Supported by
RICS Public Sector
Asset Management Guidelines
Edited by
Keith Jones
and
Alan D. White
Acknowledgements
The authors and publishers wish to thank the following for permission to
reproduce copyright material:
BRE
COPROP
DETR
HM Treasury
IPD Global
DCLG
OGC
University of Leeds
Every effort has been made to trace copyright owners. Anyone claiming copyright
should contact RICS at the address below.
www.ricsbooks.com
No responsibility for loss or damage caused to any person acting or refraining from
action as a result of the material included in this publication can be accepted by the
author or RICS.
ISBN 978-1-84219-370-9
3 ASSET PROGRAMMES
3.1 The stages in the preparing of asset programmes 17
3.2 Review of the asset base 17
3.3 Project evaluation (business cases) 19
3.4 Asset programme development and evaluation 21
3.5 Financial planning for assets 22
4 DELIVERY
4.1 Introduction 25
4.2 Overview of delivery 25
4.3 Direction 26
4.4 Resources and capabilities 26
4.5 Means of delivery 26
4.6 Project structure and governance 28
4.7 Project planning 29
4.8 Communications 29
4.9 Monitoring, incentives and benefits realisation 30
4.10 Risks 30
4.11 Conclusion 31
8 ORGANISATION
8.1 Key steps 51
8.2 Organisational culture 51
8.3 Process 51
8.4 Roles and responsibilities 53
8.5 Structure 54
10 SUSTAINABILITY
10.1 The context 59
10.2 Definitions 59
10.3 Building impacts 60
10.4 A sustainability criteria approach for asset management 62
10.5 Summary of sustainability principles for asset managers 63
iv
Preface
In 2006, we were approached by RICS to produce So, we embarked on what has proved to be a longer
public sector guidelines on property asset manage- journey than we all expected! We have had great sup-
ment. It had identified a need for the guidelines for the port from RICS officers, who had the foresight to take
following reasons: the initiative in the first place, and we have been very
G The subject has been at the forefront of public fortunate to have a good team of authors, and a good
sector property thinking for some time and whilst publishing team, to work with. Many representative
its application was previously primarily in local bodies have also been keen to support us. We thank all
government, interest and expectations were spread- these people and organisations sincerely for their time
ing to many other parts of the public sector. and effort in assisting with the preparation of this
G The subject is a challenging area for chartered publication.
surveyors and other property practitioners, as it We took the decision to ask a number of specialists
requires skill sets that are as much to do with to write some of the individual chapters and so we
management and business processes as they are to became editors rather than authors of the whole pub-
do with mainstream property expertise. lication. The text was actually written quite quickly.
G It was felt important to set out the key features of The time has really been consumed by logistics
good property asset management practice for identifying the right authors (and then getting them to
members and other property practitioners. agree to do it!), bringing consistency to the text,
G An initiative was needed to identify and explain honing the text down to a manageable length, getting
the wide range of skill requirements applicable consents and approvals, typesetting and printing and
across the whole of public sector property asset so on.
management, which would become the main However, we feel that the effort has been very
reference point for asset managers. If, subsequently, worthwhile. We hope you do too.
specific guidance in a particular sub-sector is
needed, then more focus on that area will be able to Keith Jones
be developed using the overarching framework pro- Alan D White
vided by these guidelines. January 2008
v
Foreword
Public sector asset management first came into the wide range of public sector groups4 have formed strong
spotlight in the early 1980s. The Ceri Davies report1 on communities of practice who have captured and
the NHS estate, the Cabinet Office report2 on Central shared best practice, providing real evidence of the
Government office accommodation and the Audit impact of these ideas. Consequently, there has been a
Commission report3 on Local Authority property all considerable increase in knowledge about how public
highlighted issues of under-use and a reactive approach sector organisations can gain more from their
to property asset management. These reviews provided property and this has resulted in a more strategic and
a platform for a major process of improvement a systematic approach to asset management.
search for new and better ways to manage the valuable These guidelines therefore come at an opportune
public sector resource and asset base: property. time. They pull together an extensive body of work and
At the same time, the last 25 years have seen rapid take a holistic approach to property asset management
changes in all aspects of working practices and the from strategy development to implementation. By
public sector has not been immune to these. The drawing together a wide range of guidance, techniques
pervasive impact of technology, the rise of the service and practice, it becomes a single authoritative source
culture and search for greater efficiency in the use of of much of the best material currently available.
all resources have challenged professionals to deliver I commend these guidelines to all those who have
new and more responsive property solutions to meet a real interest in improving the performance and
the needs of the occupiers, customers and a wide range contribution of property to the overall goals of their
of other stakeholders. organisation. I have no doubt that it will become an
Responding to these challenges, academics, con- essential resource for practioners in the public sector
sultants and advisory bodies have developed tools and and beyond.
techniques to help asset managers proactively deal with
their portfolios. New financial management tools, a Professor Ginny Gibson
better understanding of information and performance Land Securities Trillium Fellow
monitoring, and new approaches to the use and man- Dept of Real Estate & Planning
agement of the workplace are but a few of the areas University of Reading
which have seen considerable progress. Additionally, a
1 Underused and Surplus Property in the National Health Service, Department of Health and Social Security, HMSO, London, 1982
(Chaired by Ceri Davies).
2 Office Accommodation: A Review of Government Accommodation Management A Report to the Prime Minister, Cabinet Office, HMSO,
London, 1985 (Report prepared by Lord Gowrie).
3 Local Authority Property A Management Overview, Audit Commission, HMSO, London, 1988.
4 ACES (Association of Chief Estates Surveyors), COPROP (Association of Chief Corporate Property Officers in Local Government),
AUDE (Association of University Directors of Estates) and OGC (Office of Government Commerce) are a few of the groups.
vii
Acknowledgements
and Contributors
EDITORS, DRAFTERS AND REVIEWERS We thank Ginny Gibson, Professor of Corporate Real
Estate, University of Reading, for writing the Foreword.
We are indebted to the following editors, drafters and
reviewers, all of whom contributed enormously to the
production of these Guidelines. Consultative group
viii
Glossary
Asset mally this will not be the senior manager responsible
for asset management (SMAM).
The term asset can be used to describe many different
types of assets, for example, financial assets, infra-
structure assets, plant and machinery, equipment and Asset management
property. For the purpose of these guidelines the term
asset is used to refer to land and buildings. This is the activity that ensures that the land and build-
ings asset base of an organisation is optimally struc-
tured in the best corporate interest of the organisation
Asset base concerned. It seeks to align the asset base with the or-
ganisations corporate goals and objectives. It requires
The entirety of the land and building assets owned or business skills as well as property skills although only
occupied by an organisation. an overall knowledge of property matters is required.
However, property input within the overall process is
Asset base performance measures imperative. It does not seek to respond solely to the re-
quirements of any particular operating part of the or-
The measures grounded in an organisations strategic ganisation, but rather, it seeks to take all requirements
objectives. They fit into four key categories or per- into account and to deliver the optimal solution in terms
spectives, based on the balanced scorecard: of the organisations overall operational and financial
goals and objectives. It has a consultancy and executive
G Financial traditional balance sheet and other fi- orientation. It is a corporate, that is whole organisa-
nancial measures. tion, activity and may be led and/or coordinated by a
G Customer satisfaction issues from the customers property, construction or facilities professional, al-
perspective. though this is not always the case.
G Internal the extent to which internal working
practices contribute towards the successful delivery
of corporate objectives. Asset management plan
G Innovation and Learning intended to help drive
improvement in financial, customer and internal A plan covering the organisations asset strategy to-
process performance. gether with other related matters, for example, the or-
A fifth category may also be added to address wider so- ganisational structure and governance, roles and
cial, economic and environmental/physical perspec- responsibilities, data and performance management
tives, to reflect the wider public policy role of the arrangements and performance measurement infor-
public sector. mation.
The public sector approach would, therefore, cover:
G social, economic and environmental/physical im-
pacts; Asset programme
G financial imperatives;
G stakeholder views; A programme of action designed to implement an
G internal excellence; asset strategy or part of it.
G innovation and learning and for the future.
Asset review
Asset champion
The analysis of all or part of the asset base to assess its
The senior individual in an organisation who is current condition, suitability, utilisation and suffi-
charged with promoting and sustaining good practice ciency and the comparison of this with the expectation
in asset management within the organisation. Nor- for the asset base as described in the asset strategy. It
ix
RICS Public Sector Asset Management Guidelines
Asset strategy
Net present value
The organisations strategy for its asset base. It will
The sum of a series of future values discounted to re-
have both generic elements (e.g. a desire to achieve
flect the dates at which they occur.
co-location) and also specific elements (e.g. the
approach to be adopted in offices).
Operating units
Aunt Sally
The various parts of an organisation which deliver el-
A colloquial term used to describe a proposition, put ements of its goods or services or which enable those
forward to test peoples reaction to it. Also known as a goods or services to be delivered.
straw man.
Operational objectives
Capital expenditure
The objectives of operating units which whilst within
One-off expenditure on major items which have a life the overall ambit of the organisations objectives will
of longer than one year (e.g. land and property), often, be more specific and narrow.
but not always, funded by borrowing with current ex-
penditure implications.
Organisational objectives
x
Glossary
More technically based measures than asset base per- This refers to strategic asset management for land and
formance measures, property measures are often bro- buildings. For simplicity, this is referred to as asset
ken down into a range of more focused component management in the guidelines (see asset management
parts normally related to efficiency, effectiveness and above).
economy. Examples are:
G costs and cost control;
G space utilisation; Strategic asset management for land and buildings
G service levels and customer satisfaction;
G environmental sustainability; For simplicity, this is referred to as asset management
G risk management (including health and safety); in the guidelines (see asset management above).
G in-house services management practice;
G outsourced supplier management.
Strategy proposition
These are the top managers or decision makers. Typ- The Treasury has, for many years, provided guidance
ically they would be, for example, Board members, to other public sector bodies on how proposals should
Cabinet members, top management team members, be appraised, before significant funds are committed
Ministers, trustees, etc. and how past and present activities should be evalu-
ated. The current edition of the Green Book, Appraisal
and Evaluation in Central Government (HMT), incor-
Senior manager responsible for asset management porates revised guidance, to encourage a more thor-
(SMAM) ough, long-term and analytically robust approach to
appraisal and evaluation.
The senior manager in the organisation that has direct
responsibility for the operation and performance of
asset management within the organisation. Top management
xi
Introduction
1
RICS Public Sector Asset Management Guidelines
them suitable for purpose there. Whilst all the princi- G Supporting and facilitating wider objectives
ples will remain the same, the extent and complexity (e.g. regeneration, inclusion, sustainability).
of the processes will not be so great and, therefore, G Improving stakeholder satisfaction with property
more streamlined arrangements based on these guide- and with property services.
lines may be more appropriate. G Having a lean, well maintained portfolio which
allows the authority to live within its means (capi-
tal and revenue) by managing property running
BENEFITS OF GOOD ASSET MANAGEMENT costs effectively and efficiently and releasing capital
and then recycling it into corporate priorities.
Practical benefits G Delivering new capital projects effectively and
efficiently.
Land and buildings are probably the slowest of all the G Maximising returns on any investment
strategic resources (finance, people, ICT and land and property.
buildings) to respond to change. The reasons for this G Delivering continuous improvement through
vary but they are mainly attributable to legal, financial, performance management.
construction/development, regulatory and property
market issues. As a consequence there are: Improving Property Asset Management in the
Central Civil Government Estate, Leeds University
G long lead-in times for asset creation;
(for the Office of Government Commerce), 2006
G existing assets are illiquid (i.e. long lead-in times, too),
based on the International Infrastructure
and so there is a need to plan change in a very system- Management Manual 2002, Institute of Asset
atic way. Management, London, 2002
Annual incremental change will not suffice, as it cannot The benefits of Property Asset Management relate to
respond to the challenges of 21st-century public accountability, service management, risk manage-
services and has often led to many parts of the ment and financial efficiency through:
public sector property asset base underperforming in
G Improved stewardship and accountability of prop-
non-financial and financial terms. Examples of this are:
erty assets involving:
G extensive maintenance backlogs; The demonstration to owners, customers and
G poor fit between service requirements and the stakeholders that services are being delivered
property from which it is delivered; effectively and efficiently.
G poor accommodation for the workforce impacting Providing the start point for evaluating and
on productivity, recruitment and retention; balancing service/price/quality tradeoffs.
G limited co-location of public services; Improving accountability in the use of
G inefficient sourcing and procurement of property resources through published performance and
and construction and property support services; financial measures.
G inefficient use of capital; Having the ability to benchmark results
G insufficient control over running costs. against similar organisations.
Thus, there is a need for a structured and programmed G Improved communication and relationships with
3
Business Drivers
Financial Drivers
Chapter 1
Asset Strategy
Asset Management Plan
STRATEGY
Leadership
DELIVERY
Management? Asset
Management
System Review
Performance Management
of Assets
Balance Scorecard
Delivery
Planning
Achieving the Desired
Outcomes
Procurement
Project Management
5
RICS Public Sector Asset Management Guidelines
organisations business needs, the deployment of its Asset Management of Local Authority Land and
assets, and its future investment needs. Buildings Good Practice Guidelines, DETR, 2000
Report on Improving the Capability and Capacity Local authority land and property assets are held as
of Managing Property Assets in Central Civil a support to the main business of an authority, which
Government, OGC, 2006 (Andrew Howarth, is to provide services. First and foremost, the property
National School of Government for OGC) resource must be used to maximise benefits to services
in the most efficient and effective manner. The excep-
Asset management, in its wider sense, needs to be seen tion is where property assets are primarily held for
as a contributor to core business resource planning so financial rather than service requirements. In this
as to ensure that the physical asset base is aligned with case, the focus will be on maximising financial return.
organisational objectives.
The Research Project (Measuring Performance in the
Asset managements strong links with investment Management of Local Authority Property, DETR
planning means that it sits comfortably within the 1999) and these Guidelines apply the term asset
Finance structure, where financial tools can be management to the authority-wide management of
applied to test business options and, through the local authority assets. Furthermore, asset manage-
Corporate Finance Director, has direct exposure to the ment is applied in terms of the long term strategic
Board. view of all the local authoritys assets. It covers the
strategic issues related to all aspects of estate manage-
Whilst specialist knowledge or technical competency ment and development. This differs from the day-to-
is very important to the everyday running of property day provision of estate and project management
and estates, asset management, as proposed by Sir services such as building maintenance, rent reviews
Michael (Lyons), implies a wider understanding of and so on.
the part property can play in the delivery of the or-
ganisations primary objectives. There are, therefore, There appears to be considerable consensus over the
differences between the property management view of basic characteristics of strategic asset management for
assets and the asset management view of property. land and buildings and a distinction between this and
operational property management. Therefore, for the
Asset Management properly lies at the level of corpo- purposes of this book, we have sought to differentiate
rate resource management. It is a feature of thinking between the two activities as follows:
at a strategic level, which means matching future ca-
pabilities to a future environment in order to achieve Strategic asset management for land and buildings
defined outcomes. Asset management, therefore, is the activity that ensures that the land and build-
aligns itself with strategic resource and ICT manage- ings asset base of an organisation is optimally struc-
ment at the business thinking level. Decisions to utilise tured in the best corporate interest of the
property assets as an enabler to business planning organisation concerned. It seeks to align the asset
stem from this level and manifests itself as strategic base with the organisations corporate goals and ob-
property management. jectives. It requires business skills as well as prop-
erty skills although only an overall knowledge of
Measuring Performance in the Management property matters is required. However property
of Local Authority Property, Department of input within the overall process is imperative. It
Environment, Transport and the Regions (DETR), does not seek to respond solely to the requirements of
1999 any particularly operating part of the organisation,
but rather, it seeks to take all requirements into ac-
Asset management in the context of this project is the count and to deliver the optimal solution in terms of
strategic management of land and buildings assets in the organisations overall operational and financial
terms of the portfolio as a whole. We have identified goals and objectives. It has a consultancy and execu-
asset management as optimising the utilisation of as- tive orientation. It is a corporate, that is, whole or-
sets in terms of service benefit and financial return. ganisation, activity and may be led and/or
There is a difference between this type of asset man- coordinated by a property, construction or facilities
agement and day-to-day property and project man- professional, although this is not always the case.
agement, and property services. Asset management is
concerned with the long term view of all the local au- Property management is the activity that ensures
thoritys assets, including those held and used by in- that land and buildings matters are dealt with so
dividual service departments, as well as those held by that they operate efficiently and effectively. In effect
a local authority but used by an external organisa- it delivers the strategic asset management objectives
tion, such as the community organisation or a tenant for land and buildings. It is sometimes referred to as
of an industrial unit. operational and it is the activity of undertaking the
6
Chapter 1: What is Public Sector Asset Management?
professional/technical work necessary to ensure G an activity that sees property as a key strategic re-
that property is in the condition desired, in the source in an organisation.
form and layout and location desired and supplied This book focuses on strategic asset management
with the services required, together with related for land and buildings and describes the techniques
activities such as the disposal of surplus property, that are needed to practice it well. The techniques and
the construction or acquisition of new property, the practices of property management are not covered
valuation of property, dealing with landlord and by these guidelines other than in those areas where it
tenant and rating matters, all at an optimum and overlaps with strategic asset management for land and
affordable cost. It also involves offering advice to buildings.
decision makers on the best ways of doing this.
It has a customer orientation and it is normally un- For simplicity, strategic asset management for land
dertaken by property, construction or facilities and buildings is referred to as asset management in
professionals and technicians. the remainder of this book.
