Real Estate Assessment Center Scoring Methodology - HUD - YouTube

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\f0\fs28 \cf0 Hello and welcome. I am Deputy Assistant Secretary David Vargas for the Real

Estate Assessment Center in the Office of Public and Indian Housing. As part of our

new charge for improved customer service, and to facilitate communication with our clients

throughout the United States, we are developing a series of training videos to help you better

understand the various aspects of the physical inspection process. \

From requesting a database adjustment to how to file a technical review, as well as other

important topics, these videos will give you the information you need to successfully navigate

through REAC's processes. \ Together we share a common goal of providing

decent, safe and sanitary housing to the families we serve. Over the past months, we have met

with our partners to determine the areas they believe are most in need of clarification.

I trust these informational videos, along with our renewed commitment for Reliable,

Replicable and Reasonable inspections, will be just the beginning of the improvements

we will implement based on our discussions with you and will result in a much enhanced

experience for you, our partners in assisted housing.\

\ Hello, \

\pard\pardeftab720\ri720\sl276\slmult1\sa200\ql\qnatural \cf0 My name is Richard Schmehl and I am here

to provide some information about the scoring used by REAC\'92s Physical Assessment Sub-System,

PASS. I will give a brief overview of our scoring methodology and discuss a few factors

that significantly affect scores.\ \pard\pardeftab720\ri720\ql\qnatural

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\cf0 In general, an inspection involves inspectors observing items for problems or issues that

may affect the well-being of residents. The inspector records these observations into

a hand-held computer. The hand-held computer is then linked to computers at HUD that compute

the score and create a report. It is important to point out that inspectors are not instructed

as to how scoring is computed to prevent the inspectors from biasing their observations.\

The scoring methodology is very complicated because it provides a means to inspect all

types of housing ranging from single-family dwellings to high-rise buildings. In fact,

more than 45,000 properties have been inspected using this methodology.\

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\cf0 Computing the score manually or by hand is too complicated to obtain credible results.

However, individual computations may be done manually making it possible to double-check

specific computations. \f1\fs24 \

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\f0\fs28 \cf0 The inspection protocol is a standard set of rules to be followed on all

inspections and is called the Uniform Physical Condition Standards, or UPCS. Weights and

constants used by this protocol were developed by a consortium of public and private housing

experts, engineers, and advisors. The scoring methodology was developed in-house by REAC.

REAC also developed the business and functional requirements and performs the data quality

assurance needed to insure that the inspection results are fit for public consumption.\

The inspection protocol can be used for all housing ranging from single-family homes to

multi-story high rise buildings. As a result, it is a very complex system. The problem of

\'93one size fits all\'94 is in part resolved by using a weighting system. The weighting

system allows inspection results to be used for comparing different properties. In a

few minutes I will discuss issues related to weighting.\

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\pard\tqc\tx4680\tqr\tx9360\pardeftab720\ri720\sl276\slmult1\sa200\ql\qnatural \cf0 The inspection results are shown on the

Inspection Summary Report. The Scores Table from the Summary Inspection Report provides

details behind the final score.\ \pard\pardeftab720\ri720\ql\qnatural

\cf0 An inspection partitions properties into five Inspectable Areas: Site, Building Exterior,

Building Systems, Common Areas, and Dwelling Units. The Scores Table lists the five inspectable

areas. Each inspectable area is defined by what is or isn\'92t on the property. Take

for instance the Inspectable Area Site. It is defined by which inspectable items are

on the property grounds and can include mail boxes, project signs, parking lots, driveways,

roadways, play areas and equipment, refuse disposal areas, retaining walls, storm drainages,

walkways, stairs, fencing, and gates.\ \

\pard\pardeftab720\ri720\sl276\slmult1\sa200\ql\qnatural \cf0 The entire list of inspectable items

can be found in Appendix 1 of the Physical Condition Process Notice published in the

Federal Register in 2001. One page from that Notice is shown here. I know it is difficult

to read, but I want to point out some items on this page.\

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\pard\pardeftab720\ri720\sl276\slmult1\sa200\ql\qnatural \cf0 The title at the top of the page reads:\

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\cf0 Appendix 1 \'96 Item Weights and Criticality Levels\

