RICS Public Sector Asset Management

RICS Public Sector Asset Management Guidelines

A guide to best practice

Supported by

RICS Public SectorAsset Management Guidelines

A guide to best practice

Edited by

Keith Jones

and

Alan D. White

AcknowledgementsThe authors and publishers wish to thank the following for permission toreproduce copyright material:

BRECOPROPDETRHM TreasuryIPD GlobalDCLGOGCUniversity of Leeds

Every effort has been made to trace copyright owners. Anyone claiming copyrightshould contact RICS at the address below.

Published by the Royal Institution of Chartered SurveyorsSurveyor CourtWestwood Business ParkCoventry CV4 8JEUK

www.ricsbooks.com

No responsibility for loss or damage caused to any person acting or refraining fromaction as a result of the material included in this publication can be accepted by theauthor or RICS.

ISBN 978-1-84219-370-9

© Royal Institution of Chartered Surveyors (RICS) January 2008. Copyright in all orpart of this publication rests with RICS, and save by prior consent of RICS, no part orparts shall be reproduced by any means electronic, mechanical, photocopying orotherwise, now known or to be devised.

Typeset and printed in Great Britain by Page Bros

Printed on Greencoat Silk 115gsm

iii

Contents

Preface v

Foreword vii

Acknowledgements and Contributors viii

Glossary ix

Introduction 1

1 WHAT IS PUBLIC SECTOR ASSET MANAGEMENT?

1.1 Description of asset management 51.2 Concept diagram and arrangement of the guidelines 7

2 STRATEGY AND VISION DEVELOPMENT

2.1 The purpose and role of asset strategies 92.2 The coverage of the asset management plan (including the asset strategy) 102.3 Key elements of preparing asset strategies 112.4 The pivotal role of the asset strategy and the asset management plan 15

3 ASSET PROGRAMMES

3.1 The stages in the preparing of asset programmes 173.2 Review of the asset base 173.3 Project evaluation (business cases) 193.4 Asset programme development and evaluation 213.5 Financial planning for assets 22

4 DELIVERY

4.1 Introduction 254.2 Overview of delivery 254.3 Direction 264.4 Resources and capabilities 264.5 Means of delivery 264.6 Project structure and governance 284.7 Project planning 294.8 Communications 294.9 Monitoring, incentives and benefits realisation 304.10 Risks 304.11 Conclusion 31

5 REVIEW AND PERFORMANCE MANAGEMENT

5.1 Performance management 335.2 Reviewing the asset management system 335.3 Developing performance management for the asset base 355.4 Conclusion 39

6 CHANGE MANAGEMENT

6.1 Coverage of this chapter 416.2 Understanding the nature of change in asset management 416.3 Attributes of good change managers in asset management 44

7 LEADERSHIP AND CUSTOMERS

7.1 Leadership skills 477.2 Engaging stakeholders 49

8 ORGANISATION

8.1 Key steps 518.2 Organisational culture 518.3 Process 518.4 Roles and responsibilities 538.5 Structure 54

9 RESOURCES AND CAPACITY

9.1 The role of resources and capacity in asset management 559.2 Defining resources and capacity for asset management 569.3 What needs to be done? 57

10 SUSTAINABILITY

10.1 The context 5910.2 Definitions 5910.3 Building impacts 6010.4 A sustainability criteria approach for asset management 6210.5 Summary of sustainability principles for asset managers 63

11 DATA AND INFORMATION MANAGEMENT

11.1 Introduction 6511.2 Specifying requirements 6511.3 Options for systems 6711.4 Business case 6711.5 Implementing the systems 6811.6 Managing and maintaining the data 68

12 ASSET MANAGEMENT – AN INTERNATIONAL DISCIPLINE

12.1 Overview 7112.2 Asset management in Australia 7112.3 Asset management in New Zealand 7612.4 Asset management in the USA 7612.5 Summary 7812.6 Appendices 78

Bibliography – What’s Been Published Already 83

Index 87


iv

In 2006, we were approached by RICS to producepublic sector guidelines on property asset manage-ment. It had identified a need for the guidelines for thefollowing reasons:

� The subject has been at the forefront of publicsector property thinking for some time and whilstits application was previously primarily in localgovernment, interest and expectations were spread-ing to many other parts of the public sector.

� The subject is a challenging area for charteredsurveyors and other property practitioners, as itrequires skill sets that are as much to do withmanagement and business processes as they are todo with mainstream property expertise.

� It was felt important to set out the key features ofgood property asset management practice formembers and other property practitioners.

� An initiative was needed to identify and explainthe wide range of skill requirements applicableacross the whole of public sector property assetmanagement, which would become the mainreference point for asset managers. If, subsequently,specific guidance in a particular sub-sector isneeded, then more focus on that area will be able tobe developed using the overarching framework pro-vided by these guidelines.

So, we embarked on what has proved to be a longerjourney than we all expected! We have had great sup-port from RICS officers, who had the foresight to takethe initiative in the first place, and we have been veryfortunate to have a good team of authors, and a goodpublishing team, to work with. Many representativebodies have also been keen to support us. We thank allthese people and organisations sincerely for their timeand effort in assisting with the preparation of thispublication.

We took the decision to ask a number of specialiststo write some of the individual chapters and so webecame editors rather than authors of the whole pub-lication. The text was actually written quite quickly.The time has really been consumed by logistics –identifying the right authors (and then getting them toagree to do it!), bringing consistency to the text,honing the text down to a manageable length, gettingconsents and approvals, typesetting and printing andso on.

However, we feel that the effort has been veryworthwhile. We hope you do too.

Keith JonesAlan D WhiteJanuary 2008

v

Preface

vii

Public sector asset management first came into thespotlight in the early 1980s. The Ceri Davies report1 onthe NHS estate, the Cabinet Office report2 on CentralGovernment office accommodation and the AuditCommission report3 on Local Authority property allhighlighted issues of under-use and a reactive approachto property asset management. These reviews provideda platform for a major process of improvement – asearch for new and better ways to manage the valuablepublic sector resource and asset base: property.

At the same time, the last 25 years have seen rapidchanges in all aspects of working practices and thepublic sector has not been immune to these. Thepervasive impact of technology, the rise of the serviceculture and search for greater efficiency in the use ofall resources have challenged professionals to delivernew and more responsive property solutions to meetthe needs of the occupiers, customers and a wide rangeof other stakeholders.

Responding to these challenges, academics, con-sultants and advisory bodies have developed tools andtechniques to help asset managers proactively deal withtheir portfolios. New financial management tools, abetter understanding of information and performancemonitoring, and new approaches to the use and man-agement of the workplace are but a few of the areaswhich have seen considerable progress. Additionally, a

wide range of public sector groups4 have formed strongcommunities of practice who have captured andshared best practice, providing real evidence of theimpact of these ideas. Consequently, there has been aconsiderable increase in knowledge about how publicsector organisations can gain more from theirproperty and this has resulted in a more strategic andsystematic approach to asset management.

These guidelines therefore come at an opportunetime. They pull together an extensive body of work andtake a holistic approach to property asset managementfrom strategy development to implementation. Bydrawing together a wide range of guidance, techniquesand practice, it becomes a single authoritative sourceof much of the best material currently available.

I commend these guidelines to all those who havea real interest in improving the performance andcontribution of property to the overall goals of theirorganisation. I have no doubt that it will become anessential resource for practioners in the public sectorand beyond.

Professor Ginny GibsonLand Securities Trillium FellowDept of Real Estate & Planning

University of Reading

Foreword

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.

EDITORS, DRAFTERS AND REVIEWERS

We are indebted to the following editors, drafters andreviewers, all of whom contributed enormously to theproduction of these Guidelines.

Editors

Keith Jones, Director, Performent Consulting, Chair ofthe RICS Asset Management Group and member ofthe RICS Management Consultancy Faculty Board.

Alan D White, Director, Lenborough Consultants,Chair of RICS Facilities Management Faculty Boardand the RICS Business Development Board.

Drafters and reviewers

David Bentley, Head of Asset Management, IPF/CIPFA

Frank Bowyer, RICS Oceania and FB Consultants PtyLtd, Australia

Elisabeth Carter, Elisabeth Carter Consulting

Tony Comer, County Property Officer, HertfordshireCounty Council

John Cornish, Head of Estates Branch, Department forCommunities and Local Government

Iain Gillies, Network Property and Facility Manager,New Zealand Telecom

Ian Jeffries, IPD (Investment Property Databank)

Keith Jones, Director, Performent Consulting,

Mark Jones, Partner, Remit Consulting

Robert Lee, Interim Management Consultant, SolaceEnterprises

Steven Male, Professor of Construction Management,University of Leeds

Sarah Sayce, Professor and Head of Surveying,Kingston University

Stephen Walton, State government of New South Wales,Australia

Clive Warren, University of Queensland, Australia

Neil Webster, Partner, GVA Grimley,

Alan D White, Director, Lenborough Consultants.

We thank Ginny Gibson, Professor of Corporate RealEstate, University of Reading, for writing the Foreword.

Consultative group

We are also indebted to the Consultative Group for theproject, who gave valuable advice on the drafts inpreparation. The members of the Group were:

Bob Baber, Audit Commission

Stuart Bates/Rob Shelton, Consortium of LocalAuthorities in Wales

Roger Bond, Association of University Directors ofEstates

Joanne Cavey/Sal Ratnayake, Department forCommunities and Local Government

Pam Chapman, Department of Health

Richard Hanson/Dinesh Kotecha, Association ofCorporate Property officers in Local Government

Yvonne Hardy/Bridget Hardy, Office of GovernmentCommerce

Ian Hay, Association of Chief Estate Surveyors in LocalGovernment

Alan Jones, Department of Education and Skills

Nigel Mason, York Consulting

Bill Ness, Edinburgh City Council

Alan Stokes, Society of Construction and QuantitySurveying

Alan Tyler, Federation of Property Services

viii

Acknowledgementsand Contributors

Asset

The term ‘asset’ can be used to describe many differenttypes of assets, for example, financial assets, infra-structure assets, plant and machinery, equipment andproperty. For the purpose of these guidelines the term‘asset’ is used to refer to land and buildings.

Asset base

The entirety of the land and building assets owned oroccupied by an organisation.

Asset base performance measures

The measures grounded in an organisation’s strategicobjectives. They fit into four key categories or per-spectives, based on the ‘balanced scorecard’:

� Financial – ‘traditional’ balance sheet and other fi-nancial measures.

� Customer – satisfaction issues from the customers’perspective.

� Internal – the extent to which internal workingpractices contribute towards the successful deliveryof corporate objectives.

� Innovation and Learning – intended to help driveimprovement in financial, customer and internalprocess performance.

A fifth category may also be added to address wider so-cial, economic and environmental/physical perspec-tives, to reflect the wider public policy role of thepublic sector.

The public sector approach would, therefore, cover:

� social, economic and environmental/physical im-pacts;

� financial imperatives;� stakeholder views;� internal excellence;� innovation and learning and for the future.

Asset champion

The senior individual in an organisation who ischarged with promoting and sustaining good practicein asset management within the organisation. Nor-

mally this will not be the senior manager responsiblefor asset management (SMAM).

Asset management

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 organisationconcerned. It seeks to align the asset base with the or-ganisation’s corporate goals and objectives. It requiresbusiness skills as well as property skills although onlyan overall knowledge of property matters is required.However, property input within the overall process isimperative. It does not seek to respond solely to the re-quirements of any particular operating part of the or-ganisation, but rather, it seeks to take all requirementsinto account and to deliver the optimal solution in termsof the organisation’s overall operational and financialgoals and objectives. It has a consultancy and executiveorientation. It is a corporate, that is whole organisa-tion, activity and may be led and/or coordinated by aproperty, construction or facilities professional, al-though this is not always the case.

Asset management plan

A plan covering the organisation’s asset strategy to-gether with other related matters, for example, the or-ganisational structure and governance, roles andresponsibilities, data and performance managementarrangements and performance measurement infor-mation.

Asset programme

A programme of action designed to implement anasset strategy or part of it.

Asset review

The analysis of all or part of the asset base to assess itscurrent condition, suitability, utilisation and suffi-ciency and the comparison of this with the expectationfor the asset base as described in the asset strategy. It

ix

Glossary

normally results in a clear understanding of the gap be-tween the current asset base and the desired asset baseand the potential action required to close that gap.

Asset services/asset management services

The services that support asset management in an or-ganisation. They may be provided in-house or exter-nally.

Asset strategy

The organisation’s strategy for its asset base. It willhave both generic elements (e.g. a desire to achieveco-location) and also specific elements (e.g. theapproach to be adopted in offices).

Aunt Sally

A colloquial term used to describe a proposition, putforward to test people’s reaction to it. Also known as a‘straw man’.

Capital expenditure

One-off expenditure on major items which have a lifeof longer than one year (e.g. land and property), often,but not always, funded by borrowing with current ex-penditure implications.

Capital strategy for assets

The overall capital requirements of the asset strategyand of funding sources to meet those requirements.

Corporate

The organisation acting as a whole rather than as parts.

Customers

Those who are in any way customers for assets or assetsservices. Typically they will be the users of land orbuildings but in some cases it might be wider than justusers, for example, parents of children in schools. Thisterm should not be confused with ‘stakeholders’.

Discounted cash flow calculations

Methods to determine the present value of future cashflows by discounting them using the appropriate costof capital.

Green Book

See ‘Treasury Green Book’.

Modernisation

The policy of government designed to rethink the waypublic services are delivered and consequently to im-prove them.

Net present value

The sum of a series of future values discounted to re-flect the dates at which they occur.

Operating units

The various parts of an organisation which deliver el-ements of its goods or services or which enable thosegoods or services to be delivered.

Operational objectives

The objectives of operating units which whilst withinthe overall ambit of the organisation’s objectives willbe more specific and narrow.

Organisational objectives

The objectives of the organisation as a whole.

Organisational performance

The performance of the organisation measured interms of its organisational objectives.

Property management

This is the activity that ensures that land and buildingsmatters are dealt with so that they operate efficientlyand effectively. In effect it delivers the strategic assetmanagement objectives for land and buildings. It issometimes referred to as ‘operational’ and it is the ac-tivity of undertaking the professional/technical worknecessary to ensure that property is in the conditiondesired, in the form and layout and location desiredand supplied with the services required, together withrelated activities such as the disposal of surplus prop-erty, the construction or acquisition of new property,the valuation of property, dealing with landlord andtenant and rating matters, all at an optimum and af-


x

fordable cost. It also involves offering advice to deci-sion makers on the best ways of doing this. It has a cus-tomer orientation. It is normally undertaken byproperty, construction or facilities professionals andtechnicians.

Property performance measures

More technically based measures than asset base per-formance measures, property measures are often bro-ken down into a range of more focused componentparts normally related to efficiency, effectiveness andeconomy. Examples are:

� costs and cost control;� space utilisation; � service levels and customer satisfaction;� environmental sustainability; � risk management (including health and safety); � in-house services management practice; � outsourced supplier management.

Recurring expenditure

Annual expenditure which is variously referred to inthe public sector as, for example, current expenditure,recurring expenditure, resource expenditure or rev-enue expenditure.

Senior managers and decision makers

These are the ‘top’ managers or decision makers. Typ-ically they would be, for example, Board members,Cabinet members, top management team members,Ministers, trustees, etc.

Senior manager responsible for asset management(SMAM)

The senior manager in the organisation that has directresponsibility for the operation and performance ofasset management within the organisation.

Spend to Save

A saving which requires initial and lesser expenditurein order to realise a subsequent saving.

Stakeholders

All those that have a direct or indirect legitimate inter-est in the use of the organisation’s land or buildings.

Strategic asset management

This refers to ‘strategic asset management for land andbuildings’. For simplicity, this is referred to as ‘assetmanagement’ in the guidelines (see ‘asset management’above).

Strategic asset management for land and buildings

For simplicity, this is referred to as ‘asset management’in the guidelines (see ‘asset management’ above).

Strategy proposition

This is the first stage in preparing an asset strategy. It isnot the firm strategy but a proposition (or hypothesis)showing the desired direction which is to be taken butwhich will need to be tested and amended in the lightof, for example, technical, practical, financial or otherconstraints.

Treasury Green Book

The Treasury has, for many years, provided guidanceto other public sector bodies on how proposals shouldbe appraised, before significant funds are committed –and how past and present activities should be evalu-ated. The current edition of the Green Book, Appraisaland Evaluation in Central Government (HMT), incor-porates revised guidance, to encourage a more thor-ough, long-term and analytically robust approach toappraisal and evaluation.

Top management

See ‘Senior managers and decision makers’.

xi

Glossary

1

Chapter overviewThis chapter describes the purpose and format ofthe book, explains how the term ‘asset management’is used and describes the overall benefits of goodasset management.

PURPOSE OF THE BOOK

In the light of the increasing focus on the wayassets are managed in the public sector, RICSfelt it was necessary to produce these guidelines onstrategic asset management for land and buildings forits members and for others who are involved with thepractice of strategic asset management. The book seeksto cover the whole subject of public sector strategicasset management, by setting out a structured ap-proach to the subject, withreferences on where to findmore information. Rather than being just a textbook,it seeks to help managers to practice good strategicasset management by explaining the key steps and thetechniques to be used.

The book is designed to be used by the whole of thepublic sector. It is also hoped that it will provide an‘umbrella’ under which more specific guidelines inparticular parts of the public sector can sit. Thereforeit is hoped that this book will provide the ‘how to do it’and that this will be a backdrop against which morespecific performance standards in each sub sector canbe developed.

FORMAT OF THE BOOK

This book is part of a suite of guidelines on publicsector strategic asset management for land and build-ings and it also has an accompanying short guide forpractitioners – Getting Started Quickly Guide forSurveyors.

As Figure I.1 indicates there is also a short guide forsenior and operational managers and decision makersand a practice information and case studies guidewhich completes this suite as follows:

� Public Sector Asset Management Guidelines� Senior Decision Makers’ Guide

� Getting Started Quickly Guide for Surveyors� Practice Information and Case Studies

Figure I.1: The Guidelines

APPLICABILITY OF THESE GUIDELINES TOPROPERTY ASSETS ONLY

The term ‘asset’ can be used to describe many differenttypes of assets, for example, financial assets, infra-structure assets, plant and machinery, equipment andproperty. For the purpose of these guidelines the term‘asset’ is used to refer to land and buildings (i.e. in thestrict legal sense, real property).

USE OF THE TERM ‘ASSET MANAGEMENT’

As will be explained more fully in Chapter 1 this bookfocuses on ‘strategic asset management for land andbuildings’. For simplicity, this is referred to as ‘assetmanagement’ in the following chapters.

APPLICABILITY TO SMALLER PUBLICSECTOR BODIES

These guidelines have been written with relatively largeoccupational asset bases in mind. In national terms, itis there that the major benefits of good asset manage-ment can be achieved. However, good asset manage-ment has universal benefits. In smaller organisationsthese guidelines will need to be interpreted to make

Introduction

Public Sector AssetManagement Guidelines

Practice Information andCase Studies

Getting Started QuicklyGuide for Surveyors

Senior DecisionMakers’ Guide

them suitable for purpose there. Whilst all the princi-ples will remain the same, the extent and complexityof the processes will not be so great and, therefore,more streamlined arrangements based on these guide-lines may be more appropriate.

BENEFITS OF GOOD ASSET MANAGEMENT

Practical benefits

Land and buildings are probably the slowest of all thestrategic resources (finance, people, ICT and land andbuildings) to respond to change. The reasons for thisvary but they are mainly attributable to legal, financial,construction/development, regulatory and propertymarket issues. As a consequence there are:

� long lead-in times for asset creation;� existing assets are illiquid (i.e. long lead-in times, too),

and so there is a need to plan change in a very system-atic way.

Annual incremental change will not suffice, as it cannotrespond to the challenges of 21st-century publicservices and has often led to many parts of thepublic sector property asset base underperforming innon-financial and financial terms. Examples of this are:

� extensive maintenance backlogs;� poor fit between service requirements and the

property from which it is delivered;� poor accommodation for the workforce impacting

on productivity, recruitment and retention;� limited co-location of public services;� inefficient sourcing and procurement of property

and construction and property support services;� inefficient use of capital;� insufficient control over running costs.

Thus, there is a need for a structured and programmedapproach to long-term change in the asset bases ofpublic sector organisations, in short: 21st-century, fitfor purpose, land and buildings.

Business benefits

These have been variously described in a number oftexts and we select four representative examples below.

Asset Management – Getting the Outcomes,COPROP, 2005

‘By now we should all know what needs be done, andhow it should be done and, therefore, it is the righttime to focus on the outcomes that we are seeking toachieve:

� Supporting service improvement by deliveringcurrent and future portfolio requirements.

� Supporting and facilitating wider objectives(e.g. regeneration, inclusion, sustainability).

� Improving stakeholder satisfaction with propertyand with property services.

� Having a lean, well maintained portfolio whichallows the authority to live within its means (capi-tal and revenue) by managing property runningcosts effectively and efficiently and releasing capitaland then recycling it into corporate priorities.

� Delivering new capital projects effectively andefficiently.

� Maximising returns on any “investment”property.

� Delivering continuous improvement throughperformance management.’

Improving Property Asset Management in theCentral Civil Government Estate, Leeds University(for the Office of Government Commerce), 2006– based on the International InfrastructureManagement Manual 2002, Institute of AssetManagement, London, 2002

‘The benefits of Property Asset Management relate toaccountability, service management, risk manage-ment and financial efficiency through:

� Improved stewardship and accountability of prop-erty assets involving:– The demonstration to owners, customers and

stakeholders that services are being deliveredeffectively and efficiently.

– Providing the start point for evaluating andbalancing service/price/quality tradeoffs.

– Improving accountability in the use ofresources through published performance andfinancial measures.

– Having the ability to benchmark resultsagainst similar organisations.

� Improved communication and relationships withservice users through:– Improved understanding of service require-

ments and options.– Formal consultation/agreement with users on

the service levels.– Having a more holistic approach to physical

asset management through the use of multi-disciplinary management teams.

– Improved customer satisfaction and organisa-tional image.

� Improved risk management through:– Assessing probability and consequence of asset

failure and the resultant impact on businesscontinuity and assisting in addressing conti-nuity of service.

– Addressing the inter-relationships betweendifferent networks and risk managementstrategies.

Influencing decisions on non-asset solutions throughdemand management.


2

� Improved financial efficiency through:– Improved decision-making based on cost and

benefits of alternative options, either strategic,policy or technical in focus.

– Being able to justify forward works pro-grammes and funding requirements.

– Recognising all the costs associated withowning/operating assets over the life cycle ofthe assets.’

Local Authority Asset Management Guidelines,ODPM, 2005

‘Through good asset management, local authoritieswill wish to target the following outcomes:

� Customer and Stakeholder Satisfaction –enhanced customer satisfaction from improvedperformance and control of service delivery to therequired standards along with improved corporateimage. This is relevant in both how the public viewlocal authorities and value and rank their servicesand purposes, as well as in staff morale andperformance.

� Affordability – clear processes for assessing pru-dence, affordability and sustainability includingthe effective use of capital for new projects, capitalrelease and redeployment and efficient and effec-tive running costs.

� Compliance with Statutory/Regulatory Codes –health and safety, asbestos, legionella, accommo-dation minimum standards.

� Improved Corporate Management – for CPA andother purposes, the ability to demonstrate clearlinking between corporate and service goalsand objectives on the one hand and the manage-ment of assets crucial to their delivery on the other;and

� Environment – sustainability, CO2 emissions,green energy, etc.’

High Performing Property, OGC, 2006

‘The effective planning of government property is akey part of this story:

� selling surplus assets to free resources for newinvestment

� transferring ownership of assets to the private sec-tor where this secures better value for moneythrough access to new funding and skills, or byplacing risk where it can be better managed

� identifying and capitalising hidden assets� increasing value for money from retained assets

and property.’

Whilst each of the descriptions above was originallyaddressed to particular parts of the public sector, theirapplicability (with suitable amendment as necessary)is apparent to all parts of the public sector.

In summary the business benefits are as follows:

� release of capital for re-investment or debt reduction;� efficient running costs;� better public service provision by improved prop-

erty and co-location of services;� property in good condition;� improved property utilisation and bringing to-

gether similar uses into the same property, ratherthan providing them separately;

� improved productivity, changes in corporate cul-ture and facilitation of corporate change;

� improved delivery of community objectivesthrough the more effective use of property;

� innovative strategic procurement.

Policy benefits

Asset management is increasingly being recognised bycentral government as part of the modernisationagenda. Since Sir Michael Lyons’ Report (TowardsBetter Management of Public Sector Assets) in December2004, the Treasury has taken a keen interest and assetmanagement has gained a higher profile in theComprehensive Spending Review 2007 with explicittargets for many public organisations. The Office ofGovernment Commerce (OGC) is encouraging goodpractice in asset management throughout centralgovernment and its agencies, which will also berelevant to other parts of the public sector. TheDepartment of Communities and Local Government,the Department for Children, Families and Schoolsand the Audit Commission continue to encouragegood performance in local government and similarencouragement is being promoted in the educationand health sectors.

Therefore, not only is good practice in asset man-agement desirable, it is also an expectation of centralgovernment for all parts of the public sector.

3

Introduction

5

Chapter overviewThis chapter describes the nature of asset manage-ment and the distinction between it and propertymanagement, and the business process associatedwith it. It also explains the reasoning behind the sub-ject matter chosen for each chapter of the book.

1.1 DESCRIPTION OF ASSET MANAGEMENT

The term asset management is variously described inmany documents, for example:

Local Government Asset Management Guidelines,RICS/ODPM, 2005

‘Asset management is a structured process that seeks toensure best value for money from property assets inserving the strategic needs of local authorities. Prop-erty assets have three features that place primacy ontheir proper management:

� they are expensive – in terms of both their capitalvalue and annual costs of upkeep;

� they need to be carefully managed over their livesto ensure best value – e.g. use, maintenance andgeneration of income; and

� it takes time to determine carefully new propertyneeds and to procure and provide them.’

Improving Property Asset Management in theCentral Civil Government Estate, Leeds University(for the Office of Government Commerce),April 2006

‘Strategic Asset Management (SAM) is a subset ofStrategic Resource Management (SRM) and is the ef-fective and efficient direction and utilisation of assets,

both tangible and intangible, to sustain the business.This definition covers all asset classes including pro-duction, facilities, fleet assets and IT infrastructure,for example.

Property Asset Management (PAM) is a subset ofStrategic Asset Management (SAM). It is a struc-tured, holistic and integrating approach for aligningand managing over time service delivery requirementsand the performance of property assets to meet busi-ness objectives and drivers. Property asset manage-ment encompasses two interacting components:

A strategic component, the focus of which is themedium to longer term and involves decisions onappropriate investment in property assets to meetcustomers/end-user needs and service deliveryrequirements. Typically the time frame would be threeto five years (medium term) and up to ten years andbeyond (long term), and,

An operational component, the focus of whichencompasses the ongoing management of propertyassets over the short to medium term time horizonwithin an allocated budgetary framework set at thestrategic level once investment decisions in propertyassets have been made. Typically the time framewould be up to three years. The locus of the opera-tional element of property asset management wouldbe, for example, at or below estates level within adepartment.’

Towards Better Management of Public SectorAssets, A Report to the Chancellor of the Exchequer(Sir Michael Lyons), HM Treasury, 2004

‘Asset management is a key part of business planningwhich connects at a strategic level decisions about an

Chapter 1

What is PublicSector AssetManagement?