Therefore strategic asset management for land and
buildings is: 1.2 CONCEPT DIAGRAM AND ARRANGEMENT
G involved with business, corporate and organisa- OF THE GUIDELINES
tional objectives;
G concerned with both non-financial and financial In deciding on the structure of the content of this book
matters; we have first considered the basic business process for
G connected with property management; effective asset management. This is based on a simple
G systematic and coordinated; process which has been described in varying ways in
G concerned with whole life costs and benefits; many business management texts. Our version of it is
G involved with planning on a medium/long term shown in Figure 1.1.
basis;
G a corporate activity and not solely the province of From this we can begin to define the various activities
property, construction and facilities professionals; involved in asset management in each part of the
STRATEGY
IMPROVEMENT PROGRAMMES
REVIEW DELIVERY
7
RICS Public Sector Asset Management Guidelines
Business Drivers
Financial Drivers
Asset Strategy
Asset Management Plan
STRATEGY
Leadership
Change in Asset Culture
Asset Reviews
Management Customers
Structure Business Cases
Corporate Change
CHANGE Roles PROGRAMMES Asset Programmes
AM Services Change
Responsibilities Financial Planning
The Attributes
Resources and for Assets
Needed
Capacity
Governance
Data
Sustainability
REVIEW DELIVERY
Asset Delivery
Management Planning
System Review Achieving the Desired
Performance Management Outcomes
of Assets Procurement
Balance Scorecard Project Management
process. These are described in Figure 1.2 by the text G Change management
in the ellipses. G Leadership and customers Leadership for assets
G Organisational issues
However this does not describe the full range of activ- G Resources and capacity
ities involved in asset management. There are a num- G Sustainability and corporate social responsibility
ber of essential enabling activities and subjects which G Data and information management
support the basic business process activities. These are G Asset management An international discipline
shown in box at the centre of Figure 1.2. This will enable the reader to work through the whole
asset management process and understand the plan-
As a result, this book is arranged in the following ning, process, delivery, resourcing, data management
chapters: and practical implications of preparing an asset plan. It
G Strategy and vision development will also enable the reader to dip-in to any individual
G Asset programmes chapters which are particularly relevant at any given
G Delivery Strategic implementation issues time.
G Review and performance management
8
Business Drivers
Chapter 2
Financial Drivers
Asset Strategy
Asset Management Plan
STRATEGY
Strategy and
Leadership
Change in Asset Culture
Asset Reviews
Management Customers
Structure Business Cases
Corporate Change
CHANGE Roles PROGRAMMES Asset Programmes
AM Services Change
Responsibilities Financial Planning
The Attributes
for Assets
Vision
Needed Resources and
Capacity
Governance
Data
Sustainability
Development
REVIEW DELIVERY
Asset Delivery
Management Planning
System Review Achieving the Desired
Performance Management Outcomes
of Assets Procurement
Balance Scorecard Project Management
9
RICS Public Sector Asset Management Guidelines
Strategy development an iterative process Fitting the asset strategy into the organisations
business process
It will be almost impossible to get the first asset strat-
egy right. The process of refining the strategy may take The asset strategy needs to be part of the organisations
several years especially if the asset base concerned is overall business process and Figure 2.2 gives the broad
complex and extensive. The process will be iterative, conceptual position of the asset strategy in the overall
gradually refining and reviewing all aspects of the organisational planning framework.
strategy over time. This is shown in Figure 2.1.
Even after the strategy has been refined, over time it will 2.2 THE COVERAGE OF THE ASSET
still be necessary to review it annually and whilst it may MANAGEMENT PLAN (INCLUDING THE ASSET
not change radically year on year, it will need to change STRATEGY)
as the organisation itself changes and as the outside en-
vironment and customer requirements change. Whilst less has been written about the content of asset
strategies themselves, much has been written about the
In simple terms the purpose of a strategy is to provide: content of asset management plans (which include the
asset strategy) and a very useful summary of some of
G a platform for structured and rigorous forward
these is given in Leeds Universitys Research Docu-
thinking;
ment, Improving Property Asset Management in the
G a basis for corporate and consultative strategy de-
Central Civil Government Estate (Leeds University for
velopment;
the Office of Government Commerce, 2006) which re-
G an explicit description of the direction that the or-
views the suggested asset management plan content of
ganisation wishes to take with its assets;
the following:
G a clear statement for communicating the strategy to
the organisation; and G New South Wales Treasury, Australia
G a basis for future decision making. G Department of Education and Employment, UK
G Federal Real Property Council, USA
Asset strategy should be distinguished from asset pro-
G Cambridge County Council, UK
grammes. Asset programmes are the mechanisms by
G Consortium of Local Authorities in Wales (CLAW),
which the asset strategy will be put into place, increas-
UK
ingly on a two-, three- or four-year rolling basis. They
G The Lyons Report, UK
are the practical and implementable actions to put the
G Institute of Asset Management, UK
strategy in place and will be technically and financially
robust (these are discussed further in Chapter 3).
Years
10
Chapter 2: Strategy and Vision Development
Partners
External Financial
Environment Context
Corporate
Operating Units Strategy Corporate Operating
Strategies and Governance
Policies
Figure 2.2: Position of the asset strategy in the overall planning process
Further examples of asset management plan content 2.3 KEY ELEMENTS OF PREPARING ASSET
can be found in PAS 55 (Publicly Available Specification STRATEGIES
55) Asset Management (BSI, 2004); NAMS Property
Manual (National Asset Management Steering The stages
(NAMS) Group, Thames, New Zealand, 2006);
RICS/ODPM Guidance on Asset Management 2005 The process of preparing an asset strategy is covered in
(RICS/ODPM, 2005). the five key stages shown in Figure 2.3. These are cov-
ered, in turn, in the rest of this chapter. The process
Drawing from these references, an example of the content will depend on the particular needs of your organisa-
of an asset management plan is illustrated in Table 2.1. tion.
Whilst it is unrealistic to set a maximum length for
such documents they should be kept as short as possi-
ble by distilling down the essence of what needs to be Business drivers
communicated. The reason for this is that a key role of
the asset management plan is to get the message across The first stage must be to identify the key business
to those who may be busy or who may not be moti- drivers that determine the overall direction of the or-
vated to read a long document on a subject that they ganisation and in particular to understand the likely
may consider is only of indirect importance to them. implications of these drivers for assets. There are many
It is helpful to summarise the strategy in a single issues to consider and they will be particular to the or-
page or in two or three diagrams. This might then be ganisation concerned. A mind map of just some of
used as the executive summary. them is provided in Figure 2.4.
Figure 2.3
11
RICS Public Sector Asset Management Guidelines
Table 2.1: Content of an asset management plan (including the asset strategy)
Purpose and expectation of the strategy G Why does the organisation have an asset strategy?
G How does it fit with other planning documents and the overall
business process?
The organisations goals and objectives G What is the organisation seeking to do, making sure that those
and the organisations major business business drivers that have asset implications are highlighted?
drivers (service/policy delivery/ The key directions and aspirations of the organisation
production and financial) G Organisational mission, vision and values
G Key organisational objectives (internal and external)
The gap between where the asset base G What the business drivers mean for the asset base
is now and where the organisation wants G Gap analysis
it to be, i.e. the implications for assets G Approach to closing/eradicating the gap
Asset goals and objectives and G Explicit statement of asset goals and objectives
the organisations vision for its asset G The overall approach to the use of assets
base over the next, say 10 years G Key themes
G How the asset base will help delivery of the business objectives
Critical success factors G Drawn from the asset goals, objectives and vision
G This will form the basis for future performance measurement
The approach to each category of the G The way in which the organisation will approach and decide upon
asset base (i.e. the gap analysis and the the future of each part of the asset base by category
way the gap will be closed or narrowed
in effect, this charts out the strategy itself)
Performance management for assets G The performance measures to be used, drawn for the critical
success factors
G The performance management system
G Current performance and key historic trends
Strategic action and milestones G The main actions that will be taken over the next year to deliver
the strategy
G Some will be actions to develop the strategy
G Some will be actions to implement asset change
G Some will be actions to implement organisational change
12
Chapter 2: Strategy and Vision Development
Corporate goals, objectives and strategy The organisations vision for property
Corporate values and policy Suitability and alignment of existing property portfolio
Procurement
Financial outlook of the organisation
Efficiency savings
The organisations vision for its future
Brand
Asset Sustainability and environment
Customer interface
Strategy Possibilities for co-location
Impact of outsourcing/partnering/shared
service provision
Possible changes in government policy
Changes in headcount
Figure 2.4: A mind map of some of the issues to consider in understanding business drivers for the asset strategy
A start can often be made by consulting documents tives will form the basis of the indicators that would
and plans produced by the organisation business be used to measure the contribution the asset base
strategies, business plans, operating unit plans, finan- makes to corporate performance
cial statements and documents. However, this will not G General themes and the approach to these themes
be enough. The documents will often be out of date (e.g. working environment, co-location, mainte-
and are unlikely to look far enough ahead (510 years). nance, regeneration, standards, branding, approach
In addition some matters may be confidential or may to public realm/landscaping, sustainability issues,
not be written down. It is essential to meet with the key etc.)
players in the organisation to discuss their views on fu- G Broad approaches to be adopted for each asset cat-
ture direction and plans. These key players might in- egory of asset/accommodation in the asset base
clude senior managers (including politicians if (e.g. schools, adult care, teaching blocks, student
applicable), heads of operating units, senior finance accommodation, offices, hospital wards, customer
staff, senior policy making and organisational devel- access points, etc.)
opment staff, heads of ICT and HR and so on. From The vision will clarify the dynamic between financial
this, a picture of the future direction of the organisa- matters and new initiatives. For example, it will seek to
tion will emerge and it is often surprising how much broadly quantify capital release, recurring expenditure
agreement on this there is. efficiencies, whilst at the same time explaining the broad
Having understood the organisations business thrust of the organisations new initiatives. It will also
drivers, some visioning for assets can now begin. identify where any other non-asset responses are needed,
for example, if a workstyle policy is to be followed to im-
prove productivity, recruitment and retention, which
Visioning will change office accommodation requirements, then
it will also be necessary to pursue parallel HR and ICT
It is a truism that there are always two conflicting strategies which will enable the change.
pressures on an organisation. One is the desire to take A good way of bringing this vision to life will be for
new initiatives and the second is financial constraint. the asset manager to chart out an Aunt Sally and then
Any asset visioning needs to strike a balance between for this to be debated and honed at a workshop with
the two but at this early stage it may not be easy to the senior representatives of operating units, the cor-
quantify either. As a result visioning is an iterative porate centre and support services.
process. The visioning stage should end with an agreed pre-
The visioning should take the information gleaned liminary vision for the future of assets in the organisa-
from the assessment of business drivers and seek to tion.
map this information onto the asset base. What will be
the implications for the asset base? These implications Buy-in
are likely to be in the following three categories:
G Asset objectives (What do the business drivers in- Before doing any further work it will be important to
dicate our asset objectives should be?) These objec- get the buy-in of top managers and, as appropriate,
13
RICS Public Sector Asset Management Guidelines
senior politicians/board members/trustees. This may Examples of how it might be carried out are as follows:
best be achieved by presenting the draft vision, and the G Financial Look at the overall estimated capital
logic behind it, to a meeting of these senior personnel. costs of the approach outlined in the strategy
The process of brokering (acting as a go-between proposition and the estimated capital receipts from
and facilitator with all the internal parties who have an the approach. Estimate whether, very broadly, the
interest in the asset strategy) an asset vision with sen- approach in the strategy proposition will be fund-
ior management may have some other very important able and over what broad timescale. At this stage
additional benefits, for example: you will probably be using present day costs and
G getting asset issues on the corporate agenda;
present day values only. You are only seeking to see
G clarifying business drivers and corporate policy;
whether a strategy proposition of this type is sensi-
G clarifying organisation issues that need to be ad-
ble and warrants further investigation, or whether it
dressed in relation to assets; needs amending. Consider any significant changes
G facilitating and promoting change in the organisa-
in recurring costs. Would this prevent the strategy
tion as a whole. proposition being pursued?
G Assets Assess the broad feasibility of the approach
Testing from an asset perspective. Will the land/buildings
be available to purchase? Are there abnormal con-
Once there is an agreed asset vision, the specifics of this struction or procurement challenges? What are the
vision can be developed into the organisations draft prospects in the property market? Will the result-
asset strategy (this should be a short step). This may be ant asset base be manageable? What delivery
termed a strategy proposition so that the organisation vehicles might you use? Are these delivery vehicles
is clear that at this stage it is merely work in progress available? What are the overall risks to the organi-
which remains to be tested. sation? What are the overall asset risks? Are these
Testing can then begin. The testing process will risks manageable? Does the organisation have the
comprise high level financial, assets, ICT and HR appetite for the risks?
issues. This testing is very broad and generic and G Information and communications technology
should not be confused with detailed feasibility and ap- (ICT) and human resources (HR) The implica-
praisal work which would follow later. What you are tions of the strategy proposition for ICT and HR
seeking to do is to find out if the strategy is realistic or may be very significant. These implications will
whether it may need amendment. need to be assessed at this early stage not only to
Asset Vision
High level
testing
Asset Strategy
14
Chapter 2: Strategy and Vision Development
make sure that they are taken into account and that 2.4 THE PIVOTAL ROLE OF THE ASSET STRATEGY
the strategy proposition is realistic in these respects, AND THE ASSET MANAGEMENT PLAN
but also to flag up these parallel implications to the
organisation and to the ICT and the HR managers. Asset strategy drives the entire asset management
This will complete the resource picture finance, process. Without asset strategy it is difficult, if not im-
people, assets and ICT. possible, to properly answer the following questions:
G Against what do we assess potential projects?
G What implementation mechanisms are best suited
Asset strategy document to our needs?
G How will we measure our success in implementing
Having completed the testing stage the strategy docu- our strategy?
ment can now be prepared. It may well have changed G What organisational changes do we need to man-
from the original strategy proposition or proposition age to achieve the strategy?
that was tested, as the testing process may have flagged G How should we organise ourselves to implement
up necessary changes. There may also be a need to bro- our strategy?
ker the final strategy again with top managers, if it has G How will we provide the capacity to do it?
significantly changed. G Precisely what data do we need?
15
Business Drivers
Financial Drivers
STRATEGY
Asset
Leadership
Change in Asset Culture
Asset Reviews
Management Customers
Structure Business Cases
Corporate Change
CHANGE Roles PROGRAMMES Asset Programmes
AM Services Change
Responsibilities Financial Planning
The Attributes
Resources and for Assets
Needed
Programmes
Capacity
Governance
Data
Sustainability
REVIEW DELIVERY
Direction set
Asset Project Programme Financial
by the Asset
Review Evaluation Development Planning
Strategy
Figure 3.1
17
RICS Public Sector Asset Management Guidelines
the frequency of review must reflect the nature of the fices, schools, health facilities, community buildings,
assets being reviewed. Those that change more rapidly police stations, libraries, etc. Or the review may be of
and have significant impact on organisational per- government offices in a UK region or of a campus of a
formance should be reviewed on a more regular basis. university or of a specific hospital complex within a
Reviews can take place for the whole asset base or, large Health Trust.
more commonly, for an asset type or within a defined This type of review is best suited to a mixed asset
geographical area. Part of the reason for so doing is base (or a large single category asset base), within a
that a review of a large and complex asset base needs specific area.
to be broken down into more manageable portions.
The types of review are exemplified in Figure 3.2.
Reviews and timing
N
O O
P SERVICE A R
E T
R H
A
T SERVICE B
I
N
G
SERVICE C
U
N S
I
O
T
C U SERVICE D
B E T
A N H
S W T E
E E R A CORPORATE RESOURCE
D S A S
T L T
AREA BASED
18
Chapter 3: Asset Programmes
G the degree to which they will meet organisational G Big bang a major change initiative, with, for ex-
objectives from a non-financial and financial per- ample, wholesale new build and significant asset
spective; and disposals.
G the feasibility of project implementation. G The middle ground a middle course with, for ex-
ample, some refurbishment of buildings and pos-
sibly a limited amount of new build.
3.3 PROJECT EVALUATION (BUSINESS CASES) In choosing your options it is important not to have
too many or too few three is a very good number to
The business case allow a good range and still remain manageable.
Economic
Job Creation/retention
Regeneration
Social
Building Aesthetics
Noise pollution
Service Disruption
Customer Satisfaction
Technical
Storage capacity
Efficiency of buildings (fit for purpose)
Strategic location
Public transport access
Functionality
Condition of IT and other infrastructure
Environment
Pollution levels
Environmental impact
Supply of Land
Energy Efficiency
Sustainability
(Work) Environment
Internal Layout
Car Parking
Training Facilities
Staff Facilities
Legal
DDA
Ease of Obtaining planning
Total Scores
20
Chapter 3: Asset Programmes
ated, refurbished or managed is a key part in the deliv- to manage peaks of work and very specialist assign-
ery of a service to customers, i.e. the value of the proj- ments.
ect. So the financial assessment should also include the The business case will also need to define standards
effect of options and operational issues on quality of and determine how quality is to be controlled/moni-
service and the cost of the service delivery, often drawn tored. The financial modelling in the business case will
for the non-financial assessment. In the example above, have quantified both cost and value. Good project and
this is expressed as cost per head and NPV per head. cost management will ensure that neither the costs go
In other cases it might be expressed as NPV per bene- up nor the quality decreases.
fit point (benefit point refers to the total weighed From the production of the outline business case to
points for that option or project derived from the non- the completion of the project there will undoubtedly
financial appraisal). be change. How is that change going to be identified;
It should also be noted that there is a difference be- what mechanisms will be in place to manage and facil-
tween value for money and affordability both must itate the change; and who will make the decision?
be assessed. A project may provide good value for These matters need to be decided and evaluated up-
money if it provides extensive overall benefits at high front, not at a later time when the issue is identified.
financial costs however, these financial costs may not An understanding of the Gateway Review Process
be affordable. (Office of Government Commerce (OGC)) and
PRINCE2 guidance (see the OGC website at:
www.ogc.gov.uk/methods_prince_2.asp) will help with
Commercial assessment the project management assessment.