\pard\pardeftab720\ri720\sl276\slmult1\sa200\ql\qnatural \cf0 Sub-Title:\

\pard\pardeftab720\ri720\sl276\slmult1\sa200\qc \cf0 Area: Site\

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Column Headings:\ \pard\pardeftab720\li720\fi-360\ri720\ql\qnatural

\ls1\ilvl0\cf0 1. Inspectable Item \'96 it lists the items I just named\

2. Nominal Item Weight \'96 a pre-assigned weight for an inspectable item and it measures

the importance within an Inspectable Area\ 3. Observable Deficiency \'96 describes the

deficiency\ 4. Criticality \'96 is one of five levels

that reflect the relative importance of the deficiencies for the inspectable item\

5. Level \'96 is a means to measure the extent of damage associated with each deficiency

and observed and recorded by an inspector. There are three levels of severity\

6. Health and Safety - identifies deficiencies as either non-life threatening (NLT) or life

threatening (LT).\ \pard\pardeftab720\ri720\sl276\slmult1\sa200\ql\qnatural

\cf0 \ The Federal Register has similar lists for

the other Inspectable Areas. Examples of inspectable items from the other four Inspectable Areas

are:\ \pard\tx720\pardeftab720\li720\fi-360\ri720\ql\qnatural

\ls2\ilvl0 \f2 \cf0 \'a5

\f0 \ul Building exterior\ulnone inspectable items include doors, fire escapes, foundations,

lighting, roofs, walls, and windows \ \ls2\ilvl0

\f2 \'a5 \f0 \ul Building systems\ulnone inspectable

items include water and electrical systems, elevators, emergency power, exhaust system,

fire protection, HVAC, and sanitary systems\ \ls2\ilvl0

\f2 \'a5 \f0 \ul Common Area\ulnone inspectable items

include basement, garage, community room, daycare, halls, corridors, stairs, laundry

room, lobby, office, patio, porch, and pool\ \ls2\ilvl0

\f2 \'a5 \f0 \ul Dwelling Units\ulnone inspectable

items include floors, doors, ceiling, walls, stairs, windows, lighting, outlets, electrical

switches, HVAC, kitchen, bathroom, balcony, and smoke detectors\

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\cf0 Earlier I had mentioned that a public/private consortium developed the weighting system

used by this protocol. Part of that weighting scheme involves the initial weighting of the

five inspectable areas. This weighting is shown under the column heading Initial Area

Weights. As you can see, the five inspectable areas (Site, Building Exterior, Building Systems,

Common Area, and Dwelling Units) have initials weights 15, 15, 20, 15, and 35, respectively.

These weights reflect the relative importance among the five areas and to the resident.

Dwelling Unit has the greatest impact on the resident and thus has the most weight. A characteristic

about these weights is that their sum is 100, an important feature of the UPCS protocol.

Since all properties are scored on the same scale, from zero to one hundred, comparisons

between properties may be made.\ If all inspectable items were present in all

the inspectable areas then the point value associated with each Inspectable Area would

be the same as the initial area weights shown. However, since the list of inspectable items

is so comprehensive, a single property never has all inspectable items. Otherwise, the

value associated with each area is a function of the Nominal Weight Percentage shown in

Federal Register.\ Take for instance the example shown where

the property does not have a common area, which will occur, for example, if the property

is a detached home. The initial area weights are reallocated to take into account the missing

Common Area using a normalization procedure that forces the values associated with the

four remaining areas to sum to 100, thus ensuring that this inspection is scored on a scale

from 0 to 100. The list of these reallocated and normalized values is shown on the Scores

Table under the Possible Points column. Consequently, Possible Points provide the maximum point

value for each inspectable area, uniquely describe the property and, add to 100.\

In our example, the maximum point value, or Possible Points, for Site is 17.6. Possible