STRATEGY

Business DriversFinancial DriversAsset Strategy

Asset Management Plan

AssetManagement

System ReviewPerformance Management

of AssetsBalance Scorecard

DeliveryPlanning

Achieving the DesiredOutcomes

ProcurementProject Management

REVIEW DELIVERY

Change in AssetManagement

Corporate ChangeAM Services Change

The AttributesNeeded

CHANGE

LeadershipCulture

CustomersStructure

RolesResponsibilitiesResources and

CapacityGovernance

DataSustainability

Asset ReviewsBusiness CasesAsset ProgrammesFinancial Planningfor Assets

PROGRAMMES

organisation’s business needs, the deployment of itsassets, and its future investment needs.’

Report on Improving the Capability and Capacityof Managing Property Assets in Central CivilGovernment, OGC, 2006 (Andrew Howarth,National School of Government for OGC)

‘Asset management, in its wider sense, needs to be seenas a contributor to core business resource planning soas to ensure that the physical asset base is aligned withorganisational objectives.

Asset management’s strong links with investmentplanning means that it sits comfortably within theFinance structure, where financial tools can beapplied to test business options and, through theCorporate Finance Director, has direct exposure to theBoard.’

‘Whilst specialist knowledge or technical competencyis very important to the everyday running of propertyand estates, asset management, as proposed by SirMichael (Lyons), implies a wider understanding ofthe part property can play in the delivery of the or-ganisation’s primary objectives. There are, therefore,differences between the property management view ofassets and the asset management view of property.’

‘Asset Management properly lies at the level of corpo-rate resource management. It is a feature of thinkingat a strategic level, which means matching future ca-pabilities to a future environment in order to achievedefined outcomes. Asset management, therefore,aligns itself with strategic resource and ICT manage-ment at the business thinking level. Decisions to utiliseproperty assets as an enabler to business planningstem from this level and manifests itself as strategicproperty management.’

Measuring Performance in the Managementof Local Authority Property, Department ofEnvironment, Transport and the Regions (DETR),1999

‘Asset management in the context of this project is thestrategic management of land and buildings assets interms of the portfolio as a whole. We have identifiedasset management as “optimising the utilisation of as-sets in terms of service benefit and financial return.”There is a difference between this type of asset man-agement and day-to-day property and project man-agement, and property services. Asset management isconcerned with the long term view of all the local au-thority’s assets, including those held and used by in-dividual service departments, as well as those held bya local authority but used by an external organisa-tion, such as the community organisation or a tenantof an industrial unit.’

Asset Management of Local Authority Land andBuildings – Good Practice Guidelines, DETR, 2000

‘Local authority land and property assets are held asa support to the main business of an authority, whichis to provide services. First and foremost, the propertyresource must be used to maximise benefits to servicesin the most efficient and effective manner. The excep-tion is where property assets are primarily held forfinancial rather than service requirements. In thiscase, the focus will be on maximising financial return.

The Research Project (Measuring Performance in theManagement of Local Authority Property, DETR1999) and these Guidelines apply the term assetmanagement to the authority-wide management oflocal authority assets. Furthermore, asset manage-ment is applied in terms of the long term strategicview of all the local authority’s assets. It covers thestrategic issues related to all aspects of estate manage-ment and development. This differs from the day-to-day provision of estate and project managementservices such as building maintenance, rent reviewsand so on.’

There appears to be considerable consensus over thebasic characteristics of strategic asset management forland and buildings and a distinction between this andoperational property management. Therefore, for thepurposes of this book, we have sought to differentiatebetween the two activities as follows:

Strategic asset management for land and buildingsis 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 theorganisation concerned. It seeks to align the assetbase with the organisation’s corporate goals and ob-jectives. It requires business skills as well as prop-erty skills although only an overall knowledge ofproperty matters is required. However propertyinput within the overall process is imperative. Itdoes not seek to respond solely to the requirements ofany particularly operating part of the organisation,but rather, it seeks to take all requirements into ac-count and to deliver the optimal solution in terms ofthe organisation’s overall operational and financialgoals and objectives. It has a consultancy and execu-tive orientation. It is a corporate, that is, whole or-ganisation, activity and may be led and/orcoordinated by a property, construction or facilitiesprofessional, although this is not always the case.

Property management is the activity that ensuresthat land and buildings matters are dealt with sothat they operate efficiently and effectively. In effectit delivers the strategic asset management objectivesfor land and buildings. It is sometimes referred to as‘operational’ and it is the activity of undertaking the


6

professional/technical work necessary to ensurethat property is in the condition desired, in theform and layout and location desired and suppliedwith the services required, together with relatedactivities such as the disposal of surplus property,the construction or acquisition of new property, thevaluation of property, dealing with landlord andtenant and rating matters, all at an optimum andaffordable cost. It also involves offering advice todecision makers on the best ways of doing this.It has a customer orientation and it is normally un-dertaken by property, construction or facilitiesprofessionals and technicians.

Therefore strategic asset management for land andbuildings is:

� involved with business, corporate and organisa-tional objectives;

� concerned with both non-financial and financialmatters;

� connected with property management;� systematic and coordinated;� concerned with whole life costs and benefits;� involved with planning on a medium/long term

basis;� a corporate activity and not solely the province of

property, construction and facilities professionals;

� an activity that sees property as a key strategic re-source in an organisation.

This book focuses on ‘strategic asset managementfor land and buildings’ and describes the techniquesthat are needed to practice it well. The techniques andpractices of property management are not coveredby these guidelines other than in those areas where itoverlaps with strategic asset management for land andbuildings.

For simplicity, ‘strategic asset management for landand buildings’ is referred to as ‘asset management’ inthe remainder of this book.

1.2 CONCEPT DIAGRAM AND ARRANGEMENTOF THE GUIDELINES

In deciding on the structure of the content of this bookwe have first considered the basic business process foreffective asset management. This is based on a simpleprocess which has been described in varying ways inmany business management texts. Our version of it isshown in Figure 1.1.

From this we can begin to define the various activitiesinvolved in asset management in each part of the

7

Chapter 1: What is Public Sector Asset Management?

Figure 1.1: A simple business process for effective asset management

STRATEGY

REVIEW DELIVERY

IMPROVEMENT PROGRAMMES

process. These are described in Figure 1.2 by the textin the ellipses.

However this does not describe the full range of activ-ities involved in asset management. There are a num-ber of essential enabling activities and subjects whichsupport the basic business process activities. These areshown in box at the centre of Figure 1.2.

As a result, this book is arranged in the followingchapters:

� Strategy and vision development� Asset programmes� Delivery – Strategic implementation issues� Review and performance management

� Change management� Leadership and customers – Leadership for assets� Organisational issues� Resources and capacity� Sustainability and corporate social responsibility� Data and information management� Asset management – An international discipline

This will enable the reader to work through the wholeasset management process and understand the plan-ning, process, delivery, resourcing, data managementand practical implications of preparing an asset plan. Itwill also enable the reader to ‘dip-in’ to any individualchapters which are particularly relevant at any giventime.


8

Figure 1.2: Business process for assets and supporting activities

STRATEGY



AssetManagement



DeliveryPlanning



REVIEW DELIVERY




CHANGE

LeadershipCulture

CustomersStructure


CapacityGovernance

DataSustainability


PROGRAMMES

9

2.1 THE PURPOSE AND ROLE OF ASSETSTRATEGIES

Overview

In these guidelines, ‘asset strategy’ is used to describe thegeneral direction that the asset base will take over thenext 5–10 years, the approach to be adopted in gettingthere and the policies that will be applied to decisionmaking. In consequence, it would consider the businessgoals and objectives of the organisation, its businessdrivers, its financial context and the implications for theorganisation’s assets. It would describe the organisation’sasset objectives and its longer term vision for the assetbase, the way in which each category of the asset basewould be treated in the future and the overall financialframework in which this would happen.

The asset strategy is almost always a central partof a wider document: the asset management plan.In addition to the strategy this wider asset manage-ment plan will also describe the organisationalarrangements that are to be adopted to implement thestrategy and will make clear the critical success factorsand associated performance measures that will need tobe met in implementing the strategy, together with anassessment of current performance.

This chapter of the guidelines focuses on strategypreparation while other chapters of the guidelinescover organisational and performance management is-sues. This chapter also covers the overall content of anasset management plan (including its asset strategyelement).

Chapter 2

Strategy andVisionDevelopmentKeith Jones, Director, Performent Consulting

STRATEGY



AssetManagement



DeliveryPlanning



REVIEW DELIVERY




CHANGE

LeadershipCulture

CustomersStructure


CapacityGovernance

DataSustainability


PROGRAMMES

Chapter overviewThis chapter describes the nature and content ofasset strategies. It also describes the key steps inpreparing asset strategies.

Benefits of good asset management plans(including asset strategies)� Aligns asset objectives with organisational

objectives� Ensures overall efficient and effective use of

assets in the medium/long term� Provides:

– a platform for structured and rigorous for-ward thinking;

– a basis for corporate and consultative strategydevelopment;

– an explicit description of the direction of theorganisation (or a particular aspect of thatorganisation, in this case, assets) – i.e. theelements of the strategy;

– a clear statement for communicating thestrategy to the organisation;

– a basis for future decision making� Asset strategy is placed in the context of wider

organisational issues� Brings clarity to the way assets are managed in

the organisation:– the organisational arrangements for asset

management;– corporate processes for assets;– performance measures and measurement;– data management;– capacity management

Strategy development – an iterative process

It will be almost impossible to get the first asset strat-egy ‘right’. The process of refining the strategy may takeseveral years especially if the asset base concerned iscomplex and extensive. The process will be iterative,gradually refining and reviewing all aspects of thestrategy over time. This is shown in Figure 2.1.

Even after the strategy has been refined, over time it willstill be necessary to review it annually and whilst it maynot change radically year on year, it will need to changeas the organisation itself changes and as the outside en-vironment and customer requirements change.

In simple terms the purpose of a strategy is to provide:

� a platform for structured and rigorous forwardthinking;

� a basis for corporate and consultative strategy de-velopment;

� an explicit description of the direction that the or-ganisation wishes to take with its assets;

� a clear statement for communicating the strategy tothe organisation; and

� a basis for future decision making.

Asset strategy should be distinguished from asset pro-grammes. Asset programmes are the mechanisms bywhich the asset strategy will be put into place, increas-ingly on a two-, three- or four-year rolling basis. Theyare the practical and implementable actions to put thestrategy in place and will be technically and financiallyrobust (these are discussed further in Chapter 3).

Fitting the asset strategy into the organisation’sbusiness process

The asset strategy needs to be part of the organisation’soverall business process and Figure 2.2 gives the broadconceptual position of the asset strategy in the overallorganisational planning framework.

2.2 THE COVERAGE OF THE ASSETMANAGEMENT PLAN (INCLUDING THE ASSETSTRATEGY)

Whilst less has been written about the content of assetstrategies themselves, much has been written about thecontent of asset management plans (which include theasset strategy) and a very useful summary of some ofthese is given in Leeds University’s Research Docu-ment, Improving Property Asset Management in theCentral Civil Government Estate (Leeds University forthe Office of Government Commerce, 2006) which re-views the suggested asset management plan content ofthe following:

� New South Wales Treasury, Australia� Department of Education and Employment, UK� Federal Real Property Council, USA� Cambridge County Council, UK� Consortium of Local Authorities in Wales (CLAW),

UK� The Lyons Report, UK� Institute of Asset Management, UK


10

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

��

Figure 2.1: Refining the strategy – an iterative process

11

Chapter 2: Strategy and Vision Development

ICTStrategy

CorporateStrategy

Annual (or 2/3 year Rolling)Capital and Recurring Expenditure

Programmes

AssetStrategy

HRStrategy

ProcurementStrategy

Partners

ExternalEnvironment

Operating Units’Strategies

Corporate Operatingand Governance

Policies

FinancialContext

Capital and Recurring RevenueExpenditure Strategy

Figure 2.3

Figure 2.2: Position of the asset strategy in the overall planning process

Further examples of asset management plan contentcan be found in PAS 55 (Publicly Available Specification55) – Asset Management (BSI, 2004); NAMS PropertyManual (National Asset Management Steering(NAMS) Group, Thames, New Zealand, 2006);RICS/ODPM Guidance on Asset Management 2005(RICS/ODPM, 2005).

Drawing from these references, an example of the contentof an asset management plan is illustrated in Table 2.1.

Whilst it is unrealistic to set a maximum length forsuch documents they should be kept as short as possi-ble by distilling down the ‘essence’ of what needs to becommunicated. The reason for this is that a key role ofthe asset management plan is to get the message acrossto those who may be busy or who may not be moti-vated to read a long document on a subject that theymay consider is only of indirect importance to them.

It is helpful to summarise the strategy in a singlepage or in two or three diagrams. This might then beused as the ‘executive summary’.

2.3 KEY ELEMENTS OF PREPARING ASSETSTRATEGIES

The stages

The process of preparing an asset strategy is covered inthe five key stages shown in Figure 2.3. These are cov-ered, in turn, in the rest of this chapter. The processwill depend on the particular needs of your organisa-tion.

Business drivers

The first stage must be to identify the key businessdrivers that determine the overall direction of the or-ganisation and in particular to understand the likelyimplications of these drivers for assets. There are manyissues to consider and they will be particular to the or-ganisation concerned. A ‘mind map’ of just some ofthem is provided in Figure 2.4.

BusinessDrivers Visioning Buy-in Testing Strategy


12

Purpose and expectation of the strategy � Why does the organisation have an asset strategy?� How does it fit with other planning documents and the overall

business process?

The organisation’s goals and objectives � What is the organisation seeking to do, making sure that thoseand the organisation’s major business business drivers that have asset implications are highlighted? drivers (service/policy delivery/ The key directions and aspirations of the organisationproduction and financial) � Organisational mission, vision and values

� Key organisational objectives (internal and external)

The organisation’s financial context � Overall financial position of the organisation � Financial outlook� Financial context for asset decision making

The gap between where the asset base � What the business drivers mean for the asset baseis now and where the organisation wants � Gap analysisit to be, i.e. the implications for assets � Approach to closing/eradicating the gap

Asset goals and objectives and � Explicit statement of asset goals and objectives the organisation’s vision for its asset � The overall approach to the use of assetsbase over the next, say 10 years � Key themes

� How the asset base will help delivery of the business objectives

Critical success factors � Drawn from the asset goals, objectives and vision� This will form the basis for future performance measurement

The approach to each category of the � The way in which the organisation will approach and decide uponasset base (i.e. the gap analysis and the the future of each part of the asset base by categoryway the gap will be closed or narrowed –in effect, this charts out the strategy itself)

Broad resource implications of the � Capital implicationsstrategy, particularly financial (in some � Recurring (resource/revenue/current) expenditure implicationsparts of the public sector this is referred � ICT implicationsto as the ‘capital strategy’ for assets) but � HR implicationsalso ICT, HR and procurement � Broad investment and divestment strategy for assets

� The overall approach to sourcing and procurement

Performance management for assets � The performance measures to be used, drawn for the critical success factors

� The performance management system� Current performance and key historic trends

Organisational arrangements for asset � Structural issuesmanagement � Roles and responsibilities

� Governance and decision making� Relationships with stakeholders� Corporate processes for asset management� Data management� Capacity management

Strategic action and milestones � The main actions that will be taken over the next year to deliver the strategy

� Some will be actions to develop the strategy� Some will be actions to implement asset change� Some will be actions to implement organisational change

Table 2.1: Content of an asset management plan (including the asset strategy)

A start can often be made by consulting documentsand plans produced by the organisation – businessstrategies, business plans, operating unit plans, finan-cial statements and documents. However, this will notbe enough. The documents will often be out of dateand are unlikely to look far enough ahead (5–10 years).In addition some matters may be confidential or maynot be written down. It is essential to meet with the keyplayers in the organisation to discuss their views on fu-ture direction and plans. These key players might in-clude senior managers (including politicians ifapplicable), heads of operating units, senior financestaff, senior policy making and organisational devel-opment staff, heads of ICT and HR and so on. Fromthis, a picture of the future direction of the organisa-tion will emerge and it is often surprising how muchagreement on this there is.

Having understood the organisation’s businessdrivers, some visioning for assets can now begin.

Visioning

It is a truism that there are always two conflictingpressures on an organisation. One is the desire to takenew initiatives and the second is financial constraint.Any asset visioning needs to strike a balance betweenthe two but at this early stage it may not be easy toquantify either. As a result visioning is an iterativeprocess.

The visioning should take the information gleanedfrom the assessment of business drivers and seek tomap this information onto the asset base. What will bethe implications for the asset base? These implicationsare likely to be in the following three categories:

� Asset objectives (What do the business drivers in-dicate our asset objectives should be?) These objec-

tives will form the basis of the indicators that wouldbe used to measure the contribution the asset basemakes to corporate performance

� General themes and the approach to these themes(e.g. working environment, co-location, mainte-nance, regeneration, standards, branding, approachto public realm/landscaping, sustainability issues,etc.)

� Broad approaches to be adopted for each asset cat-egory of asset/accommodation in the asset base(e.g. schools, adult care, teaching blocks, studentaccommodation, offices, hospital wards, customeraccess points, etc.)

The vision will clarify the dynamic between financialmatters and new initiatives. For example, it will seek tobroadly quantify capital release, recurring expenditureefficiencies, whilst at the same time explaining the broadthrust of the organisation’s new initiatives. It will alsoidentify 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, whichwill change office accommodation requirements, thenit will also be necessary to pursue parallel HR and ICTstrategies which will enable the change.

A good way of bringing this vision to life will be forthe asset manager to chart out an ‘Aunt Sally’ and thenfor this to be debated and honed at a workshop withthe senior representatives of operating units, the cor-porate centre and support services.

The visioning stage should end with an agreed pre-liminary vision for the future of assets in the organisa-tion.

Buy-in

Before doing any further work it will be important toget the buy-in of top managers and, as appropriate,

13


Corporate goals, objectives and strategy

Corporate values and policy

Financial outlook of the organisation

The organisation’s vision for its future

Operating Unit’s aspirations and plans

Brand

Customer interface

Possible changes in government policy

Changes in internal organisation and structure

Changes in the external operating environment

Strategy and actions of partners

The organisation’s vision for property

Suitability and alignment of existing property portfolio

Procurement

Efficiency savings

Relationship with other key resources

Sustainability and environment

Possibilities for co-location

Impact of outsourcing/partnering/sharedservice provision

Changes in headcount

Impact of alternative workstyle

Access

Regulation and standards

AssetStrategy

Figure 2.4: A mind map of some of the issues to consider in understanding business drivers for the asset strategy

senior politicians/board members/trustees. This maybest be achieved by presenting the draft vision, and thelogic behind it, to a meeting of these senior personnel.

The process of ‘brokering’ (acting as a go-betweenand facilitator with all the internal parties who have aninterest in the asset strategy) an asset vision with sen-ior management may have some other very importantadditional benefits, for example:� getting asset issues on the corporate agenda;� clarifying business drivers and corporate policy;� clarifying organisation issues that need to be ad-

dressed in relation to assets;� facilitating and promoting change in the organisa-

tion as a whole.

Testing

Once there is an agreed asset vision, the specifics of thisvision can be developed into the organisation’s draftasset strategy (this should be a short step). This may betermed a ‘strategy proposition’ so that the organisationis clear that at this stage it is merely work in progresswhich remains to be tested.

Testing can then begin. The testing process willcomprise high level financial, assets, ICT and HRissues. This testing is very broad and generic andshould not be confused with detailed feasibility and ap-praisal work which would follow later. What you areseeking to do is to find out if the strategy is realistic orwhether it may need amendment.

Examples of how it might be carried out are as follows:

� Financial – Look at the overall estimated capitalcosts of the approach outlined in the strategyproposition and the estimated capital receipts fromthe approach. Estimate whether, very broadly, theapproach in the strategy proposition will be fund-able and over what broad timescale. At this stageyou will probably be using present day costs andpresent day values only. You are only seeking to seewhether a strategy proposition of this type is sensi-ble and warrants further investigation, or whether itneeds amending. Consider any significant changesin recurring costs. Would this prevent the strategyproposition being pursued?

� Assets – Assess the broad feasibility of the approachfrom an asset perspective. Will the land/buildingsbe available to purchase? Are there abnormal con-struction or procurement challenges? What are theprospects in the property market? Will the result-ant asset base be manageable? What deliveryvehicles might you use? Are these delivery vehiclesavailable? What are the overall risks to the organi-sation? What are the overall asset risks? Are theserisks manageable? Does the organisation have theappetite for the risks?

� Information and communications technology(ICT) and human resources (HR) – The implica-tions of the strategy proposition for ICT and HRmay be very significant. These implications willneed to be assessed at this early stage not only to


14

Figure 2.5: Testing the asset vision

ICTFeasibility

Asset Vision

Asset Strategy

PropertyFeasibility

HRFeasibility

FinancialFeasibility

High leveltesting

make sure that they are taken into account and thatthe strategy proposition is realistic in these respects,but also to flag up these parallel implications to theorganisation and to the ICT and the HR managers.This will complete the resource picture – finance,people, assets and ICT.

Asset strategy document

Having completed the testing stage the strategy docu-ment can now be prepared. It may well have changedfrom the original strategy proposition or propositionthat was tested, as the testing process may have flaggedup necessary changes. There may also be a need to ‘bro-ker’ the final strategy again with top managers, if it hassignificantly changed.

2.4 THE PIVOTAL ROLE OF THE ASSET STRATEGYAND THE ASSET MANAGEMENT PLAN

Asset strategy drives the entire asset managementprocess. Without asset strategy it is difficult, if not im-possible, to properly answer the following questions:

� Against what do we assess potential projects?� What implementation mechanisms are best suited

to our needs?� How will we measure our success in implementing

our strategy?� What organisational changes do we need to man-

age to achieve the strategy?� How should we organise ourselves to implement

our strategy?� How will we provide the capacity to do it?� Precisely what data do we need?

15


17

3.1 THE STAGES IN THE PREPARING OF ASSETPROGRAMMES

The first stage is to review the asset base in detail to ex-amine the practical implications of the asset strategy.For a large or diverse asset base this may have to bedone in stages over a number of years.

The second stage is to develop specific projects orproject options designed to implement the strategy.These projects or project options will need to be eval-uated to assess both the degree to which they meetorganisational objectives, and their affordability.

The third stage is to bring the most beneficial andaffordable projects together into a programme of proj-ects for implementation.

Finally, the programme must be financially robustand be integrated into the organisation’s overallfinancial planning, budgeting and monitoringprocesses.

The four stages are shown diagrammatically inFigure 3.1. They are then described in detail in theparagraphs that follow.

3.2 REVIEW OF THE ASSET BASE

Approach to reviews

Reviews can take place annually or less frequently asnecessary. Some reviews may be statutory, but if not,

Chapter 3

AssetProgrammesNeil Webster, Partner, GVA Grimley

STRATEGY



AssetManagement



DeliveryPlanning



REVIEW DELIVERY




CHANGE

LeadershipCulture

CustomersStructure


CapacityGovernance

DataSustainability


PROGRAMMES

Chapter overviewThis chapter of the guidelines considers the next partof the business process, after asset strategies/assetmanagement plans have been prepared. Once theasset strategy has provided a clear statement of direc-tion on the vision for the asset base and the approachto be adopted to each category of the asset base, moredetailed work needs to be undertaken to translate thisinto programmes of action.

Benefits of effective programming� Formulating programmes is simply management

practice enabling the efficient and economic useof resources.

� They ensure that strategic initiatives are trans-lated into actions.

� Their existence gives everyone involved a tem-plate to work from and a reference document toensure the right activities are taking place.

� They assist in making sure that investmentsmade are effective and efficient.

� They assist in making sure that risks are miti-gated and managed and ensure that effort isbased on communication and coordination.

Direction setby the Asset

Strategy

AssetReview

ProjectEvaluation

ProgrammeDevelopment

FinancialPlanning

Figure 3.1

the frequency of review must reflect the nature of theassets being reviewed. Those that change more rapidlyand have significant impact on organisational per-formance should be reviewed on a more regular basis.

Reviews can take place for the whole asset base or,more commonly, for an asset type or within a definedgeographical area. Part of the reason for so doing isthat a review of a large and complex asset base needsto be broken down into more manageable portions.The types of review are exemplified in Figure 3.2.

Asset category reviews

Asset category reviews are where the asset base is re-viewed by considering similar asset types within theasset base. For example:

� where an asset category of primary schools may bereviewed within a local authority area or evennationally, to determine what investment isrequired; or

� in response to the LIFT programme, where PrimaryCare Trusts review their asset base and producebusiness cases to demonstrate an investment needin primary care; or

� in an office accommodation review.

The case for investment is based on criteria includingcondition of premises, inappropriate locations andhealth needs.

Geographic area asset reviews

The asset review could also take place within a definedgeographic area. A review of all the assets serving thatarea may be undertaken to include, for example, of-

fices, schools, health facilities, community buildings,police stations, libraries, etc. Or the review may be ofgovernment offices in a UK region or of a campus of auniversity or of a specific hospital complex within alarge Health Trust.

This type of review is best suited to a mixed assetbase (or a large single category asset base), within aspecific area.

Reviews and timing

Often it will be necessary to undertake asset categoryreviews and geographical area reviews at differenttimes. The former will clarify specific operational re-quirements in asset terms and the latter will be impor-tant in bringing together different asset categories orin making the analysis of a large asset base manageable.The timing of asset reviews is unlikely to be concur-rent and the review of an organisation’s entire assetbase may be spread over a number of years, workingsystematically through each category or geographicarea.

Outcome of an asset review

The outcome of an asset review must be the identifi-cation of potential projects which will move the assetbase from its current state to a state better aligned withoverall organisational objectives. There may be manypossible projects that will achieve this as well as alter-native options for projects on specific sites. In addition,the total cost of all the projects/options may exceed thefunding available. For that reason all projects and op-tions will need to be evaluated to test:


18

SERVICE A

SERVICE B

SERVICE C

SERVICE D

CORPORATE RESOURCE

AREA BASED

NORTH

OPERATING

UNIT

BASED

WEST

CENTRAL

EAST

SOUTH

Figure 3.2: Types of asset review

� the degree to which they will meet organisationalobjectives from a non-financial and financial per-spective; and

� the feasibility of project implementation.

3.3 PROJECT EVALUATION (BUSINESS CASES)

The business case

The evaluation of projects can be carried out in manyways but it is increasingly recognised that this is bestdone through undertaking comprehensive outlinebusiness cases. For those projects that successfully passthrough the outline business case stage, a subsequentdetailed business case will usually be prepared.

Reasons for business cases

Business cases are produced:

� so that the taxpayer gets the best value for money;� so that capital and recurring expenditure implica-

tions are taken into account;� to integrate other areas that are affected by the proj-

ect concerned;� to ensure that all the benefits (financial and

non-financial) are captured and assessed.

Part of the business case is, therefore, a cost benefitanalysis.

Key elements of business cases

A variety of business case formats exist. Set out beloware the headings that are likely to be included.

Strategic justification

Strategic justification sets out the strategic context andoverall reasons for the project. What are the opera-tional objectives which require the project to be un-dertaken and what are the outcomes desired? How dothese outcomes link to the key business goals of theorganisation?

Options identification

In order to deliver the outcomes what options havebeen considered? Whilst at the project outset a long listof options and sub-options will be discussed, threebroad options are invariably amongst the most impor-tant considered:

� Do a minimum or do nothing – in effect it asks,what are the implications if we carry on as we arenow?

� Big bang – a major change initiative, with, for ex-ample, wholesale new build and significant assetdisposals.

� The middle ground – a middle course with, for ex-ample, some refurbishment of buildings and pos-sibly a limited amount of new build.

In choosing your options it is important not to havetoo many or too few – three is a very good number toallow a good range and still remain manageable.

Non-financial assessment

In assessment terms, this is the non-financial evalua-tion of the project and it is just as important as thefinancial evaluation. Issues addressed in this part ofthe business case include all of the benefits andnon-financial costs that flow from the project and thatcannot be determined in monetary units. This is wherecost benefit techniques are often used.