Commercial assessment will answer the following
questions: Risk assessment
G how is it being procured traditional in-sourcing In the early stages of business cases, risks need to be
or outsourced to the private sector; identified and quantified in terms of impact and like-
G if the former, then freehold or leasehold tenure; lihood. The risks will be described in each section of
G if leasehold, what is the length of the lease; the business case but they will need to be brought to-
G if outsourced, will Facilities Management (FM) and gether and assessed and compared. A typical frame-
lifecycle be included in the contract; work for assessing the relative risks of options is given
G what is the marketplace like for this (these) trans- in Figure 3.5 (in this case the example compares two
action(s); different scenarios for change).
G is it based on an input specification (defined prod-
ucts) or output based (building performance pa-
rameters); Recommendation
G what is the payment mechanism a simple quar-
The project is assessed by drawing together all the as-
terly in-advance rent or performance based;
sessments and making a decision on overall value for
G how have the risks been quantified and have they
money, affordability benefits and non-financial costs
been allocated to the party best equipped to manage
and risks.
them;
G has the risk transfer been correctly priced;
G are there any personnel issues such as TUPE (Trans-
fer of Undertakings (Protection of Employment) 3.4 ASSET PROGRAMME DEVELOPMENT AND
Regulations) transfers; EVALUATION
G what are the implementation timescales and are Asset Programmes
there any penalties for under performance?
Having assessed, using business cases, each of the po-
tential projects or project options that have been de-
Project management assessment veloped from the asset review, a realistic programme
The main question here is how is the project going to of some of the projects (or possibly, all, although this
be delivered? How will it be governed and who will be is unlikely on overall affordability, value and bene-
involved? Often there will be a split of these activities, fit/non-financial costs grounds) will now need to be
with a Strategic Project Board dealing with major de- assembled that provides the desired value for money,
cisions, to whom a Project Management Team report, affordability and benefits.
who subsequently deal with day-to-day matters and
decisions.
Does the organisation have the resource and capa- Development of programmes
bility to run the project or is there a need for out-
sourcing/partnering? Often, for example, framework The proposed projects to be included in the pro-
agreements are used to supplement existing resources gramme should be relatively easily assembled, as each
21
RICS Public Sector Asset Management Guidelines
= not applicable
= very low
= low
= moderate
= high
= very high
of their business cases will have indicated which are the Whatever the programme is, it will need to be well
more desirable ones. Nonetheless it must be acknowl- defined (budget, timetables and outputs/outcomes)
edged that senior decision makers may chose to evalu- and have a series of accompanying performance meas-
ate some of the non-financial issues in a different way, ures to judge its success.
or with a different weighting, to those chosen in the
business cases, especially when projects are compared
to each other, or where benefits vary between, for ex- 3.5 FINANCIAL PLANNING FOR ASSETS
ample, different communities. Thus, the final selection
of projects in the draft programme may be the subject Principles
of change at the time that the programme is finally
confirmed. However, the business cases will undoubt- In effect, the above process (asset review, business case,
edly inform this decision-making process. programme development) should have resulted in a
The programme will usually contain a schedule of programme that is financially robust, but this should
actions required to change the asset base. For example: always be checked. Therefore:
G acquisitions and new builds; G plan ahead;
G refurbishment and maintenance of the stock re- G ensure that the projects or groups of projects are fi-
tained; nancially sustainable not just affordable in the short
G disposals of surplus or unfit-for-purpose assets; term;
G innovative procurement. G check that a capital investment today will not create
a massive recurring/revenue expenditure headache
Some of these will be stand-alone tasks, others will in- in a few years time;
terconnect, hence the importance of programme and G where possible use capital receipts to reinvest in as-
project management support. sets that can help to reduce the future revenue
budget;
Some items in the programme will be short term, less G rather than just delivering capital receipts when
than a year; others may be timetabled over several needed, develop a pool of monies which can be in-
years, e.g. large scale projects with long lead-in times. vested in spend to save schemes;
A timetable for reviews of individual projects and the G dont be afraid to change the financial profile of a
overall schedule will be contained in the programme. project or programme as a result of an annual review.
Frequent reviews, at least annually, will give rise to pro-
gramme modifications.
22
Chapter 3: Asset Programmes
Partners
External Financial
Environment Context
Capital
HR Asset ICT
Strategy
Strategy Strategy Strategy
for Assets
Business Cases
and Programmes
Current Capital
Investment Plan
Expenditure Expenditure
for Property
Programme Programme
Implementation
Figure 3.6: The asset planning process within the overall business planning process
Asset management and the annual budget process the accuracy of the budget. As Figure 3.6 shows, if the
process is running smoothly the forecasting of the cap-
Asset strategy, asset reviews, historic performance, as ital and current (resource/revenue/recurring) budgets
well as timely production of business cases and robust associated with assets will be accurate.
programmes, all inform the annual budget process and
23
Business Drivers
Financial Drivers
STRATEGY
Delivery
Leadership
Change in Asset Culture
Asset Reviews
Management Customers
Structure Business Cases
Corporate Change
CHANGE Roles PROGRAMMES Asset Programmes
AM Services Change
Responsibilities Financial Planning
The Attributes
Resources and for Assets
Needed
Capacity
Governance
Elisabeth Carter, Director, Elisabeth Carter Data
Sustainability
Key issues
4.1 INTRODUCTION
All public sector organisations are challenged with
This chapter provides a high-level view of the asset finding the most efficient way to deliver their services
managers role and responsibilities in the successful de- successfully. Most organisations rely on third parties
livery of asset management plans and strategies. It for at least some part of their delivery. This is likely to
looks at the components underlying successful deliv- become an increasing trend across the public sector
ery and considers the key issues facing the asset man- and is already well-established practice for property
ager in delivering asset management plans and and construction projects. Studies and evidence gath-
projects. ered by the OGC and the National Audit Office suggest
that there are key things you must get right and these
are listed below (drawn from the OGCs Successful
4.2 OVERVIEW OF DELIVERY Delivery Pocketbook, 2006):
G better informed investment decisions;
Successful delivery G more effective engagement with stakeholders;
G capacity and capability: adequate skills;
No matter how well prepared, well written or compre- G better understanding of the supplier marketplace;
hensive an asset strategy or asset management plan is, G good understanding of the delivery chain;
it will be wasted and all efforts at asset management G effective management of risk;
25
RICS Public Sector Asset Management Guidelines
G taking a whole life view; ery. At the delivery stage, identifying, assessing and se-
G active management of intended outcomes. curing the resources (human, physical, financial, in-
frastructure and any other resources) necessary to
deliver the plan or project will determine the ability to
The cycle of planning and managing delivery deliver successfully.
An examination of capability and capacity should
Figure 4.1 represents the overall cycle for planning include the wider delivery chain both existing and
and managing delivery. The diagram is an adaptation potential. Innovative ways of delivery are becoming in-
of a similar model contained in the Successful Delivery creasingly evident and possible. Case studies and guid-
Pocketbook but contains some additions to reflect the ance from the sources listed at the end of this chapter
specific issues and steps that occur in the delivery of illustrate how collaboration with suppliers and part-
property related projects. The key delivery steps are ners from both the public and private sectors can be
presented in their logical sequence. In practice, there widely used for the benefit of delivering property or
will be a considerable amount of cross-referral between accommodation-related projects. Indeed, delivery
the various stages. For example, orchestrating the re- through partnership is invariably a key feature of prop-
sources for delivery will be greatly influenced by the erty construction and/or property services procure-
chosen means of future delivery whilst the chosen de- ment projects and is considered in more detail later in
livery model may well be a reflection of the organisa- this chapter.
tions existing resource capability, its approach to risk
and the benefits being sought.
The following delivery steps are considered in turn 4.5 MEANS OF DELIVERY
in the paragraphs that follow:
G Direction Third party involvement and partnership
G Resources and capabilities
G Means of delivery Public sector organisations are increasingly looking to
G Project planning third parties to help deliver services and projects. This
G Action plan is particularly evident in the case of support services,
G Communications such as property services, and in the delivery of com-
G Monitoring, incentives and benefits realisation plex or specialist projects that lie outside the scope of
G Risks the organisations normal experience or capacity, such
as large construction projects. Indeed, the expectation
is that public sector organisations will use third party
suppliers unless there are justifiable and value for
4.3 DIRECTION
money reasons for doing otherwise.
The prevailing theme, and certainly the approach
The direction of major asset related projects should be
promoted by the Achieving Excellence in Construction
guided by the asset strategies and programmes, under-
initiative, is on partnership. This requires both part-
pinned by a rigorous business case approach, that have
ners to the contract to be working collaboratively in
been explained in the previous Chapters of these
delivering the objectives of the contracted service
guidelines. The further development of the business
and/or project, with a shared commitment (and in-
case continues to be relevant during delivery. The busi-
variably an incentive) to continuous improvement and
ness case is an evolving working document and a vital
value for money.
management tool in planning and delivering asset
The Public Accounts Committee Report Improving
plans and projects.
Construction Performance (December, 2001) advises as
The OGCs Successful Delivery Toolkit provides the
follows:
detailed explanation, guidance and templates that are
There is scope for benefits in terms of quality, faster
needed to make full and effective use of business cases
construction times and financial savings through con-
in successful project delivery. Business cases are also
tractors and their clients working more closely to-
closely linked to two other important delivery tools:
gether in longer-term relationships (partnering).
the OGC Gateway Review process and PRINCE2 proj-
Safeguards include the appointment of partners
ect management.
through competition; periodically re-tendering; agree-
ing clear, measurable targets for continuous improve-
ments in quality, delivery time and cost reductions;
4.4 RESOURCES AND CAPABILITIES establishing payment arrangements to give contrac-
tors incentives to be innovative and cost effective; and
A high-level assessment of resources and costs (in- securing reasonable access to contractors financial
cluding whole-life project costs in accordance with HM records and cost information to check that agreed
Treasury guidance) should have been made and proven improvements in efficiency and performance are
in the business case stages leading up to project deliv- being achieved.
26
Figure 4.1: Delivery planning cycle
Required resources 2.
1. and capabilities 3. 4.
Resources Capabilities:
Direction: Means of Delivery: Project structure and
What resources and
What do we want to What are the delivery governance:
capabilities (people,
do and when? vehicles and which model Who is responsible and
physical resources and
What is the scope? suits us best? accountable for what?
funding) do we need?
Evidence Project
Required result 5.
What has Plan
Action Plan:
worked
Plan for carrying out
previously?
required processes and
actions, how and when?
Trade-offs
Communication
requirements
and plans
Risk
strategy 6.
7.
Risks: Communications
What is an acceptable How will we communicate
balance of cost, benefit with all relevant
and risks and how should stakeholders; how do we
risks be managed? share information and
knowledge?
8.
Monitoring: Incentives
Delivery, reporting and
and benefits realisation
Risks and costs accountability requirements
How will progress be
monitored and reported?
What are the performance
measures, incentives and
benefits realisation?
Chapter 4: Delivery
27
RICS Public Sector Asset Management Guidelines
Decisions about the delivery and procurement of prop- The need for good governance
erty related projects should always be on the basis of
value for money over the whole life of the facility or This aspect of project delivery concerns the project
service and not on the initial capital cost alone. OGCs management and governance arrangements that
Best Practice briefing Value for Money Evaluations in clearly establish reporting lines, roles and responsibil-
Complex Procurements explains how to take account of ities for delivery both within the department/organi-
all the factors when making an investment decision. sation and with others in the delivery chain, such as
partners and suppliers.
Lack of clarity and acceptance about decision mak-
Procurement strategies and procurement routes ing, reporting and accountability arrangements are fre-
quent reasons for project delay, increased costs and, in
There are two key outputs to help determine the means extreme circumstances, project breakdown. This is par-
of delivery: the procurement strategy and the procure- ticularly the case where third parties involved in deliv-
ment route. The procurement strategy identifies the ering the project (such as delivering the procured
best way of achieving the objectives of the project and property or serviced accommodation) have not been
value for money, taking account of the risks and con- effectively included in the project management and de-
straints. The procurement route delivers the procure- cision-making structure.
ment strategy. It includes the contract strategy that will
best meet the clients needs, where this is relevant to
the procurement route chosen. PRINCE2
OGCs Achieving Excellence in Construction Pro-
curement Guide recommends that the following factors PRINCE2 project management principles and practice
should be considered when developing the procure- are now widely adopted and applied throughout the
ment strategy: public sector to ensure that programmes and projects
G the project objectives; are well and effectively managed. Using a PRINCE2
G constraint; project management approach will help construct a
G cultural factor; decision-making framework that can also accommo-
G risk; date governance requirements and is recommended as
G capabilities to manage a project over the whole life- an aid to planning and managing the delivery of asset
cycle; management projects and programmes. The approach
G the length of operational service required from the can be adapted to suit the individual project and or-
facility. ganisation requirements.
Procurement route options are clearly influenced and,
to a large degree, determined by the procurement strat- Inclusion
egy. Choices are additionally influenced by government
policy. There are specific requirements relating to con- Care needs to be taken to ensure that the project man-
struction projects. Since April 2000, construction proj- agement arrangements take account of the various
ects should be procured by one of the three governance requirements of all participating partners.
recommended procurement routes: For example, particular requirements may apply to dif-
G PFI where the public sector contracts to purchase ferent public, charity, voluntary or not-for-profit or-
services and/or products (such as new serviced ac- ganisations and these will need to be accommodated
commodation) on a long-term basis in exchange in the project management structure, as determined by
for a yearly unitary payment and where private sec- the mix of partners involved.
tor skills are incentivised by having private finance
at risk. This is only recommended for projects
exceeding 20m capital cost. Roles and responsibilities
G Prime contracting using a single contractor to act
as the sole point of responsibility to a public sector The OGCs Achieving Excellence Guide 2 Project Or-
client for the management and delivery of a con- ganisation provides some very useful guidance about
struction project. the key roles and responsibilities involved in construc-
G Design and build (and also operate, as appropriate) tion procurement projects. The advice is equally rele-
using a single contractor to act as the sole point of vant for delivering any property related project. It
responsibility to a public sector client for the de- highlights the important points to note about report-
sign, management, delivery (and operation, where ing and decision making and recommends an inte-
included) of a construction project. grated project team whilst also incorporating the
28
Chapter 4: Delivery
The development of the project plan is clearly a prod- It is particularly critical to think about the end-users/oc-
uct of all the other stages of the delivery planning cycle. cupiers perspective and to ensure a customer-focused
Adopting PRINCE2 project management principles view. It is recommended that the project sponsor should
provides a framework for developing, managing, pro- ensure that stakeholders, including user representatives,
cessing and delivering the overall project plan and provide important input in developing the outputs re-
makes use of concepts and tools to help make project quired from the proposed delivery.
delivery more manageable. Anticipate and determine how to resolve conflict-
The project plan provides an overview of the total ing demands. Think about how to achieve stakeholder
project and identifies its key outputs. It sets out the buy-in and how to overcome resistance to changes or
project costs and is used as a basis against which to proposals. PRINCE2 advocates the development and
monitor actual costs and project progress, stage by use of a live communication plan throughout project
stage. delivery. It will be necessary to determine how to com-
municate and consult with stakeholders from the out-
set through to completion of delivery.
Stakeholders,
including end-users
Supply team:
Integrated supply
Client team: Managed by:
chains of consultants,
SRO project sponsor project sponsor
constructors,
and support as and project
specialist
required manager
suppliers and
facilities
managers
Independent
client adviser/s
29
RICS Public Sector Asset Management Guidelines
4.9 MONITORING, INCENTIVES AND BENEFITS benefits of the subsequent results or outcomes of the
REALISATION project and lies at the heart of being able to demon-
strate the success or otherwise of delivering an asset
Performance measurement is the activity of checking management strategy, plan or project.
actual performance against targets throughout the life A post-project review is carried out after construc-
of a project, during construction and through the op- tion is completed and focuses on how well the project
erational life of the completed facility. The delivery of was managed. It includes the views of suppliers and
a project is subject to three main stages of evaluation, specialists at the point of actual delivery and considers
or monitoring: performance against key performance indicators.
G project evaluation; A post-implementation review, also known as post-
G post-project review; and occupancy evaluation, should be carried out when the
G post-implementation review. facility has been in use long enough to determine
whether the business benefits have been achieved from
The business case, which continues to be refined the investment in the facility, as justified in the busi-
throughout the delivery of the project, will establish ness case.
the project objectives, key benefits and critical meas- Post-project review and post-implementation re-
ures and indicators of success. Depending upon the view need to be thought about and prepared for in the
nature of the project there will be output specifications early stages of planning delivery. They should not be
and other related documents, particularly those relat- left as a post-script or an after-thought as the project
ing to procurement arrangements. All these documents nears completion or has been completed.
provide the basis for developing the measures and The elements of managing performance are broadly
processes against which future benefits can be assessed similar and are summarised in Figure 4.3.
and evaluated. All require effective performance man-
agement if they are to be delivered.
