Senior Decision. An insight into property asset management. rics.org/publicsector. RICS Public Sector property asset management Guidelines

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1 RICS Public Sector property asset management Guidelines Senior Decision Makers Guide An insight into property asset management Written for RICS by Keith Jones and Alan D White rics.org/publicsector

2 take a look at these questions Do you have a corporate strategy with a compatible property strategy and plan which is up-to-date (i.e. reviewed at least annually)? Do you have adequate and accurate information about your total property portfolio? Do you have one or more managers solely responsible for property? Does the Senior Management team receive regular reports about property and its performance against pre-agreed overall corporate /business KPIs? Are you retaining any surplus property which could be disposed? Does your property help to deliver your services in the way you would like it to? Do you have a flexible workstyle strategy for your staff and as a result have you rationalised your staff accommodation to reflect more efficient use of space? Does your property encourage good productivity, recruitment and retention of your staff? Do your customers have a good experience when visiting your properties? Are your properties good for the image of your organisation? Do you know how much your property is costing you? Do you have a plan to improve occupational efficiency of non-office buildings? Do you know the extent of your maintenance backlog and what you are doing about it? Are you working with your partners to improve services and release capital and recurring expenditure from your property? Are you pursuing collaboration, shared services and co-location as a way of improving public service delivery, productivity and making efficiencies? Are you working with your community to improve service levels and efficiency through property ownership and use? Total NO scores 0, YES scores 1, DON T KNOW scores -1. A score less than 12 suggests that you need to improve your property asset management. SENIOR DECISION MAKERS GUIDE an insight into property asset management

3 The public sector is under constant pressure to cut costs and release capital At the same time, service delivery and quality expectations are increasing, requiring more efficient and effective use of all resources. As a result, most public sector organisations face challenges which inevitably involve significant property change to meet demanding operational and financial strategies: financial efficiency, budget reduction and capital release, usually meaning using less accommodation service/business re-engineering, resulting in changing locations and introducing reconfigured space improved staff productivity, retention and recruitment, using better quality, more flexible space and increasing choice in workstyles better co-ordinated and shared public service delivery points, again meaning changed locations and often mould-breaking ways of working place based budgeting/collaboration, requiring working across boundaries, perhaps for the first time, and sharing budgets carbon/energy/sustainability targets, requiring new design concepts, materials, facility management concepts, perhaps new locations and ways of working improved procurement, again breaking long-established procedures and introducing new operational methodologies greater community involvement in local services, requiring consultation and communication with the community, staff and customers public sector ownership vehicles, leveraging the value of public sector organisations to create cost effective, efficient delivery of services through quality property assets. Property will make a significant contribution to organisational and financial change and may be used as an instrument of change. Here are some examples : experience shows that more effective and efficient use of property will deliver improved services. Property change can be a catalyst for organisational change over the last year energy costs have increased by 25%. Carbon reduction measures recommended by the Westminster Sustainable Business Forum (WSBF) can reduce annual costs by 650,000 for the average public sector organisation the introduction of modern working practices and workplace standards can reduce staff accommodation costs by up to 25% and increase productivity by 5% to 15% it is estimated that financial benefits worth potentially 8 billion could be generated by improving workforce productivity in the public sector it is further estimated that public sector organisations can deliver 7 billion in savings by using less space and through aggregation in property related procurement the Department of Communities and Local Government s Capital and Asset Pathfinder Programme has predicted that the seven projects already examined by the CAP programme alone can deliver total savings of 155 million over 25 years from floor space and revenue reductions. DCLG also estimates potential for 35 billion in capital receipts over the next 10 years through surplus property sales. 1 From: Westminster Sustainable Business Forum Leaner and Greener II, Putting Building to Work, 2011 rics.org/publicsector

4 Why do we need a more strategic approach to property? Property asset management is the process which aligns business and property strategies, ensuring the optimisation of an organisation s property assets in a way which best supports its key service and business goals and objectives. The resulting property asset plan lays the foundation for the efficient and effective use of all assets and provides a platform for structured and rigorous forward thinking and decision-making about operational and property asset strategies. The plan enables management to be clear about the extent, value, condition and suitability of the property portfolio right across the organisation. This will form the basis for corporate and consultative strategy development and clear methodologies for measuring performance. Property cannot be changed as quickly as other resources and so it is essential to have a longer term property asset strategy so that the right property is provided to suit each activity of the organisation. The gains to the organisation in having a measured approach to property will be considerable and will be amplified over the years as the complete property asset strategy is delivered. These gains are financial, as well as improvements in productivity, service delivery and increased customer satisfaction. Property asset management will ensure that land and buildings make the maximum contribution to achieving the goals and objectives of the organisation. It locks into to the overall strategy of the organisation by addressing questions about key operational objectives, such as: Public service aspirations how will re-engineered and improved services use property most effectively and efficiently? How will property support the re-engineering and its implementation? Productivity how can accommodation decisions and their implementation lead to a better performing workforce? Branding How will property create the appropriate image to users about the organisation that provides it? Annual expenditure how can property contribute to annual savings and efficiency whilst at the same time improving public services and workforce productivity? Capital release how can capital be released from property to support other capital spending or reduce debt, without undermining services or productivity? Ownership does the property need to be owned by the organisation or should accommodation be provided in another way (by for example, sharing, or pooled property vehicles)? Collaboration can accommodation or property management services be provided in collaboration with partners to improve the customer experience and staff experience and/or efficiency? An aligned property asset strategy will provide the management team with the best solutions to these issues from both operational delivery and property asset management perspectives. This activity is significantly different to property management. The latter focuses on managing buildings, making sure they run well on a day to day basis. Property asset management, on the other hand, requires business skills as well as an overall knowledge of property matters, considering property as a strategic corporate asset and not solely as an operational envelope. Property asset management is: 1. strategic and needs to be driven from the top, supported by the rest of the organisation 2. corporate, not just the province of property professionals 3. concerned with long term benefits, costs and efficiency 4. related to, but different from, day-to-day property management 5. systematic and co-ordinated.

5 What is needed to make sure it happens? The key features in practicing good property asset management are: 1. Good planning and programming 2. Efficient and effective delivery 3. Explicit review of performance aimed at operational and financial excellence 4. Appropriate organisation, structure, capacity and capability, both corporately and in the property asset management department 5. Leadership from the top, empowering staff across the organisation to practice good property asset management 6. Communication across the organisation to ensure that property supports services, that there is clarity of the message, and that good property asset management is practiced. The benefits of property asset management: Without property asset management Ad hoc reductions in annual costs leading to underperformance of land and buildings Ad hoc and sporadic capital release Ageing and inappropriate buildings not fulfilling public services requirements and working requirements effectively Performance monitoring focussed on building performance Lack of a coherent overall approach to the efficient and effective use of property With property asset management Planned, significant and on-going reductions in annual costs, generally from using less property and from improved procurement Planned capital release, sustained over time until all capital in property is working as effectively as possible Systematic renewal and refurbishment, often funded by property rationalisation and collaboration Performance monitoring focussed on the contribution of property to overall business performance Organisation wide culture of medium and long term efficient and effective use of property Make property and accommodation assets a top management priority For more detail about these processes, take a look at the RICS Books website for the full version of the Public Sector Property Asset Management Guidelines document, or at the following web address: Here you will find the full text of the RICS Public Sector Property Asset Management Guidelines 2012 and a document entitled The Quick Start Guide to property asset management which gives more technical information on the subject in an abridged format. SENIOR DECISION MAKERS GUIDE an insight into property asset management

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