These come under a number of headings and coverpolitical, economic, social, technical, legal andenvironmental considerations (sometimes known asPESTLE). The actual evaluation criteria used will bederived from organisational and operating objectiveswhich will have been explained in the asset strategy.

There are various ways in which they can be scoredfor each option. For example, each evaluation criterioncan be weighted according to its importance and thenscored (1–5 or 1–10) in terms of its impact. The two fig-ures are then multiplied out to give a weighted score.Figure 3.3 below shows an example of a typical matrix(in this case evaluating alternative options for a project).

Financial assessment

Financial assessments of each project or option shouldbe undertaken on a Discounted Cash Flow basis fol-lowing the Treasury Green Book (Appraisal and Eval-uation in Central Government) principles.

In summary the key principles are as follows:

� equal importance attached to capital and revenue;� full revenue costs adopted;� discount rate adopted to reflect when money is ex-

pended in order to produce Net Present Costs andValues;

� a reasonable period of time, say 20 years, used forthe cash flow;

� sensible conservative assumptions, no optimismbias (i.e. too rosy a view of the future);

� sensitivity analysis to illustrate the effect if key vari-ables were to change.

The financial assessment should be robust and be ableto stand up to scrutiny and the content should resem-ble the example in Figure 3.4.

Asset professionals should note that whilst this as-sessment shows asset related costs, the asset being cre-

19

Chapter 3: Asset Programmes


20

Option 1 Option 2 Option 3a

Do Nothing Reduce 2 CentrePortfolio to Strategy30 Buildings

Total Employees in Final Portfolio 3,695 3,695 3,695Total Site Value and Disposal Income 33,126,033 17,104,013 –5,412,861

Total Refurbishment Costs 0 66,091,404 29,821,604Total Demolition Costs 0 0 126,351Total New Build Construction Cost 0 0 41,889,072Total Refurbishment and Construction Cost 0 66,091,404 71,837,027

Total LC Costs 47,807,023 34,836,725 30,668,188

Total Annual FM Cost 75,381,638 51,570,894 51,641,747

Total Other Costs 4,434,000 9,376,074 5,178,404

TOTAL 20 YEAR COST 160,748,694 178,979,111 153,912,505cost per head 43,504 48,438 41.654annual cost per head 2,175 2,422 2,083

Net Present Cost 91,641,613 124,230,462 100,086,483Equivalent Annual Cost 4,582,081 6,211,523 5,004,324NPV per head 1,240 1,681 1,354

SUMMARY(Excluding opportunity costs)

Figure 3.4: Summary sheet of a discounted cash flow appraisal

Weighting Option 1 Option 2 Option 3PoliticalMember SatisfactionPublic Satisfaction

EconomicJob Creation/retentionRegeneration

SocialBuilding AestheticsNoise pollutionService DisruptionCustomer Satisfaction

TechnicalStorage capacityEfficiency of buildings (fit for purpose)Strategic locationPublic transport accessFunctionalityCondition of IT and other infrastructure

EnvironmentPollution levelsEnvironmental impactSupply of LandEnergy EfficiencySustainability(Work) EnvironmentInternal LayoutCar ParkingTraining FacilitiesStaff Facilities

LegalDDAEase of Obtaining planning

Total Scores

Figure 3.3: Example of a non-financial scoring matrix

ated, refurbished or managed is a key part in the deliv-ery of a service to customers, i.e. the value of the proj-ect. So the financial assessment should also include theeffect of options and operational issues on quality ofservice and the cost of the service delivery, often drawnfor the non-financial assessment. In the example above,this is expressed as ‘cost per head’ and ‘NPV per head’.In other cases it might be expressed as ‘NPV per bene-fit point’ (benefit point refers to the total weighedpoints for that option or project derived from the non-financial appraisal).

It should also be noted that there is a difference be-tween value for money and affordability – both mustbe assessed. A project may provide good value formoney if it provides extensive overall benefits at highfinancial costs – however, these financial costs may notbe affordable.

Commercial assessment

Commercial assessment will answer the followingquestions:

� how is it being procured – traditional in-sourcingor outsourced to the private sector;

� if the former, then freehold or leasehold tenure;� if leasehold, what is the length of the lease;� if outsourced, will Facilities Management (FM) and

lifecycle be included in the contract;� what is the marketplace like for this (these) trans-

action(s);� is it based on an input specification (defined prod-

ucts) or output based (building performance pa-rameters);

� what is the payment mechanism – a simple quar-terly in-advance rent or performance based;

� how have the risks been quantified and have theybeen allocated to the party best equipped to managethem;

� has the risk transfer been correctly priced;� are there any personnel issues such as TUPE (Trans-

fer of Undertakings (Protection of Employment)Regulations) transfers;

� what are the implementation timescales and arethere any penalties for under performance?

Project management assessment

The main question here is how is the project going tobe delivered? How will it be governed and who will beinvolved? Often there will be a split of these activities,with a Strategic Project Board dealing with major de-cisions, to whom a Project Management Team report,who subsequently deal with day-to-day matters anddecisions.

Does the organisation have the resource and capa-bility to run the project or is there a need for out-sourcing/partnering? Often, for example, frameworkagreements are used to supplement existing resources

to manage peaks of work and very specialist assign-ments.

The business case will also need to define standardsand determine how quality is to be controlled/moni-tored. The financial modelling in the business case willhave quantified both cost and value. Good project andcost management will ensure that neither the costs goup nor the quality decreases.

From the production of the outline business case tothe completion of the project there will undoubtedlybe change. How is that change going to be identified;what mechanisms will be in place to manage and facil-itate the change; and who will make the decision?These matters need to be decided and evaluated up-front, not at a later time when the issue is identified.

An understanding of the Gateway Review Process(Office of Government Commerce (OGC)) andPRINCE2 guidance (see the OGC website at:www.ogc.gov.uk/methods_prince_2.asp) will help withthe project management assessment.

Risk assessment

In the early stages of business cases, risks need to beidentified and quantified in terms of impact and like-lihood. The risks will be described in each section ofthe business case but they will need to be brought to-gether and assessed and compared. A typical frame-work for assessing the relative risks of options is givenin Figure 3.5 (in this case the example compares twodifferent scenarios for change).

Recommendation

The project is assessed by drawing together all the as-sessments and making a decision on overall value formoney, affordability benefits and non-financial costsand risks.

3.4 ASSET PROGRAMME DEVELOPMENT ANDEVALUATION

Asset Programmes

Having assessed, using business cases, each of the po-tential projects or project options that have been de-veloped from the asset review, a realistic programmeof some of the projects (or possibly, all, although thisis unlikely on overall affordability, value and bene-fit/non-financial costs grounds) will now need to beassembled that provides the desired value for money,affordability and benefits.

Development of programmes

The proposed projects to be included in the pro-gramme should be relatively easily assembled, as each

21


of their business cases will have indicated which are themore desirable ones. Nonetheless it must be acknowl-edged that senior decision makers may chose to evalu-ate some of the non-financial issues in a different way,or with a different weighting, to those chosen in thebusiness cases, especially when projects are comparedto each other, or where benefits vary between, for ex-ample, different communities. Thus, the final selectionof projects in the draft programme may be the subjectof change at the time that the programme is finallyconfirmed. However, the business cases will undoubt-edly inform this decision-making process.

The programme will usually contain a schedule ofactions required to change the asset base. For example:

� acquisitions and new builds;� refurbishment and maintenance of the stock re-

tained;� disposals of surplus or unfit-for-purpose assets;� innovative procurement.

Some of these will be stand-alone tasks, others will in-terconnect, hence the importance of programme andproject management support.

Some items in the programme will be short term, lessthan a year; others may be timetabled over severalyears, e.g. large scale projects with long lead-in times.A timetable for reviews of individual projects and theoverall schedule will be contained in the programme.Frequent reviews, at least annually, will give rise to pro-gramme modifications.

Whatever the programme is, it will need to be welldefined (budget, timetables and outputs/outcomes)and have a series of accompanying performance meas-ures to judge its success.

3.5 FINANCIAL PLANNING FOR ASSETS

Principles

In effect, the above process (asset review, business case,programme development) should have resulted in aprogramme that is financially robust, but this shouldalways be checked. Therefore:

� plan ahead;� ensure that the projects or groups of projects are fi-

nancially sustainable not just affordable in the shortterm;

� check that a capital investment today will not createa massive recurring/revenue expenditure headachein a few year’s time;

� where possible use capital receipts to reinvest in as-sets that can help to reduce the future revenuebudget;

� rather than just delivering capital receipts whenneeded, develop a pool of monies which can be in-vested in ‘spend to save’ schemes;

� don’t be afraid to change the financial profile of aproject or programme as a result of an annual review.


22

Example of ‘First-cut’ Risk Matrix

RISK SCENARIO 1 SCENARIO 2

MAGNITUDE LIKELIHOOD MAGNITUDE LIKELIHOOD

Declining Service Quality

No increase in staff productivity

Risks of assumptions made proving to be erroneous

Service disruption during transition

Gaining planning permission

Property market risks

Construction costs

Construction risks

Public/Community/Political impact

Outsourcing risk

Resistance of staff to accept change

Strategy/Implementation risks

Unforeseen changes in the future

Capital funding risks

Revenue funding risks

Capacity to implement the strategy

Aggregate

– = not applicable� = very low�� = low�� = moderate�� = high�� = very high

Figure 3.5: Risk assessment

Figure 3.6: The asset planning process within the overall business planning process

HRStrategy

CorporateStrategy

CapitalExpenditureProgramme

CurrentExpenditureProgramme

AssetStrategy

Asset CategoryReviews

Asset AreaReviews

Business Casesand Programmes

Investment Planfor Property

Implementation

CapitalStrategyfor Assets

ICTStrategy

Partners

ExternalEnvironment

Operating Units’Strategies

Corporate Operatingand Governance

Policies

FinancialContext

Asset management and the annual budget process

Asset strategy, asset reviews, historic performance, aswell as timely production of business cases and robustprogrammes, all inform the annual budget process and

the accuracy of the budget. As Figure 3.6 shows, if theprocess is running smoothly the forecasting of the cap-ital and current (resource/revenue/recurring) budgetsassociated with assets will be accurate.

23


25

Chapter overviewDelivery of asset strategies and programmes is anextensive subject in its own right which could jus-tify a separate book on its own. In addition muchhas been written on the subject elsewhere. Thischapter therefore merely seeks to give an overviewof the key issues and to signpost the reader to guide-lines available elsewhere.

Benefits of good delivery Put simply, good delivery of asset strategies and pro-grammes ensures that the intended project benefitsare realised, that good value for money is securedand that projects are delivered on time.

4.1 INTRODUCTION

This chapter provides a high-level view of the assetmanager’s role and responsibilities in the successful de-livery of asset management plans and strategies. Itlooks at the components underlying successful deliv-ery and considers the key issues facing the asset man-ager in delivering asset management plans andprojects.

4.2 OVERVIEW OF DELIVERY

Successful delivery

No matter how well prepared, well written or compre-hensive an asset strategy or asset management plan is,it will be wasted and all efforts at asset management

will have failed in the absence of real results andpositive outcomes. Successful delivery depends uponhaving:

� the right rationale for delivery;� the right support, ownership and leadership;� the right resources;� the right delivery plan;� the right delivery processes; and� the right results.

Developing the rationale is covered in Chapter 2,Strategy, and Chapter 3, Asset Programmes. Securingcorporate ownership and leadership is examined inChapter 8. This chapter focuses upon the remainingaspects of successful delivery: the resources for delivery,delivery planning, delivery management, benefits real-isation and risk.

Key issues

All public sector organisations are challenged withfinding the most efficient way to deliver their servicessuccessfully. Most organisations rely on third partiesfor at least some part of their delivery. This is likely tobecome an increasing trend across the public sectorand is already well-established practice for propertyand construction projects. Studies and evidence gath-ered by the OGC and the National Audit Office suggestthat there are ‘key things you must get right’ and theseare listed below (drawn from the OGC’s SuccessfulDelivery Pocketbook, 2006):

� better informed investment decisions;� more effective engagement with stakeholders; � capacity and capability: adequate skills; � better understanding of the supplier marketplace; � good understanding of the delivery chain; � effective management of risk;

Chapter 4

DeliveryElisabeth Carter, Director, Elisabeth CarterConsulting and Tony Comer, CountyProperty Officer, Hertfordshire CountyCouncil

STRATEGY



AssetManagement



DeliveryPlanning



REVIEW DELIVERY




CHANGE

LeadershipCulture

CustomersStructure


CapacityGovernance

DataSustainability


PROGRAMMES

� taking a ‘whole life’ view; � active management of intended outcomes.

The cycle of planning and managing delivery

Figure 4.1 represents the overall cycle for planningand managing delivery. The diagram is an adaptationof a similar model contained in the Successful DeliveryPocketbook but contains some additions to reflect thespecific issues and steps that occur in the delivery ofproperty related projects. The key delivery steps arepresented in their logical sequence. In practice, therewill be a considerable amount of cross-referral betweenthe various stages. For example, orchestrating the re-sources for delivery will be greatly influenced by thechosen means of future delivery whilst the chosen de-livery model may well be a reflection of the organisa-tion’s existing resource capability, its approach to riskand the benefits being sought.

The following delivery steps are considered in turnin the paragraphs that follow:

� Direction� Resources and capabilities� Means of delivery � Project planning� Action plan� Communications� Monitoring, incentives and benefits realisation� Risks

4.3 DIRECTION

The direction of major asset related projects should beguided by the asset strategies and programmes, under-pinned by a rigorous business case approach, that havebeen explained in the previous Chapters of theseguidelines. The further development of the businesscase continues to be relevant during delivery. The busi-ness case is an evolving working document and a vitalmanagement tool in planning and delivering assetplans and projects.

The OGC’s Successful Delivery Toolkit provides thedetailed explanation, guidance and templates that areneeded to make full and effective use of business casesin successful project delivery. Business cases are alsoclosely linked to two other important delivery tools:the OGC Gateway Review process and PRINCE2 proj-ect management.

4.4 RESOURCES AND CAPABILITIES

A high-level assessment of resources and costs (in-cluding whole-life project costs in accordance with HMTreasury guidance) should have been made and provenin the business case stages leading up to project deliv-

ery. At the delivery stage, identifying, assessing and se-curing the resources (human, physical, financial, in-frastructure and any other resources) necessary todeliver the plan or project will determine the ability todeliver successfully.

An examination of capability and capacity shouldinclude the wider delivery chain – both existing andpotential. Innovative ways of delivery are becoming in-creasingly evident and possible. Case studies and guid-ance from the sources listed at the end of this chapterillustrate how collaboration with suppliers and part-ners from both the public and private sectors can bewidely used for the benefit of delivering property oraccommodation-related projects. Indeed, deliverythrough partnership is invariably a key feature of prop-erty construction and/or property services procure-ment projects and is considered in more detail later inthis chapter.

4.5 MEANS OF DELIVERY

Third party involvement and partnership

Public sector organisations are increasingly looking tothird parties to help deliver services and projects. Thisis particularly evident in the case of support services,such as property services, and in the delivery of com-plex or specialist projects that lie outside the scope ofthe organisation’s normal experience or capacity, suchas large construction projects. Indeed, the expectationis that public sector organisations will use third partysuppliers unless there are justifiable and value formoney reasons for doing otherwise.

The prevailing theme, and certainly the approachpromoted by the Achieving Excellence in Constructioninitiative, is on partnership. This requires both part-ners to the contract to be working collaboratively indelivering the objectives of the contracted serviceand/or project, with a shared commitment (and in-variably an incentive) to continuous improvement andvalue for money.

The Public Accounts Committee Report ImprovingConstruction Performance (December, 2001) advises asfollows:

‘There is scope for benefits in terms of quality, fasterconstruction times and financial savings through con-tractors and their clients working more closely to-gether in longer-term relationships (partnering).Safeguards include the appointment of partnersthrough competition; periodically re-tendering; agree-ing clear, measurable targets for continuous improve-ments in quality, delivery time and cost reductions;establishing payment arrangements to give contrac-tors incentives to be innovative and cost effective; andsecuring reasonable access to contractors’ financialrecords and cost information to check that agreedimprovements in efficiency and performance arebeing achieved.’


26

27

Chapter 4: Delivery

Pro

ject

Pla

n

1.

Dir

ect

ion

:W

hat

do w

e w

ant

todo a

nd w

hen

?W

hat

is

the

scope?

2.

Reso

urc

es

Cap

ab

ilit

ies:

What

res

ourc

es a

nd

capab

ilities

(peo

ple

,phys

ical

res

ourc

es a

nd

fundin

g)

do w

e nee

d?

7.

Ris

ks:

What

is

an a

ccep

table

bal

ance

of

cost

, ben

efit

and r

isks

and h

ow

should

risk

s be

man

aged

?

Evid

en

ceW

hat

has

work

edpre

viousl

y?

Req

uir

ed

reso

urc

es

an

d c

ap

ab

ilit

ies

Map

of

po

ten

tial

deli

very

ag

en

ts;

pro

cure

men

tst

rate

gy

Ris

ks

an

d c

ost

s

Deli

very

, re

po

rtin

g a

nd

acc

ou

nta

bil

ity r

eq

uir

em

en

ts

Co

mm

un

icati

on

req

uir

em

en

tsan

d p

lan

s

Rep

ort

ing

an

dacc

ou

nti

ng

req

uir

em

en

ts

Req

uir

ed

resu

lt

Ben

efi

ts/

cau

sal

fact

ors

Tra

de-o

ffs

Ris

kst

rate

gy

Ris

ks

an

d c

ost

s

8.

Mo

nit

ori

ng

: In

cen

tives

an

d b

en

efi

ts r

eali

sati

on

How

will

pro

gre

ss b

em

onitore

d a

nd r

eport

ed?

What

are

the

per

form

ance

mea

sure

s, ince

ntive

s an

dben

efits

real

isat

ion?

3.

Mean

s o

f D

eli

very

:W

hat

are

the

del

iver

yve

hic

les

and w

hic

h m

odel

suits

us

bes

t?

5.

Act

ion

Pla

n:

Plan

for

carr

ying o

ut

required

pro

cess

es a

nd

actions,

how

and w

hen

?

6.

Co

mm

un

icati

on

sH

ow

will

we

com

munic

ate

with a

ll re

leva

nt

stak

ehold

ers;

how

do w

esh

are

info

rmat

ion a

nd

know

ledge?

4.

Pro

ject

str

uct

ure

an

d

go

vern

an

ce:

Who is

resp

onsi

ble

and

acco

unta

ble

for

what

?

Figu

re 4

.1: D

eliv

ery

plan

ning

cyc

le

Whole life

Decisions about the delivery and procurement of prop-erty related projects should always be on the basis ofvalue for money over the whole life of the facility orservice and not on the initial capital cost alone. OGC’sBest Practice briefing Value for Money Evaluations inComplex Procurements explains how to take account ofall the factors when making an investment decision.

Procurement strategies and procurement routes

There are two key outputs to help determine the meansof delivery: the procurement strategy and the procure-ment route. The procurement strategy identifies thebest way of achieving the objectives of the project andvalue for money, taking account of the risks and con-straints. The procurement route delivers the procure-ment strategy. It includes the contract strategy that willbest meet the client’s needs, where this is relevant tothe procurement route chosen.

OGC’s Achieving Excellence in Construction Pro-curement Guide recommends that the following factorsshould be considered when developing the procure-ment strategy:

� the project objectives;� constraint;� cultural factor;� risk;� capabilities to manage a project over the whole life-

cycle;� the length of operational service required from the

facility.

Procurement route options are clearly influenced and,to a large degree, determined by the procurement strat-egy. Choices are additionally influenced by governmentpolicy. There are specific requirements relating to con-struction projects. Since April 2000, construction proj-ects should be procured by one of the threerecommended procurement routes:

� PFI – where the public sector contracts to purchaseservices and/or products (such as new serviced ac-commodation) on a long-term basis in exchangefor a yearly unitary payment and where private sec-tor skills are incentivised by having private financeat risk. This is only recommended for projectsexceeding £20m capital cost.

� Prime contracting – using a single contractor to actas the sole point of responsibility to a public sectorclient for the management and delivery of a con-struction project.

� Design and build (and also operate, as appropriate) –using a single contractor to act as the sole point ofresponsibility to a public sector client for the de-sign, management, delivery (and operation, whereincluded) of a construction project.

4.6 PROJECT STRUCTURE AND GOVERNANCE

The need for good governance

This aspect of project delivery concerns the projectmanagement and governance arrangements thatclearly establish reporting lines, roles and responsibil-ities for delivery both within the department/organi-sation and with others in the delivery chain, such aspartners and suppliers.

Lack of clarity and acceptance about decision mak-ing, reporting and accountability arrangements are fre-quent reasons for project delay, increased costs and, inextreme circumstances, project breakdown. This is par-ticularly the case where third parties involved in deliv-ering the project (such as delivering the procuredproperty or serviced accommodation) have not beeneffectively included in the project management and de-cision-making structure.

PRINCE2

PRINCE2 project management principles and practiceare now widely adopted and applied throughout thepublic sector to ensure that programmes and projectsare well and effectively managed. Using a PRINCE2project management approach will help construct adecision-making framework that can also accommo-date governance requirements and is recommended asan aid to planning and managing the delivery of assetmanagement projects and programmes. The approachcan be adapted to suit the individual project and or-ganisation requirements.

Inclusion

Care needs to be taken to ensure that the project man-agement arrangements take account of the variousgovernance requirements of all participating partners.For example, particular requirements may apply to dif-ferent public, charity, voluntary or not-for-profit or-ganisations and these will need to be accommodatedin the project management structure, as determined bythe mix of partners involved.

Roles and responsibilities

The OGC’s Achieving Excellence Guide 2 – Project Or-ganisation provides some very useful guidance aboutthe key roles and responsibilities involved in construc-tion procurement projects. The advice is equally rele-vant for delivering any property related project. Ithighlights the important points to note about report-ing and decision making and recommends an inte-grated project team whilst also incorporating the


28

elements and roles of a PRINCE2 project managementapproach.

Figure 4.2 shows the roles within an integratedproject team involved in a typical construction project.The roles of the various players are described in detailin Achieving Excellence Guide 2. Details about the sup-ply team and independent client adviser roles are con-tained in the companion guide, Achieving ExcellenceGuide 5 – The Integrated Project Team.

4.7 PROJECT PLANNING

Project plan

The development of the project plan is clearly a prod-uct of all the other stages of the delivery planning cycle.Adopting PRINCE2 project management principlesprovides a framework for developing, managing, pro-cessing and delivering the overall project plan andmakes use of concepts and tools to help make projectdelivery more manageable.

The project plan provides an overview of the totalproject and identifies its key outputs. It sets out theproject costs and is used as a basis against which tomonitor actual costs and project progress, stage bystage.

Stage plans

A stage plan is required for each identified stage of theoverall project. This is similar in content to the projectplan but each element is broken down to the level ofdetail required to be an adequate basis for day-to-daycontrol by the project manager. Stage plans are re-quired to go through defined reporting and approvalprocesses from commencement through to completionand ‘sign-off ’. Variations to approved stage plans aremanaged through a process of exception plans.

4.8 COMMUNICATIONS

It is particularly critical to think about the end-user’s/oc-cupier’s perspective and to ensure a customer-focusedview. It is recommended that the project sponsor shouldensure that stakeholders, including user representatives,provide important input in developing the outputs re-quired from the proposed delivery.

Anticipate and determine how to resolve conflict-ing demands. Think about how to achieve stakeholderbuy-in and how to overcome resistance to changes orproposals. PRINCE2 advocates the development anduse of a live communication plan throughout projectdelivery. It will be necessary to determine how to com-municate and consult with stakeholders from the out-set through to completion of delivery.

29

Chapter 4: Delivery

Stakeholders,including end-users

Independentclient adviser/s

Integrated project team

Client team:SRO project sponsorand support asrequired

Managed by:project sponsorand projectmanager

Supply team:Integrated supplychains of consultants,constructors,specialistsuppliers andfacilitiesmanagers

Figure 4.2: The Integrated Project Team

4.9 MONITORING, INCENTIVES AND BENEFITSREALISATION

Performance measurement is the activity of checkingactual performance against targets throughout the lifeof a project, during construction and through the op-erational life of the completed facility. The delivery ofa project is subject to three main stages of evaluation,or monitoring:

� project evaluation;� post-project review; and� post-implementation review.

The business case, which continues to be refinedthroughout the delivery of the project, will establishthe project objectives, key benefits and critical meas-ures and indicators of success. Depending upon thenature of the project there will be output specificationsand other related documents, particularly those relat-ing to procurement arrangements. All these documentsprovide the basis for developing the measures andprocesses against which future benefits can be assessedand evaluated. All require effective performance man-agement if they are to be delivered.

The project plan and associated project manage-ment processes and reviews provide the means formonitoring project progress and delivery. This stage isabout monitoring the effectiveness, performance and

benefits of the subsequent results or outcomes of theproject and lies at the heart of being able to demon-strate the success or otherwise of delivering an assetmanagement strategy, plan or project.

A post-project review is carried out after construc-tion is completed and focuses on how well the projectwas managed. It includes the views of suppliers andspecialists at the point of actual delivery and considersperformance against key performance indicators.

A post-implementation review, also known as post-occupancy evaluation, should be carried out when thefacility has been in use long enough to determinewhether the business benefits have been achieved fromthe investment in the facility, as justified in the busi-ness case.

Post-project review and post-implementation re-view need to be thought about and prepared for in theearly stages of planning delivery. They should not beleft as a post-script or an after-thought as the projectnears completion or has been completed.

The elements of managing performance are broadlysimilar and are summarised in Figure 4.3.

4.10 RISKS

The OGC website provides some excellent risk man-agement guidance, tools and techniques with access,


30

OriginsWhat are we trying to

achieve?What constitutes

success?

Building aperformanceframework

What processes andoutputs do we need

to know about?

Choosingperformance measuresWhat will be measured?

Setting targetsWhat levels of

performance areacceptable?

Shouldperformanceimprove over

time?

Definingprocesses

Who will collectthe data and how?What will that cost?

Performancemonitoring andmeasurement

activityWhat’s happening

now?

Using performanceinformation

Have we met ourtargets?

How can we improve?

ReviewDid we find out

what weneeded to know?

Should we redefinesuccess?

What can we learnfrom this?

Did we realise the benefitswe wanted?

Figure 4.3: Performance Management Cycle

also, to the Achieving Excellence Guides which includeguidance specifically designed for the procurement ofproperty construction. Practitioners are strongly urgedto access these information sources and make full useof the material available.

The Modernising Construction report (NAO, 1999)highlighted inadequate use and understanding of riskmanagement and value management as barriers to im-provement in construction performance. Weak riskmanagement features regularly in Gateway review rec-ommendations and is one of the most common areasof concern. A requirement for risk managementarrangements should be incorporated in relevant ten-der documentation.

The aim of risk management is to ensure that risksare identified at project inception, their potential impactsallowed for and, where possible, the risks or their impactsminimised. Risk management in construction and prop-erty related projects involves the following key stages:

� identifying and assessing risks in terms of impactand probability;

� establishing and maintaining a risk register, and arisk owner identified for each risk. The risk registershould be regularly updated throughout the proj-ect lifecycle;

� responding to risks to contain them within accept-able limits. This information forms the risk man-agement plan;

� monitoring, updating and controlling risks;� feedback on how well risks were managed and les-

sons learned.

A suggested approach for assessing the status of eachidentified risk is against a matrix of its probability(high/medium/low probability) and impact (high/medium/low impact) (this approach has been de-scribed in the previous chapter).