The project plan and associated project manage- 4.10 RISKS
ment processes and reviews provide the means for
monitoring project progress and delivery. This stage is The OGC website provides some excellent risk man-
about monitoring the effectiveness, performance and agement guidance, tools and techniques with access,
Origins
Review What are we trying to
Did we find out achieve?
Building a
what we What constitutes
needed to know? performance
success?
Should we redefine framework
success? What processes and
What can we learn
from this? outputs do we need
Did we realise the benefits to know about?
we wanted?
Using performance
information Choosing
Have we met our performance measures
targets? What will be measured?
How can we improve?
30
Chapter 4: Delivery
31
Business Drivers
Financial Drivers
STRATEGY
Review and
Leadership
Change in Asset Culture
Asset Reviews
Management Customers
Structure Business Cases
Corporate Change
CHANGE Roles PROGRAMMES Asset Programmes
AM Services Change
Responsibilities Financial Planning
The Attributes
Resources and for Assets
Needed
Performance
Capacity
Governance
Data
Sustainability
Management
REVIEW DELIVERY
Asset Delivery
Management Planning
System Review Achieving the Desired
Performance Management Outcomes
of Assets Procurement
Balance Scorecard Project Management
33
RICS Public Sector Asset Management Guidelines
these guidelines or, for example, The Maturity Matrix G How well is the asset strategy articulated and com-
from Improving Property Asset Management in the Cen- municated?
tral Civil Government Estate (Leeds University for the G How well is the asset strategy placed in the context
Office of Government Commerce, 2006), PAS 55 of a wider asset management plan?
Asset Management 2004 (IAM/BSI, 2004) or the NAMS G How well is the strategy used as the basis for per-
Property Manual 2006 (NAMS Group, Thames, New formance measurement?
Zealand, 2006). We describe below an example using G How well is the link between strategy, programmes
the key elements of these guidelines. and delivery made?
The stages are as follows and are shown in
Figure 5.1:
Assessment method
G define your evaluation framework;
G identify your assessment criteria; This is normally achieved by scoring each of the key is-
G define your assessment method; sues on a scale of, say, 0-5 (or possibly 0-10) where 0
G assess performance; would represent very poor performance and 5 would
G set targets, identify improvement action, and represent excellent performance. A decision will need
implement that action. to be made on whether or how the scores should be
weighted, which may vary for different organisations,
Evaluation framework depending on the particular requirements and priori-
ties of the organisation concerned.
Decide where performance needs to be measured.
Using the content of these guidelines, that would mean
Assess performance
the following:
G strategy development; The measurement may be difficult for the asset man-
G programme development; ager, who may find it difficult to be objective or may be
G programme delivery; too familiar with the detail to stand back sufficiently. If
G performance management; this is the case then perhaps another manager from
G change management; elsewhere in the organisation might do it, or a peer in
G leadership; another, similar organisation, or a consultant special-
G customer focus; ising in such assessments. Independence and objectiv-
G organisation and roles and responsibilities; ity will be important.
G resources and capacity; Once the assessment has been made it will need to
G sustainability; be made explicit and understood. It can be sum-
G data management; marised as shown in Figure 5.2.
G value for money. This assessment now leads to a clear understanding
Different organisations may decide to use different of where action needs to be taken to improve per-
headings but the coverage will broadly be the same. formance.
Next decide on the key issues to be examined in each. Identify improvement action and implement that
Taking strategy development as an example, the fol- action
lowing might be chosen.
G How well is the relationship between organisational The improvement action needs to be clear and agreed
business drivers and property implications under- across the organisation. Chapter 6 of these guidelines
stood? explains how change should be handled when imple-
G How well is visioning undertaken? menting the action.
G How well is buy-in achieved? In subsequent years, the assessment process can be
G How well is the strategy proposition tested and it- undertaken again to see how performance in this area
erated? has improved.
Figure 5.1
34
Chapter 5: Review and Performance Management
Strategy
Data Programmes
Sustainability Delivery
Resources Performance
Management
Organisation Change
Customers Leadership
Figure 5.3
35
RICS Public Sector Asset Management Guidelines
Asset Asset
Pls Pls
Stakeholder Financial
Views Imperatives
Objectives
Physical Impacts Pls
Factors
Innovation and
Internal
Leaning for the
Excellence
Future
Asset Asset
Pls Pls
36
Chapter 5: Review and Performance Management
G Relevant measures should be clear and relevant to G costs, and cost control;
all stakeholders and should take account of a di- G space utilisation;
verse range of perspectives within the organisation G user satisfaction;
G Communicated set out clear roles and responsi- G environmental sustainability;
bilities, publish the results, have a clear presentation G risk management (including health and safety);
style and ensure feedback and follow up. G in-house asset, property and facilities management
services;
G outsourced supplier of asset, property and facilities
Use of ratios management services.
Financial managers often use ratios to analyse finan-
cial performance. Likewise, asset managers can use Review and quality management
asset performance ratios. It is important to consider
ratios carefully and to consider which ones are relevant Once measures are in place, using them to measure
and of use. performance can also be a key part of any organisations
Some key points to consider include: quality management system, where the key question is:
G Dont use too many! If there are too many meas- to what extent have we done what we set out to do?
ures/ratios, probably none will get used. G It is important to use the performance management
G Do not be solely asset specific. Ratios are used at an system as part of day-to-day working. It is not a
organisational, or strategic business unit (SBU) bolt-on, but an essential process.
level. G Consider a form of audit process (look at ISO 9000
G Ensure they drive performance. The big number ra- series as a base model).
tios are a useful tool enabling you to get there. G A clear system of targets can be a vital tool to help
drive up performance. While appropriate targets
will vary from one organisation to the next, in set-
Measurement ting them it is important that they are sufficiently
challenging and accord with SMART objective-set-
The use of the balance scorecard approach will allow ting principles.
the development of a (limited) number of perform- G To give the performance management system teeth
ance measures that will measure the contribution that it may be wise to consider ways to motivate im-
the asset base makes to overall organisational per- provements (e.g. linking incentive payments or fu-
formance (asset base performance measures). Al- ture contract awards to performance and budget
though they are not always easy to formulate these expenditures).
might cover measures designed to monitor the contri-
bution of the asset base to, for example: Benchmarking
G getting public services closer to the community and
customers; There should now be a clear picture of how the organ-
G co-location of public services to improve customer isation is performing against objectives. How does this
satisfaction and patient care; compare with other similar organisations? Crucially, is
G culture change in the workforce; the performance level providing value for taxpayers
G productivity of the workforce; money given how well others are performing? This is
G cleaner, greener sustainability issues; where benchmarking comes in.
G capital release; Benchmarking is generically defined by Watson in
G social and economic regeneration and sustainable his book Strategic Benchmarking as a continuous
communities. search for the application of significantly better prac-
tices that leads to superior competitive performance
Armed with a thorough understanding of the organi-
(Watson, G.H., Strategic Benchmarking, 1993).
sations vision and with a balanced set of asset base
Its essence is to assess an organisations relative per-
performance measures in place, the next step is to
formance and to learn from the experiences of others in
develop other more technically based measures
an effort to improve performance. Indeed, if organisa-
(property performance measures) to supplement these.
tions are to close the gaps that exist between them and
The property measures that are used will need to be
the best in class, it is vital to discover where the gaps exist,
broken down into a range of more focused component
their size, and then aim to make step improvements. In
parts normally related to efficiency, effectiveness and
this respect, benchmarking can be a vital tool in the drive
economy. The following are key elements of any prop-
for success and the promotion of best practice.
erty/facilities management (FM) measurement system,
but need to be balanced and weighted according to
Five key essentials are as follows:
each organisations needs. These key elements would
often be used at an asset category or individual estab- G For the process to work the participants must build
lishment level: up a relationship of mutual trust and honesty
37
RICS Public Sector Asset Management Guidelines
they must be willing to share information equally Having undertaken the benchmarking process, if all is
and openly. well and nothing needs improving which is rarely the
G Effective leadership is vital and should clarify at the case then at least this has been confirmed. However,
outset the nature of the benchmarking exercise organisations will almost always wish to adopt some
being undertaken. For example, whether it is a vol- of what has been learned from partners in the
untary or mandatory exercise (perhaps as part of a exercise, and perhaps to set targets accordingly.
value for money assessment or audit process). Ultimately, if anyone is doing things better than you,
G What to compare? Getting this right is fundamen- you will know how, why and at what cost.
tal to the success of any benchmarking project. Only
critical areas which drive headline costs and/or con-
tribute directly to the effectiveness of core functions Reporting and improvement planning
should be targeted. In this context it is important
to understand the benchmarking information cor- It is clearly important to report performance, both up
rectly for example, low costs may mean efficiency the line to demonstrate current success and direction
or, more likely, may well mean neglect. and also down the line to service delivery levels.
G Before committing valuable time and resource, it is Typical reports might all come from the same dataset,
important that organisations realise that bench- but be cut in the following ways:
marking is not a one-off exercise but part of an on-
G board report;
going cycle of continuous improvement.
G business unit report;
G Take care to understand the data. For example, low
G asset senior management team report;
maintenance costs per square metre may be because
G service team(s) reports;
of underinvestment rather than efficiency.
G outsourced supplier reports;
Key benefits of benchmarking include: G stakeholders (such as health and safety, group secu-
G Innovation can inspire new ways of doing business rity, etc.);
which could generate quantum leap improvements G building manager reports;
in performance. G user group reports.
G Motivation seeing is believing, especially when These reports are very much bespoke to each organi-
there is a clearly measurable basis for change. sation, but the following points are universal truths:
G Focus helps to concentrate attention on the key
G only report what is required, to the people that need
drivers of organisational performance (incorporat-
it;
ing a business-like approach to public sector asset
G stick to the headlines, do not report too much in-
management).
formation; and
G Learning quantifies best practice, highlighting areas
G try to avoid jargon, use plain language.
of weaknesses and the work needed to be done to
close the gap.
Current Position
Objectives
Action
Targets
Performance
Measures
38
Chapter 5: Review and Performance Management
The final crucial step in the cycle of performance man- This chapter has made two main points:
agement is to take action to improve performance. In- G the wisdom of reviewing the entire asset manage-
deed, John Oaklands work on Total Quality ment system in an organisation before embarking
Management (TQM) states that having recorded your on more detailed performance measurement; and
performance data, used and analysed that information,
the next key task is to act on the results. Failure to take G more detailed performance measurement com-
action is likely to lead to frustration. prises both:
Figure 5.5 indicates a process that can be used to asset base measures, designed to assess the con-
help clients build up a performance culture. tribution of the asset to the achievement of or-
ganisational goals; and
property measures designed to measure the per-
formance of asset categories or individual es-
tablishments.
39
Business Drivers
Financial Drivers
STRATEGY
Change
Leadership
Change in Asset Culture
Asset Reviews
Management Customers
Structure Business Cases
Corporate Change
CHANGE Roles PROGRAMMES Asset Programmes
AM Services Change
Responsibilities Financial Planning
The Attributes
Resources and for Assets
Needed
Management
Capacity
Governance
Data
Sustainability
REVIEW DELIVERY
Property Asset Management Maturity Matrix, adapted and modified from the IAM Manual and the DETR
Document Building a Better Quality of Life.
(From Improving Property Asset Management in the Central Civil Government Estate, Leeds University for the Office of Government Commerce, 2006 and 2007)
42
Chapter 6: Change Management
G organisational structure, roles and responsibilities, decision making, rather than operating unit de-
governance; cision making, on asset management matters.
G resource management and capacity building; Culture ensuring that there is a culture of sup-
G data management. port and belief in asset management in the or-
This is illustrated in Figure 6.1. ganisation.
G Asset management strategy and policy
Two distinct types of change can be identified that an Identifying explicit business drivers for assets
asset manager may be called upon to implement: working with senior and middle managers in the
organisation, to comprehend and record the
G corporate change (i.e. change outwith asset services long-term business drivers of the organisation
and the individual buildings within the asset base) and to identify its implications for assets and the
those needed to get the organisation, as a whole, long-term vision and strategy for the asset base.
to respond; and G Roles, responsibilities and governance
G asset management services change those needed Agreeing corporate standards, procedures, roles
to make sure that asset management services facil- and responsibilities working through the asset
itate the delivery of the changes and the improve- management processes across the organisation
ment in performance of the asset base and and clearly agreeing standards and procedures;
individual assets. and clearly agreeing roles and responsibilities for
asset matters and decisions, and the organisa-
tional structure necessary to make those deci-
Corporate change sions and implement them.
G Communication
The asset manager can typically be at the centre of the Forging links with stakeholders creating effec-
following corporate changes: tive dialogue on asset matters with all stake-
holders to ensure effective involvement in
G General decision making and to inform stakeholders of
Senior managers championing getting senior relevant asset information and particularly per-
managers to understand the significance of as- formance information.
sets in business management and to champion Forging links with partners creating effective di-
the process. alogue with partners to allow joined up use of
Getting buy-in to strategic decision making work- the public asset base.
ing with operating units to understand their re- Communicating complex asset issues simply de-
quirements and to get their buy-in to corporate veloping skills and capacity to communicate
STRATEGY
Leadership
Culture
Customers
Structure
CHANGE Roles PROGRAMMES
Responsibilities
Resources and
Capacity
Governance
Data
Sustainability
REVIEW DELIVERY
43
RICS Public Sector Asset Management Guidelines
asset issues (strategy, performance, technical) System review introducing effective review of
simply and relevantly to stakeholders. asset management systems and appropriate cor-
Influencing other bodies funded by the organisa- rective action programmes.
tion, on asset matters making sure that the
principles of asset management being applied in Asset management services change
the organisation are being communicated to,
and acted upon, in other bodies which are The Asset Manager will typically be leading the fol-
funded by the parent organisation, e.g. spon- lowing changes in asset services:
sored bodies in central government and schools G Skills and capacity development ensuring that the
in local government. capacity and skills required for effective asset man-
G Asset management planning agement are present within the organisation.
Business planning techniques for asset manage- G Culture change moving those involved in asset
ment development, introduction and use of management from a property management mind-
modern and sophisticated business evaluation set to an asset management mindset.
techniques applied to the asset base. G Changing from a customer focus to a client/executive
Corporate asset data introducing corporate focus the asset management function will require
asset data systems where necessary linked to client management/executive decision-making tech-
other corporate management information sys- niques that have been described by some experienced
tems and linked to operational databases. asset managers as consultancy techniques (e.g. client
Corporate project management large corporate relationship management, information collection,
projects where asset change is at their centre analytical skills and techniques, recommending and
often start as asset projects and then gradually getting agreement to high-level executive action,
grow. The asset manager will need to have de- change project implementation, advocacy of recom-
veloped the capability to manage such projects mended action, presentation skills (which may be
with all the non-asset activities and relationships slightly different from the customer skills of prop-
that may be involved. erty management)). These techniques allow the asset
G Acquisition and disposal manager to relate to their stakeholders in the most
Corporate and planned acquisitions and appropriate way to achieve success.
disposals developing a business-driven, G Organisational change asset management services
planned acquisitions and disposal policy, driven and their relationship with property management
by corporate value and medium- and long-term services may necessitate some structural reorgani-
corporate planning, rather than driven by sation, to make them function effectively and to en-
price/cost and short-term operational planning sure that they relate to each other effectively.
considerations. G Team building and people change the asset man-
Strategic procurement the introduction and use agement team may need to be brought together to
of corporate procedures for procurement of assets form an efficient and effective team involving team
designed to be innovative, effective and efficient. development and people development.
G Operation and maintenance
Operational assets encouraging, introducing
and monitoring the use of robust asset systems A gradual process
in the management of operational assets. Improvement in the performance of the asset base and
Maintenance agreeing an effective and funded of asset management services will not be achieved im-
programme of planned maintenance together mediately or even in one year. It will be a constant it-
with reactive maintenance procedures, designed eration of gradual improvement over a long period of
to minimise whole life costs and maximise time, continually visiting and revisiting various aspects
whole life value to the organisation. to improve each in turn.
Sustainability ensuring that all aspects of the
use of assets are properly founded on good en-
vironmental and sustainability principles. 6.3 ATTRIBUTES OF GOOD CHANGE
G Performance review and accounting MANAGERS IN ASSET MANAGEMENT
Agreeing business critical success factors for assets
working with senior managers to determine the Some of the attributes that will help to make corporate
critical performance areas for assets in terms of change happen are listed in the following paragraphs.
business goals and objectives and business drivers. They are also captured in Figure 6.2.
Business performance indicators for assets using
agreed critical success factors to develop per- Leadership
formance indicators for the asset base and using
these indicators, over time, to improve per- The importance of leadership in asset management is
formance. described in Chapter 7 Leadership and Customers.
44
Chapter 6: Change Management
Leadership
Understanding and
Engaging People
Position Position
Delegation and Empowerment
1 2
Motivation
Communication
Suffice it to say here that the leadership style required Effective use of time delegation and empowerment
in asset management is more likely to be democratic
and permissive rather than autocratic or charismatic. Asset management is not a part time job! It must be a full-
time occupation. It will be important for the asset manager
not to be drawn into the detail of property management
Understanding people and engagement and to ensure that other staff who are dedicated to asset
management are empowered to do so. The head of asset
People skills are an important attribute of the asset management will need to spend much time on the change
manager. Highly effective relationships with those in process and delegate day-to-day responsibilities.
the organisation who must be influenced in order to The dilemma is illustrated in Figure 6.3.
improve asset management performance will be para-
mount to change.