Points for Dwelling Units is 41.2.\ \pard\pardeftab720\ri720\ql\qnatural

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\cf0 In addition to Possible Points, the Scores Table has other important features. The magnitude

of the points lost by each inspectable area is shown as is the impact on the score due

to health and safety deficiencies. The health and safety deduction is listed separately

to focus attention on those deficiencies that are unhealthy to the resident, particularly

those that are life threatening.\ Most importantly, the Scores Table displays

the overall score. The final score is equal to the overall Area Points (the column sum)

minus overall Health and Safety Deduction (the column sum).\

As previously stated properties are divided into inspectable areas. A property has sub-areas

if it has more than one building or more than one dwelling unit. Individual dwelling units

and individual building create sub-areas. For example, if a property has multiple buildings

and/or units then the property has sub-areas. \

So the scores associated with each inspectable area comprise the final score.\

Likewise, sub-areas scores comprise inspectable area scores.\

The Area Points used in the Final Score is a sum of the sub-area points. This summing

of sub-area scores to get area scores, which are then summed to get a final score, is a

hierarchical structure to the scoring.\ Thus, the sub-area scores comprise area scores

that are in turn comprise of the final overall property score. The final score is the combined

score of the five inspectable areas and sub-areas.\ PASS scoring methodology is complicated because

it provides a means to inspect all types of housing ranging from single-family dwellings

to high-rise buildings using a single method. Weighting allows this to occur. \

Unfortunately, the same defect in different buildings or units can have different point

deductions is one way that this weighting will manifest itself. Simply put, a deficiency

observed at two different locations may have different point loss.\

This is an example of different point deductions for a one-building property compared to a

twenty-building property. The inspector observed a misaligned chimney/ventilation system. The

point deduction for the one-building property is 15.5 whereas the point deduction for the

twenty-building property is 0.78, or about 1/20\super th\nosupersub of the point deduction

of the one-building property. This is intuitive because the defect in the one-building property

affects all buildings on the property whereas on the other property, only one of twenty-

building is affected by the defect \f3\fs22 .

\f1 \

\f0\fs28 Another example, the inspector observed a sharp edges hazard at the building level

and in a dwelling unit. The building level point deduction is 15.5 whereas the unit level

point deduction is 1.05. This makes sense because the building level deficiency impacts

all units in the building as compared the unit level deficiency that impacts only the

inspected unit.\ Recall that the Health and Safety deficiencies

are shown separately in the Inspection Summary Table. H&S was separately listed to emphasize

the importance H&S deficiencies and to further facilitate the repair as these deficiencies

are very heavily weighted. H&S deficiencies are assigned the highest nominal item weights,

severity levels, and highest criticality (for Life Threatening H&S).\

Exigent H&S items identified in the report need to be repaired within 24 hours and HUD

notification of the repair is required within 3 days.\

Another issue that may cause confusion occurs because negative area scores are reported

as zero. We refer to this as the zero-constraint rule. It is possible that the accumulated

deficiency points are greater than the possible points for an inspectable area or sub-area

which would result in a negative score. In this case, the zero-constraint rule would

be applied and instead of reporting a negative value, zero is the reported score for that

area or sub-area.\ The up side is that the final score does not

suffer from a highly-penalized sub-area. The down side is if some, but not all, deficiencies

that are causing the problem are corrected, the area or sub-area score does not increase

and thus the final score is unchanged. Confusion arises because the property owner expected

the score to rise after the repairs when in fact it did not. \

A HUD Appropriations Law passed in 2000 mandated that HUD procure the services of an independent

third party reviewer to conduct a statistically valid study of the REAC PASS inspection methodologies.\

In response, a study was performed by the Louis Berger Group states that PASS results

are repeatable. Repeatability means the likelihood that two different inspectors would score

the property the same or nearly the same under similar circumstances. The study revealed

that properties inspected twice by different inspectors found that 73% of the results were

within 10 points and 96% were within 20 points. Furthermore, the report states that other

systems that are available for assessing and recording property condition have \'93little

similarity with the REAC program in terms of documentation of corrections, the maintenance

of databases for comparison of re-inspections, or the documentation of QC data\'94 and there

is no system other than PASS that is useful for comparing \'93differences in inspection

results\'94. PASS results have further been substantiated as a result of investigations

lead by the GAO (US General Accounting Office) and the HUD IG (Inspector General) office.\

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\f0\fs28 \cf0 This completes the discussion about PASS scoring and related issues. Displayed

here are the results of inspecting almost 7,000 Asset Management Projects or AMPs, categorized

by AMP and by Dwelling Unit. Note that 92% of all AMPS receive a score above 60 and almost

37% are scored 90 or better.}