Deciding upon the appropriate response to a risk,which will then be recorded in the risk managementplan, can only occur after a risk’s possible causes andeffects have been considered and fully understood. Itwill take the form of one or more of the followingmanagement actions:

� avoidance;� reduction;� transfer;� retention/acceptance.

4.11 CONCLUSION

This chapter has sought to outline the broad steps todelivery of an asset strategy/asset management plan. Itis not intended to be a detailed guide to implementa-tion and asset managers are strongly urged to consultthe extensive information provided elsewhere.

Some excellent on-line sources providing detailedguidance, tools and templates to support the practicaldelivery of asset management projects and pro-grammes are readily available. The primary sources arelisted below:

� OGC’s Successful Delivery Toolkit on the Office ofGovernment Commerce (OGC) website at:www.ogc.gov.uk/resource_toolkit.asp

� OGC’s Achieving Excellence Guides on the OGCwebsite at: www.ogc.gov.uk/ppm_documents_construction.asp

� Improvement and Development Agency (I&DeA)Project, programme and change management toolkiton the I&DeA website at: www.idea.gov.uk

� ‘The Estate We’re In’ and other publications and in-formation – Public Private Partnership Programme(4ps) on the 4ps website at: www.4ps.gov.uk

Other useful sources of information, case studies,methodologies and guidance on various aspects ofasset management project and programme deliverycan be found on the following organisations’ websites:

� Audit Commission at: www.audit-commission.gov.uk� National Audit Office at: www.nao.gov.uk� HM Treasury at: www.hm-treasury.gov.uk� CIPFA at: www.cipfa.org.uk� Partnerships UK (PUK) at www.partnershipsuk.org.uk� Department of Communities and Local Government

at: www.communities.gov.uk

31

Chapter 4: Delivery

33

first considers how an asset management system isreviewed, to ensure that the key elements of goodasset management are in place. It then goes on toconsider how the performance of assets is measured andmonitored, in terms of meeting business objectives.

5.2 REVIEWING THE ASSET MANAGEMENTSYSTEM

Using a framework

Some might say that this is where an asset managershould start and in many ways that is true. All assetmanagers should review, at the beginning of theirtenure, or when circumstances dictate, whether all thekey elements of asset management are present in theirorganisation. The paragraphs that follow explain howthose key elements can be assessed and they assumeknowledge of the entire content of these guidelines indoing so. We therefore urge the reader to read all thechapters in this book before undertaking a review ofthe organisation’s asset management system.

The review should seek to establish whether allthe elements of the key diagram (see Figure 1.1 inChapter 1 – What is public sector asset management?)are in place in the organisation and the extent to whichimprovements will need to be made.

To do this, there is a need for an evaluation frame-work to do so. We suggest that this framework shouldbe based on some description of good practice, be it

Chapter 5

Review andPerformanceManagement Christopher Hedley and Ian Jeffries,IPD (Investment Property Databank)and Keith Jones, Director, PerformentConsulting

STRATEGY



AssetManagement



DeliveryPlanning



REVIEW DELIVERY




CHANGE

LeadershipCulture

CustomersStructure


CapacityGovernance

DataSustainability


PROGRAMMES

Chapter overview� Assessing the performance of the entire asset

management system in an organisation is often aprerequisite to more technical performance im-provement.

� Metrics are a key feature in effective performancemanagement of the asset base. Measurementthrough the balanced scorecard, key perform-ance indicators (KPIs), business ratios andbenchmarking enable positive action to be takento improve delivery, financial efficiency and thequality of service to customers.

Benefits of performance management� An ability to track operations and assess when

optimal performance is achieved.� Performance reviews using corporate ratios,

scorecard results, KPIs and benchmarking exer-cises all add value by showing how performancegaps can be closed and ‘beacon’ performancereplicated across many organisations.

5.1 PERFORMANCE MANAGEMENT

Coverage of this chapter

Before going on to describe techniques used to managethe performance of the asset base itself, this chapter

these guidelines or, for example, The Maturity Matrixfrom Improving Property Asset Management in the Cen-tral Civil Government Estate (Leeds University for theOffice of Government Commerce, 2006), PAS 55 –Asset Management 2004 (IAM/BSI, 2004) or the NAMSProperty Manual 2006 (NAMS Group, Thames, NewZealand, 2006). We describe below an example usingthe key elements of these guidelines.

The stages are as follows and are shown inFigure 5.1:

� define your evaluation framework;� identify your assessment criteria;� define your assessment method;� assess performance;� set targets, identify improvement action, and

implement that action.

Evaluation framework

Decide where performance needs to be measured.Using the content of these guidelines, that would meanthe following:

� strategy development;� programme development;� programme delivery;� performance management;� change management;� leadership;� customer focus;� organisation and roles and responsibilities;� resources and capacity;� sustainability;� data management;� value for money.

Different organisations may decide to use differentheadings but the coverage will broadly be the same.

Next decide on the key issues to be examined in each.Taking strategy development as an example, the fol-lowing might be chosen.

� How well is the relationship between organisationalbusiness drivers and property implications under-stood?

� How well is visioning undertaken?� How well is buy-in achieved?� How well is the strategy proposition tested and it-

erated?

� How well is the asset strategy articulated and com-municated?

� How well is the asset strategy placed in the contextof a wider asset management plan?

� How well is the strategy used as the basis for per-formance measurement?

� How well is the link between strategy, programmesand delivery made?

Assessment method

This is normally achieved by scoring each of the key is-sues on a scale of, say, 0-5 (or possibly 0-10) – where 0would represent very poor performance and 5 wouldrepresent excellent performance. A decision will needto be made on whether or how the scores should beweighted, which may vary for different organisations,depending on the particular requirements and priori-ties of the organisation concerned.

Assess performance

The measurement may be difficult for the asset man-ager, who may find it difficult to be objective or may betoo familiar with the detail to stand back sufficiently. Ifthis is the case then perhaps another manager fromelsewhere in the organisation might do it, or a ‘peer’ inanother, similar organisation, or a consultant special-ising in such assessments. Independence and objectiv-ity will be important.

Once the assessment has been made it will need tobe made explicit and understood. It can be sum-marised as shown in Figure 5.2.

This assessment now leads to a clear understandingof where action needs to be taken to improve per-formance.

Identify improvement action and implement thataction

The improvement action needs to be clear and agreedacross the organisation. Chapter 6 of these guidelinesexplains how change should be handled when imple-menting the action.

In subsequent years, the assessment process can beundertaken again to see how performance in this areahas improved.


34

EvaluationFramework

AssessmentCriteria

AssessmentMethod

AssessPerformance

ImprovementAction

Figure 5.1

5.3 DEVELOPING PERFORMANCEMANAGEMENT FOR THE ASSET BASE

The paragraphs that follow introduce the concepts ofperformance management and performance reviewand explain how managers can use these techniques tomeasure how well their assets are functioning and thentake appropriate action to increase productivity, im-prove service quality or deliver savings specifically fromproperty.

Performance management is simply about adopt-ing a systematic approach to help improve organisa-tional ‘performance’. That is to say, the extent to whichorganisations are able to achieve desired outcomes –its corporate objectives.

A successful performance management system mayinclude the following key elements, each of which willbe examined in turn:

� measuring organisational performance;� a balanced scorecard;� key performance indicators;� measuring property performance;� data validation;

� review and quality management;� benchmarking;� reporting;� improvement action.

These key steps are shown in Figure 5.3

Understanding organisational performance

When starting out on the performance measurementprocess it is important to:

� gain a complete understanding of the organisation’sdirection and specific objectives;

� identify the key challenges and opportunities relat-ing to each of these objectives;

� clarify the most compelling strategies for achievingthem – addressing the challenges and exploiting theopportunities.

These high-level goals help to define ‘organisationalperformance’ and undertaking this process will help toidentify the most important factors of performancemeasurement of assets, not just those measures whichare merely convenient or easy to obtain.

35

Chapter 5: Review and Performance Management

Programmes

Delivery

Strategy

Data

Sustainability

PerformanceManagement

Change

LeadershipCustomers

Organisation

Resources

UnderstandingOrganisationalPerformance

MeasurementReview and

QualityManagement

BenchmarkingReporting andImprovement

Action

TheBalancedScorecard

KeyPerformanceIndicators

Figure 5.3

Figure 5.2: Summarising the results

Introducing the balanced scorecard

The balanced scorecard was developed at HarvardBusiness School by Kaplan and Norton in the early1990s and provides a relatively straightforward frame-work for translating an organisation’s strategic objec-tives into a coherent and comprehensive set ofperformance measures.

The measures it uses are grounded in an organisa-tion’s strategic objectives and fit into four key cate-gories or perspectives:

� Financial – ‘traditional’ balance sheet and other fi-nancial measures

� Customer – satisfaction issues from the customers’perspective

� Internal – the extent to which internal workingpractices contribute towards the successful deliveryof corporate objectives

� Innovation and learning – intended to help driveimprovement in financial, customer and internalprocess performance

A fifth category may also be added to address wider so-cial, economic and environmental/physical perspec-tives, to reflect the wider public policy role of thepublic sector.

The public sector approach would, therefore, cover:

� social, economic and environmental/physical im-pacts;

� financial imperatives;� stakeholder views;� internal excellence;� innovation and learning and for the future.

By selecting a limited number of critical performanceindicators (PIs) for asset performance that drive cor-porate success within each of these four/five categories– usually no more than 15-20 measures in total – thescorecard helps focus this strategic vision and can serveas the focal point for an organisation’s efforts to im-prove performance of its asset base.

The way in which this approach applies to asset per-formance management is shown in Figure 5.4.

Key performance indicators

Principles

A key performance indicator (KPI) is a key part of ameasurable objective which is made up of a direction,a measure, a target, a benchmark and timeframe. Forexample: ‘Reduce total property costs per person by10% by financial year end 2008.’ Total property costsper person is therefore the KPI.

KPIs will necessarily vary from one organisation tothe next, but like setting SMART (Specific, Measura-ble, Agreed, Realistic, Timed) objectives, some key‘rules’ to consider when developing your critical meas-ures are to ensure they are:

� Significant – focused on the key outcomes and driv-ers of performance

� Manageable – ‘The best is the enemy of the good’.Be realistic, do not try to measure too much, stick towhat matters and what makes a difference

� Accurate and available – must be robust and defen-sible, reliable, consistent and available over time (allessential for benchmarking)


36

Figure 5.4: Applying the balanced scorecard to assets

AssetPls

AssetPls

AssetPls

AssetPls

AssetPls

Asset CriticalSuccessFactors

BusinessGoals andObjectives

Social EconomicEnvironmental/Physical Impacts

InternalExcellence

Innovation andLeaning for the

Future

FinancialImperatives

StakeholderViews

� Relevant – measures should be clear and relevant toall stakeholders and should take account of a di-verse range of perspectives within the organisation

� Communicated – set out clear roles and responsi-bilities, publish the results, have a clear presentationstyle and ensure feedback and follow up.

Use of ratios

Financial managers often use ratios to analyse finan-cial performance. Likewise, asset managers can useasset performance ratios. It is important to considerratios carefully and to consider which ones are relevantand of use.

Some key points to consider include:

� Don’t use too many! If there are too many meas-ures/ratios, probably none will get used.

� Do not be solely asset specific. Ratios are used at anorganisational, or strategic business unit (SBU)level.

� Ensure they drive performance. The big number ra-tios are a useful tool enabling you to get there.

Measurement

The use of the balance scorecard approach will allowthe development of a (limited) number of perform-ance measures that will measure the contribution thatthe asset base makes to overall organisational per-formance (asset base performance measures). Al-though they are not always easy to formulate thesemight cover measures designed to monitor the contri-bution of the asset base to, for example:

� getting public services closer to the community andcustomers;

� co-location of public services to improve customersatisfaction and patient care;

� culture change in the workforce;� productivity of the workforce;� cleaner, greener sustainability issues;� capital release;� social and economic regeneration and sustainable

communities.

Armed with a thorough understanding of the organi-sation’s vision and with a ‘balanced’ set of asset baseperformance measures in place, the next step is todevelop other more technically based measures(property performance measures) to supplement these.

The property measures that are used will need to bebroken down into a range of more focused componentparts normally related to efficiency, effectiveness andeconomy. The following are key elements of any prop-erty/facilities management (FM) measurement system,but need to be balanced and weighted according toeach organisation’s needs. These key elements wouldoften be used at an asset category or individual estab-lishment level:

� costs, and cost control;� space utilisation; � user satisfaction;� environmental sustainability; � risk management (including health and safety); � in-house asset, property and facilities management

services; � outsourced supplier of asset, property and facilities

management services.

Review and quality management

Once measures are in place, using them to measureperformance can also be a key part of any organisation’squality management system, where the key question is:‘to what extent have we done what we set out to do?’ � It is important to use the performance management

system as part of day-to-day working. It is not a‘bolt-on’, but an essential process.

� Consider a form of audit process (look at ISO 9000series as a base model).

� A clear system of targets can be a vital tool to helpdrive up performance. While appropriate targetswill vary from one organisation to the next, in set-ting them it is important that they are sufficientlychallenging and accord with SMART objective-set-ting principles.

� To give the performance management system ‘teeth’it may be wise to consider ways to motivate im-provements (e.g. linking incentive payments or fu-ture contract awards to performance and budgetexpenditures).

Benchmarking

There should now be a clear picture of how the organ-isation is performing against objectives. How does thiscompare with other similar organisations? Crucially, isthe performance level providing value for taxpayers’money given how well others are performing? This iswhere benchmarking comes in.

Benchmarking is generically defined by Watson inhis book Strategic Benchmarking as ‘a continuoussearch for the application of significantly better prac-tices that leads to superior competitive performance’(Watson, G.H., Strategic Benchmarking, 1993).

Its essence is to assess an organisation’s relative per-formance and to learn from the experiences of others inan effort to improve performance. Indeed, if organisa-tions are to close the gaps that exist between them andthe ‘best in class’, it is vital to discover where the gaps exist,their size, and then aim to make ‘step’ improvements. Inthis respect, benchmarking can be a vital tool in the drivefor success and the promotion of best practice.

Five key essentials are as follows:

� For the process to work the participants must buildup a relationship of mutual trust and honesty –

37


they must be willing to share information equallyand openly.

� Effective leadership is vital and should clarify at theoutset the nature of the benchmarking exercisebeing undertaken. For example, whether it is a vol-untary or mandatory exercise (perhaps as part of avalue for money assessment or audit process).

� What to compare? Getting this right is fundamen-tal to the success of any benchmarking project. Onlycritical areas which drive headline costs and/or con-tribute directly to the effectiveness of core functionsshould be targeted. In this context it is importantto understand the benchmarking information cor-rectly – for example, low costs may mean efficiencyor, more likely, may well mean neglect.

� Before committing valuable time and resource, it isimportant that organisations realise that bench-marking is not a one-off exercise but part of an on-going cycle of continuous improvement.

� Take care to understand the data. For example, lowmaintenance costs per square metre may be becauseof underinvestment rather than efficiency.

Key benefits of benchmarking include:

� Innovation can inspire new ways of doing businesswhich could generate quantum leap improvementsin performance.

� Motivation – seeing is believing, especially whenthere is a clearly measurable basis for change.

� Focus helps to concentrate attention on the keydrivers of organisational performance (incorporat-ing a business-like approach to public sector assetmanagement).

� Learning quantifies best practice, highlighting areasof weaknesses and the work needed to be done toclose the gap.

Having undertaken the benchmarking process, if all iswell and nothing needs improving – which is rarely thecase – then at least this has been confirmed. However,organisations will almost always wish to adopt someof what has been learned from partners in theexercise, and perhaps to set targets accordingly.Ultimately, if anyone is doing things better than you,you will know how, why and at what cost.

Reporting and improvement planning

It is clearly important to report performance, both ‘upthe line’ to demonstrate current success and directionand also ‘down the line’ to service delivery levels.Typical reports might all come from the same dataset,but be cut in the following ways:

� board report;� business unit report;� asset senior management team report;� service team(s) reports;� outsourced supplier reports;� stakeholders (such as health and safety, group secu-

rity, etc.);� building manager reports;� user group reports.

These reports are very much bespoke to each organi-sation, but the following points are universal truths:

� only report what is required, to the people that needit;

� stick to the headlines, do not report too much in-formation; and

� try to avoid jargon, use ‘plain language’.


38

Current Position

Objectives

Targets

PerformanceMeasures

Action

Figure 5.5: Achieving performance

39


Taking improvement action

The final crucial step in the cycle of performance man-agement is to take action to improve performance. In-deed, John Oakland’s work on Total QualityManagement (TQM) states that having recorded yourperformance data, used and analysed that information,the next key task is to act on the results. Failure to takeaction is likely to lead to frustration.

Figure 5.5 indicates a process that can be used tohelp clients build up a performance culture.

5.4 CONCLUSION

This chapter has made two main points:

� the wisdom of reviewing the entire asset manage-ment system in an organisation before embarkingon more detailed performance measurement; and

� more detailed performance measurement com-prises both:– asset base measures, designed to assess the con-

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.

41

agers can resort to these texts to apprise or remindthemselves of those matters. Neither is it the purpose ofthis chapter to consider the implementation of techni-cal changes that may be needed to the asset base, whichis covered elsewhere in this book and in a multitude ofother sources elsewhere.

6.2 UNDERSTANDING THE NATURE OFCHANGE IN ASSET MANAGEMENT

Context

The stages needed to move an organisation from ‘un-awareness’ to ‘excellence’ in asset management can befound in the Leeds University/OGC ‘Maturity Matrix’which is reproduced on the following page (ImprovingProperty Asset Management in the Central Civil Gov-ernment Estate, Leeds University for the Office of Gov-ernment Commerce, 2006 and updated atwww.ogc.gov.uk/high_performing_property_the_ma-turity_matrix.asp). Identifying the potential changesneeded to move from one stage to another gives a clearinsight into the challenges for the asset manager.

The asset management business process diagramused in this guidance (see Chapter 1, Figure 1.2) alsogives an insight into the changes that may need to bemade. They are also described in Chapter 5 – Review).The changes may be concerned with:

� improving strategy; � improving programming;� improving delivery;� improving review,

as well as changing the contextual activities, such as:

� leadership;� culture;� customer service;

Chapter 6

ChangeManagementKeith Jones, Director, Performent Consulting

STRATEGY



AssetManagement



DeliveryPlanning



REVIEW DELIVERY




CHANGE

LeadershipCulture

CustomersStructure


CapacityGovernance

DataSustainability


PROGRAMMES

Chapter overview� This chapter describes the attributes that are

needed to change the way in which an organisa-tion deals with its asset base. It covers corporatechange and asset services change and the desir-able change management attributes of an assetmanager.

Benefits of change management and improvement� Essential to moving an organisation from un-

awareness to excellence in asset management� Puts asset management on the corporate stage� Makes asset management a key business tool� Facilitates improved business performance

6.1 COVERAGE OF THIS CHAPTER

In the previous chapter of these guidelines, the needfor both asset management system review and ongo-ing asset performance review was discussed. Both typesof review will often require a response across the wholeorganisation rather than solely within the services thatdirectly manage the assets. Providing that response canbe challenging and sometimes the asset manager maynot be familiar with the change management tech-niques needed. This chapter of the guidelines discussesthe issues involved in change management. Its purposeis to highlight the importance, in asset management,of being able to manage change. It identifies the areasof change that are often encountered and records someof the specific features of change in relation to assetmanagement.

It is not the purpose of this chapter to reproduceextracts from management texts or to repeat manage-ment principles on change management. Asset man-


42

Property Asset Management Maturity Matrix, adapted and modified from the IAM Manual and the DETRDocument ‘Building a Better Quality of Life’.

(Fro

mIm

prov

ing

Pro

pert

y A

sset

Man

agem

ent i

n th

e C

entr

al C

ivil

Gov

ernm

ent E

stat

e, L

eeds

Un

iver

sity

for

the

Off

ice

of G

over

nm

ent

Com

mer

ce, 2

006

and

2007

)

� organisational structure, roles and responsibilities,governance;

� resource management and capacity building;� data management.

This is illustrated in Figure 6.1.

Two distinct types of change can be identified that anasset manager may be called upon to implement:

� corporate change (i.e. change outwith asset servicesand the individual buildings within the asset base)– those needed to get the organisation, as a whole,to respond; and

� asset management services change – those neededto make sure that asset management services facil-itate the delivery of the changes and the improve-ment in performance of the asset base andindividual assets.

Corporate change

The asset manager can typically be at the centre of thefollowing corporate changes:

� General– Senior managers championing – getting senior

managers to understand the significance of as-sets in business management and to championthe process.

– Getting buy-in to strategic decision making – work-ing with operating units to understand their re-quirements and to get their buy-in to corporate

decision making, rather than operating unit de-cision making, on asset management matters.

– Culture – ensuring that there is a culture of sup-port and belief in asset management in the or-ganisation.

� Asset management strategy and policy– Identifying explicit business drivers for assets –

working with senior and middle managers in theorganisation, to comprehend and record thelong-term business drivers of the organisationand to identify its implications for assets and thelong-term vision and strategy for the asset base.

� Roles, responsibilities and governance– Agreeing corporate standards, procedures, roles

and responsibilities – working through the assetmanagement processes across the organisationand clearly agreeing standards and procedures;and clearly agreeing roles and responsibilities forasset matters and decisions, and the organisa-tional structure necessary to make those deci-sions and implement them.

� Communication– Forging links with stakeholders – creating effec-

tive dialogue on asset matters with all stake-holders to ensure effective involvement indecision making and to inform stakeholders ofrelevant asset information and particularly per-formance information.

– Forging links with partners – creating effective di-alogue with partners to allow joined up use ofthe public asset base.

– Communicating complex asset issues simply – de-veloping skills and capacity to communicate

43

Chapter 6: Change Management

STRATEGY

REVIEW DELIVERY

CHANGE

LeadershipCulture

CustomersStructure


CapacityGovernance

DataSustainability

PROGRAMMES

Figure 6.1: Change can affect all aspects of asset management

asset issues (strategy, performance, technical)simply and relevantly to stakeholders.

– Influencing other bodies funded by the organisa-tion, on asset matters – making sure that theprinciples of asset management being applied inthe organisation are being communicated to,and acted upon, in other bodies which arefunded by the ‘parent organisation’, e.g. spon-sored bodies in central government and schoolsin local government.

� Asset management planning– Business planning techniques for asset manage-

ment – development, introduction and use ofmodern and sophisticated business evaluationtechniques applied to the asset base.

– Corporate asset data – introducing corporateasset data systems where necessary linked toother corporate management information sys-tems and linked to operational databases.

– Corporate project management – large corporateprojects where asset change is at their centreoften start as asset projects and then graduallygrow. The asset manager will need to have de-veloped the capability to manage such projectswith all the non-asset activities and relationshipsthat may be involved.

� Acquisition and disposal– Corporate and planned acquisitions and

disposals – developing a business-driven,planned acquisitions and disposal policy, drivenby corporate value and medium- and long-termcorporate planning, rather than driven byprice/cost and short-term operational planningconsiderations.

– Strategic procurement – the introduction and useof corporate procedures for procurement of assetsdesigned to be innovative, effective and efficient.

� Operation and maintenance– Operational assets – encouraging, introducing

and monitoring the use of robust asset systemsin the management of operational assets.

– Maintenance – agreeing an effective and fundedprogramme of planned maintenance togetherwith reactive maintenance procedures, designedto minimise whole life costs and maximisewhole life value to the organisation.

– Sustainability – ensuring that all aspects of theuse of assets are properly founded on good en-vironmental and sustainability principles.

� Performance review and accounting– Agreeing business critical success factors for assets –

working with senior managers to determine thecritical performance areas for assets in terms ofbusiness goals and objectives and business drivers.

– Business performance indicators for assets – usingagreed critical success factors to develop per-formance indicators for the asset base and usingthese indicators, over time, to improve per-formance.

– System review – introducing effective review ofasset management systems and appropriate cor-rective action programmes.

Asset management services change

The Asset Manager will typically be leading the fol-lowing changes in asset services:

� Skills and capacity development – ensuring that thecapacity and skills required for effective asset man-agement are present within the organisation.

� Culture change – moving those involved in assetmanagement from a ‘property management’ mind-set to an ‘asset management’ mindset.

� Changing from a customer focus to a client/executivefocus – the asset management function will requireclient management/executive decision-making tech-niques that have been described by some experiencedasset managers as ‘consultancy’ techniques (e.g. clientrelationship management, information collection,analytical skills and techniques, recommending andgetting agreement to high-level executive action,change project implementation, advocacy of recom-mended action, presentation skills (which may beslightly different from the customer skills of prop-erty management)). These techniques allow the assetmanager to relate to their stakeholders in the mostappropriate way to achieve success.

� Organisational change – asset management servicesand their relationship with property managementservices may necessitate some structural reorgani-sation, to make them function effectively and to en-sure that they relate to each other effectively.

� Team building and people change – the asset man-agement team may need to be brought together toform an efficient and effective team involving teamdevelopment and people development.

A gradual process

Improvement in the performance of the asset base andof asset management services will not be achieved im-mediately or even in one year. It will be a constant it-eration of gradual improvement over a long period oftime, continually visiting and revisiting various aspectsto improve each in turn.

6.3 ATTRIBUTES OF GOOD CHANGEMANAGERS IN ASSET MANAGEMENT

Some of the attributes that will help to make corporatechange happen are listed in the following paragraphs.They are also captured in Figure 6.2.

Leadership

The importance of leadership in asset management isdescribed in Chapter 7 – Leadership and Customers.


44

Suffice it to say here that the leadership style requiredin asset management is more likely to be democraticand permissive rather than autocratic or charismatic.

Understanding people and engagement

People skills are an important attribute of the assetmanager. Highly effective relationships with those inthe organisation who must be influenced in order toimprove asset management performance will be para-mount to change.

Effective use of time – delegation and empowerment

Asset management is not a part time job! It must be a full-time occupation. It will be important for the asset managernot to be drawn into the detail of property managementand to ensure that other staff who are dedicated to assetmanagement are empowered to do so. The head of assetmanagement will need to spend much time on the changeprocess and delegate day-to-day responsibilities.

The dilemma is illustrated in Figure 6.3.

45

Chapter 6: Change Management

Leadership

Understanding andEngaging People

Effective Use of Time

Delegation and Empowerment

Motivation

Communication

Organisation and Performance

Position1

Position2

Figure 6.2: Attributes of change managers

Figure 6.3: Turning the Vicious Circle into a Virtuous Circle

I’m toobusy

I’m too busybecause I havetoo many things

to do

I need to get otherpeople to do some of

my work

I need to train themto do it so that I can

rely on them

ImprovedPerformance

PoorerPerformance

Changing mybehaviour

I need to work out whatI can give them to doand what I need to

continue to do

Motivation

To sustain change will require motivation: motivationon the part of the asset manager and motivation in-stilled into those across the organisation that are re-sponsible for the various aspects of corporate assetmanagement. Understanding what does and does notmotivate people will be important to the asset man-ager.

Communication

It is said that there are three rules of change manage-ment:

1. communicate;2. communicate; and3. communicate!

The asset manager will need to marshall high-levelcommunication skills in:

� presentations;� facilitating group work and workshops;� chairing meetings;� one-to-one dialogues;

� the written word generally and particularly report writing (the importance of this ability should notbe underestimated).

As the asset manager moves more and more into thecorporate limelight it may not be enough just to relyon innate abilities. Some training and development inthis area may be among the most beneficial of all train-ing and development for the asset manager.