45
RICS Public Sector Asset Management Guidelines
46
Business Drivers
Chapter 7
Financial Drivers
Asset Strategy
Asset Management Plan
STRATEGY
Leadership and
Leadership
Change in Asset Culture
Asset Reviews
Management Customers
Structure Business Cases
Corporate Change
CHANGE Roles PROGRAMMES Asset Programmes
AM Services Change
Responsibilities Financial Planning
The Attributes
Resources and for Assets
Customers
Needed
Capacity
Governance
Data
Sustainability
REVIEW DELIVERY
47
RICS Public Sector Asset Management Guidelines
48
Chapter 7: Leadership and Customers
corporate change projects, which have at their heart stakeholders in key decisions that shape day-to-day op-
asset change (an example of this is an office rationali- erations, organisations gain an understanding of cur-
sation/relocation where corporate objectives are as rent and emerging issues and can best balance interests
much about productivity, culture change, recruitment and improve performance.
and retention as they are about asset change and fi-
nance). It should not be left as a task to be undertaken
as a bolt on to day-to-day property management. Effective consultation
Leaders of corporate projects, where assets are one of Effective consultation should include:
the main, or the main enabler, need to understand the:
G Initial identification of all relevant stakeholders,
G principles of property management and construc- stakeholder groupings and stakeholder representa-
tion management; tives in relation to each area of asset management.
G key linkages within corporate projects; These could include internal and external stake-
G business need for the project and its intended con- holders such as board members, strategic officers,
tribution to corporate objectives; other departments, building or service users, non-
G appraisal of business options; service users, client groups, external interest groups
G difference between feasibility project management, and opinion formers, staff, trade unions, clients and
corporate change project management and con- partner organisations.
struction or property project management; G Categorisation of responses of stakeholders by their
G principles of project and change management; influence or impact and commitment.
G IT support available for project design and man- G Setting clear objectives for consultation. Establish why
agement; you are doing it; what information you want to find
G need to analyse the impact and outcomes on the out; who you are going to consult with and what
organisation; you are going to ask; which form of consultation
G need for stakeholder input at relevant stages. will work with which stakeholder group (especially
Project leaders also need the ability to: with hard-to-reach groups); and finally, and prob-
ably most importantly, what you are going to do
G accept personal accountability for the projects suc- with the information.
cess; G Ensuring consultations are not too asset management
G project plan, including critical paths; focused, where the key issue relates to service
G assess and manage corporate risk; delivery and business performance as opposed
G assess investment decisions to be taken; to simply the performance of an asset. By consult-
G identify the integrated project team and their roles ing on the service itself you should be able to track
and responsibilities including clients, consultants, back to the contribution that the asset is making
contractors, specialist advisers and suppliers and to the service and whether there needs to be
run as a single team; any change.
G manage an integrated project team and/or be an ef- G Carrying out an overall cost benefit assessment of the
fective team player in a project team; proposed consultation methodology. The approach
G monitor projects and ensure their implementation; and, therefore, the cost of consultation should be
G communicate within the team and manage com- tailored to the expected benefits envisaged. Public
munication outside the team and the organisation; sector organisations need to prioritise when con-
G select appropriate and effective delivery partners; sulting, otherwise the consultation exercise could
G define the authority for project decision making. grow to become unmanageable or over extravagant
for the original purpose.
7.2 ENGAGING STAKEHOLDERS
Consultation and asset management
Why consult?
Historically public organisations have perhaps over-
Public authorities should develop consultation ap-
looked the importance of consultation in relation to
proaches that encompass the full range of asset man-
asset management and it is only recently that the po-
agement functions.
tential for significant benefits has been realised.
Stakeholders are those people or organisations who
Consultation with key stakeholders across all func-
influence, or are impacted by, the business of the or-
tions is very important to effective asset management.
ganisation, its programmes or projects. Public sector
There are a number of specific areas that are worth
organisations do not operate in isolation from society
highlighting.
and their stakeholders have a legitimate interest in the
way business is conducted. Stakeholder satisfaction is G Capital prioritisation needs an approach that allows
central to effective asset management. By involving strategic consultation. Questionnaires, often with
49
RICS Public Sector Asset Management Guidelines
simple scoring mechanisms, can be effective in Identifying and engaging external stakeholders
achieving this.
G Option appraisal is similar to capital prioritisation Managing external stakeholders is essential to achiev-
but usually requires more in-depth consultation ing successful change programmes and projects. Rela-
with potential stakeholders to ensure the best solu- tionships with key external stakeholders should reflect
tion within the resources available. the influence or impact of the stakeholder. Involvement
G Effectiveness of assets particularly requires consulta- can be through:
tion with building managers and users including, G one-to-one briefings;
where relevant, the public, to ensure the suitability G direct request for comments on a briefing paper on
of the building for the services that are being deliv- the issues concerned;
ered from it. G presentations;
Often there are insufficient resources to consult widely G workshops and seminars;
and so organisations should carefully prioritise to en- G newsletters hard copy/e-mail shots;
sure the best consultation fit is achieved. There is no G web communication;
one right method for all circumstances. Different G stakeholder forums where there are many diverse
stakeholder groups, different circumstances and dif- stakeholders; and
ferent service areas will require different approaches to G other organised events.
ensure the best results. Whatever approach is adopted there should be consis-
Be clear about how you are going to communicate tency and stakeholders should receive information that
the consultation results both to those you have con- is relevant to their area of interest and not be over-
sulted with, and to others, and how the results of the loaded with unnecessary information or detail. The
consultation will change or improve things. This can briefings should lead to awareness, then familiarity, and
be done through intranet bulletins, newsletters and ultimately, trust and high performance relationships.
communication direct with consultees or a combina-
tion of these.
The benefits of improved consultation
Engaging key internal decision makers Better consultation helps to:
Internal decision makers can be subject to many com- G align customer and client service need to service
peting demands on their time and attention. It is im- provision;
portant, therefore, to communicate effectively with G prioritise services enabling better overall use of re-
them and indicate succinctly and concisely what the is- sources;
sues are, the consideration given to the issues, their im- G set performance standards and make monitoring
pact on the wider organisation and the recommended more relevant to stakeholder needs;
way forward. G establish a working partnership with stakeholders
Personal and regular contact by the person respon- so they can understand and help with any future
sible for asset management, with key decision makers difficulties;
can be a powerful means of conveying concepts, ideas G become alert to problems quickly so that these can
and advice on asset management and gaining the all be rectified before they escalate; and
important corporate understanding and support G symbolise the commitment to openness, trans-
needed. Time invested in short, well-planned meetings parency and accountability, putting service delivery
can be particularly productive, capturing the attention first.
and understanding of the significant issues involved.
50
Business Drivers
Chapter 8
Financial Drivers
Asset Strategy
Asset Management Plan
STRATEGY
Organisation
Leadership
Change in Asset Culture
Asset Reviews
Management Customers
Structure Business Cases
Corporate Change
CHANGE Roles PROGRAMMES Asset Programmes
AM Services Change
Responsibilities Financial Planning
The Attributes
Resources and for Assets
Needed
Capacity
Roles and
Culture Process Structure
Responsibilities
Figure 8.1
51
RICS Public Sector Asset Management Guidelines
G good linkages to corporate aims and objectives and pected that such a team would action everything them-
to corporate decision makers and budget holders; selves, but it is important that the asset management
G single point of contact for the asset management team has a clear and current overview of the asset sit-
team; uation across the organisation, can provide clear cur-
G clear demarcation between asset management and rent and consistent guidance and has the ability to
property management and decision making; intercept and identify issues and problems at an early
G full involvement of all key operational areas; stage.
G clear and regular asset management reporting lines
throughout the organisation;
G integration with financial planning; Clear demarcation between asset management and
G good linkage with other support functions; property management decision making
G an effective corporate annual business planning
process for assets. Ideally asset management functions should be pro-
vided separately from day-to-day property manage-
ment functions. Chapter 1 of these guidelines
Good linkage to corporate aims and objectives and highlights the difference between asset management
to corporate decision makers/budget holders and property management.
The asset management function will provide coor-
An organisation needs to be able to translate its high- dination in relation to land and buildings and will
level ambitions into asset aims and objectives. Some- closely interact with corporate policy and decision
times these can be related to prioritisation of service makers providing forward strategy and planning. The
objectives or they may concern particular policies or size, scope and exact nature of the asset management
standards such as reduction of energy use, or the im- team will vary dependent on the characteristics of the
posing of space restrictions. In all cases this high-level organisations asset base. However, it is important that
process requires asset managers to engage with the or- the asset management team has adequate resources
ganisation at corporate level and develop a robust on- and is separated from operational tasks. This is dis-
going relationship with key policy developers and cussed in Chapter 9 Resources and Capacity. Over-
decision makers. Meetings will take place often on an lapping with operational responsibilities often means
ad hoc basis throughout the year and will, for exam- that overall strategy and planning is neglected through
ple, review the asset strategy and/or asset management undue pressure from day-to-day emergencies that
plan; review asset base performance against corporate should be handled elsewhere.
objectives; review overall capital planning and capital
programming; consider major corporate change proj-
ects (e.g. office relocations), etc. Full involvement of all key operational areas
Reporting to decision makers and budget holders
needs to be timely and in a clear, agreed format en- Any successful asset management approach has to be
abling key decisions regarding assets to be made with effective in engaging with all key operational areas. For
confidence. Sometimes asset management reports are some public sector bodies this may just be with one
written in technical language with little business com- principal operating unit, while other organisations
munication impact (either positive or negative) or ref- may have many operating units that will have differing
erence to service delivery and quality standards. This and sometimes competing accommodation require-
often results in ill-informed decisions being made. It is ments which need to be corporately prioritised. Each
important that asset managers engage with decision operational section, in conjunction with the asset man-
makers and provide regular briefings on current and agement team, will need to develop its own accommo-
impending asset issues thus facilitating more informed dation requirements that conform to the overall asset
decision making. strategy. Key operating units should also be represented
by personnel at an appropriately high level on any cor-
porate asset management group (see Roles and re-
Single point of contact for asset management team sponsibilities at 8.4 below.), and these personnel will,
in essence, be the focal point for assets within their own
In many large organisations there may be a lack of operating units.
awareness about who will assist with asset management This may become an increasingly important key re-
issues and enquiries. It is important, therefore, to have lationship in the future as good asset management
an agreed single point of contact for corporate proce- practice spreads out from parent organisations into
dure, advice and standards on asset management. In sponsored organisations (examples of this are schools,
smaller organisations this may be one person, but most departmental sponsored bodies in central government
commonly this will be a asset management team to and increasingly in local government where assets may
which all relevant asset issues are referred. It is not ex- be gradually transferred to local communities).
52
Chapter 8: Organisation
Clear and regular asset management reporting lines ganisation and a asset champion must exist at Board
throughout the organisation level to whom the senior manager responsible for asset
management reports. The asset champion is responsi-
Good communication channels within public sector ble for ensuring that the organisation responds to the
organisations should stretch from high-level corporate call for excellence in the management of its assets. A
policy right down to operational delivery. It is not number of these key roles are described below.
enough to put systems in place: they need to be regu-
larly reviewed and monitored to ensure any commu-
nication approach remains effective. Senior manager for asset management (SMAM)
53
RICS Public Sector Asset Management Guidelines
Asset Champion
Management/Executive/Member Group (An asset voice at
(Corporate Decision making body) management/executive/
member level)
Actively involved on
Corporate Asset
Management Group
Asset Management
Function
Develop (Managed by SMAM, supports
Operational Corporate Asset Management
Plans with Group in coordinating asset
AM Function management strategically,
Operational assists service areas in
Department Asset developing future
Representatives accommodation needs)
The asset champion must sit on the top management The simple structure shown in Figure 8.2 identifies the
team, be a senior politician or Board member and take key roles and responsibilities that need to be present to
the responsibility for getting the asset voice heard at the facilitate a successful corporate approach to asset man-
top of the organisation and getting CAMG recommen- agement. Clearly there are also many other mecha-
dations adopted and followed. In this regard the asset nisms that will need to be in place to enable this
champion would liaise closely with the SMAM and be structure to succeed, such as consultation methodolo-
aware of the asset management needs of the organisa- gies and decision-making structures in the wider or-
tion to enable these to be set in context against other ganisation. Often the asset management approach will
strategic needs and priorities. In some organisations the stand or fall on the wider structure and management of
SMAM and the asset champion may be the same person. the organisation.
54
Business Drivers
Financial Drivers
STRATEGY
Resources and
Leadership
Change in Asset Culture
Asset Reviews
Management Customers
Structure Business Cases
Corporate Change
CHANGE Roles PROGRAMMES Asset Programmes
AM Services Change
Responsibilities Financial Planning
The Attributes
Resources and for Assets
Needed
Capacity
Capacity
Governance
Data
Sustainability
REVIEW DELIVERY
55
RICS Public Sector Asset Management Guidelines
Whichever solution is appropriate, there needs to be a G Those in roles supporting asset management, such
clear allocation of roles and responsibilities for asset as information systems support and administrative
management and a clear statement of the organisa- roles, will need training and development to enable
tions requirements and expectations. It also needs to them to fulfil their roles.
be recognised that asset management, if it is to be The scope, level, amount and timing of training and
properly practised, will necessitate commitment to development necessary in any organisation will depend
providing the necessary resources to undertake it. That upon:
may mean either an expansion of resources or the bet-
ter deployment of existing resources. G the quantitative and qualitative features of its exist-
ing resources and capacity; and
G the needs of the organisations asset management
Why resources and capacity matter strategy and plans which in large measure will re-
late to the size and complexity of its assets.
In the public sector in recent years, the importance of This chapter primarily addresses resources and capac-
addressing resources and capacity building has received ity in terms of property, construction and facilities
much attention. Examples of this are: practitioners. The training and development needs, as
G the Department for Communities and Local Gov- they relate to asset management, of others in the or-
ernment Local Government Association Capacity ganisation will be similar but should be mindful that
Building Programme; resources and capacity need to be considered at three
G the introduction of Professional Skills for Govern- levels within the organisation:
ment for the Civil Service, as part of the Govern- G the organisation as a whole;
ments Delivery Reform Agenda; G functional and cross-organisational teams;
G the Business Excellence Model (European Founda- G individuals.
tion for Quality Management) approach;
Apart from their own training and development needs,
G the Prime Ministers Delivery Unit initiatives.
property, construction and facilities practitioners will
In the case of asset management, there is a particular play a crucial role in supporting others in the organi-
reason why resources and capacity matter. As Sir sation with whom they need to work in undertaking
Michael Lyons points out (Towards Better Manage- asset management.
ment of Public Sector Assets: A Report to the
Chancellor of the Exchequer: Sir Michael Lyons:
HMSO (Dec 2004)), historically, estates and property 9.2 DEFINING RESOURCES AND CAPACITY
management have had a low profile in the public FOR ASSET MANAGEMENT
sector, playing a largely reactive role as far as business
strategy has been concerned, despite the fact that asset
budgets are often second only in size to payroll. Strate- Organisational and team capacity for asset
gic business management demands as much regard for management
the strategic management of assets as it does for
human resources, finance and ICT. The University of Leeds (Improving Property Asset
Management in the Central Civil Government Estate: A
Report for OGC, University of Leeds, 2006, updated in
Who needs to be involved? 2007 at www.ogc.gov.uk/high_performing_property
_the_maturity_matrix.asp) suggests a set of capabili-
Given that asset management is an integral part of an ties, relevant at organisational and team levels, and a
organisations strategic business management, all rele- matrix of maturity for assessing how well organisations
vant personnel across an organisation need training: are currently conducting asset management (the ma-
G Elected or board members need to be familiar with trix is reproduced in Chapter 6 Change):
the broad concepts and principles of asset manage- G Asset management policy. This sets out the level an
ment. organisation is at regarding its policy towards asset
G Senior and operational managers, who by virtue of management. This is a key enabler and sets the
their position have an influential role in the strate- scene and impetus for how an organisation ap-
gic direction of the organisation or service, need a proaches asset management as a whole and includes
higher level of understanding of asset management. aspects such as guidelines, key performance indica-
G Property and construction practitioners (profes- tors (KPIs) and published targets.
sionally qualified, or otherwise experienced) who G Roles and responsibilities. These set out how an or-
may play a leading part in asset management ganisations asset management decision-making
processes need support in developing capacity in structure is set up and managed, including ensuring
terms of asset management but also in their under- roles are formally made explicit at tactical and
standing of strategic business management. strategic levels of the organisation.
