme circumstances (refer to examples listed below). DSD intends to use Departmental Adjustments as a control mechanism to deal with extreme or exceptional occasions where grant may be revised upwards or downwards consistent with the Tariff funding approach (Under Tariff grant paid to an Association may be lower or match the costs of delivering the scheme). NIHE (DPG) will monitor scheme submissions and Tranche payment claims to identify appropriate cases and make recommendations to DSD on where a Departmental Adjustment may be proper. Associations are also permitted to apply directly to NIHE (DPG) requesting an adjustment to its applicable grant. Applicable scheme submissions must contain detailed robust reasons for a Departmental Adjustment with supporting evidence including an itemised cost breakdown or the request will not be considered by DPG. See Scheme Submission documents
Examples of extraordinary scheme circumstances:-
Departmental Adjustment – Enhancement
- High Acquisition Costs due to location “hot spot” within a District Council
- Isolated geographical location
- Major site development works
- Costs associated with archaeological investigations
- Work associated with Listed Building features
- Work associated with features required within Conservation Areas or designated Areas of Outstanding Natural Beauty
- Installation of small sewage treatment plant or pumping station associated with a maximum of two dwellings
Departmental Adjustment – Reduction (N.B. guidance valid at date of scheme approval continues to apply)
- Grant exceeding Qualifying Scheme Cost
- Works Final Account substantially(>30%) below approved Works Costs
Where Associations have not adequately or reasonably investigated site conditions prior to site purchase, a Departmental Adjustment may not be normally be available.
In assessing any Departmental Adjustment, NIHE (DPG) will take into account the cumulative tariff Gain/Loss of the respective Association in the preceding year. Please note DA will not be considered for tariff schemes after start on site stage or where the scheme/element cost index is lower than the scheme/element TCI benchmark.
The amount of any Departmental Adjustment is converted into a Supplementary Multiplier with a corresponding revised Grant Rate for the entire scheme.
4.11 Rent Benchmarking - Guidance on rent benchmarking is under review.