Organisation and a programmatic approach

The final area where attention is needed is in havingan organised and programmatic approach to changemanagement. It is not an adhoc activity to be ‘knockedoff ’ as it arises. It is important to see it as a strategic ac-tivity with a strategy and a series of tactical steps overa sensible period of time. Change does not happenquickly. Indeed, some observers in local government,where asset management has been a key initiative overthe last ten years or so, have remarked that thesub-sector is only half-way there at this time. Not onlyis organisation important but so is measuringperformance. Set targets for change and measure theorganisation against them.


46

47

Chapter overview� The creation of an effective asset strategy and

asset management system requires leadershipand communication skills as well as an under-standing of property management issues. Thischapter considers the skills that are needed tolead asset management in an organisation; howthese skills might be recognised and developed;and the importance of leading projects in a cor-porate environment is investigated.

� The relationship with customers and stakehold-ers is also considered and the importance of con-sultation with these stakeholders.

BenefitsMost organisations require strong leadership if theyare to get the best out of their assets. This extends toleading major corporate projects. This leadershipshould also include developing good relationshipswith stakeholders, including customers.

Without this leadership and dialogue with stake-holders it is extremely doubtful that effective assetmanagement can be achieved.

7.1 LEADERSHIP SKILLS

Leading the asset management agenda

Within an organisation, leading the agenda for assetmanagement requires an understanding of, and an em-pathy with, the business and its objectives. Additionally,there should be an ability to formulate and promote anoverall strategy that supports and develops the business.

The effective leader will work with relevant deci-sion-making boards and groups, internal stakeholdersand partners and customers/clients to identify needs,develop, and then achieve, agreed objectives.

This may be a different role than one hithertoadopted by property managers in the public sector,where the requirement may have been for highly effec-tive property management expertise and propertymanagement services, reacting to client requirements.The asset management agenda changes this and theasset manager will now need to display the followingcharacteristics:

� business leadership rather than purely propertymanagement leadership;

� enthusing the organisation about asset issues;� communicating precisely and simply, presenting

asset issues in a clear manner;� convincing senior managers of the importance of

asset issues to business performance;� developing and brokering a clear vision for the fu-

ture of assets in the organisation;� understanding and explaining the relationship be-

tween business performance and asset perform-ance;

� helping and persuading operational managers toachieve corporate asset objectives and ensuring thatthey follow corporate objectives for assets.

Identifying leadership skills for asset managers

Leadership skills are wide ranging and an effective leaderrequires a combination of many if not all of the neces-sary attributes. Although extensive, they can be nar-rowed down into four distinctive spheres of activity:

� technical expertise;� knowing the business;

Chapter 7

Leadership andCustomersJohn Cornish, Head of Estates, Departmentfor Communities and Local Government

STRATEGY



AssetManagement



DeliveryPlanning



REVIEW DELIVERY




CHANGE

LeadershipCulture

CustomersStructure


CapacityGovernance

DataSustainability


PROGRAMMES

� use of human, IT and financial resources; � personal skills.

The list that follows is applicable to the person chargedwith leading the asset management agenda within theorganisation. Others involved in leadership and man-agement of assets may only require some of the skillslisted.

Technical expertise

Technical knowledge and expertise requires an under-standing of:

� basic overall asset functions, practice and proce-dure;

� the difference between asset management andproperty management and the principles of assetmanagement;

� the ethos of modernisation agendas;� resource accounting and asset related finance, gen-

erally;� the key elements of capital and revenue funding re-

lating to the organisation;� business planning and business process;� sustainability and environmental issues.

Knowing the business

Understanding and integrating with the business re-quires:

� awareness of the organisation’s corporate strategyand policies;

� knowledge of the structure and organisation of thebusiness;

� an interest in and understanding of the organisa-tion’s aims and objectives;

� knowledge of its financial and other resource con-straints;

� an ability to relate to, communicate and work withother resource deliverers;

� developing close and regular contact with those de-livering the organisation’s policies and services.

Use of human, IT and financial resources

Managing people and resources requires skills in:

� engaging the right key people for the team andidentifying those within stakeholder groups whowill coordinate activity and information to informthe asset strategy;

� developing individual skills of asset managementstaff;

� building a corporate team including dedicated assetmanagement staff;

� managing strategic performance;� financial management;� information management.

Personal skills

As far as personal leadership skills are concerned, anumber of people are born with or acquire them nat-urally, but many if not most of us will learn and de-velop them over time building on life experience, onthe job familiarity, and through training and develop-ment. Some of the key skills for leaders are the abilityto be:

� visionary and innovative;� motivational and inspirational;� a problem solver who remains results focused;� trusted and sound in judgment;� loyal and to have integrity;� a communicator, open and accessible to the views

and ideas of others;� a good organiser;� confident, determined and a strong, decisive deci-

sion maker willing to stay the course;� continuously improving;� a team leader and player able to delegate, support,

coach and direct;� an initiator and developer of change;� advocating, engaging and persuading; and� strategic and promote cultural change.

Developing leadership skills

A person charged with responsibility for asset man-agement in an organisation should have access to ap-propriate training in order to fulfil the corporate assetmanagement leadership role. It should not be seen asan ‘optional extra’. In many public organisations theseskills need development and should be programmedand properly funded. This HR investment should beaimed at and will result in enhanced returns to the or-ganisation through better service quality and financialperformance improvements.

Leadership development may be provided by:

� training and development programmes;� longer-term sponsored education (e.g. MBA, MSc,

Diplomas, Certificates, Specialist Programmes,etc.);

� targeted external conference/workshop/seminar at-tendance;

� structured self-learning;� managed personal development plans;� outside challenge and mentoring;� consultancy support aimed at knowledge transfer;� working with other organisations that are dealing

with similar issues.

Corporate project management

It is the asset management leader’s role and challengeto justify and obtain adequate resource allocation for


48

corporate change projects, which have at their heartasset change (an example of this is an office rationali-sation/relocation where corporate objectives are asmuch about productivity, culture change, recruitmentand retention as they are about asset change and fi-nance). It should not be left as a task to be undertakenas a ‘bolt on’ to day-to-day property management.

Leaders of corporate projects, where assets are one ofthe main, or the main enabler, need to understand the:

� principles of property management and construc-tion management;

� key linkages within corporate projects;� business need for the project and its intended con-

tribution to corporate objectives;� appraisal of business options;� difference between feasibility project management,

corporate change project management and con-struction or property project management;

� principles of project and change management;� IT support available for project design and man-

agement;� need to analyse the impact and outcomes on the

organisation;� need for stakeholder input at relevant stages.

Project leaders also need the ability to:

� accept personal accountability for the project’s suc-cess;

� project plan, including critical paths;� assess and manage corporate risk;� assess investment decisions to be taken;� identify the integrated project team and their roles

and responsibilities including clients, consultants,contractors, specialist advisers and suppliers andrun as a single team;

� manage an integrated project team and/or be an ef-fective team player in a project team;

� monitor projects and ensure their implementation;� communicate within the team and manage com-

munication outside the team and the organisation;� select appropriate and effective delivery partners;� define the authority for project decision making.

7.2 ENGAGING STAKEHOLDERS

Why consult?

Public authorities should develop consultation ap-proaches that encompass the full range of asset man-agement functions.

Stakeholders are those people or organisations whoinfluence, or are impacted by, the business of the or-ganisation, its programmes or projects. Public sectororganisations do not operate in isolation from societyand their stakeholders have a legitimate interest in theway business is conducted. Stakeholder satisfaction iscentral to effective asset management. By involving

stakeholders in key decisions that shape day-to-day op-erations, organisations gain an understanding of cur-rent and emerging issues and can best balance interestsand improve performance.

Effective consultation

Effective consultation should include:

� Initial identification of all relevant stakeholders,stakeholder groupings and stakeholder representa-tives in relation to each area of asset management.These could include internal and external stake-holders such as board members, strategic officers,other departments, building or service users, non-service users, client groups, external interest groupsand opinion formers, staff, trade unions, clients andpartner organisations.

� Categorisation of responses of stakeholders by theirinfluence or impact and commitment.

� Setting clear objectives for consultation. Establish whyyou are doing it; what information you want to findout; who you are going to consult with and whatyou are going to ask; which form of consultationwill work with which stakeholder group (especiallywith hard-to-reach groups); and finally, and prob-ably most importantly, what you are going to dowith the information.

� Ensuring consultations are not too asset managementfocused, where the key issue relates to servicedelivery and business performance as opposedto simply the performance of an asset. By consult-ing on the service itself you should be able to trackback to the contribution that the asset is makingto the service and whether there needs to beany change.

� Carrying out an overall cost benefit assessment of theproposed consultation methodology. The approachand, therefore, the cost of consultation should betailored to the expected benefits envisaged. Publicsector organisations need to prioritise when con-sulting, otherwise the consultation exercise couldgrow to become unmanageable or over extravagantfor the original purpose.

Consultation and asset management

Historically public organisations have perhaps over-looked the importance of consultation in relation toasset management and it is only recently that the po-tential for significant benefits has been realised.

Consultation with key stakeholders across all func-tions is very important to effective asset management.There are a number of specific areas that are worthhighlighting.

� Capital prioritisation needs an approach that allowsstrategic consultation. Questionnaires, often with

49

Chapter 7: Leadership and Customers

simple scoring mechanisms, can be effective inachieving this.

� Option appraisal is similar to capital prioritisationbut usually requires more in-depth consultationwith potential stakeholders to ensure the best solu-tion within the resources available.

� Effectiveness of assets particularly requires consulta-tion with building managers and users including,where relevant, the public, to ensure the suitabilityof the building for the services that are being deliv-ered from it.

Often there are insufficient resources to consult widelyand so organisations should carefully prioritise to en-sure the best consultation ‘fit’ is achieved. There is noone ‘right’ method for all circumstances. Differentstakeholder groups, different circumstances and dif-ferent service areas will require different approaches toensure the best results.

Be clear about how you are going to communicatethe consultation results both to those you have con-sulted with, and to others, and how the results of theconsultation will change or improve things. This canbe done through intranet bulletins, newsletters andcommunication direct with consultees or a combina-tion of these.

Engaging key internal decision makers

Internal decision makers can be subject to many com-peting demands on their time and attention. It is im-portant, therefore, to communicate effectively withthem and indicate succinctly and concisely what the is-sues are, the consideration given to the issues, their im-pact on the wider organisation and the recommendedway forward.

Personal and regular contact by the person respon-sible for asset management, with key decision makerscan be a powerful means of conveying concepts, ideasand advice on asset management and gaining the allimportant corporate understanding and supportneeded. Time invested in short, well-planned meetingscan be particularly productive, capturing the attentionand understanding of the significant issues involved.

Identifying and engaging external stakeholders

Managing external stakeholders is essential to achiev-ing successful change programmes and projects. Rela-tionships with key external stakeholders should reflectthe influence or impact of the stakeholder. Involvementcan be through:

� one-to-one briefings;� direct request for comments on a briefing paper on

the issues concerned;� presentations;� workshops and seminars;� newsletters – hard copy/e-mail shots;� web communication;� stakeholder forums where there are many diverse

stakeholders; and� other organised events.

Whatever approach is adopted there should be consis-tency and stakeholders should receive information thatis relevant to their area of interest and not be over-loaded with unnecessary information or detail. Thebriefings should lead to awareness, then familiarity, andultimately, trust and high performance relationships.

The benefits of improved consultation

Better consultation helps to:

� align customer and client service need to serviceprovision;

� prioritise services enabling better overall use of re-sources;

� set performance standards and make monitoringmore relevant to stakeholder needs;

� establish a working partnership with stakeholdersso they can understand and help with any futuredifficulties;

� become alert to problems quickly so that these canbe rectified before they escalate; and

� symbolise the commitment to openness, trans-parency and accountability, putting service deliveryfirst.


50

51

utor in delivering asset ‘success’ than the organisationof the asset management function itself. Asset successcan be measured in many ways, but to be completelyeffective the asset management function must have in-fluence beyond its own professional area and embracethe whole organisation. Aims and objectives at a cor-porate level, and right down to operational delivery,need to be translated into asset needs.

Equally, operational and other non-asset managersneed to understand the importance of assets within theorganisation.

A successful organisational culture, therefore, canbe stated as a willingness for all parts of the organisa-tion, asset and non-asset stakeholders alike, to under-stand others’ service requirements, standards, prioritiesand budget constraints and be prepared to work for thegreater good of the organisation. This of course shouldbe the policy though all parts of an organisation.

8.3 PROCESS

The elements

There is no one model that can be identified as ‘bestpractice’ for asset management. There are, however, anumber of key elements and how these are imple-mented varies across organisations dependent on size,resources, ways of working and culture.

The contributing elements of a ‘good’ asset man-agement structure are as follows:

Chapter 8

OrganisationDavid Bentley, Head of Asset Management,CIPFA (Chartered Institute of PublicFinance and Accountancy)

STRATEGY



AssetManagement



DeliveryPlanning



REVIEW DELIVERY




CHANGE

LeadershipCulture

CustomersStructure


CapacityGovernance

DataSustainability


PROGRAMMES

Chapter overviewThis chapter examines the key organisational issuesrelating to asset management. It stresses the need forcorporate structures and processes, for clear re-sponsibilities for asset management and for gover-nance mechanisms and to have the appropriateorganisational culture for asset management.

Benefits of good organisation for assetmanagementGood organisation arrangements are a prerequisiteto successful asset management, whether it is foralignment with corporate objectives or for improvedperformance. In its absence, it is unlikely that any ofthe outcomes described elsewhere in these guide-lines can be achieved.

8.1 KEY STEPS

The key steps involved in considering organisationalissues for asset management are explained in theparagraphs that follow and they are summarised inFigure 8.1.

8.2 ORGANISATIONAL CULTURE

The culture and attitude of an organisation towardsasset management is often a more significant contrib-

Culture Process Roles andResponsibilities Structure

Figure 8.1

� good linkages to corporate aims and objectives andto corporate decision makers and budget holders;

� single point of contact for the asset managementteam;

� clear demarcation between asset management andproperty management and decision making;

� full involvement of all key operational areas;� clear and regular asset management reporting lines

throughout the organisation;� integration with financial planning;� good linkage with other support functions;� an effective corporate annual business planning

process for assets.

Good linkage to corporate aims and objectives andto corporate decision makers/budget holders

An organisation needs to be able to translate its high-level ambitions into asset aims and objectives. Some-times these can be related to prioritisation of serviceobjectives or they may concern particular policies orstandards such as reduction of energy use, or the im-posing of space restrictions. In all cases this high-levelprocess requires asset managers to engage with the or-ganisation at ‘corporate’ level and develop a robust on-going relationship with key policy developers anddecision makers. Meetings will take place often on anad hoc basis throughout the year and will, for exam-ple, review the asset strategy and/or asset managementplan; review asset base performance against corporateobjectives; review overall capital planning and capitalprogramming; consider major corporate change proj-ects (e.g. office relocations), etc.

Reporting to decision makers and budget holdersneeds to be timely and in a clear, agreed format en-abling key decisions regarding assets to be made withconfidence. Sometimes asset management reports arewritten in technical language with little business com-munication impact (either positive or negative) or ref-erence to service delivery and quality standards. Thisoften results in ill-informed decisions being made. It isimportant that asset managers engage with decisionmakers and provide regular briefings on current andimpending asset issues thus facilitating more informeddecision making.

Single point of contact for asset management team

In many large organisations there may be a lack ofawareness about who will assist with asset managementissues and enquiries. It is important, therefore, to havean agreed single point of contact for corporate proce-dure, advice and standards on asset management. Insmaller organisations this may be one person, but mostcommonly this will be a asset management team towhich all relevant asset issues are referred. It is not ex-

pected that such a team would action everything them-selves, but it is important that the asset managementteam has a clear and current overview of the asset sit-uation across the organisation, can provide clear cur-rent and consistent guidance and has the ability tointercept and identify issues and problems at an earlystage.

Clear demarcation between asset management andproperty management decision making

Ideally asset management functions should be pro-vided separately from day-to-day property manage-ment functions. Chapter 1 of these guidelineshighlights the difference between asset managementand property management.

The asset management function will provide coor-dination in relation to land and buildings and willclosely interact with corporate policy and decisionmakers providing forward strategy and planning. Thesize, scope and exact nature of the asset managementteam will vary dependent on the characteristics of theorganisation’s asset base. However, it is important thatthe asset management team has adequate resourcesand is separated from operational tasks. This is dis-cussed in Chapter 9 – Resources and Capacity. Over-lapping with operational responsibilities often meansthat overall strategy and planning is neglected throughundue pressure from day-to-day emergencies thatshould be handled elsewhere.

Full involvement of all key operational areas

Any successful asset management approach has to beeffective in engaging with all key operational areas. Forsome public sector bodies this may just be with oneprincipal operating unit, while other organisationsmay have many operating units that will have differingand sometimes competing accommodation require-ments which need to be corporately prioritised. Eachoperational section, in conjunction with the asset man-agement team, will need to develop its own accommo-dation requirements that conform to the overall assetstrategy. Key operating units should also be representedby personnel at an appropriately high level on any cor-porate asset management group (see ‘Roles and re-sponsibilities’ at 8.4 below.), and these personnel will,in essence, be the focal point for assets within their ownoperating units.

This may become an increasingly important key re-lationship in the future as good asset managementpractice spreads out from ‘parent’ organisations into‘sponsored’ organisations (examples of this are schools,departmental sponsored bodies in central governmentand increasingly in local government where assets maybe gradually transferred to local communities).


52

Clear and regular asset management reporting linesthroughout the organisation

Good communication channels within public sectororganisations should stretch from high-level corporatepolicy right down to operational delivery. It is notenough to put systems in place: they need to be regu-larly reviewed and monitored to ensure any commu-nication approach remains effective.

Integration with financial planning

Asset strategy needs to be integrated with the capitaland current expenditure financial planning of an or-ganisation. Often these are carried out in isolation witha result that neither can be effectively delivered. Thekey relationship is with the financial planning process,but it is also important that ongoing monitoring ofstrategic financial information continues, for examplethe measurement of capital receipts from surplus as-sets. Only in this way will there be an awareness of thebenefit of aligned asset management and, for example,financial efficiencies.

Good linkage with other support functions

Asset management, as a support function, needs towork closely with other support areas to deliver or-ganisational objectives. Many asset-led initiatives re-quire great input from other resource areas to berealised. For example, the success of space utilisationor hot-desking initiatives often relies just as much onnew ways of working, skills and competences and thedevelopment of IT as it does on the fabric and designof office space. The exact method for engaging othersupport functions can vary dependent on the organi-sation and the specific project.

An effective annual business process for assets

The asset planning process needs to be very closely re-lated to the overall corporate business planningprocess. This is described in detail in Chapter 2 – Strat-egy and Vision Development.

8.4 ROLES AND RESPONSIBILITIES

Although the organisational structure for asset man-agement within any organisation may vary greatly, it isworth highlighting a number of key recommendedroles and responsibilities. We are aware that job titlesvary according to the organisation but the principle re-mains that the structure must place a senior managerto be responsible for asset management across the or-

ganisation and a ‘asset champion’ must exist at Boardlevel to whom the senior manager responsible for assetmanagement reports. The asset champion is responsi-ble for ensuring that the organisation responds to thecall for excellence in the management of its assets. Anumber of these key roles are described below.

Senior manager for asset management (SMAM)

The SMAM is responsible for putting the necessaryasset management processes into place and for pro-ducing asset performance and outcomes aligned to anorganisation’s aims and objectives.

The exact roles and responsibilities of a SMAM willvary but these will include:

� facilitating and providing a focal point for a corpo-rate approach to asset management;

� strategically managing the asset managementprocesses and programmes;

� being responsible for the development and subse-quent review of an asset strategy or asset manage-ment plan and keeping this up to date;

� ensuring that consultation on asset management isundertaken with all relevant stakeholders;

� being responsible for the development and man-agement of a performance framework for assetmanagement;

� ensuring that appropriate information is availableon assets and their condition.

Corporate asset management group (CAMG)

The CAMG is typically a corporate group made up ofrepresentatives from each operational and central de-partment within the organisation. The group wouldhave an overall responsibility for developing a corpo-rate approach to capital expenditure and the use of as-sets throughout the organisation, take a strategic viewof the capital programme and asset management andmanage the implementation of the agreed asset strat-egy, capital strategy and asset management plan. Rec-ommendations from the group will be reporteddirectly to the senior decision makers, senior politi-cians and to Board members as appropriate.

The SMAM would be a key member of this groupand may act as the chair and organise the facilitation ofthe group. The representation would be made up ofsenior personnel from major operational areas and re-source sections.

The group will meet on a regular basis but the in-tervals for such meetings would be very much de-pendent on the size of the organisation. A largemulti-faceted public body with many assets would havea group that could meet perhaps on a monthly basis,whilst a smaller organisation may only have a CAMGthat meets two to three times a year.

53

Chapter 8: Organisation

Asset champion

The asset champion must sit on the top managementteam, be a senior politician or Board member and takethe responsibility for getting the ‘asset voice’ heard at thetop of the organisation and getting CAMG recommen-dations adopted and followed. In this regard the assetchampion would liaise closely with the SMAM and beaware of the asset management needs of the organisa-tion to enable these to be set in context against otherstrategic needs and priorities. In some organisations theSMAM and the asset champion may be the same person.

8.5 STRUCTURE

The simple structure shown in Figure 8.2 identifies thekey roles and responsibilities that need to be present tofacilitate a successful corporate approach to asset man-agement. Clearly there are also many other mecha-nisms that will need to be in place to enable thisstructure to succeed, such as consultation methodolo-gies and decision-making structures in the wider or-ganisation. Often the asset management approach willstand or fall on the wider structure and management ofthe organisation.


54

Management/Executive/Member Group(Corporate Decision making body)

Corporate Asset Management Group(Coordinates asset management strategically/

recommends to Management Level)

Asset Champion(An asset voice at

management/executive/member level)

Senior Manager forAsset Management

(Chairs Corporate AssetManagement Group and

Managers AssetManagement Function)

Asset ManagementFunction

(Managed by SMAM, supportsCorporate Asset ManagementGroup in coordinating assetmanagement strategically,

assists service areas indeveloping future

accommodation needs)

OperationalDepartment AssetRepresentatives

Actively involved onCorporate Asset

Management Group

DevelopOperationalPlans with

AM Function

Figure 8.2: Corporate roles for asset management

55

Chapter overviewThis chapter examines the strategic aspects of the re-sources and capacity necessary to support assetmanagement in the public sector. It outlines:� the contribution that resources and capacity

make to asset management;� the risks of not addressing training and develop-

ment needs;� the role that practitioners can play in support-

ing, not just their own training and development,but that of others in the organisation;

� the definitions and examples of resources and ca-pacity in asset management – emphasising theinterplay between strategic business manage-ment skills and those applicable more directly toasset management.

Benefits of proper regard to resources andcapacity� Supporting asset strategies and targeted out-

comes� Improved corporate commitment and integra-

tion of asset management with strategic businessmanagement

� Improved value for money through asset strate-gies and programmes better focusing on organ-isational goals and objectives

� Structured approach to identifying needs andplanning and implementing organisations’ re-source and capacity training and developmentaction plans and programmes

9.1 THE ROLE OF RESOURCES AND CAPACITYIN ASSET MANAGEMENT

This chapter covers the resources and capacity of anorganisation to undertake asset management, this hav-ing both quantitative and qualitative aspects.

Asset management is intrinsically a cross-organi-sational activity. There are two principal ways in whichasset management capacity can be provided, either by:

� the formation of a separate specialist asset manage-ment team; or

� the allocation of the responsibility for asset man-agement within an existing property managementteam.

In either case, resources may be supplemented withsupport from within the organisation or externally.

Which of these two approaches is appropriate will de-pend upon the size of the asset base and the level ofcomplexity of issues relating to its management.

There are two risks that need to be managed:� a separate specialist asset management team carries

the risk of isolation. Clear roles for the asset man-agement team and any property managementteam(s) need to be set down along with how thoserespective teams are to work with the rest of the or-ganisation; and

� where the function is integrated with an existingproperty management team, then potential con-flicts of time and effort as between asset manage-ment and operational day-to-day propertymanagement need to be recognised and managed(see Chapter 8 – Organisation). Asset managementmay risk being sidelined rather than used creativelyto better organise, prioritise and administer corpo-rate priorities and operational service delivery.

Chapter 9

Resources andCapacityRobert Lee, Interim ManagementConsultant, Solace Enterprises

STRATEGY



AssetManagement



DeliveryPlanning



REVIEW DELIVERY




CHANGE

LeadershipCulture

CustomersStructure


CapacityGovernance

DataSustainability


PROGRAMMES

Whichever solution is appropriate, there needs to be aclear allocation of roles and responsibilities for assetmanagement and a clear statement of the organisa-tion’s requirements and expectations. It also needs tobe recognised that asset management, if it is to beproperly practised, will necessitate commitment toproviding the necessary resources to undertake it. Thatmay mean either an expansion of resources or the bet-ter deployment of existing resources.

Why resources and capacity matter

In the public sector in recent years, the importance ofaddressing resources and capacity building has receivedmuch attention. Examples of this are:

� the Department for Communities and Local Gov-ernment – Local Government Association ‘CapacityBuilding Programme’;

� the introduction of ‘Professional Skills for Govern-ment’ for the Civil Service, as part of the ‘Govern-ment’s Delivery Reform Agenda’;

� the Business Excellence Model (European Founda-tion for Quality Management) approach;

� the Prime Minister’s Delivery Unit initiatives.

In the case of asset management, there is a particularreason why resources and capacity matter. As SirMichael Lyons points out (‘Towards Better Manage-ment of Public Sector Assets’: A Report to theChancellor of the Exchequer: Sir Michael Lyons:HMSO (Dec 2004)), historically, estates and propertymanagement have had a low profile in the publicsector, playing a largely reactive role as far as businessstrategy has been concerned, despite the fact that assetbudgets are often second only in size to payroll. Strate-gic business management demands as much regard forthe strategic management of assets as it does forhuman resources, finance and ICT.

Who needs to be involved?

Given that asset management is an integral part of anorganisation’s strategic business management, all rele-vant personnel across an organisation need training:

� Elected or board members need to be familiar withthe broad concepts and principles of asset manage-ment.

� Senior and operational managers, who by virtue oftheir position have an influential role in the strate-gic direction of the organisation or service, need ahigher level of understanding of asset management.

� Property and construction practitioners (profes-sionally qualified, or otherwise experienced) whomay play a leading part in asset managementprocesses need support in developing capacity interms of asset management but also in their under-standing of strategic business management.

� Those in roles supporting asset management, suchas information systems support and administrativeroles, will need training and development to enablethem to fulfil their roles.

The scope, level, amount and timing of training anddevelopment necessary in any organisation will dependupon:

� the quantitative and qualitative features of its exist-ing resources and capacity; and

� the needs of the organisation’s asset managementstrategy and plans – which in large measure will re-late to the size and complexity of its assets.

This chapter primarily addresses resources and capac-ity in terms of property, construction and facilitiespractitioners. The training and development needs, asthey relate to asset management, of others in the or-ganisation will be similar but should be mindful thatresources and capacity need to be considered at threelevels within the organisation:

� the organisation as a whole;� functional and cross-organisational teams;� individuals.

Apart from their own training and development needs,property, construction and facilities practitioners willplay a crucial role in supporting others in the organi-sation with whom they need to work in undertakingasset management.

9.2 DEFINING RESOURCES AND CAPACITYFOR ASSET MANAGEMENT

Organisational and team capacity for assetmanagement

The University of Leeds (Improving Property AssetManagement in the Central Civil Government Estate: AReport for OGC, University of Leeds, 2006, updated in2007 at www.ogc.gov.uk/high_performing_property_the_maturity_matrix.asp) suggests a set of capabili-ties, relevant at organisational and team levels, and amatrix of maturity for assessing how well organisationsare currently conducting asset management (the ma-trix is reproduced in Chapter 6 – Change):

� Asset management policy. This sets out the level anorganisation is at regarding its policy towards assetmanagement. This is a key enabler and sets thescene and impetus for how an organisation ap-proaches asset management as a whole and includesaspects such as guidelines, key performance indica-tors (KPIs) and published targets.