56
Chapter 9: Resources and Capacity
G Communication. This sets out how information re- skills, drawing attention especially to business, people,
garding asset management is handled in terms of information and risk management.
data collection, as well as stakeholder, supply chain G Strategic business planning
and management interactions. Business drivers and strategy thinking
G Asset management planning. This sets out the level Corporate asset strategy
an organisation is at regarding formal asset man- Asset management plans
agement planning, including lifecycle costing, risk Risk management
management, benchmarking and meeting corpo- Project and programme management
rate objectives. Sustainability
G Acquisition and disposal. This sets out how acquisi- G Leadership
tion and disposal of assets within the organisation Building up capacity and capability
is managed, including factors such as lifecycle Manage strategic change
costing, health and safety, environmental issues, Manage strategic performance
KPIs, risk management, procurement and social Take responsibility for professional resources
aspects. Leadership/people management skills
G Operation and maintenance. This sets out how G Asset performance management
operation and maintenance of assets within an or- Benchmarking of KPIs
ganisation are managed, including factors such Contract management and monitoring
as planned maintenance strategy, risk assessments, performance
cost benefit analysis, training aspects, operation Customer/stakeholder management
and maintenance plans, responsibilities, ranking G Financial management
of assets in terms of criticality, proactive imple- Resource accounting
mentation and evaluation against return on assets. Capital and revenue budgets
G Performance review and accounting. This sets out Whole life costing
how the review and accounting processes within an Business cases and option appraisals
organisation are managed, including aspects such G Data management
as KPIs, asset registers, training, financial manage- The investment in, effective compilation and
ment, roles and responsibilities as well as strategic management of asset registers and the use of in-
reviews. formation and reports therefrom
G Audit and review. This sets out how the asset man- Ensuring validity of data
agement process is audited and reviewed, including Scope, storage and retrieval of data
skills and training needs, risk avoidance, use of Analysis of data
technology and benchmarking of effectiveness and
efficiencies.
The University of Leeds Maturity Matrix particularly 9.3 WHAT NEEDS TO BE DONE?
refers to the Governments Civil Estate. It is suggested
that practitioners in general will find this model help- Training and development for asset management in
ful in: the corporate context
G considering capacity at organisational and team
levels; Organisations need to take a structured, disciplined ap-
G identifying priority areas for improvement; proach to resources and capacity development to sup-
G developing improvement strategies and plans; and port asset management. A generic approach is
G securing organisational agreement and commit- suggested below but there are a number of models for
ment. analysing resource and capacity training and develop-
ment needs which can be used.
G formulates programmes to close the identified gaps it is important to recognise the unique histories and
within appropriate timescales. Such plans and pro- circumstances of the home organisation: what
grammes may include such initiatives as: works in one context, may not work in another;
training and development; G most organisations will have well-established or-
mentoring; ganisational capabilities. Insofar as those capabili-
seminars; ties need to be changed and developed, there can be
borrowing or seconding of those with relevant considerable in-built resistance to change. That puts
skills within the organisation; a premium on leadership and inspirational quali-
recruitment; or ties as well as on a clear understanding of and
strategic partnerships with third parties; and shared commitment to the goals and objectives of
G keeps under constant review resource and capacity asset management.
strengths and weaknesses and plans and pro- Finally, it is recommended that a senior manager
grammes to close gaps. (probably the SMAM) should specifically be given re-
sponsibility for this process and, in particular, for en-
Potential traps in implementing training and suring that training and development plans and
development plans and programmes programmes are implemented efficiently and effec-
tively. Without that level of commitment and drive, re-
In training and developing resources and capacity, note source and capacity training and development may
that: falter, with potentially serious consequences for asset
G while studying resource and capacity in asset man- management and its likely contribution to the organi-
agement of other organisations can be informative, sation.
58
Business Drivers
Financial Drivers
STRATEGY
Sustainability
Leadership
Change in Asset Culture
Asset Reviews
Management Customers
Structure Business Cases
Corporate Change
CHANGE Roles PROGRAMMES Asset Programmes
AM Services Change
Responsibilities Financial Planning
The Attributes
Resources and for Assets
Needed
Capacity
Sustainable development
10.1 THE CONTEXT
There are many definitions of sustainable development
There surely cannot be an asset manager who is un- but the one that has been most widely adopted is the
aware of the concerns raised by global environmental Brundtland Commissions definition published in 1987
issues, such as climate change and the depletion of fi- which calls for development which meets the needs of
nite resources. Current predictions are that the UK will today without compromising the ability of others to
suffer significant warming over the next century, but meet the needs of tomorrow (Brundtland Commis-
perhaps of greater importance, unpredictable weather sion, Our Common Inheritance, World Organisation on
patterns and rising sea levels may, in some cases, Economic Development, 1987). In essence it intro-
threaten the very existence of some buildings in low- duces the concept of intra-generational equity.
lying or exposed areas. In terms of resource depletion,
current estimates would show that the Western world
is using resources at the three planet world level, i.e. Sustainability and the triple bottom line
we are using resources at three times the rate at which
the world eco-system can support. The concept of sustainable development, as defined by
The problems can seem to be too pervasive and all Brundtland, has been widely applauded at many levels
embracing to be capable of incorporating within day- of government. The principle was developed subse-
59
RICS Public Sector Asset Management Guidelines
quently and enshrined into principles set out in the in- opers for not requiring such buildings; developers
ternational declaration following the Rio Summit in blame the investors who wont pay for such buildings;
1992. and the investors blame the occupiers, as there is no
This has led to a wider understanding and has de- demand for them). This proposition was focused on
veloped the need to make decisions based, not just on the commissioning of new buildings. This was indica-
the single bottom line of profit and short-term eco- tive that, at that time, sustainability was seen in terms
nomic gain, but on the triple bottom line (TBL) of en- of the environmental credentials of new builds. At that
vironmental protection, social justice and economic time it was not articulated in terms of relevance to the
viability. Within the triple bottom line further distinc- work of asset management.
tions can be drawn and these are shown diagrammat- Since the circle of blame was recognised, much has
ically in Figure 10.1. changed and there is now an increasing acceptance
From this definition and its extension into the TBL both that sustainability for assets means more than just
philosophy, it is apparent that there are innate conflicts energy efficient design of buildings and that appropri-
between the business decision-making processes and ate management and refurbishment of existing stock
delivery on the TBL. In no area is this a greater chal- is vital to meeting any form of sustainability targets.
lenge than in asset management where conventional
decision making is based on the concepts of risk re-
duction and maximisation of returns; additionally for 10.3 BUILDING IMPACTS
the public sector the requirement for business effi-
ciency and value for money may seem to sit uncom- The environmental impact of buildings
fortably with the TBL. Therefore, the challenge is to
achieve business efficacy whilst also meeting environ- Buildings have a high environmental impact. It has
mental and social targets. been estimated that within the UK buildings are re-
This challenge has proved difficult for the property sponsible for up to 50% of all carbon emissions. Addi-
and construction industry and has led to concerns that tionally, buildings are associated with pollution, water
the sector has been too slow to act. In 2000, the Sus- use and the depletion of finite resources. They are
tainable Construction Task Group, chaired by Sir Mar- therefore key to delivery of any environmental agenda.
tin Laing, put forward the proposition that a circle of The environmental impact can be viewed in terms of
blame (Risk, Reputation and Reward, Sustainable Con- all stages of their lifecycle from site choice, including
struction Task Group, 2000) was preventing the speci- location, to construction, to use and eventual demoli-
fying of green, or sustainable buildings (i.e. occupiers tion.
blame the constructors for not building environmen- All of these matters should properly be addressed
tally efficient buildings; constructors blame the devel- at the concept and design of a building project.
Promoting social
Living within the
cohesion through
worlds environmental
health, well-being
carrying capacity
and education
A sound economy
enabling progress,
research and
opportunity
60
Chapter 10: Sustainability
The construction phase psychological health; in some cases physical health can
be compromised or promoted by the building charac-
At the stage of design and construction, the following teristics. Studies of public buildings such as schools
are the main environmental impacts of a building: and hospitals point to patient well-being and student
G winning and transportation of materials to site with
learning being enhanced by well-designed, well-lit and
consequent implications for energy consumption, well-serviced space.
carbon emissions and depletion of finite resources; Social sustainability is not just associated with the
G waste produced and subsequent transportation of
soft issues of well-being and comfort. For offices,
waste from site; many studies have now found relationships between
G energy and water consumed during construction;
building layout and worker efficiency. Matters such as
and good daylight levels, natural ventilation and locally
G ecological impact and hazard to biodiversity.
controllable heating systems all have a positive impact
on worker productivity. Additionally, the accessibility
The energy used within the pre-completion phase is of a building can affect worker retention.
normally referred to as embodied energy and can typ- Social sustainability of buildings can also be con-
ically vary from 30% to 70% of estimated whole life sidered in terms of the respect agenda with legislation
energy use. such as the Disability Discrimination Act 2005 placing
responsibilities on building owners, occupiers and
managers to make reasonable adjustments to enable
The building-in-use phase access.
61
RICS Public Sector Asset Management Guidelines
whereas sustainability implies a wider approach. If G promote sustainable practices (such as provision of
local authority asset managers are to be effective in lockers and showers for cyclists).
driving forward the governments ambitions in rela- The argument for sustainability within newly procured
tion to both the environmental and social targets, it is buildings is enhanced if a long-term perspective is
improved management systems and sustainable refur- taken. Not only are running costs likely to be reduced
bishments that must be the chief engines of delivery. and occupier satisfaction enhanced, the periods be-
tween refurbishments are likely to lengthen.
Some principles that asset managers should seek to
10.4 A SUSTAINABILITY CRITERIA APPROACH include at the procurement stage are as follows:
FOR ASSET MANAGEMENT
G design to support the ambitions of the six Ls (see
Action for the asset manager below) notably longevity and loose fit;
G design to maximise natural lighting where possible;
G install heating systems which maximise the use of
An intrinsic aim of asset managers should be to en-
hance the sustainability of the asset base they manage renewables;
G install grey water harvesting systems to ensure water
right across the TBL. In so doing they will be:
conservation;
G reducing risk to future economic performance; G ensure the use of low maintenance and, where pos-
G enabling progress towards government targets in re- sible, locally sourced materials;
lation to carbon reduction and social well-being; G consider the use of off-site manufacture to minimise
and waste and transportation of excess materials and
G supporting their authorities to deliver services ef- improve site health and safety performance;
fectively and efficiently. G seek to reduce embodied energy within the construc-
The three major points in the building lifecycle at tion process and through the type of materials spec-
which sustainability informed action is essential are: ified; and
G consult potential users to ensure that the buildings
G the point of procurement; will meet their ongoing needs and that it can adapt
G the point of decision making in respect of redevel- to respond to predicted future changes in needs.
opment or refurbishment; and
G during ongoing management including regular
revaluations of the estate.
Considerations in respect of the demolition versus
These are now each taken in turn. refurbishment decision
62
Chapter 10: Sustainability
carbon footprint. This may be initially design In terms of strategic management the overall aim
driven, but can be achieved, in part at least, by ap- should be to ensure that buildings are regularly as-
propriate refurbishment and by operational man- sessed against these criteria, and as and where possible,
agement. adjustments of the overall asset base taken in the light
G Locationally appropriate: the location of a building of the reviews. Whilst there are no publicly available
will impact on its economic value; it will also benchmarks against which to monitor performance,
affect the environmental impact of the building. owners should consider developing internal bench-
One that can only be reached by car will not only marks in order to target continuous improvement.
increase the environmental impact but, if restric- It is possible to identify a number of sustainability
tions on fuel are introduced or fuel costs rise, such criteria which should be considered by asset managers
buildings may depreciate in value disproportion- when developing both asset strategies. Although the re-
ately. However, a building that is inaccessible by car search which identified the criteria related to commer-
may, depending on its use, simply not meet occu- cial investment asset, most have application to public
pational needs. sector estates. These are:
G Liked by occupiers: the point has been made earlier, G accessibility;
under social sustainability, that there is a linkage be- G adaptability;
tween occupier satisfaction and economic and so- G building quality;
cial performance. However, this L goes beyond this G climate control;
to consider the economic drivers for the building. G energy efficiency;
Only if there is economic usefulness going forward G pollutants;
can the building be said to sustainable. G waste; and
G Lovability: buildings have stakeholders who are in- G water.
ternal, i.e. who have a direct interest (legal, financial
or employee). They also have external visitors. Re- These criteria were developed as part of the Sustain-
search suggests that buildings which have the abil- able Property Appraisal Project led by Kingston Uni-
ity to inspire a positive response among external versity School of Surveying, in partnership with
stakeholders as well as those with a direct interest Prudential Property Investment Management, Invest-
will be more likely to achieve longevity. ment Property Forum, Boots Plc, Drivers Jonas, Uni-
versities Superannuation Scheme and Forum for the
The above characteristics provide an indication that a Future.
sustainable building is far more than a simple energy These criteria are by no means definitive. They do,
efficient structure. When considering asset manage- however, represent the factors which are likely to have
ment decisions regarding redevelopment or refurbish- an impact on the future operational performance of
ment, these criteria provide a possible framework buildings and will therefore also impact on capital val-
within which discussions as to whether to refurbish or ues. If a building is evaluated in terms of these criteria
redevelop can take place. it will provide the asset manager with an agenda for fu-
ture action in terms of refurbishment or replacement
and it should lead to enhanced financial cost control
Management and valuation
and in time this will be reflected in enhanced capital
values.
The effective asset manager will seek to balance the
needs of the operational entity with the requirement
to ensure optimum value in capital terms. In sustain- 10.5 SUMMARY OF SUSTAINABILITY
ability terms this requires knowledge of factors that af- PRINCIPLES FOR ASSET MANAGERS
fect both the operational aspects of the asset now
(revenue or rental drivers) and those which will affect G Sustainability embraces the need to evaluate and
the ability of the property to perform as an asset mov- manage assets on the basis of their TBL perform-
ing forward or, in other words, the degree to which it ance; that is they should consider their social and
could be said to be future proofed. Where assets in the environmental as well as economic performances.
asset base are bulk class assets (bulk class asset is the G Asset managers must recognise that sustainability
term normally given to shops, offices, residential and is more than a matter of applying technical inno-
light industrial/warehouse/distribution properties as vation and the pursuit of energy efficiency.
these are the properties normally traded in the mar- G The growth of corporate social responsibility (CSR)
ketplace), sustainability performance will influence as a management principle is widely adopted across
capital value but only if potential investment owners a range of private sector organisations and should
build sustainability criteria into their decision-making be embedded in all public sector organisations. It
process and/or tenants build them into their rental follows that building owners and occupiers should
bids. Where they are not specialised buildings, man- seek to integrate these principles within their selec-
agement consideration will concentrate more thor- tion, procurement and management of the assets
oughly on operational issues. within their asset base.
63
RICS Public Sector Asset Management Guidelines
G Buildings which show good performance across the G During the life of the building the asset manager
TBL are likely to suffer less obsolescence and value should ensure that buildings are managed and ap-
depreciation. praised in accordance with sustainability criteria in
G Asset managers should seek to include sustainabil- order to assess the extent to which the building is
ity principles at all stages of the buildings lifecycle. future proofed in terms of matters such as accessi-
This means that the asset manager should be in- bility, adaptability, climate control, energy, pollu-
volved at the stage of building design and planning tion waste and water. Buildings which do not score
and not after commissioning. well in relation to these criteria should be consid-
G A range of tools are available to assess sustainabil- ered for retro-fitting, redevelopment or disposal.
ity at the point of design and procurement, such as G The use of an environmental management system,
BREEAM and their use is advocated. At all times the whether or not formal accreditation is sought, will
aim should be to procure or hold buildings which: provide the framework within which an asset man-
are well-designed and capable structurally of ager can assist the organisation to move forward
long life in terms of build quality; both strategically and at an operational level.
are capable of good environmental performance G Finally, the role of the strategic asset manager is to
including being low carbon; ensure that building performance, in both revenue
are flexible, responsive, adaptable due to loose and capital value terms, is optimised and that the
fit; link between the two is recognised. The further link
are sited for maximum accessibility by multi- between building sustainability and value is cur-
modes of transport and thus locationally ap- rently tenuous but it is developing. The proactive
propriate; vanguard asset manager will recognise this linkage
are efficient in layout so that they work for and and seek to ensure that sustainability factors are
are liked by their occupiers; and considered at all points in the building lifecycle so
retain, through their aesthetic and design qual- that they can better support organisational corpo-
ities, the ability to invoke lovability from both rate responsibility goals without compromising
internal and external stakeholders. user needs and good economic performances.
64
Business Drivers
Financial Drivers
Chapter 11
Asset Strategy
Asset Management Plan
STRATEGY
Data and
Leadership
Change in Asset Culture
Asset Reviews
Management Customers
Structure Business Cases
Corporate Change
CHANGE Roles PROGRAMMES Asset Programmes
AM Services Change
Responsibilities Financial Planning
The Attributes
Resources and for Assets
Needed
Information
Capacity
Governance
Data
Sustainability
REVIEW DELIVERY
Management Asset
Management
System Review
Performance Management
of Assets
Balance Scorecard
Delivery
Planning
Achieving the Desired
Outcomes
Procurement
Project Management
Asset management relies on data. The data is crucial The need for data
for informing the development of strategies, evaluating
and appraising options, decision making and planning, The key to justifying improvements in data manage-
and performance management activities. ment will be careful consideration of why an asset data
System
Requirement Business System Ongoing Data
Options and
Specification Case Implementation Management
Selection
Figure 11.1
65
RICS Public Sector Asset Management Guidelines
system is needed, and how it will contribute to the asset G review the asset management business processes;
management process. The data and systems must sat- G confirm and analyse the key performance indica-
isfy a range of different needs: tors (KPIs); and
G to inform asset review, appraisal, decision-making G conduct a reports analysis to determine reporting
and planning processes; requirements.
G to monitor and assess the implementation of asset
strategy and asset performance; Performing each of these steps enables the following:
G to satisfy statutory and other external reporting and G identification of base data that must be maintained;
compliance requirements; G mapping of base data requirements to check that
G to support the continuous management and main- the data is actually collected, recorded and main-
tenance of the asset base; tained in identified business processes;
G to maintain a complete and accurate asset register. G identification of system processing requirements
and further reporting requirements;
G confirmation or determination of responsibilities
Types of data for maintaining data.