� Roles and responsibilities. These set out how an or-ganisation’s asset management decision-makingstructure is set up and managed, including ensuringroles are formally made explicit at tactical andstrategic levels of the organisation.


56

� Communication. This sets out how information re-garding asset management is handled in terms ofdata collection, as well as stakeholder, supply chainand management interactions.

� Asset management planning. This sets out the levelan organisation is at regarding formal asset man-agement planning, including lifecycle costing, riskmanagement, benchmarking and meeting corpo-rate objectives.

� Acquisition and disposal. This sets out how acquisi-tion and disposal of assets within the organisationis managed, including factors such as lifecyclecosting, health and safety, environmental issues,KPIs, risk management, procurement and socialaspects.

� Operation and maintenance. This sets out howoperation and maintenance of assets within an or-ganisation are managed, including factors suchas planned maintenance strategy, risk assessments,cost benefit analysis, training aspects, operationand maintenance plans, responsibilities, rankingof assets in terms of criticality, proactive imple-mentation and evaluation against return on assets.

� Performance review and accounting. This sets outhow the review and accounting processes within anorganisation are managed, including aspects suchas KPIs, asset registers, training, financial manage-ment, roles and responsibilities as well as strategicreviews.

� Audit and review. This sets out how the asset man-agement process is audited and reviewed, includingskills and training needs, risk avoidance, use oftechnology and benchmarking of effectiveness andefficiencies.

The University of Leeds’ Maturity Matrix particularlyrefers to the Government’s Civil Estate. It is suggestedthat practitioners in general will find this model help-ful in:

� considering capacity at organisational and teamlevels;

� identifying priority areas for improvement; � developing improvement strategies and plans; and� securing organisational agreement and commit-

ment.

Skills and competencies for asset managers

The University of Leeds report (above, 2006) helpfullygoes on to indicate a set of competencies for the indi-vidual that are particularly relevant for asset manage-ment. This draws upon other work by the NationalSchool of Government (Howarth, A., Report on Im-proving the Capability and Capacity of Managing Prop-erty Assets in Central Civil Government, NationalSchool of Government for OGC, 2006 and work of theInstitute of Asset Management). This set of competen-cies seeks to balance strategic business skills with asset

skills, drawing attention especially to business, people,information and risk management.

� Strategic business planning – Business drivers and strategy thinking – Corporate asset strategy – Asset management plans – Risk management – Project and programme management – Sustainability

� Leadership – Building up capacity and capability – Manage strategic change – Manage strategic performance – Take responsibility for professional resources – Leadership/people management skills

� Asset performance management – Benchmarking of KPIs– Contract management and monitoring

performance – Customer/stakeholder management

� Financial management – Resource accounting – Capital and revenue budgets – Whole life costing – Business cases and option appraisals

� Data management – The investment in, effective compilation and

management of asset registers and the use of in-formation and reports therefrom

– Ensuring validity of data – Scope, storage and retrieval of data – Analysis of data

9.3 WHAT NEEDS TO BE DONE?

Training and development for asset management inthe corporate context

Organisations need to take a structured, disciplined ap-proach to resources and capacity development to sup-port asset management. A generic approach issuggested below but there are a number of models foranalysing resource and capacity training and develop-ment needs which can be used.

Key steps in analysing resource and capacity

By whatever process appropriate for the particular or-ganisation in undertaking asset management, it is im-portant that the organisation:

� undertakes a review of its resources and capacity forasset management at the outset;

� assesses existing capabilities and competencies toidentify ‘gaps’ in respect of the organisation as awhole, relevant teams within the organisation andrelevant individuals;

57

Chapter 9: Resources and Capacity

� formulates programmes to close the identified gapswithin appropriate timescales. Such plans and pro-grammes may include such initiatives as: – training and development; – mentoring;– seminars;– ‘borrowing or seconding’ of those with relevant

skills within the organisation;– recruitment; or– strategic partnerships with third parties; and

� keeps under constant review resource and capacitystrengths and weaknesses and plans and pro-grammes to close gaps.

Potential traps in implementing training anddevelopment plans and programmes

In training and developing resources and capacity, notethat:

� while studying resource and capacity in asset man-agement of other organisations can be informative,

it is important to recognise the unique histories andcircumstances of the ‘home’ organisation: whatworks in one context, may not work in another;

� most organisations will have well-established or-ganisational capabilities. Insofar as those capabili-ties need to be changed and developed, there can beconsiderable in-built resistance to change. That putsa premium on leadership and inspirational quali-ties as well as on a clear understanding of andshared commitment to the goals and objectives ofasset management.

Finally, it is recommended that a senior manager(probably the SMAM) should specifically be given re-sponsibility for this process and, in particular, for en-suring that training and development plans andprogrammes are implemented efficiently and effec-tively. Without that level of commitment and drive, re-source and capacity training and development mayfalter, with potentially serious consequences for assetmanagement and its likely contribution to the organi-sation.


58

59

to-day asset management. However, this is not the case.Although there are indeed global challenges the role ofthe asset manager is pivotal in ensuring that buildingsare procured, maintained and managed in ways thatminimise their environmental impact and still meetthe occupier’s and owner’s requirements.

Sustainability goes beyond the issue of environ-mental protection and resource conservation; it em-braces the concept of social equity and respect forpeople and thereby embraces a range of social goalsand mechanisms, from health and well-being to goodgovernance. Increasingly, it is the drive to ensure deliv-ery of this agenda which presents asset managers withsome of their biggest challenges as legislative changesimpact on building usability and increasing emphasisis placed on occupier requirements.

10.2 DEFINITIONS

Sustainable development

There are many definitions of sustainable developmentbut the one that has been most widely adopted is theBrundtland Commission’s definition published in 1987which calls for development which ‘meets the needs oftoday without compromising the ability of others tomeet the needs of tomorrow’ (Brundtland Commis-sion, Our Common Inheritance, World Organisation onEconomic Development, 1987). In essence it intro-duces the concept of intra-generational equity.

Sustainability and the triple bottom line

The concept of sustainable development, as defined byBrundtland, has been widely applauded at many levelsof government. The principle was developed subse-

Chapter 10

SustainabilitySarah Sayce, Professor and Head ofSurveying, Kingston University

STRATEGY



AssetManagement



DeliveryPlanning



REVIEW DELIVERY




CHANGE

LeadershipCulture

CustomersStructure


CapacityGovernance

DataSustainability


PROGRAMMES

Chapter overviewThis chapter describes the concepts of sustainabil-ity and sustainable development. It explains whysustainability is important to asset management anddetails ways in which sustainability criteria are be-ginning to impact on asset management and valua-tion.

Benefits of sustainability in asset managementIn simple terms it seeks to ensure that the environ-mental aspects of buildings are sustainable, particu-larly in relation to their carbon footprint. But on awider front it also seeks to ensure that buildings aresocially, economically and environmentally sustain-able.

10.1 THE CONTEXT

There surely cannot be an asset manager who is un-aware of the concerns raised by global environmentalissues, such as climate change and the depletion of fi-nite resources. Current predictions are that the UK willsuffer significant warming over the next century, butperhaps of greater importance, unpredictable weatherpatterns and rising sea levels may, in some cases,threaten the very existence of some buildings in low-lying or exposed areas. In terms of resource depletion,current estimates would show that the Western worldis using resources at the ‘three planet’ world level, i.e.we are using resources at three times the rate at whichthe world eco-system can support.

The problems can seem to be too pervasive and allembracing to be capable of incorporating within day-

quently and enshrined into principles set out in the in-ternational declaration following the Rio Summit in1992.

This has led to a wider understanding and has de-veloped the need to make decisions based, not just onthe ‘single bottom line’ of profit and short-term eco-nomic gain, but on the ‘triple bottom line’ (TBL) of en-vironmental protection, social justice and economicviability. Within the triple bottom line further distinc-tions can be drawn and these are shown diagrammat-ically in Figure 10.1.

From this definition and its extension into the TBLphilosophy, it is apparent that there are innate conflictsbetween the business decision-making processes anddelivery on the TBL. In no area is this a greater chal-lenge than in asset management where conventionaldecision making is based on the concepts of risk re-duction and maximisation of returns; additionally forthe public sector the requirement for business effi-ciency and ‘value for money’ may seem to sit uncom-fortably with the TBL. Therefore, the challenge is toachieve business efficacy whilst also meeting environ-mental and social targets.

This challenge has proved difficult for the propertyand construction industry and has led to concerns thatthe sector has been too slow to act. In 2000, the Sus-tainable Construction Task Group, chaired by Sir Mar-tin Laing, put forward the proposition that a ‘circle ofblame’ (Risk, Reputation and Reward, Sustainable Con-struction Task Group, 2000) was preventing the speci-fying of green, or sustainable buildings (i.e. occupiersblame the constructors for not building environmen-tally efficient buildings; constructors blame the devel-

opers for not requiring such buildings; developersblame the investors who won’t pay for such buildings;and the investors blame the occupiers, as there is nodemand for them). This proposition was focused onthe commissioning of new buildings. This was indica-tive that, at that time, sustainability was seen in termsof the environmental credentials of new builds. At thattime it was not articulated in terms of relevance to thework of asset management.

Since the circle of blame was recognised, much haschanged and there is now an increasing acceptanceboth that sustainability for assets means more than justenergy efficient design of buildings and that appropri-ate management and refurbishment of existing stockis vital to meeting any form of sustainability targets.

10.3 BUILDING IMPACTS

The environmental impact of buildings

Buildings have a high environmental impact. It hasbeen estimated that within the UK buildings are re-sponsible for up to 50% of all carbon emissions. Addi-tionally, buildings are associated with pollution, wateruse and the depletion of finite resources. They aretherefore key to delivery of any environmental agenda.The environmental impact can be viewed in terms ofall stages of their lifecycle from site choice, includinglocation, to construction, to use and eventual demoli-tion.

All of these matters should properly be addressedat the concept and design of a building project.


60

Figure 10.1: Key concepts in delivering sustainability

Adapted from UK Principles of Sustained Development

www.sustainable-development.gov.uk/what/principles.htm

Living within theworld’s environmental

carrying capacity

Environmental SocialEconomic

Promoting socialcohesion throughhealth, well-being

and education

Good governance toensure justice and

equity both for todayand the future

Working within theprecautionary principle– to ensure planetary

survival

A sound economyenabling progress,

research andopportunity

The construction phase

At the stage of design and construction, the followingare the main environmental impacts of a building:

� winning and transportation of materials to site withconsequent implications for energy consumption,carbon emissions and depletion of finite resources;

� waste produced and subsequent transportation ofwaste from site;

� energy and water consumed during construction;and

� ecological impact and hazard to biodiversity.

The energy used within the pre-completion phase isnormally referred to as embodied energy and can typ-ically vary from 30% to 70% of estimated whole lifeenergy use.

The building-in-use phase

During building use the key environmental impactsare:

� energy use in occupation;� water consumption;� waste management; � travel to and from the building including distance

and mode.

It is at this stage of the building lifecycle that opera-tional management policies can be effective not just inreducing the impacts but also enabling good cost con-trol and value enhancement.

The life-end phase

The life of a building is seldom clearly related to its de-sign life. Put simply, if buildings fail to fulfil their eco-nomic function, then, in absence of the ability to adaptto other uses, they will fail regardless of their designlife. At this point the demolition process has implica-tions for the environment in terms of both energy andwaste. Within the UK construction industry, the levelof waste is high compared to many other Europeancountries, with limited success in ensuring maximisa-tion of materials re-use or recycling. Indeed, evenwhere materials can be re-used or recycled there aretransport implications and, in the case of recycling,process implications.

Social impact of buildings

It is estimated that people spend up to 80% of theirlives in buildings. In the case of children and the elderlythis percentage may be even higher. Therefore the qual-ity of the environment in which this time is spent willhave a significant impact on feelings of well-being and

psychological health; in some cases physical health canbe compromised or promoted by the building charac-teristics. Studies of public buildings such as schoolsand hospitals point to patient well-being and studentlearning being enhanced by well-designed, well-lit andwell-serviced space.

Social sustainability is not just associated with the‘soft’ issues of well-being and comfort. For offices,many studies have now found relationships betweenbuilding layout and worker efficiency. Matters such asgood daylight levels, natural ventilation and locallycontrollable heating systems all have a positive impacton worker productivity. Additionally, the accessibilityof a building can affect worker retention.

Social sustainability of buildings can also be con-sidered in terms of the respect agenda with legislationsuch as the Disability Discrimination Act 2005 placingresponsibilities on building owners, occupiers andmanagers to make reasonable adjustments to enableaccess.

Sustainable assets

Sustainable assets have often been considered as thosewhich are built to good ‘green’ credentials as exempli-fied by a range of scoring systems. Most are designed foruse at the design stage and have evaluated design fea-tures, but the Building Research Establishment Envi-ronmental Assessment Method (BREEAM), which is thebest known system in the UK, does consider manage-ment issues as well. BREEAM was initially devised foroffices but has subsequently been developed for use withretail, residential and, from 2005, school buildings.

For all its assessments, BREEAM scores buildings(from PASS, GOOD, EXCELLENT) against the follow-ing criteria (www.breeam.org):

� management;� energy use;� health and well-being;� pollution;� transport;� land use;� ecology;� materials; and � water.

The emphasis contained within the BREEAM systemand others has been on assessing the sustainability ofassets in relation to new-build stock only. However, theasset manager is concerned primarily with the ongo-ing management of the building stock and this is nor-mally replaced at a rate of only 1% to 2% per annum.Therefore, in practical terms for the asset manager, themajor impact is likely to fall on existing stock and itsability, or otherwise, to meet ongoing occupational re-quirements and the need to comply with legislation.

Characteristic of most of the scoring systems is thatthey concentrate on environmental performance,

61

Chapter 10: Sustainability

whereas sustainability implies a wider approach. Iflocal authority asset managers are to be effective indriving forward the government’s ambitions in rela-tion to both the environmental and social targets, it isimproved management systems and sustainable refur-bishments that must be the chief engines of delivery.

10.4 A SUSTAINABILITY CRITERIA APPROACHFOR ASSET MANAGEMENT

Action for the asset manager

An intrinsic aim of asset managers should be to en-hance the sustainability of the asset base they manageright across the TBL. In so doing they will be:

� reducing risk to future economic performance;� enabling progress towards government targets in re-

lation to carbon reduction and social well-being;and

� supporting their authorities to deliver services ef-fectively and efficiently.

The three major points in the building lifecycle atwhich sustainability informed action is essential are:

� the point of procurement;� the point of decision making in respect of redevel-

opment or refurbishment; and � during ongoing management including regular

revaluations of the estate.

These are now each taken in turn.

Promoting sustainability during the procurement ofbuildings

Frequently the asset manager will not be involved at anearly stage in building procurement. Given the impor-tance of initial design, as outlined above, it is goodpractice for both users and asset managers to be en-gaged early in the process.

As long ago as 1998, Edwards advocated that greenbuildings pay (Edwards, B., Green Buildings Pay, Spons,1998 (it has subsequently been revised)). Since then awealth of research points to new-build cost premiumsfrequently being zero or in any event no more than 3%to 5%. When set against savings achievable as meas-ured through, for example, whole life cost assessmenttechniques, the argument for specifying sustainabilitydriven design features for owner-occupied buildingsbecomes irrefutable. The management principle mustbe to include the asset manager within discussions atan initial stage to ensure that design principles areadopted which:

� promote energy conservation and efficiency and re-duce carbon;

� allow for water management systems;� enable good waste management;

� promote sustainable practices (such as provision oflockers and showers for cyclists).

The argument for sustainability within newly procuredbuildings is enhanced if a long-term perspective istaken. Not only are running costs likely to be reducedand occupier satisfaction enhanced, the periods be-tween refurbishments are likely to lengthen.

Some principles that asset managers should seek toinclude at the procurement stage are as follows:

� design to support the ambitions of the six ‘Ls’ (seebelow) notably longevity and loose fit;

� design to maximise natural lighting where possible;� install heating systems which maximise the use of

renewables; � install grey water harvesting systems to ensure water

conservation; � ensure the use of low maintenance and, where pos-

sible, locally sourced materials;� consider the use of off-site manufacture to minimise

waste and transportation of excess materials andimprove site health and safety performance;

� seek to reduce embodied energy within the construc-tion process and through the type of materials spec-ified; and

� consult potential users to ensure that the buildingswill meet their ongoing needs and that it can adaptto respond to predicted future changes in needs.

Considerations in respect of the demolition versusrefurbishment decision

Mention has been made above of the six ‘Ls’ of sus-tainability. These were developed (Sayce, S. Walker, A.and McIntosh, A., Building Sustainability in the Bal-ance, London Estates Gazette, 2004) to provide a frame-work within which to consider the issue of demolitionversus refurbishment. It is easy to espouse the case thatbuildings should always be kept for as long as possibleon the grounds that this will minimise the embodiedenergy when this is amortised over building life. Con-versely, the technological changes and the drive for lowcarbon buildings could be seen to hasten the processof redevelopment. The six L framework is an attemptto take a wider view in assessing the issues involved.

� Longevity: a building that achieves a long life amor-tises the embodied energy and use of resources overthe maximum time possible.

� Loose-fit: given that patterns of occupational re-quirements can change rapidly, a building that isreadily adaptable both for other users within thesame category of use or to an alternative use, bettermeets the definition of a sustainable building.Today, the specification of many buildings can beachieved through the use of non-specialist designs.

� Low carbon: it is self evident given the targets forCO2 reductions and the drive for a low carbon so-ciety that a sustainable building is one with a low


62

carbon footprint. This may be initially designdriven, but can be achieved, in part at least, by ap-propriate refurbishment and by operational man-agement.

� Locationally appropriate: the location of a buildingwill impact on its economic value; it will alsoaffect the environmental impact of the building.One that can only be reached by car will not onlyincrease the environmental impact but, if restric-tions on fuel are introduced or fuel costs rise, suchbuildings may depreciate in value disproportion-ately. However, a building that is inaccessible by carmay, depending on its use, simply not meet occu-pational needs.

� Liked by occupiers: the point has been made earlier,under social sustainability, that there is a linkage be-tween occupier satisfaction and economic and so-cial performance. However, this ‘L’ goes beyond thisto consider the economic drivers for the building.Only if there is economic usefulness going forwardcan the building be said to sustainable.

� Lovability: buildings have stakeholders who are ‘in-ternal’, i.e. who have a direct interest (legal, financialor employee). They also have ‘external’ visitors. Re-search suggests that buildings which have the abil-ity to inspire a positive response among externalstakeholders as well as those with a direct interestwill be more likely to achieve longevity.

The above characteristics provide an indication that asustainable building is far more than a simple energyefficient structure. When considering asset manage-ment decisions regarding redevelopment or refurbish-ment, these criteria provide a possible frameworkwithin which discussions as to whether to refurbish orredevelop can take place.

Management and valuation

The effective asset manager will seek to balance theneeds of the operational entity with the requirementto ensure optimum value in capital terms. In sustain-ability terms this requires knowledge of factors that af-fect both the operational aspects of the asset now(revenue or rental drivers) and those which will affectthe ability of the property to perform as an asset mov-ing forward or, in other words, the degree to which itcould be said to be ‘future proofed’. Where assets in theasset base are ‘bulk class’ assets (bulk class asset is theterm normally given to shops, offices, residential andlight industrial/warehouse/distribution properties asthese are the properties normally traded in the mar-ketplace), sustainability performance will influencecapital value but only if potential investment ownersbuild sustainability criteria into their decision-makingprocess and/or tenants build them into their rentalbids. Where they are not specialised buildings, man-agement consideration will concentrate more thor-oughly on operational issues.

In terms of strategic management the overall aimshould be to ensure that buildings are regularly as-sessed against these criteria, and as and where possible,adjustments of the overall asset base taken in the lightof the reviews. Whilst there are no publicly availablebenchmarks against which to monitor performance,owners should consider developing internal bench-marks in order to target continuous improvement.

It is possible to identify a number of sustainabilitycriteria which should be considered by asset managerswhen developing both asset strategies. Although the re-search which identified the criteria related to commer-cial investment asset, most have application to publicsector estates. These are:

� accessibility;� adaptability;� building quality;� climate control;� energy efficiency;� pollutants;� waste; and� water.

These criteria were developed as part of the Sustain-able Property Appraisal Project led by Kingston Uni-versity School of Surveying, in partnership withPrudential Property Investment Management, Invest-ment Property Forum, Boots Plc, Drivers Jonas, Uni-versities Superannuation Scheme and Forum for theFuture.

These criteria are by no means definitive. They do,however, represent the factors which are likely to havean impact on the future operational performance ofbuildings and will therefore also impact on capital val-ues. If a building is evaluated in terms of these criteriait will provide the asset manager with an agenda for fu-ture action in terms of refurbishment or replacementand it should lead to enhanced financial cost controland in time this will be reflected in enhanced capitalvalues.

10.5 SUMMARY OF SUSTAINABILITYPRINCIPLES FOR ASSET MANAGERS

� Sustainability embraces the need to evaluate andmanage assets on the basis of their TBL perform-ance; that is they should consider their social andenvironmental as well as economic performances.

� Asset managers must recognise that sustainabilityis more than a matter of applying technical inno-vation and the pursuit of energy efficiency.

� The growth of corporate social responsibility (CSR)as a management principle is widely adopted acrossa range of private sector organisations and shouldbe embedded in all public sector organisations. Itfollows that building owners and occupiers shouldseek to integrate these principles within their selec-tion, procurement and management of the assetswithin their asset base.

63

Chapter 10: Sustainability

� Buildings which show good performance across theTBL are likely to suffer less obsolescence and valuedepreciation.

� Asset managers should seek to include sustainabil-ity principles at all stages of the building’s lifecycle.This means that the asset manager should be in-volved at the stage of building design and planningand not after commissioning.

� A range of tools are available to assess sustainabil-ity at the point of design and procurement, such asBREEAM and their use is advocated. At all times theaim should be to procure or hold buildings which:– are well-designed and capable structurally of

long life in terms of build quality; – are capable of good environmental performance

including being low carbon;– are flexible, responsive, adaptable due to loose

fit;– are sited for maximum accessibility by multi-

modes of transport and thus locationally ap-propriate;

– are efficient in layout so that they work for andare liked by their occupiers; and

– retain, through their aesthetic and design qual-ities, the ability to invoke lovability from bothinternal and external stakeholders.

� During the life of the building the asset managershould ensure that buildings are managed and ap-praised in accordance with sustainability criteria inorder to assess the extent to which the building is‘future proofed’ in terms of matters such as accessi-bility, adaptability, climate control, energy, pollu-tion waste and water. Buildings which do not scorewell in relation to these criteria should be consid-ered for retro-fitting, redevelopment or disposal.

� The use of an environmental management system,whether or not formal accreditation is sought, willprovide the framework within which an asset man-ager can assist the organisation to move forwardboth strategically and at an operational level.

� Finally, the role of the strategic asset manager is toensure that building performance, in both revenueand capital value terms, is optimised and that thelink between the two is recognised. The further linkbetween building sustainability and value is cur-rently tenuous but it is developing. The proactivevanguard asset manager will recognise this linkageand seek to ensure that sustainability factors areconsidered at all points in the building lifecycle sothat they can better support organisational corpo-rate responsibility goals without compromisinguser needs and good economic performances.


64

65

That data will come from a wide variety of sources.The volume of data required will depend on the size ofthe asset base, and it may be large. However, the data isonly valuable if it is current, correct, complete and con-sistent. It must be readily accessible and presented in aformat suitable for its target audience. Poor quality datais misleading and potentially as bad as no data at all.

The management of such data is not straightfor-ward. Organisations must plan to equip themselveswith systems and processes to capture, record andmanage the base property data effectively, then ma-nipulate, consolidate, update and report informationclearly and efficiently.

It is important to note that while good data is centralto good asset management, it will take some time to im-plement a new data system for asset management. Thisdoes not mean that nothing can be done in the mean-time. Far from it. It is frequently the case that by usingdata that already exists in an innovative and creativemanner, good initial progress can be made, especially ifthere are major issues that need to be addressed.

The key steps to improving data management areshown in Figure 11.1 and are explained, in turn thereafter.

11.2 SPECIFYING REQUIREMENTS

The need for data

The key to justifying improvements in data manage-ment will be careful consideration of why an asset data

Chapter 11

Data andInformationManagementMark Jones, Partner, Remit Consulting

STRATEGY



AssetManagement



DeliveryPlanning



REVIEW DELIVERY




CHANGE

LeadershipCulture

CustomersStructure


CapacityGovernance

DataSustainability


PROGRAMMES

Chapter overviewThis chapter describes the need for data to supportasset management, with a suggested guide to defin-ing and implementing the systems required. It alsoproposes an approach to managing and maintain-ing data to ensure the long-term accuracy of the in-formation.

Benefits of good data management� Enables the provision of the information needed

to support asset management processes, when itis needed, and to those who need it, in an easilyaccessible way

� Ensures the quality of the information so that itis correct, complete, consistent and current

� Employs organisation and structures that instilconfidence in the users of the information, and asense of responsibility and ownership in theproviders of the information

11.1 INTRODUCTION

Asset management relies on data. The data is crucialfor informing the development of strategies, evaluatingand appraising options, decision making and planning,and performance management activities.

RequirementSpecification

SystemOptions and

Selection

BusinessCase

SystemImplementation

Ongoing DataManagement

Figure 11.1

system is needed, and how it will contribute to the assetmanagement process. The data and systems must sat-isfy a range of different needs:

� to inform asset review, appraisal, decision-makingand planning processes;

� to monitor and assess the implementation of assetstrategy and asset performance;

� to satisfy statutory and other external reporting andcompliance requirements;

� to support the continuous management and main-tenance of the asset base;

� to maintain a complete and accurate asset register.

Types of data

The data required to satisfy these needs will be broadlythe same from organisation to organisation although itwill vary in emphasis and detail. The following list ofdata types provides an indication of the range of assetdata a public sector organisation will need to manageand maintain:

� core data about each asset which generally does notchange over time or only very infrequently, for in-stance, location, physical characteristics;

� additional data which changes and describes thestate of the asset at a point in time, for instance,condition and backlog maintenance estimate;

� financial data;� energy consumption and performance;� data, financial and temporal, which describes the

progress of strategic initiatives and programmessuch as capital projects and disposals programmes;

� where the organisation controls a tenanted com-mercial asset base, a range of data covering leaseand tenancy details, rental income and so on;

� data which will be used for planning and perform-ance management purposes.

Organisations will already have operational systemsand processes for maintaining, managing and report-ing asset data. However, these may be of variablequality.

The first step is to define the required data and re-porting requirements and develop a functional speci-fication for the required systems. The resultingspecification can then be used to analyse the organisa-tion’s options and determine a strategy for sourcingsuitable systems.

Approach to defining data and reportingrequirements

There are many formal methodologies for analysingand specifying system and data requirements and someorganisations will have selected and adopted a pre-ferred option. The basic principles which should be fol-lowed are:

� review the asset management business processes;� confirm and analyse the key performance indica-

tors (KPIs); and� conduct a reports analysis to determine reporting

requirements.

Performing each of these steps enables the following:

� identification of base data that must be maintained;� mapping of base data requirements to check that

the data is actually collected, recorded and main-tained in identified business processes;

� identification of system processing requirementsand further reporting requirements;

� confirmation or determination of responsibilitiesfor maintaining data.

Prioritising requirements

It is also useful at this stage to start to identify the crit-ical asset management processes. The objective here isto identify priorities; often it will not be possible to in-troduce new data and systems in one go. It may be nec-essary to adopt a phased approach to implementationand the requirements of the critical processes will cer-tainly be considered for the first phase.

Reviewing requirements and critical processesthrough this exercise enables a reality check to ensurethat the most important and relevant data is identified.

It is also important to consider the flexibility whichcomes with the system to add new portfolios, changethe reporting arrangements, alter the KPIs or increasethe amount of key data required for each entry.

Property professionals may sometimes only thinkabout property and property related outputs so a keypriority is to ensure that the asset management anddata system links back to the organisation’s purposesand the services which it delivers to customers. Thewhole system must be relevant and add value to theoutputs of the organisation, not just to the propertyasset managers.

Asset data structure and categorisation

A key aspect of the data definition will be determiningthe property asset database structure. Even though dif-ferent types of properties are different physically, it isuseful to determine a standard way for describing all ofthe types of asset being managed. Often the highest levelwill be the ‘site’ and then subsequent levels will describe‘buildings’, then perhaps ‘blocks’, then ‘floors’ and‘rooms’. The level at which areas of ‘land’ within a siteare defined will also need to be decided. In practice, soft-ware systems may force a particular structure anyway.

Secondly, it is important to decide at what level eachtype of additional data will be recorded, i.e. costs, con-dition, space utilisation, etc. Of course, some of thesetypes of data will only apply to certain types of asset


66

and the categorisation discussed above should reflectthese circumstances.

Further system requirements

Whilst an initial evaluation of systems might be madeon the basis of the data and the reporting requirementsidentified, these are not the only factors that will influ-ence the selection of appropriate technology. Data andreporting (and how data is processed in between) rep-resent the functional requirements but there is a set ofnon-functional aspects about which the organisationneeds to make decisions. These are just as importantin shaping the most suitable technology solution, forexample:

� the locations from which the data needs to be ac-cessed by users;

� the types of users that need access to the data; � the different methods of reporting envisaged;� consideration of how users work;� the way in which security and access controls need

to be applied to the data; � expectations of system performance and capacity.

11.3 OPTIONS FOR SYSTEMS

The functional and non-functional requirements mustbe documented and agreed to provide a baseline spec-ification against which options for systems can be eval-uated.

The challenge is to make sure that the asset man-agement software chosen is properly integrated withinthe organisation’s existing environment, taking ac-count of existing organisation-wide management in-formation systems. In fact, the organisation mayalready have some form of property or asset manage-

ment software that will be suitable to support the re-quirements – it may never have been implementedfully before.

The requirements definition will have identified awide range of data that will need to be maintained andreported. Ideally, all of this data would reside in a sin-gle system and there would be no need for any links orinterfaces. In reality, this is unlikely to be the case.Whilst the specialist asset management software pack-ages are becoming more functional and may be able tohold a wide range of data, it is likely that there are arange of operational systems that will not be replacedby an asset management package. These may include:

� central finance;� graphical information systems (GIS); � computer aided design (CAD);� land and property terrier;� energy management;� project control;� human resources.

The overall objective is to ensure that data only needsto be entered once, that it is maintained consistentlyand as far as possible automatically, across the varioussystems where it is duplicated.

These systems will need to be linked together logi-cally by a common asset coding system and structure.Of prime importance will be the allocation of a uniquereference number for each property.

The options analysis will need to consider whereautomatic interfaces are required between the varioussystems. This will almost certainly involve bespoke sys-tem work, the complexity and cost of which is easy tounderestimate.

Potentially, additional software will be required toprovide the consolidated asset management reportsthat read data from the various systems, or some formof consolidation database or ‘data warehouse’ may berequired that is updated regularly from operationalfeeder systems.

An overriding constraint may be the organisation’scentral policy for applications.

11.4 BUSINESS CASE

It will be necessary to develop a business case in orderto demonstrate why resources should be invested in theasset management data project.

Each organisation will have its own standard forcontent and presentation, but the business case shouldinclude the basic elements:

� the reasons why asset management systems areneeded for data management and the implicationsof not pursuing the initiative;

� what the benefits are expected to be in measurableterms;

� a description of the scope, likely options and ap-proaches with estimates of resources required, costsand benefits;

67

Chapter 11: Data and Information Management

Valuation

RunningCosts

CommercialTenant

AdditionalData

ConditionSurvey

Asbestosdata

Site

Building

Block

Room

Core Asset Data

Figure 11.2: Example of Core data structure and Additional data

� an outline of the timescale for the project and therisks involved.

The business case provides the mechanism for se-curing approval and senior fund-holder sponsorshipand ensuring a common level of understanding toguide the project in terms of scope, prioritisation andexpectations.

11.5 IMPLEMENTING THE SYSTEMS

Sponsorship and resources

The asset management system will not be successfullyimplemented unless the organisation is prepared tocommit appropriate resources to the initiative, bothduring the implementation and thereafter.

Crucial to the project will be the buy-in of thosesenior stakeholders who will need to allocate resourcesfrom their teams and potentially make changes to theirmode of operation over time in response to the busi-ness process definition work.

That means that the benefits and imperatives mustbe articulated clearly, and the resolve of the seniorsponsor must be strong. If this is a project to revitalisean existing system, the work required may look daunt-ing and very similar to starting again from scratch.However, good information systems will significantlyease the day-to-day burden of the asset managementteam.

The difference between success and failure in a sys-tems project is the ability to concentrate on these busi-ness benefits from the start and remain focused on howthe system will help the team improve its work.

Project management

Of course, the other crucial factor for a successful im-plementation is project management. Whatever ap-proach and methodology is adopted the key elementsthat must be in place include:

� a dedicated project manager;� a ‘project board’ to whom the project manager re-

ports; and� a sound project plan.

Other key implementation activities

Other key activities that need to be undertaken duringimplementation will include:

� user acceptance testing;� user training and procedures – ensuring that users

are trained ‘just in time’, probably using role-basedtraining techniques and in a way that is relevant tothe business processes and procedures;

� ongoing support planning;� data migration.

11.6 MANAGING AND MAINTAINING THE DATA

Data governance and stewardship

Given such a wide range and potentially large volumeof data, organisations will need to put in place an ap-propriate management structure to ensure that thedata is properly defined, managed and maintained.

It is suggested that organisations consider imple-menting a formal data governance structure anddata stewardship role to ensure that the necessary assetdata is properly managed, particularly in thosesituations where responsibility for data is not centralised.In any case, it will be necessary to define rules and stan-dards for ongoing data management and maintenance.

The data stewardship role is likely to be best placedwithin the centralised asset management function andhave the authority to determine the data managementstandards and processes. Additionally, some organisa-tions will find it beneficial to form a data stewardshipcorporate group.

Responsibilities for data

It is necessary, first, to define explicitly who will be re-sponsible for maintaining each type of asset data and,secondly, which types of asset data must be collatedcentrally for strategic asset management purposes, per-formance measurement and other corporate and or-ganisation-wide reporting.

The central asset management function shouldideally maintain the asset register, but may delegate re-sponsibility for maintaining specific core informationabout the asset to devolved teams as appropriate.

The data stewardship role will need to coordinate thecollation of the data required centrally. Whilst this willof course be facilitated where a centralised system is inplace and used by devolved teams, specific programmesof data collection will still need to programmed, agreedand managed across the organisation.

Standards for data definition

As well as defining responsibilities for maintaining dataand managing collation of necessary data centrally, thedata itself should be described formally to provide aconsistent basis for all parties to work from and a cen-tral reference for various data governance, manage-ment and system activities. This asset ‘data model’documents the different data types that are identifiedthrough data requirements and business process analy-sis. It sets out how the data types are related to one an-other and the various rules and standards, includingthose that govern how the data will be recorded, qual-


68

ity criteria for the data and responsibilities for datamaintenance.

It is recommended that the data model is docu-mented in a ‘data dictionary’. This may be a simpleword document or specific dictionary software formore sophisticated situations.

Sustaining data quality

The data stewardship role should also be concernedwith maintaining the quality of data on an ongoing

basis. There are two distinct strategies that can be em-ployed here: quality can be built into the process ordata can be monitored once it has been recorded.

The first strategy will involve, for example, ensur-ing those who are responsible for maintaining data doso according to the standards defined. The secondstrategy involves the development of processes forauditing the data, on some defined regular basis, andperhaps at the time of specific data collection pro-grammes. The likelihood is that both will need to beused to ensure data quality.

69

Chapter 11: Data and Information Management

71

peared in these countries and have been replaced bysmaller, commercially focused procurement organisationsmanaging capital, costs and organising the purchase orleasing of accommodation from private sectors providers.

The introduction of commercial-style performancemeasurement for public sector operations drove downa similar approach to asset management, focusing on:

� performance measurement and improvement;� reduced public sector involvement and increased

outsourcing of services based largely on cost re-duction;

� separation of policy-making and service delivery;� greater management flexibility;� greater financial accountability but with fewer

checks and balances.

Other drivers of asset management reform include in-ternational accounting reforms and the entry of pri-vate sector real estate professionals into public sectormanagement roles.

In the USA, years of under-investment and poormanagement led the Administration to mandate de-partments to produce asset strategies, plans and regu-larly updated asset registers.

12.2 ASSET MANAGEMENT IN AUSTRALIA

The Australian approach to asset management hasbeen driven more by the introduction of regulatory re-quirements and accounting standards, for example(IAM 2002):

Chapter 12

AssetManagement –An InternationalDisciplineFrank 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 ofQueensland, Australia

STRATEGY



AssetManagement



DeliveryPlanning



REVIEW DELIVERY




CHANGE

LeadershipCulture

CustomersStructure


CapacityGovernance

DataSustainability


PROGRAMMES

Chapter overviewThis chapter contains a synopsis of public sectorasset management practice in Australia (AUS), NewZealand (NZ) and the USA. It describes the context,the main features of the government structures fromwhich the processes have developed and highlightsthe benefits which have accrued.

12.1 OVERVIEW

Property asset management has been a focus for gov-ernment and local authority attention outside the UKfor nearly 20 years. In these guidelines we have focusedon other English-speaking nations whose governmen-tal systems are similar to the UK and where significantprogress has been made in property asset managementrecently; namely Australia, New Zealand and the USA.

In Australia and New Zealand radical public sectorreform resulted in significant changes in accountingconventions, reporting practice and ownership flexi-bility, with a loosening of the hitherto tight controlsover the way the public sector managed assets and cap-ital. The reforms changed the control parameters forthe cost of capital, ownership of property and man-agement standards, resulting in a ‘market’ approach tothe way public sector operations were managed.

Centralised departments charged with creating andmanaging all public sector property have largely disap-

� AAS 27 for local government;� AAS 29 for government departments;� AAS 31 for governments.

The Australian governmental system has close similari-ties with that of the UK. The Australian National AuditOffice (ANAO) performs a similar function to the NAOin the UK. The consensus from a number of their re-ports confirms that there has been a much stronger drivetowards improved asset management, including prop-erty asset management, at state level compared to centralgovernment, where property has been treated as a ‘freegood’ rather than as a valuable business enabler.

The ANAO first examined asset management in thegeneral government sector in 1995 (ANAO 1995), ex-cluding the Department of Defence. The ANAO foundsignificant scope for improvement in most organisa-tions. They reported a lack of a strategic approach toasset management, noting that this required decisionsabout current and future asset holdings to be made asan integral part of the corporate planning processes. Sixrecommendations were made and the ANAO also pub-lished an Asset Management Handbook, including strate-gic asset management principles and approaches. By1997–98 the ANAO was examining the extent to whichits earlier recommendations had been implemented.The subsequent report noted that effective strategic assetmanagement remained a challenge for many govern-ment organisations. It added that the gap had closed be-tween what had been achieved and best practice duringthe intervening two years. Noting the linkages with cor-porate governance concerns, the ANAO report high-lighted that many organisations had yet to:

� adopt a strategic approach to managing assets, in-volving integrating asset planning into corporate andresource planning frameworks;

� formalise and analyse systematically whole life costimpacts of major asset acquisition, operational useor divestment decisions;

� establish baseline cost and performance standardsfor key assets, including monitoring outcomesagainst these standards;

� implement financial management and asset man-agement systems to facilitate the routine capture andreporting of performance information for manage-ment purposes;

� integrate disposal decisions into an overall planningframework to monitor the outcome of disposalprocesses.

The audit also confirmed the limited nature of centralpolicy advice and guidance compared with that in anumber of state governments. The federal governmentin 1996 embarked on a major reform of the commercialproperty portfolio, outsourcing in three major contractsall asset management functions. All owned property wassubject to a 15% return on investment hurdle rateswhich resulted in virtually all assets failing this owner-ship test and the government entering a major divest-ment campaign, with the space being leased back as

required. These major changes in property ownershipoccurred during a period of high vacancy in the com-mercial sector and resulted in property sales which didnot recoup the government’s initial investment.

The ANAO has continued to audit central govern-ment departments and agencies in the asset manage-ment and property management areas. The AuditorGeneral, in an Occasional Paper setting out his views onCommonwealth assets and property management,noted that a further ANAO audit conducted in 2003 hadstill found difficulties experienced by a number of agen-cies in relation to:

� poor documentation concerning asset acquisitionand disposal;

� assets not being recorded on the asset register; and� asset registers not being reconciled to financial systems.

The property divestment and outsourcing programmeof the mid to late 1990s also passed the day-to-day man-agement of commercial property assets back to the rel-evant departments away from a central coordinatingasset management body. These changes have further re-duced the government’s control over the strategic direc-tion of the property they occupy and reduced thetransparency of acquisitions.

The state governments within Australia have adopteda range of asset management methodologies over thefew years ranging from major outsourcing and divest-ment similar to the federal government approach in thecase of Victoria, through to a largely in-house owner-ship model followed by Queensland. Three examples ofthe range of state government approaches to asset man-agement and property asset management are presentedin the following sections.

State government of New South Wales (NSW)

The NSW state government’s reform programme forthe management of assets and office accommodation,initiated in 1996, established in 1998 a high-level body– the Government Asset Management Committee(GAMC) – with a whole-of-government focus to driveits programme of reforms. The structure is shown inFigure 12.1.

The GAMC was established to ensure the effectivemanagement of investment in assets and office accom-modation. The Committee is chaired by the Director-General of the NSW Premier’s Department andmembers include the Chief Executive Officers of TheNSW Treasury, Department of Commerce, AttorneyGeneral’s Department, Roads and Traffic Authority, De-partment of Infrastructure, Planning and Natural Re-sources and Forests NSW. The Committee meetsquarterly with terms of reference to provide advice tothe Budget Sub-Committee of Cabinet on:

� the alignment of asset and office accommodation re-sources with government’s service delivery priorities;

� the appropriateness of agency asset managementstrategies;


72

� strategic asset and accommodation issues involvingmore than one agency;

� office accommodation strategies for metropolitanand regional areas;

� major investment strategies – acquisition, major re-furbishments, lease pre-commitments, leasehold,and asset and property disposals;

� benchmarks and performance standards for assetand property portfolios.

Policy, budgetary frameworks and planning

As part of the policy reforms, a series of Total AssetManagement (TAM) guideline papers were introducedto achieve better planning and management of NSW’sexisting and newly acquired physical assets. In this in-stance, these are defined broadly as land, buildings, IT,infrastructure, collections, equipment or fleet owned orcontrolled by an agency resulting from past transactionsor events, providing future economic benefits and hav-ing a definite business function or supporting the deliv-ery of services. The TAM guidelines have recently beenimproved and aligned with the Results and Services Plan(RSP) and the budget process overall. Changes include:

� a restructured approach to the development of anasset strategy, with greater emphasis on risk man-agement and asset performance measurement, andbetter alignment with the RSP;

� a TAM template, to assist in the preparation and as-sessment of the asset strategy and supporting TAMstrategic plans;

� a new capital investment strategic plan guideline, toreflect the requirements of the government’s pro-curement policy reforms for major capital worksprojects;

� relocation of the TAM manual, which includesdetailed guidelines together with supportingassessment and decision-making tools, to the NSWTreasury website (www.treasury.nsw.gov.au/tam/tam-guide.htm).

By 31 August each year, agencies are required to submitto NSW Treasury an integrated set of TAM plans whichcomprise an asset strategy driving four plans: a capitalinvestment strategic plan, a maintenance strategic plan,an asset disposal strategic plan, and an office accom-modation strategic plan. An agency’s RSP is consideredincomplete unless it is supported by the asset strategyand all supporting plans which effectively link execu-tive performance with asset-related budgets.

State government of Western Australia

In June 1994 the Premier of Western Australia intro-duced a strategic asset management framework forstate government that recognised the need for a morerigorous approach to the management of Western

73

Chapter 12: Asset Management – An International Discipline

Minister ofCommerce

State Government of NSW

Office ofGovernmentProcurement

GovernmentProcurementManagement

• Assetprocurementpractice

• Contract capital advisory

• Expertpurchasing

StateProcurement

• Procurementoperations

• Major contracts

State Property• Corp Real Estate

• Strategicpropertydevelopment– TAM

State ProjectServices

GovernmentArchitect

Office ofGovernment

Business

Minister ofFair Trading

GAMCDGs of

• Premiers

• Treasury

• Attorney General

• Roads

• Infrastructure Planning

Director GeneralDept of Commerce

Figure 12.1: New South Wales Government Total Asset Management Framework

Australia’s portfolio of public assets. Subsequently, aFunctional Review Taskforce was set up whichrecommended the further development and imple-mentation of appropriate strategies to strengthen assetmanagement policies and practices. This followedrecommendations in a report published byPricewaterhouseCoopers in 2002 on the governanceand management of Western Australian public sectorassets. The principal Taskforce concerns and recom-mended actions were:

Taskforce concerns Action

� Increase rigour in the � Improve the quality ofcapital investment information provided byprocess agencies for decision

making

� Give greater attention � Deliver the benefits thatto maintaining existing were initially projectedassets

� Institute greater � Planned disposal of coordination of asset significant assetsmanagement across thestate public sector

The state government structure incorporating thestrategic asset management framework is shown inFigure 12.2.

As shown above, the Department of Treasury andFinance retains regulatory responsibility, approvingfunding and working in collaboration with the Depart-ment of Housing and Works which provides thetechnical expertise. The framework promotes linkagesbetween the agencies management of their asset port-folios with asset planning and corporate planningprocesses. It outlines the processes to manage assetsthrough the lifecycle from planning to disposal, includ-ing an increased emphasis on maintaining existingassets. The results of this work are included in the newstrategic asset management framework whichcomprises four key components: asset planning, capitalinvestment, maintenance, and asset disposal.

The revised strategic asset management frameworknow includes several significant changes, notably:

� strategic asset plans are to be approved by the Min-ister and submitted to the Treasurer as part of theannual budget process;

� agencies will be requested to include informationon maintenance expenditure within the strategicasset plan, consisting of a summary of the agency’sproposed maintenance expenditure over theBudget, and forward estimates, identifying thesources of funding, such as the split between recur-rent and capital funding, and the prevailing level ofdeferred maintenance, as well as any strategies tomanage deferred maintenance.


74

Minister ForHousing & Works

Works & BuildingServices

Major Works& Construction

Economic &Financial

Management

AssetManagement

MaintenancePlanning andContracting

Public Works PolicyStrategy &Legislation

The traditional Treasury function of DFT involves• Managing the allocation of resources to state

government agencies• Providing expert analysis and advice

concerning the strategies and frameworknecessary for the sound economic and financialmanagement of the state.

The Strategic Asset Management Framework(SAMF) is an integrated policy strategydeveloped to improve asset management andcapital investment across the State public sector,comprising 11 policies and guidelines to facilitatethe provision of quality advice to government tosupport its decision-making.The Department of Treasury and Finance’s AssetPlanning & Management Branch worked incollaboration with the Department of HousingWorks to develop the SAMF.

Department ofTreasury & Finance

State Government of WA

Collecting StateRevenue

Central Contracting& Tendering

GovernmentAgencies

Ownership,Implementation

& Decisionmaking

Regulation/Funding

Expertise

The Department of Housing andWorks represents all of the stategovernment’s housing and worksfunctions, covering:• Public and community housing• Aboriginal and regional housing• Keystart home loans• Property sales• Major government projects• Capital works projects• Property & facilities managementThe Department of Housing andWorks consolidates the publicsector’s built environment and thegovernment’s assets and projectsmanagement to enhance thedelivery of services in these areas.

Figure 12.2: State Government of Western Australia Strategic Asset Management Framework

The objectives and outcomes of the process are asfollows:

Planning objectives Desired outcomes

� Strategic planning for � Management of property management of assets asset portfolios as a

corporate resource

� Ensure that facilities � Accountability for strategic meet current and future management of all realrequirements estate assets

� Benchmarking and � Rationalisationperformance management supported by specificto competency and business case reviews consistency standards

� Optimise each assetlifecycle

� Identify surplus assets � Divestment of high-costand under-utilised assets

� Matching space needs � Achieving efficiencieswith staff requirements through collocation of like

functions

� Minimising ‘all in’ costs � Improvement of the asset of owning, leasing, data and managementoccupying and using information systems andspace transparency

� Maximising flexibility inspace use and tenure

� Conforming real estatestrategies

� Key reporting and taxrequirements

The Government Office Accommodation WorkingGroup (GOAWG) exists to ensure a whole of govern-ment perspective in managing the office accommoda-tion portfolio. The GOAWG comprises seniorrepresentatives from the Department of Treasury andFinance, Department of the Premier and Cabinet plusDepartment of Housing and Works (DHW). TheGOAWG evaluates office space proposals (new leases,refurbishments, etc.) exceeding $1m, referred to it byDHW and GOAWG makes recommendations to theMinister for Works who signs off on commitments.

State government of Queensland

Asset management in Queensland is centralised underthe Department of Public Works and Housing with di-visions of Queensland Property Management (QPM),Qbuild and Project Services. Each of these divisionsprovides services to government departments on a feefor service basis. The structure provides for adminis-trative separation of the construction and maintenanceaspects of property provision from the strategic

review processes and the ongoing maintenance andleasing management functions. This is illustrated inFigure 12.3.

Commercial office procurement is governed by anumber of guidance documents and administrativeprocedures. The office accommodation managementframework (OAMF) sets the basis on which propertyprocurement is administered. It outlines the authority,scope, principles and working environment underwhich it operates and establishes clear roles and re-sponsibilities for the department and other agenciesutilising its services.

The OAMF is guided by the broader objectives ofgovernment and the strategic direction developed forthe department. The wider governance issues includethe Treasury’s State Purchasing Policy. So, in imple-menting property procurement objectives, the policyprovides clear guidance on the process to ensure stateobjectives are achieved. The Treasury also providesagencies with a framework for developing strategicasset plans within a ‘sustainable total resource man-agement framework’. The guidance seeks to encouragestrategic management of outcomes through the align-ment of assets, resources and agency services to meetgovernment priorities.

Queensland differs significantly from other statesin that it recognises the need for a balanced portfolio ofowned and leased property and seeks to maintain anapproximately equally balanced portfolio of the two.There is also recognition that government has the abil-ity to manage in-house the processes of property man-agement to achieve the best fit with a whole ofgovernment approach to the provision of supportingproperty infrastructure.

The strategic direction of property asset provisionand management is set by the Government OfficeAccommodation Committee (GOAC) which hasresponsibility for setting the strategic direction andapproach to ownership and management of govern-ment office accommodation. It also reviews allacquisitions, both freehold and leasehold, and dispos-als of buildings greater than 5,000m2. The Committeeis the final arbiter in any property-related dispute be-tween an agency and the Department of Public Works(DOPW).

At all levels of asset provision a regime of internalcontracting and fee for service exists to promote per-formance evaluation and to prevent waste. All agenciespay a market based rent to Building Services for the ac-commodation they occupy. In turn, the Building Divi-sion engages and pays QBuild to undertakemaintenance on the owned estate through contracts atmarket-based rates for the services undertaken. Thus,a commercialised property system exists, with a high-level strategic management group taking governmentpriorities and interpreting them, in terms of asset out-comes, via GOAC, which is documented and dissemi-nated both within DOPW and to other agencies. At thesame time, agencies will develop their own strategic

75


planning outcomes, based on government priorities,and, through representation on GOAC, communicatetheir strategic direction and needs for supportingproperty resources.

12.3 ASSET MANAGEMENT IN NEW ZEALAND

The New Zealand public sector is structured on theprinciple that each public entity is held individually re-sponsible for delivery of services as required by gov-ernment. Each department has autonomy and there isno central body managing assets. The structure is il-lustrated in Figure 12.4.

Most public sector organisations report perform-ance on an accrual accounting basis in a similar fash-ion to private corporations. A capital charge is appliedto capital utilised in an agency’s operations, effectivelycreating a proxy for borrowing capital from Treasury.This has changed the asset mix over time as agencieshave been encouraged to reduce capital assets.

The most comprehensive work in asset manage-ment has been undertaken by local authorities. Legis-lation – Local Government Act 2002 – introduced anexpectation that all assets held by a local authoritywould 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 authoritiesto generate clear asset management plans. These aregenerally developed from the bottom-up, commenc-ing with an asset register entry for each asset and work-ing on from there.

The NAMS Group, established by the association ofLocal Government Engineers, has developed a range ofmanuals that are now widely in use throughout thelocal authorities.

The NAMS manuals and guidelines are distributedworldwide and include the following:

� The International Infrastructure Management Man-ual (2006) is positioned as the Group’s core docu-ment in asset management theory and practice. Themanual is prescriptive in style, and sets out clear re-quirements to achieve a practical and effective assetmanagement function. Although it covers a widerange of asset types, it focuses on infrastructure as-sets.

� Optimised Decision Making Guidelines provide eco-nomic analysis for decision making on the mainte-nance, renewal and replacement of infrastructureassets and includes over 30 actual case studies.

� Depreciation and Valuation Guidelines are a practi-cal guide into the assessment of value, economic lifeand depreciation methods for infrastructure assets.

� Developing levels of service and performancemeasures guidelines 2007 demonstrate how toestablish levels of service and performance meas-urement for assets based on client requirements.

12.4 ASSET MANAGEMENT IN THE USA

The US Government has 3.3 billion square feet of of-fice space and 655 million acres of land. The General


76

Assistant DirectorGeneral

(governance)

State Government of Queensland

Whole-of-government

strategy

IntegratedServices Delivery

Assistant DirectorGeneral (works)

ProjectServices

Deputy DirectorGeneral

Human Resources

Finance

Building Division

Old Purchasing

Infrastructure/major project

Q Build

DirectorGeneral

Governanceand Review

ExecutiveServicesAdult Performance

Review

Minister ofPublic Works Housing

& Racing

GOACDGs of

• Premiers

• Treasury

• Public Service

• Works

Figure 12.3: State Government of Queensland Strategic Asset Management Framework

Services Agency (GSA) controls some 11.7% of the realproperty space inventory. In January 2003 the Govern-ment Accountability Office (GAO) identified real es-tate and its management as a high risk federalprogramme due to under investment. In that same yearthe GAO testified that federal property was deteriorat-ing badly and decision makers lacked reliable data.

As a result, in February 2004, Executive Order (EO)13327 was signed by President Bush adding improvedreal property asset management to the President’smanagement agenda. The EO defined real propertyas any real property owned, leased or otherwisemanaged by the federal government domesticallyand internationally and includes improvements tofederal lands.

The EO established the Federal Real Property Coun-cil (FRPC), under the administration of the Office ofManagement and Budget (OMB), to serve as a centre ofbest practice and assist the efforts of Senior Real Prop-erty Officers (SRPOs), a role described further below.The structure of the FRPC is set out in Figure 12.5.