The data required to satisfy these needs will be broadly
the same from organisation to organisation although it Prioritising requirements
will vary in emphasis and detail. The following list of
data types provides an indication of the range of asset It is also useful at this stage to start to identify the crit-
data a public sector organisation will need to manage ical asset management processes. The objective here is
and maintain: to identify priorities; often it will not be possible to in-
G core data about each asset which generally does not troduce new data and systems in one go. It may be nec-
change over time or only very infrequently, for in- essary to adopt a phased approach to implementation
stance, location, physical characteristics; and the requirements of the critical processes will cer-
G additional data which changes and describes the tainly be considered for the first phase.
state of the asset at a point in time, for instance, Reviewing requirements and critical processes
condition and backlog maintenance estimate; through this exercise enables a reality check to ensure
G financial data; that the most important and relevant data is identified.
G energy consumption and performance; It is also important to consider the flexibility which
G data, financial and temporal, which describes the comes with the system to add new portfolios, change
progress of strategic initiatives and programmes the reporting arrangements, alter the KPIs or increase
such as capital projects and disposals programmes; the amount of key data required for each entry.
G where the organisation controls a tenanted com- Property professionals may sometimes only think
mercial asset base, a range of data covering lease about property and property related outputs so a key
and tenancy details, rental income and so on; priority is to ensure that the asset management and
G data which will be used for planning and perform- data system links back to the organisations purposes
ance management purposes. and the services which it delivers to customers. The
whole system must be relevant and add value to the
Organisations will already have operational systems outputs of the organisation, not just to the property
and processes for maintaining, managing and report- asset managers.
ing asset data. However, these may be of variable
quality.
The first step is to define the required data and re- Asset data structure and categorisation
porting requirements and develop a functional speci-
fication for the required systems. The resulting A key aspect of the data definition will be determining
specification can then be used to analyse the organisa- the property asset database structure. Even though dif-
tions options and determine a strategy for sourcing ferent types of properties are different physically, it is
suitable systems. useful to determine a standard way for describing all of
the types of asset being managed. Often the highest level
will be the site and then subsequent levels will describe
Approach to defining data and reporting buildings, then perhaps blocks, then floors and
requirements rooms. The level at which areas of land within a site
are defined will also need to be decided. In practice, soft-
There are many formal methodologies for analysing ware systems may force a particular structure anyway.
and specifying system and data requirements and some Secondly, it is important to decide at what level each
organisations will have selected and adopted a pre- type of additional data will be recorded, i.e. costs, con-
ferred option. The basic principles which should be fol- dition, space utilisation, etc. Of course, some of these
lowed are: types of data will only apply to certain types of asset
66
Chapter 11: Data and Information Management
G an outline of the timescale for the project and the G ongoing support planning;
risks involved. G data migration.
The business case provides the mechanism for se- 11.6 MANAGING AND MAINTAINING THE DATA
curing approval and senior fund-holder sponsorship
and ensuring a common level of understanding to Data governance and stewardship
guide the project in terms of scope, prioritisation and
expectations. Given such a wide range and potentially large volume
of data, organisations will need to put in place an ap-
propriate management structure to ensure that the
11.5 IMPLEMENTING THE SYSTEMS data is properly defined, managed and maintained.
It is suggested that organisations consider imple-
Sponsorship and resources menting a formal data governance structure and
data stewardship role to ensure that the necessary asset
The asset management system will not be successfully data is properly managed, particularly in those
implemented unless the organisation is prepared to situations where responsibility for data is not centralised.
commit appropriate resources to the initiative, both In any case, it will be necessary to define rules and stan-
during the implementation and thereafter. dards for ongoing data management and maintenance.
Crucial to the project will be the buy-in of those The data stewardship role is likely to be best placed
senior stakeholders who will need to allocate resources within the centralised asset management function and
from their teams and potentially make changes to their have the authority to determine the data management
mode of operation over time in response to the busi- standards and processes. Additionally, some organisa-
ness process definition work. tions will find it beneficial to form a data stewardship
That means that the benefits and imperatives must corporate group.
be articulated clearly, and the resolve of the senior
sponsor must be strong. If this is a project to revitalise
an existing system, the work required may look daunt- Responsibilities for data
ing and very similar to starting again from scratch.
However, good information systems will significantly It is necessary, first, to define explicitly who will be re-
ease the day-to-day burden of the asset management sponsible for maintaining each type of asset data and,
team. secondly, which types of asset data must be collated
The difference between success and failure in a sys- centrally for strategic asset management purposes, per-
tems project is the ability to concentrate on these busi- formance measurement and other corporate and or-
ness benefits from the start and remain focused on how ganisation-wide reporting.
the system will help the team improve its work. The central asset management function should
ideally maintain the asset register, but may delegate re-
sponsibility for maintaining specific core information
Project management about the asset to devolved teams as appropriate.
The data stewardship role will need to coordinate the
Of course, the other crucial factor for a successful im- collation of the data required centrally. Whilst this will
plementation is project management. Whatever ap- of course be facilitated where a centralised system is in
proach and methodology is adopted the key elements place and used by devolved teams, specific programmes
that must be in place include: of data collection will still need to programmed, agreed
and managed across the organisation.
G a dedicated project manager;
G a project board to whom the project manager re-
ports; and
G a sound project plan. Standards for data definition
ity criteria for the data and responsibilities for data basis. There are two distinct strategies that can be em-
maintenance. ployed here: quality can be built into the process or
It is recommended that the data model is docu- data can be monitored once it has been recorded.
mented in a data dictionary. This may be a simple The first strategy will involve, for example, ensur-
word document or specific dictionary software for ing those who are responsible for maintaining data do
more sophisticated situations. so according to the standards defined. The second
strategy involves the development of processes for
Sustaining data quality auditing the data, on some defined regular basis, and
perhaps at the time of specific data collection pro-
The data stewardship role should also be concerned grammes. The likelihood is that both will need to be
with maintaining the quality of data on an ongoing used to ensure data quality.
69
Business Drivers
Chapter 12
Financial Drivers
Asset Strategy
Asset Management Plan
STRATEGY
Asset
Leadership
Change in Asset Culture
Asset Reviews
Management Customers
Structure Business Cases
Corporate Change
CHANGE Roles PROGRAMMES Asset Programmes
AM Services Change
Responsibilities Financial Planning
The Attributes
Resources and for Assets
Needed
Management
Capacity
Governance
Data
Sustainability
REVIEW DELIVERY
An International Asset
Management
System Review
Performance Management
of Assets
Balance Scorecard
Delivery
Planning
Achieving the Desired
Outcomes
Procurement
Project Management
Discipline
Frank Bowyer, FB Consultants Pty Ltd,
Australia, Iain Gillies, Network Property,
New Zealand Telecom, Stephen Walton,
State government of New South Wales,
Australia, Clive Warren, University of
Queensland, Australia
G AAS 27 for local government; required. These major changes in property ownership
G AAS 29 for government departments; occurred during a period of high vacancy in the com-
G AAS 31 for governments. mercial sector and resulted in property sales which did
not recoup the governments initial investment.
The Australian governmental system has close similari- The ANAO has continued to audit central govern-
ties with that of the UK. The Australian National Audit ment departments and agencies in the asset manage-
Office (ANAO) performs a similar function to the NAO ment and property management areas. The Auditor
in the UK. The consensus from a number of their re- General, in an Occasional Paper setting out his views on
ports confirms that there has been a much stronger drive Commonwealth assets and property management,
towards improved asset management, including prop- noted that a further ANAO audit conducted in 2003 had
erty asset management, at state level compared to central still found difficulties experienced by a number of agen-
government, where property has been treated as a free cies in relation to:
good rather than as a valuable business enabler. G poor documentation concerning asset acquisition
The ANAO first examined asset management in the and disposal;
general government sector in 1995 (ANAO 1995), ex- G assets not being recorded on the asset register; and
cluding the Department of Defence. The ANAO found G asset registers not being reconciled to financial systems.
significant scope for improvement in most organisa-
tions. They reported a lack of a strategic approach to The property divestment and outsourcing programme
asset management, noting that this required decisions of the mid to late 1990s also passed the day-to-day man-
about current and future asset holdings to be made as agement of commercial property assets back to the rel-
an integral part of the corporate planning processes. Six evant departments away from a central coordinating
recommendations were made and the ANAO also pub- asset management body. These changes have further re-
lished an Asset Management Handbook, including strate- duced the governments control over the strategic direc-
gic asset management principles and approaches. By tion of the property they occupy and reduced the
199798 the ANAO was examining the extent to which transparency of acquisitions.
its earlier recommendations had been implemented. The state governments within Australia have adopted
The subsequent report noted that effective strategic asset a range of asset management methodologies over the
management remained a challenge for many govern- few years ranging from major outsourcing and divest-
ment organisations. It added that the gap had closed be- ment similar to the federal government approach in the
tween what had been achieved and best practice during case of Victoria, through to a largely in-house owner-
the intervening two years. Noting the linkages with cor- ship model followed by Queensland. Three examples of
porate governance concerns, the ANAO report high- the range of state government approaches to asset man-
lighted that many organisations had yet to: agement and property asset management are presented
G adopt a strategic approach to managing assets, in- in the following sections.
volving integrating asset planning into corporate and
resource planning frameworks; State government of New South Wales (NSW)
G formalise and analyse systematically whole life cost
impacts of major asset acquisition, operational use The NSW state governments reform programme for
or divestment decisions; the management of assets and office accommodation,
G establish baseline cost and performance standards initiated in 1996, established in 1998 a high-level body
for key assets, including monitoring outcomes the Government Asset Management Committee
against these standards; (GAMC) with a whole-of-government focus to drive
G implement financial management and asset man- its programme of reforms. The structure is shown in
agement systems to facilitate the routine capture and Figure 12.1.
reporting of performance information for manage- The GAMC was established to ensure the effective
ment purposes; management of investment in assets and office accom-
G integrate disposal decisions into an overall planning modation. The Committee is chaired by the Director-
framework to monitor the outcome of disposal General of the NSW Premiers Department and
processes. members include the Chief Executive Officers of The
NSW Treasury, Department of Commerce, Attorney
The audit also confirmed the limited nature of central Generals Department, Roads and Traffic Authority, De-
policy advice and guidance compared with that in a partment of Infrastructure, Planning and Natural Re-
number of state governments. The federal government sources and Forests NSW. The Committee meets
in 1996 embarked on a major reform of the commercial quarterly with terms of reference to provide advice to
property portfolio, outsourcing in three major contracts the Budget Sub-Committee of Cabinet on:
all asset management functions. All owned property was
subject to a 15% return on investment hurdle rates G the alignment of asset and office accommodation re-
which resulted in virtually all assets failing this owner- sources with governments service delivery priorities;
ship test and the government entering a major divest- G the appropriateness of agency asset management
ment campaign, with the space being leased back as strategies;
72
Chapter 12: Asset Management An International Discipline
Minister of Minister of
Commerce Fair Trading
State
Procurement
Procurement Government
operations Architect
Major contracts
Figure 12.1: New South Wales Government Total Asset Management Framework
G strategic asset and accommodation issues involving G a TAM template, to assist in the preparation and as-
more than one agency; sessment of the asset strategy and supporting TAM
G office accommodation strategies for metropolitan strategic plans;
and regional areas; G a new capital investment strategic plan guideline, to
G major investment strategies acquisition, major re- reflect the requirements of the governments pro-
furbishments, lease pre-commitments, leasehold, curement policy reforms for major capital works
and asset and property disposals; projects;
G benchmarks and performance standards for asset G relocation of the TAM manual, which includes
and property portfolios. detailed guidelines together with supporting
assessment and decision-making tools, to the NSW
Policy, budgetary frameworks and planning Treasury website (www.treasury.nsw.gov.au/tam/
tam-guide.htm).
As part of the policy reforms, a series of Total Asset By 31 August each year, agencies are required to submit
Management (TAM) guideline papers were introduced to NSW Treasury an integrated set of TAM plans which
to achieve better planning and management of NSWs comprise an asset strategy driving four plans: a capital
existing and newly acquired physical assets. In this in- investment strategic plan, a maintenance strategic plan,
stance, these are defined broadly as land, buildings, IT, an asset disposal strategic plan, and an office accom-
infrastructure, collections, equipment or fleet owned or modation strategic plan. An agencys RSP is considered
controlled by an agency resulting from past transactions incomplete unless it is supported by the asset strategy
or events, providing future economic benefits and hav- and all supporting plans which effectively link execu-
ing a definite business function or supporting the deliv- tive performance with asset-related budgets.
ery of services. The TAM guidelines have recently been
improved and aligned with the Results and Services Plan
(RSP) and the budget process overall. Changes include: State government of Western Australia
G a restructured approach to the development of an In June 1994 the Premier of Western Australia intro-
asset strategy, with greater emphasis on risk man- duced a strategic asset management framework for
agement and asset performance measurement, and state government that recognised the need for a more
better alignment with the RSP; rigorous approach to the management of Western
73
RICS Public Sector Asset Management Guidelines
Australias portfolio of public assets. Subsequently, a As shown above, the Department of Treasury and
Functional Review Taskforce was set up which Finance retains regulatory responsibility, approving
recommended the further development and imple- funding and working in collaboration with the Depart-
mentation of appropriate strategies to strengthen asset ment of Housing and Works which provides the
management policies and practices. This followed technical expertise. The framework promotes linkages
recommendations in a report published by between the agencies management of their asset port-
PricewaterhouseCoopers in 2002 on the governance folios with asset planning and corporate planning
and management of Western Australian public sector processes. It outlines the processes to manage assets
assets. The principal Taskforce concerns and recom- through the lifecycle from planning to disposal, includ-
mended actions were: ing an increased emphasis on maintaining existing
assets. The results of this work are included in the new
Taskforce concerns Action strategic asset management framework which
Increase rigour in the Improve the quality of comprises four key components: asset planning, capital
capital investment information provided by investment, maintenance, and asset disposal.
process agencies for decision The revised strategic asset management framework
making now includes several significant changes, notably:
Give greater attention Deliver the benefits that G strategic asset plans are to be approved by the Min-
to maintaining existing were initially projected ister and submitted to the Treasurer as part of the
assets annual budget process;
G agencies will be requested to include information
Institute greater Planned disposal of on maintenance expenditure within the strategic
coordination of asset significant assets asset plan, consisting of a summary of the agencys
management across the proposed maintenance expenditure over the
state public sector Budget, and forward estimates, identifying the
sources of funding, such as the split between recur-
The state government structure incorporating the rent and capital funding, and the prevailing level of
strategic asset management framework is shown in deferred maintenance, as well as any strategies to
Figure 12.2. manage deferred maintenance.
State Government of WA
Regulation/Funding
Minister For Department of
Housing & Works Treasury & Finance
Expertise
The Department of Housing and The traditional Treasury function of DFT involves
Works represents all of the state Managing the allocation of resources to state
governments housing and works government agencies
functions, covering: Providing expert analysis and advice
Public and community housing concerning the strategies and framework
Works & Building Economic &
Aboriginal and regional housing necessary for the sound economic and financial Financial
Services
management of the state. Management
Keystart home loans
The Strategic Asset Management Framework
Property sales
Major Works (SAMF) is an integrated policy strategy
Major government projects developed to improve asset management and
& Construction Collecting State
Capital works projects capital investment across the State public sector,
Revenue
Property & facilities management comprising 11 policies and guidelines to facilitate
the provision of quality advice to government to
Public Works Policy The Department of Housing and support its decision-making.
Strategy & Works consolidates the public Central Contracting
Legislation sectors built environment and the The Department of Treasury and Finances Asset & Tendering
governments assets and projects Planning & Management Branch worked in
management to enhance the collaboration with the Department of Housing
delivery of services in these areas. Works to develop the SAMF.
Asset
Management
Ownership,
Maintenance
Implementation
Planning and
& Decision
Contracting
making
Government
Agencies
Figure 12.2: State Government of Western Australia Strategic Asset Management Framework
74
Chapter 12: Asset Management An International Discipline
The objectives and outcomes of the process are as review processes and the ongoing maintenance and
follows: leasing management functions. This is illustrated in
Figure 12.3.
Planning objectives Desired outcomes Commercial office procurement is governed by a
Strategic planning for Management of property number of guidance documents and administrative
management of assets asset portfolios as a procedures. The office accommodation management
corporate resource framework (OAMF) sets the basis on which property
procurement is administered. It outlines the authority,
Ensure that facilities Accountability for strategic scope, principles and working environment under
meet current and future management of all real which it operates and establishes clear roles and re-
requirements estate assets sponsibilities for the department and other agencies
Benchmarking and Rationalisation utilising its services.
performance management supported by specific The OAMF is guided by the broader objectives of
to competency and business case reviews government and the strategic direction developed for
consistency standards the department. The wider governance issues include
the Treasurys State Purchasing Policy. So, in imple-
Optimise each asset menting property procurement objectives, the policy
lifecycle provides clear guidance on the process to ensure state
Identify surplus assets Divestment of high-cost objectives are achieved. The Treasury also provides
and under-utilised assets agencies with a framework for developing strategic
asset plans within a sustainable total resource man-
Matching space needs Achieving efficiencies agement framework. The guidance seeks to encourage
with staff requirements through collocation of like strategic management of outcomes through the align-
functions ment of assets, resources and agency services to meet
Minimising all in costs Improvement of the asset government priorities.
of owning, leasing, data and management Queensland differs significantly from other states
occupying and using information systems and in that it recognises the need for a balanced portfolio of
space transparency owned and leased property and seeks to maintain an
approximately equally balanced portfolio of the two.
Maximising flexibility in
There is also recognition that government has the abil-
space use and tenure
ity to manage in-house the processes of property man-
Conforming real estate agement to achieve the best fit with a whole of
strategies government approach to the provision of supporting
property infrastructure.
Key reporting and tax
The strategic direction of property asset provision
requirements
and management is set by the Government Office
Accommodation Committee (GOAC) which has
The Government Office Accommodation Working responsibility for setting the strategic direction and
Group (GOAWG) exists to ensure a whole of govern- approach to ownership and management of govern-
ment perspective in managing the office accommoda- ment office accommodation. It also reviews all
tion portfolio. The GOAWG comprises senior acquisitions, both freehold and leasehold, and dispos-
representatives from the Department of Treasury and als of buildings greater than 5,000m2. The Committee
Finance, Department of the Premier and Cabinet plus is the final arbiter in any property-related dispute be-
Department of Housing and Works (DHW). The tween an agency and the Department of Public Works
GOAWG evaluates office space proposals (new leases, (DOPW).
refurbishments, etc.) exceeding $1m, referred to it by At all levels of asset provision a regime of internal
DHW and GOAWG makes recommendations to the contracting and fee for service exists to promote per-
Minister for Works who signs off on commitments. formance evaluation and to prevent waste. All agencies
pay a market based rent to Building Services for the ac-
State government of Queensland commodation they occupy. In turn, the Building Divi-
sion engages and pays QBuild to undertake
Asset management in Queensland is centralised under maintenance on the owned estate through contracts at
the Department of Public Works and Housing with di- market-based rates for the services undertaken. Thus,
visions of Queensland Property Management (QPM), a commercialised property system exists, with a high-
Qbuild and Project Services. Each of these divisions level strategic management group taking government
provides services to government departments on a fee priorities and interpreting them, in terms of asset out-
for service basis. The structure provides for adminis- comes, via GOAC, which is documented and dissemi-
trative separation of the construction and maintenance nated both within DOPW and to other agencies. At the
aspects of property provision from the strategic same time, agencies will develop their own strategic
75
RICS Public Sector Asset Management Guidelines
Minister of
Public Works Housing
& Racing
Infrastructure/ Integrated
major project Services Delivery
planning outcomes, based on government priorities, The NAMS Group, established by the association of
and, through representation on GOAC, communicate Local Government Engineers, has developed a range of
their strategic direction and needs for supporting manuals that are now widely in use throughout the
property resources. local authorities.
The NAMS manuals and guidelines are distributed
worldwide and include the following:
12.3 ASSET MANAGEMENT IN NEW ZEALAND G The International Infrastructure Management Man-
ual (2006) is positioned as the Groups core docu-
The New Zealand public sector is structured on the ment in asset management theory and practice. The
principle that each public entity is held individually re- manual is prescriptive in style, and sets out clear re-
sponsible for delivery of services as required by gov- quirements to achieve a practical and effective asset
ernment. Each department has autonomy and there is management function. Although it covers a wide
no central body managing assets. The structure is il- range of asset types, it focuses on infrastructure as-
lustrated in Figure 12.4. sets.
Most public sector organisations report perform- G Optimised Decision Making Guidelines provide eco-
ance on an accrual accounting basis in a similar fash- nomic analysis for decision making on the mainte-
ion to private corporations. A capital charge is applied nance, renewal and replacement of infrastructure
to capital utilised in an agencys operations, effectively assets and includes over 30 actual case studies.
creating a proxy for borrowing capital from Treasury. G Depreciation and Valuation Guidelines are a practi-
This has changed the asset mix over time as agencies cal guide into the assessment of value, economic life
have been encouraged to reduce capital assets. and depreciation methods for infrastructure assets.
The most comprehensive work in asset manage- G Developing levels of service and performance
ment has been undertaken by local authorities. Legis- measures guidelines 2007 demonstrate how to
lation Local Government Act 2002 introduced an establish levels of service and performance meas-
expectation that all assets held by a local authority urement for assets based on client requirements.
would be identified, managed well and would be con-
sidered in every part of the planning process for all ac-
tivities of the authority. This required local authorities
to generate clear asset management plans. These are 12.4 ASSET MANAGEMENT IN THE USA
generally developed from the bottom-up, commenc-
ing with an asset register entry for each asset and work- The US Government has 3.3 billion square feet of of-
ing on from there. fice space and 655 million acres of land. The General
76
Chapter 12: Asset Management An International Discipline
New Zealand
Public Sector Crown land Advise on the NZ Annual budgeting Annual audits
Performance ownership Economy Supervise Treasury Controller function
Provide Land Assist with budgets, Set Financial Approvals of
Information planning Standards process
Manage ownership Advise on standards
Services Agency (GSA) controls some 11.7% of the real agencies. These plans are reviewed by the OMB as part
property space inventory. In January 2003 the Govern- of the normal budgetary review process and in achiev-
ment Accountability Office (GAO) identified real es- ing government-wide property management priorities.
tate and its management as a high risk federal The SRPO is required to submit an initial asset
programme due to under investment. In that same year management plan to the OMB which:
the GAO testified that federal property was deteriorat- G identifies and categorises all real property owned,
ing badly and decision makers lacked reliable data. leased or managed by the agency within and out-
As a result, in February 2004, Executive Order (EO) side the USA;
13327 was signed by President Bush adding improved G prioritises actions to be taken to improve the oper-
real property asset management to the Presidents ational and financial management of the agencys
management agenda. The EO defined real property real estate;
as any real property owned, leased or otherwise G makes lifecycle cost estimates of these actions;
managed by the federal government domestically G identifies authorities also required to address the
and internationally and includes improvements to priorities established;
federal lands. G identifies and pursues goals, with appropriate dead-
The EO established the Federal Real Property Coun- lines, consistent with the asset management plans,
cil (FRPC), under the administration of the Office of measuring progress. Incorporates planning and
Management and Budget (OMB), to serve as a centre of management requirements established under ear-
best practice and assist the efforts of Senior Real Prop- lier EOs for heritage property and for environmen-
erty Officers (SRPOs), a role described further below. tal management;
The structure of the FRPC is set out in Figure 12.5. G annually lists and describes property assets under
The Council comprises the SRPOs, the Controller, the control of the agency.
and, Deputy Director of Office of Management and
Budget (as Chair), the Administrator of the GSA and Every agency must determine what it owns, what it
any other officials or employees deemed necessary by needs and what it costs to manage its real properties. It
the Chair. The Council is seen as a mechanism to assist must develop and implement property asset manage-
SRPOs develop and implement agency property asset ment plans and performance measures. Surplus prop-
management plans. The Council, in conjunction with erties are to be sold.
the Administrator of the GSA, works out appropriate The role of the GSA has been expanded to include
performance measures for real property. As part of its establishing and maintaining a government-wide real
remit, the FRPC has also produced a template for prop- property inventory database and reporting perform-
erty asset management plans to be rolled out across ance measures.
77
RICS Public Sector Asset Management Guidelines
So in the USA, under-investment triggered the de- G Both countries have produced best practice guidance
velopment of a mandatory property asset management centrally; state governments in Australia have also
process. A national body oversees the development and developed their own approach and a review of three
dissemination of best practice and a series of KPIs have of these (New South Wales, Western Australia
been established for measuring the performance of and Queensland) indicates close similarities
property assets over time. and consistency of approaches and some marked
differences.
G The US model has set out the requirement that a
12.5 SUMMARY named individual at strategic level in all major
agencies should be held responsible for property
Whilst the US and Australian models of property asset asset management.
management have developed from different drivers, G The ANAO has conducted a number of formal au-
there are a number of similarities and differences that dits of the embedding of asset management and
could inform a UK model of excellence: property asset management in central government
G The US and Australian models both recognise the departments and agencies.
need for a central coordination committee to de-
velop and disseminate best practice in property 12.6 APPENDICES
asset management; for example, the FRPC in the US
and the GAMC in the NSW state government. Appendix 1 sets out in tabular format comparisons of
G The US approach has been mandated by Presiden- the asset management structures in Australia, New
tial Executive Order. Zealand and the USA. Appendix 2 shows, again in tab-
G The US and Australian models link the property ular form, comparisons between asset management
asset management planning process into budgetary arrangements for the states of Western Australia,
cycles. Queensland and New South Wales.
78
Australia New Zealand USA
Regulatory framework Regulation/accounting requirements Centralised control to legislation Presidential Order:
(e.g. IAM 2002): Executive Order (EO) 13327
G AAS27 (local government) Accounting reform and asset management (Improved Asset Management)
G AAS29 (government departments) reform
G AA31 (government)
The degree of separation of ownership from
management and info systems
G State-Owned Enterprises Act 1986
G State Sector Act 1988
G Public Finance Act 1989
G Fiscal Responsibility Act 1994
Governance Australian National Audit Office Different organisations: Government Accountability Office
(federal government) G LINZ
G The Treasury
Public Works Committee in respect of G NZ Accounting Standards Review Board
major works G NZ Property Institute
G NZ Institute of Accountants
Appendix 1
Extent of devolution State level government responsibility The above organisations set the regulations
and regulation and standards, whilst many departments,
Asset management policy comparisons
79
80
Australia New Zealand USA
Key features Asset Management should be viewed as a Autonomy for state entities allows G High risk federal programme resulting
business enabler. Agencies: innovation and advancement. from years of under-investment
G lack strategic approach A capital charge regime focuses G Federal property deteriorating badly
G are required to use accrual accounting entities to reduce capital virtually G Decision makers lack reliable data
and capital charging all state departmental offices are
G lack a central register of property assets leased from private sector. Could be
seen as a world leader for example
road network management Transit NZ.
Appendix 1 continued
and flexible
G Private sector management practices
are widely used
G National wealth accumulated in
Crown property is properly recognised
G Fiscal administration and accounting
encourage accountability and
effectiveness
G Accrual accounting is used by all
government agencies
G Disaggregation of portfolios has led
to a reduction in focus on standards
of asset management
New South Wales Queensland Western Australia
Responsible ministry Commerce and Fair Trade Public Works, Housing and Racing Housing and Works, Treasury and Finance
Framework for asset Total Asset Management Strategic Asset Management Framework Strategic Asset Management Framework
planning (1992) (2002) (1994)
Governance NSW Treasury and Office of the State Auditor General Auditor General (WA)
Property Authority (SPA) and Government
Asset Management Committee (GAMC), a Minister for Public Works
functional department within the SPA
Prescribed reporting Annual strategic asset management plans Annual strategic asset plans for the portfolio Annual strategic asset plans (from each
from each agency to GAMC and individual assets agency to Ministers)
Key components G Acquisitions, disposals and G Asset planning G Asset planning
developments G Capital investment G Capital investment
G Strategic asset management G Maintenance G Maintenance
G Capital charging regime G Asset disposal G Asset disposal
Appendix 2
Objectives International best practice and standards Whole of government approach to asset Rigorous approach to public asset
planning management
Implementation authority SPA Department of Public Works Functional Review Taskforce
GAMC as part of SPA
Approach G Treasury strategy and uniformity G Clear asset management policy, Stronger policy and practices
implemented through the SPA centralised management and reporting G Linkages between agencies
G SPA powers to implement Total Asset of asset strategies G Connect asset planning with corporate
Management policy G Whole lifecycle approach to procurement planning processes
Asset management comparisons Australian states
81
Business Drivers
Financial Drivers
Bibliography
Asset Strategy
Asset Management Plan
STRATEGY
Whats been
Leadership
Change in Asset Culture
Asset Reviews
Management Customers
Structure Business Cases
Corporate Change
CHANGE Roles PROGRAMMES Asset Programmes
AM Services Change
Responsibilities Financial Planning
The Attributes
Resources and for Assets
Needed
Published
Capacity
Governance
Data
Sustainability
REVIEW DELIVERY
Already Asset
Management
System Review
Performance Management
of Assets
Balance Scorecard
Delivery
Planning
Achieving the Desired
Outcomes
Procurement
Project Management
83
RICS Public Sector Asset Management Guidelines
Gershon, P., Releasing Resources to the Front Line, 2004, Journal of Corporate Real Estate, Vol. 8, no. 3, Emerald
available at www.hm-treasury.gov.uk/media/C/A/effi Group Publishing Limited, 2006.
ciency_review120704.pdf
Local Government Asset Management Guidelines,
Getting Value for Money from Construction Projects RICS/ODPM, 2005
through Design How Auditors Can Help; Good practice
in PFI property management deals; Good practice in Lyons, M., Towards better management of Public Sector
selling publicly owned assets; Good practice in the Assets, HM Treasury, December 2004, available at
application of risk management self-assessment www.ogc.gov.uk/documents/Towards_better_manage
questions for departments; Innovation in PFI Financing: ment_of_public_sector_assets_-_Sir_Michael_ Lyons.pdf
The Treasury Building Project; Joining Up to Improve
Male, S., Improving Property Asset Management in the
Public Services; Making joint ventures work; Mod-
Central Civil Government Estate, Leeds University, April
ernising Construction; Purchasing Professional Services;
2006, available at www.ogc.gov.uk/documents/
Ten key questions departments need to consider in man-
Improving_property_asset_management_in_govt_
aging the risk of policies not delivering what is intended;
estate_-_StephenMale(1).pdf
Using call centres to deliver public services, National
Audit Office publications, available free online at National Competition Policy Report by the Independ-
www.nao.org.uk/ ent Committee of Inquiry (Hilmer Report) Industry
Commission, 1993
Grant, R., Contemporary Strategy Analysis (5th edi-
tion), Blackwell Publishing, 2005 Oakland, J. S., Total Quality Management, Elsevier But-
terworth-Heinemann, 2003
Green Book, Appraisal and Evaluation in Central
Government, HM Treasury, available at Office accommodation management framework,
http://greenbook.treasury.gov.uk/ Brisbane, Queensland, Department of Public Works,
2003
Guidance for Improved Asset Management, Federal Real
Property Council, FRPC, 2004 Option Appraisal Building Our Future: Scotlands
School Estate, Scottish Executive, 2004, available at
Hedley, C., International Total Occupancy Cost Code, www.scotland.gov.uk/Publications/2004/05/19436/
IPD Occupiers Property Databank, 2004 38224
High Performing Property: Routemap to asset manage- PAS 55-1 Asset Management Part 1 and 2, The Institute
ment excellence, available at www.ogc.gov.uk/docu of Asset Management, 2004
ments/CP0137HighPerformanceProperty.pdf
Project Portfolio Management Framework, DCLG/Cam-
Highway Asset Management: Worldwide Experience and bridgeshire County Council
Practice, County Surveyors Society, 2004
Sayce, S., Walker, A. and McIntosh, A., Building Sus-
tainability in the Balance, London Estates Gazette, 2004
Hot Property: Getting the best from local authority
assets, Audit Commission, 2000, available at School Estate Management Plans Building Our Future:
www.audit-commission.gov.uk Scotlands School Estate, Scottish Executive, 2003
available at www.scotland.gov.uk/Publications/2003/
Howarth, A., Report on Improving the Capability and 08/18009/25296
Capacity of Managing Property Assets in Central Civil
Government, OGC, 2006 Scottish Public Finance Manual, in particular on
Disposals, available at www.scotland.gov.uk/Topics/
International Infrastructure Management Manual (UK Government/Finance/spfm/Intro
Edition), The Institute of Asset Management, 2002
Staff Development and Organisational Capacity Non-
Kaplan, R. S. and Norton, D. P., Putting the Balanced profit Good Practice Guide, Johnson Center, Grand
Scorecard to Work, Harvard Business Review, SeptOct Valley State University, USA
1993
State purchasing policy, Queensland Government, Bris-
Kaplan, R. S. and Norton, D. P., The Balance Scorecard: bane, 2003
Translating Strategy into Action, HBS Press, 1996
Strategic Asset Management Framework for Western
Lindholm, A. L. and Nenonen, S., A conceptual frame- Australia, Department of Treasury and Finance,
work of CREM performance measurement tools, Government of Western Australia, August 2005
84
Bibliography: Whats been Published Already
Survey of Property trends: Green Issue, GVA Grimley, ADDITIONAL WEB REFERENCES FOR
2006 AUSTRALIA AND NEW ZEALAND
85
Index
A B
87
RICS Public Sector Asset Management Guidelines
88
Index
89
The efficient delivery of services is repeatedly emphasised across the public sector.
Rarely do performance reports focus on the key fact that public services are
invariably delivered directly or indirectly from buildings. The property portfolio of public
organisations has to be right for people for staff and customers and for the
processes for delivering products and services. The property must be in the right place
and must be affordable the price must be right.
In his 2004 report Towards Better Management of Public Sector Assets Sir Michael
Lyons stressed the importance of property assets, their place within the business
planning of public organisations and the gain to be achieved by developing strategic
asset management plans which align with business strategies.
These RICS Public Sector Asset Management Guidelines have been developed
by experts in the variety of disciplines which are required to produce effective
asset management plans. They will assist all those involved in the process of asset
management and planning whether property practitioners or operational managers.
To ensure that our members are able to provide the quality of advice
and level of integrity required by the market, RICS qualifications are only
awarded to individuals who meet the most rigorous requirements for both
education and experience and who are prepared to maintain
high standards in the public interest. With this in mind its perhaps
not surprising that the letters RICS represent the mark of property
professionalism worldwide.