The Council comprises the SRPOs, the Controller,and, Deputy Director of Office of Management andBudget (as Chair), the Administrator of the GSA andany other officials or employees deemed necessary bythe Chair. The Council is seen as a mechanism to assistSRPOs develop and implement agency property assetmanagement plans. The Council, in conjunction withthe Administrator of the GSA, works out appropriateperformance measures for real property. As part of itsremit, the FRPC has also produced a template for prop-erty asset management plans to be rolled out across

agencies. These plans are reviewed by the OMB as partof the normal budgetary review process and in achiev-ing government-wide property management priorities.

The SRPO is required to submit an initial assetmanagement plan to the OMB which:

� identifies and categorises all real property owned,leased or managed by the agency within and out-side the USA;

� prioritises actions to be taken to improve the oper-ational and financial management of the agency’sreal estate;

� makes lifecycle cost estimates of these actions;� identifies authorities also required to address the

priorities established;� identifies and pursues goals, with appropriate dead-

lines, consistent with the asset management plans,measuring progress. Incorporates planning andmanagement requirements established under ear-lier EOs for heritage property and for environmen-tal management;

� annually lists and describes property assets underthe control of the agency.

Every agency must determine what it owns, what itneeds and what it costs to manage its real properties. Itmust develop and implement property asset manage-ment plans and performance measures. Surplus prop-erties are to be sold.

The role of the GSA has been expanded to includeestablishing and maintaining a government-wide realproperty inventory database and reporting perform-ance measures.

77


New Zealand

Advising/policy/regulating

State ServicesCommissioner

• Public SectorPerformance

LINZ

• Crown landownership

• Provide LandInformation

• Manage ownership

NZTreasury

• Advise on the NZEconomy

• Assist with budgets,planning

• Advise on standards

Minister ofFinance

• Annual budgeting• Supervise Treasury• Set Financial

Standards

Office of theAuditor General

• Annual audits• Controller function• Approvals of

process

Governance • Ministers of the Crown• Statutes relevant to each public sector

Works and constructionContracting and tendering Maintenance and planning etc.

Ministries/Departments State Owned Enterprises Other Crown EntitlesCrown Research Institutes • District Health Boards

• Local Authorities• Tertiary Education Sector

The Crown The entity The entity

Entitles

Asset owner

Figure 12.4: New Zealand Government: Where Asset Management Fits

So in the USA, under-investment triggered the de-velopment of a mandatory property asset managementprocess. A national body oversees the development anddissemination of best practice and a series of KPIs havebeen established for measuring the performance ofproperty assets over time.

12.5 SUMMARY

Whilst the US and Australian models of property assetmanagement have developed from different drivers,there are a number of similarities and differences thatcould inform a UK model of excellence:

� The US and Australian ‘models’ both recognise theneed for a central coordination committee to de-velop and disseminate best practice in propertyasset management; for example, the FRPC in the USand the GAMC in the NSW state government.

� The US approach has been mandated by Presiden-tial Executive Order.

� The US and Australian models link the propertyasset management planning process into budgetarycycles.

� Both countries have produced best practice guidancecentrally; state governments in Australia have alsodeveloped their own approach and a review of threeof these (New South Wales, Western Australiaand Queensland) indicates close similaritiesand consistency of approaches and some markeddifferences.

� The US model has set out the requirement that anamed individual at strategic level in all majoragencies should be held responsible for propertyasset management.

� The ANAO has conducted a number of formal au-dits of the embedding of asset management andproperty asset management in central governmentdepartments and agencies.

12.6 APPENDICES

Appendix 1 sets out in tabular format comparisons ofthe asset management structures in Australia, NewZealand and the USA. Appendix 2 shows, again in tab-ular form, comparisons between asset managementarrangements for the states of Western Australia,Queensland and New South Wales.


78

Office of Management and Budget (OMB)

Federal Real Property Council (FRPC)

Asset Management Performance Measures Inventory SystemsChaired by Chaired by Chaired by Chaired by

General Services National Aeronautical Department of Department ofAdministration (GSA) and Space Administration Defence (DoD) Agriculture

(NASA)

Senior RealProperty Officers (SRPOs)

Figure 12.5: The Structure of the Federal Real Property Council

Appendix 1Asset management policy comparisons

79


Au

stra

lia

New

Zea

lan

dU

SA

Regu

lato

ry fr

amew

ork

Regu

latio

n/ac

coun

ting

requ

irem

ents

Cent

ralis

ed c

ontr

ol to

legi

slat

ion

Pres

iden

tial O

rder

:(e

.g. I

AM

200

2):

Exec

utiv

e O

rder

(EO

) 133

27�

AA

S27

(loc

al g

over

nmen

t)Ac

coun

ting

refo

rm a

nd a

sset

man

agem

ent

(Im

prov

ed A

sset

Man

agem

ent)

�

AA

S29

(gov

ernm

ent d

epar

tmen

ts)

refo

rm�

AA

31 (g

over

nmen

t)Th

e de

gree

of s

epar

atio

n of

ow

ners

hip

from

man

agem

ent a

nd in

fo sy

stem

s�

Stat

e-O

wne

d En

terp

rise

s A

ct19

86�

Stat

e Se

ctor

Act

1988

�P

ublic

Fin

ance

Act

198

9�

Fisc

al R

espo

nsib

ility

Act

1994

Gov

erna

nce

Aust

ralia

n N

atio

nal A

udit

Offi

ceD

iffer

ent o

rgan

isat

ions

:G

over

nmen

t Acc

ount

abili

ty O

ffice

(fed

eral

gov

ernm

ent)

�LI

NZ

�Th

e Tr

easu

ryPu

blic

Wor

ks C

omm

ittee

in re

spec

t of

�N

Z Ac

coun

ting

Stan

dard

s Rev

iew

Boa

rdm

ajor

wor

ks�

NZ

Prop

erty

Inst

itute

�N

Z In

stitu

te o

f Acc

ount

ants

�In

stitu

te o

f Pro

fess

iona

l Eng

inee

rs�

Build

ing

Indu

stry

Aut

hori

ty�

Terr

itori

al L

ocal

Aut

hori

ties

Exte

nt o

f dev

olut

ion

Stat

e le

vel g

over

nmen

t res

pons

ibili

tyTh

e ab

ove

orga

nisa

tions

set t

he re

gula

tions

and

regu

latio

nan

d st

anda

rds,

whi

lst m

any

depa

rtm

ents

,Cr

own

Entit

ies a

nd C

row

n-ow

ned

Ente

rpri

ses,

Stat

e-ow

ned

Ente

rpri

ses c

ontr

act o

ut th

epr

oper

ty m

anag

emen

t fun

ctio

ns

Publ

icat

ions

Ass

et M

anag

emen

t Han

dboo

kN

o ce

ntra

l gov

ernm

ent g

uida

nce,

alth

ough

Prop

erty

ass

et m

anag

emen

t pla

n.so

me

rese

arch

bei

ng u

nder

take

n by

the

Gen

eral

Ser

vice

s Adm

inis

trat

ion

Trea

sury

. The

Nat

iona

l Ass

et M

anag

emen

tD

epar

tmen

t iss

ued

mat

eria

l on

(NA

Ms)

gro

up p

ublis

h m

anua

ls a

nd

proc

edur

es a

nd p

rogr

ess

guid

elin

es fo

r bes

t pra

ctic

e


80

Au

stra

lia

New

Zea

lan

dU

SA

Key

feat

ures

Ass

et M

anag

emen

t sho

uld

be v

iew

ed a

s aAu

tono

my

for s

tate

ent

ities

allo

ws

�H

igh

risk

fede

ral p

rogr

amm

e re

sulti

ngbu

sine

ss e

nabl

er. A

genc

ies:

inno

vatio

n an

d ad

vanc

emen

t. fr

om y

ears

of u

nder

-inv

estm

ent

�la

ck st

rate

gic

appr

oach

A c

apita

l cha

rge

regi

me

focu

ses

�Fe

dera

l pro

pert

y de

teri

orat

ing

badl

y �

are

requ

ired

to u

se a

ccru

al a

ccou

ntin

gen

titie

s to

redu

ce c

apita

l – v

irtu

ally

�D

ecis

ion

mak

ers l

ack

relia

ble

data

and

capi

tal c

harg

ing

all s

tate

dep

artm

enta

l offi

ces a

re�

lack

a c

entr

al re

gist

er o

f pro

pert

y as

sets

leas

ed fr

om p

riva

te se

ctor

. Cou

ld b

ese

en a

s a w

orld

lead

er –

for e

xam

ple

road

net

wor

k m

anag

emen

t Tra

nsit

NZ.

�Ro

les a

nd re

spon

sibi

litie

s are

cle

ar�

Polic

y, re

gula

tory

func

tions

and

oper

atio

ns a

re se

para

ted

�A

sset

man

agem

ent i

s dec

entr

alis

edan

d fle

xibl

e�

Priv

ate

sect

or m

anag

emen

t pra

ctic

esar

e w

idel

y us

ed�

Nat

iona

l wea

lth a

ccum

ulat

ed in

Crow

n pr

oper

ty is

pro

perly

reco

gnis

ed�

Fisc

al a

dmin

istr

atio

n an

d ac

coun

ting

enco

urag

e ac

coun

tabi

lity

and

effe

ctiv

enes

s�

Accr

ual a

ccou

ntin

g is

use

d by

all

gove

rnm

ent a

genc

ies

�D

isag

greg

atio

n of

por

tfolio

s has

led

to a

redu

ctio

n in

focu

s on

stan

dard

sof

ass

et m

anag

emen

t

Appendix 1 continued

Appendix 2Asset management comparisons – Australian states

81


New

Sou

th W

ales

Qu

een

slan

dW

este

rn A

ust

rali

a

Res

pon

sib

le m

inis

try

Com

mer

ce a

nd F

air T

rade

Publ

ic W

orks

, Hou

sing

and

Rac

ing

Hou

sing

and

Wor

ks, T

reas

ury

and

Fina

nce

Fram

ewor

k fo

r as

set

Tota

l Ass

et M

anag

emen

t St

rate

gic A

sset

Man

agem

ent F

ram

ewor

kSt

rate

gic A

sset

Man

agem

ent F

ram

ewor

k p

lan

nin

g(1

992)

(200

2)(1

994)

Gov

ern

ance

NSW

Tre

asur

y an

d O

ffice

of t

he S

tate

Audi

tor G

ener

alAu

dito

r Gen

eral

(WA

)Pr

oper

ty A

utho

rity

(SPA

) and

Gov

ernm

ent

Ass

et M

anag

emen

t Com

mitt

ee (G

AM

C), a

Min

iste

r for

Pub

lic W

orks

func

tiona

l dep

artm

ent w

ithin

the

SPA

Pre

scri

bed

rep

orti

ng

Ann

ual s

trat

egic

ass

et m

anag

emen

t pla

nsA

nnua

l str

ateg

ic a

sset

pla

ns fo

r the

por

tfolio

Ann

ual s

trat

egic

ass

et p

lans

(fro

m e

ach

from

eac

h ag

ency

to G

AM

Can

d in

divi

dual

ass

ets

agen

cy to

Min

iste

rs)

Key

com

pon

ents

�Ac

quis

ition

s, di

spos

als a

nd�

Ass

et p

lann

ing

�A

sset

pla

nnin

gde

velo

pmen

ts�

Capi

tal i

nves

tmen

t�

Capi

tal i

nves

tmen

t�

Stra

tegi

c as

set m

anag

emen

t�

Mai

nten

ance

�M

aint

enan

ce�

Capi

tal c

harg

ing

regi

me

�A

sset

dis

posa

l�

Ass

et d

ispo

sal

Ob

ject

ives

Inte

rnat

iona

l bes

t pra

ctic

e an

d st

anda

rds

Who

le o

f gov

ernm

ent a

ppro

ach

to a

sset

Rig

orou

s app

roac

h to

pub

lic a

sset

plan

ning

man

agem

ent

Imp

lem

enta

tion

au

thor

ity

SPA

Dep

artm

ent o

f Pub

lic W

orks

Func

tiona

l Rev

iew

Tas

kfor

ceG

AM

C as

par

t of S

PA

App

roac

h�

Trea

sury

stra

tegy

and

uni

form

ity�

Clea

r ass

et m

anag

emen

t pol

icy,

Stro

nger

pol

icy

and

prac

tices

impl

emen

ted

thro

ugh

the

SPA

cent

ralis

ed m

anag

emen

t and

repo

rtin

g�

Link

ages

bet

wee

n ag

enci

es

�SP

A p

ower

s to

impl

emen

t Tot

al A

sset

of a

sset

stra

tegi

es�

Conn

ect a

sset

pla

nnin

g w

ith c

orpo

rate

Man

agem

ent p

olic

y�

Who

le li

fecy

cle

appr

oach

to p

rocu

rem

ent

plan

ning

pro

cess

es�

Mar

ket p

erfo

rman

ce b

ench

mar

king

�A

sset

life

cycl

e pr

ogra

mm

e –

disp

osal

pla

n

Por

tfol

io s

ize

(ap

pro

x)1,

081,

000m

284

4,00

0m2

477,

000m

2

Per

cen

tage

leas

ehol

d72

.5%

47%

39%

83

OverviewThis section lists publications about asset manage-ment and linked subjects, which have been broughtto the attention of the editors. As more informationis published, the RICS website will carry details andaccess information.

SOURCES OF INFORMATION ABOUT ASSETMANAGEMENT AND ASSOCIATED TOPICS

Achieving Excellence in Construction; Better AssetManagement; Improving Property Asset Management inthe Central Civil Government Estate; Managementof Risk; OGC Gateway Review for Programmes & Proj-ects; Programme and Project Management Resources;Public Sector Construction Clients’ Forum, Office ofGovernment Commerce, publications available freeonline at www.ogc.gov.uk

Acting on Facts: Using Performance Measurement toImprove Local Authority Services; Improving SchoolBuildings; PFI in Schools; Worth the Risk, AuditCommission publications available free online atwww.audit-commission.gov.uk

Asset Management, Audit Report No. 27, 1995–96,Australian National Audit Office, ANAO, 1995

Asset Management, Audit Report No. 27, 1998,Australian National Audit Office, ANAO, 1998

Asset strategic plan guidelines, Queensland Government,Brisbane, 2003

Bourne, M. and Bourne, P., Change Management in aWeek, Chartered Management Institute, Hodder andStoughton, 2002

BRE Environmental Assessment Method, available atwww.breeam.org

Building Better Services, IPF/FPS(Scotland)/CIPFAjoint publication, 2003

Centres of Excellence for Programme & Project Manage-ment – Information Pack, OGC, 2004

CIPFA Capital Accounting Review: Interim Position –November 2002, available at www.cipfa.org.uk/pt/capitalreview.cfm

Competence and Competency Frameworks, CharteredInstitute of Personnel and Development, available atwww.cipd.co.uk/subjects/perfmangmt/competnces

Core Competency Framework, I&DeA, available atwww.idea.gov.uk/idk/aio/6055695

Dow, P., Gillies, I., Nichols, G. and Polen, S., NewZealand: State Real Property Asset Management in O.Kaganova and J. McKellar (eds), Managing GovernmentProperty Assets: International Experiences, Urban Insti-tute Press, 2006

DTLR Implementation of Asset Management Plans andCorporate Capital Strategies: Baseline Report availableat www.local.odpm.gov.uk/research/finance/index.htm

Edwards, B., Green Buildings Pay, Spons, first publishedin 1998 and subsequently revised

Financial Incentives for Sustainable Buildings – 10 yearson, Drivers Jonas, 2007

Framework for Highway Asset Management in the UK,County Surveyors Society, 2004

Bibliography

What’s beenPublishedAlready

STRATEGY



AssetManagement



DeliveryPlanning



REVIEW DELIVERY




CHANGE

LeadershipCulture

CustomersStructure


CapacityGovernance

DataSustainability


PROGRAMMES

Gershon, P., Releasing Resources to the Front Line, 2004,available at www.hm-treasury.gov.uk/media/C/A/efficiency_review120704.pdf

Getting Value for Money from Construction Projectsthrough Design How Auditors Can Help; Good practicein PFI property management deals; Good practice inselling publicly owned assets; Good practice in theapplication of risk management – self-assessmentquestions for departments; Innovation in PFI Financing:The Treasury Building Project; Joining Up to ImprovePublic Services; Making joint ventures work; Mod-ernising Construction; Purchasing Professional Services;Ten key questions departments need to consider in man-aging the risk of policies not delivering what is intended;Using call centres to deliver public services, NationalAudit Office publications, available free online atwww.nao.org.uk/

Grant, R., Contemporary Strategy Analysis (5th edi-tion), Blackwell Publishing, 2005

Green Book, Appraisal and Evaluation in CentralGovernment, HM Treasury, available athttp://greenbook.treasury.gov.uk/

Guidance for Improved Asset Management, Federal RealProperty Council, FRPC, 2004

Hedley, C., International Total Occupancy Cost Code,IPD Occupiers Property Databank, 2004

High Performing Property: Routemap to asset manage-ment excellence, available at www.ogc.gov.uk/documents/CP0137HighPerformanceProperty.pdf

Highway Asset Management: Worldwide Experience andPractice, County Surveyors Society, 2004

Hot Property: Getting the best from local authorityassets, Audit Commission, 2000, available atwww.audit-commission.gov.uk

Howarth, A., Report on Improving the Capability andCapacity of Managing Property Assets in Central CivilGovernment, OGC, 2006

International Infrastructure Management Manual (UKEdition), The Institute of Asset Management, 2002

Kaplan, R. S. and Norton, D. P., Putting the BalancedScorecard to Work, Harvard Business Review, Sept–Oct1993

Kaplan, R. S. and Norton, D. P., The Balance Scorecard:Translating Strategy into Action, HBS Press, 1996

Lindholm, A. L. and Nenonen, S., ‘A conceptual frame-work of CREM performance measurement tools’,

Journal of Corporate Real Estate, Vol. 8, no. 3, EmeraldGroup Publishing Limited, 2006.

Local Government Asset Management Guidelines,RICS/ODPM, 2005

Lyons, M., Towards better management of Public SectorAssets, HM Treasury, December 2004, available atwww.ogc.gov.uk/documents/Towards_better_management_of_public_sector_assets_-_Sir_Michael_ Lyons.pdf

Male, S., Improving Property Asset Management in theCentral Civil Government Estate, Leeds University, April2006, available at www.ogc.gov.uk/documents/Improving_property_asset_management_in_govt_estate_-_StephenMale(1).pdf

National Competition Policy – Report by the Independ-ent Committee of Inquiry (Hilmer Report) IndustryCommission, 1993

Oakland, J. S., Total Quality Management, Elsevier But-terworth-Heinemann, 2003

Office accommodation management framework,Brisbane, Queensland, Department of Public Works,2003

Option Appraisal – Building Our Future: Scotland’sSchool Estate, Scottish Executive, 2004, available atwww.scotland.gov.uk/Publications/2004/05/19436/38224

PAS 55-1 Asset Management Part 1 and 2, The Instituteof Asset Management, 2004

Project Portfolio Management Framework, DCLG/Cam-bridgeshire County Council

Sayce, S., Walker, A. and McIntosh, A., ‘Building Sus-tainability in the Balance’, London Estates Gazette, 2004

School Estate Management Plans Building Our Future:Scotland’s School Estate, Scottish Executive, 2003available at www.scotland.gov.uk/Publications/2003/08/18009/25296

Scottish Public Finance Manual, in particular onDisposals, available at www.scotland.gov.uk/Topics/Government/Finance/spfm/Intro

Staff Development and Organisational Capacity – Non-profit Good Practice Guide, Johnson Center, GrandValley State University, USA

State purchasing policy, Queensland Government, Bris-bane, 2003

Strategic Asset Management Framework for WesternAustralia, Department of Treasury and Finance,Government of Western Australia, August 2005


84

Survey of Property trends: Green Issue, GVA Grimley,2006

The Business Excellence Model, EFQM ExcellenceModels

Total Asset Management, New South Wales Treasury,September 2004

Total Asset Management Manual, New South WalesPublic Works Department, Capital works investment:NSW Government, Sydney, 1992

Varcoe, B., A Management Guide to Facilities Perform-ance article in Facilities Management, No. 7, Eclipse,1995

Warren, C. M. J., Public sector property strategies withinAustralia, 2002 (paper presented to CIB W70 FacilitiesManagement and Asset Maintenance Applying andExtending the Global Knowledge Base, Glasgow)

Wilkins, R. and Webster, E., Better Management: Effec-tive management of the Government estate, Office ofGovernment Commerce, 2006

ADDITIONAL WEB REFERENCES FORAUSTRALIA AND NEW ZEALAND

AustraliaNew South Wales: Total Asset Management 2000 www.treasury.nsw.gov.au/tam/tam-intro.htm

Queenslandwww.treasury.qld.gov.au/office/services/asset-management/index.shtml

Victoriawww.budget.vic.gov.au/CA256FE000059F74/0/FE6329A137D83161CA2570A800193481?OpenDocument

Western Australiawww.dtf.wa.gov.au/cms/tre_content.asp?ID=1269

New Zealand

National Asset Management Steering (NAMS) Groupwww.nams.org.nz/Home

The following documents can be purchased from theNAMS website:

Developing levels of service and performancemeasures guidelines 2007

International Infrastructure Management Manual2006

Property and Depreciation and Valuation Guidelines

85

Bibliography: What’s been Published Already

87

A

Achieving Excellence Guides 28, 29Achieving Excellence in Construction initiative 26annual budget process 23asset base

developing performance management see performancemanagementreview see asset review

asset managementconcept diagram and arrangement of guidelines 7–8descriptions from various documents 5–7good organisation see organisationinternational discipline see Australia; New Zealand; USAplan see asset strategiesreviewing system see performance management; review

asset programmesbenefits of effective programming 17delivery see deliverydevelopment and evaluation 21–22financial planning for assets

asset management and the annual budget process 23principles 22

preparation, stages 17project evaluation see business casesreview of asset base see asset review

asset reviewapproach 17–18asset category reviews 18geographic area 18outcome 18–19timing 18

asset strategiesasset management plan

content 12coverage 10–11pivotal role 15

delivery see deliverypivotal role 15preparation, key elements

asset strategy document 15business drivers 11, 13buy-in 13–14stages 11testing 14–15visioning 13

purpose and rolefitting asset strategy into organisation’s business process 10overview 9strategy development – an iterative process 10

Australia 71–72, 78policy, budgetary frameworks and planning 73policy comparisons 79–80state comparisons 81state governments

New South Wales (NSW) 72–73Queensland 75–76Western Australia 73–75

B

Building Research Establishment Environmental AssessmentMethod (BREEAM) 61, 64

buildings see land and buildings‘Building Sustainability in the Balance’ (Sayce, S. Walker, A.

McIntosh, A., London Estates Gazette, 2004) 62business cases 19

data project 67–68key elements

commercial assessment 21financial assessment 19–21non-financial assessment 19, 20options identification 19project management assessment 21recommendation 21risk assessment 21, 22strategic justification 19

reasons for 19

C

change management 41attributes of good change managers

communication 46effective use of time – delegation and empowerment 45leadership 44–45motivation 46organisation and programmatic approach 46understanding people and engagement 45

benefits 41nature of change, understanding

asset management services change 44context 41–43corporate change see corporate changesgradual process 44

commercial assessment 21communication

change management 43, 46project delivery 29

corporate changesacquisition and disposal 44asset management planning 44asset management strategy and policy 43communication 43–44generally 43operation and maintenance 44performance review and accounting 44roles, responsibilities and governance 43

corporate project managementleadership 48–49

customers see stakeholders

D

data management 65benefits of good data management 65business case 67–68

Index

implementing systemsother key implementation activities 68project management 68sponsorship and resources 68

managing and maintaining datadata governance and stewardship 68responsibilities for data 68standards for data definition 68–69sustaining data quality 69

options for systems 67specifying requirements

approach to defining data and reporting requirements 66asset data structure and categorisation 66–67further requirements 67need for data 65–66prioritising requirements 66types of data 66

definitionssustainability and the triple bottom line 59–60sustainable development 59

delivery 25, 31benefits of good delivery 25communications 29direction 26key issues 25–26means of

procurement strategies and routes 28third party involvement and partnership 26whole life 28

monitoring, incentives and benefits realisation 30planning and managing, cycle 26, 27project planning

project plan 29stage plans 29

project structure and governanceinsulation 28need for good governance 28PRINCE2 28

roles and responsibilities 28–29resources and capabilities 26risks 30–31successful 25

Disability Discrimination Act 2005social sustainability of buildings 61

F

financial assessment 19–21financial planning for assets

asset management and the annual budget process 23principles 22

G

Green Buildings Pay (Edwards, B., Spons, 1998) 62

I

Improving Property Asset Management in the Central CivilGovernment Estate (Male, S., Leeds University for the Office ofGovernment Commerce, 2006) 5, 10, 34, 41–42, 56

information management see data managementinternational discipline see Australia; New Zealand; USA

L

land and buildings see also sustainabilityproperty management 6–7strategic asset management 6–7

leadershipbenefits 47

leadership skillscorporate project management 48–49development 48identification 47–48

human, IT and financial resources, use of 48knowing the business 48personal skills 48technical expertise 48

leading the agenda for asset management 47

M

Modernising Construction report (NAO, 1999) 31

N

NAMS Property Manual (National Asset Management Steering(NAMS) Group, Thames, New Zealand, 2006) 11, 34

New Zealand 71, 76, 77policy comparisons 79–80

non-financial assessment 19, 21

O

Office of Government Commerce (OGC)Achieving Excellence Guides 28, 29Successful Delivery Pocketbook, 2006 25, 26Successful Delivery Toolkit 26websites 31

organisationbenefits of good organisation 51key steps 51organisational culture 51process

clear and regular asset management reporting lines throughout organisation 53clear demarcation between asset management andproperty management decision making 52effective annual business process for assets 53elements 51–52full involvement of all key operational areas 52good linkage to corporate aims/objectives and corporate decision makers/budget holders 52good linkage with other support functions 53integration with financial planning 53single point of contact for asset management team 52

roles and responsibilities 53asset champion 54corporate asset management group (CAMG) 53senior manager for asset management (SMAM) 53

structure 54Our Common Inheritance (Brundtland Commission, World

Organisation on Economic Development, 1987) 59

P

PAS 55 (Publicly Available Specification 55) – Asset Management(BSI, 2004) 11, 34

performance management 33benefits 33development for asset base 35

balanced scorecard 36benchmarking 37–38key performance indicators 36–37measurement 37organisational performance, understanding 35reporting and improvement planning 38review and quality management 37taking improvement action 39

reviewing asset management system see reviewprocurement routes 28


88

design and build 28prime contracting 28private finance initiative 28

procurement strategies 28development, factors to be considered 28

project evaluation see business casesproject management assessment 21project planning

project plan 29stage plans 29

project structure and governanceinsulation 28need for good governance 28PRINCE2 28roles and responsibilities 28–29

property asset management (PAM) 5operational component 5strategic component 5

property management 6–7Public Accounts Committee Report

Improving Construction Performance (December, 2001) 26

R

Report on Improving the Capability and Capacity of ManagingProperty Assets in Central Civil Government (Howarth, A.,National School of Government for OGC, 2006 and work ofThe Institute of Asset Management) 57

resources and capacityanalysing, key steps 57–58benefits and proper regard 55defining

organisation and team capacity for asset management 56–57skills and competencies for asset managers 57

role 55–56training and development

asset management in the corporate context 57potential traps in implementing plans and programmes 58

reviewassessment method 34assess performance 34, 35evaluation framework 34improvement action, identification and implementation 34using a framework 33–34

RICS/ODPM Guidance on Asset Management 2005 (RICS/ODPM,2005) 11

risk assessmentbusiness cases 21, 22

risk management 30–31Risk, Reputation and Reward (Sustainable Construction Task

Group, 2000) 60

S

stakeholdersconsultation 49–50

effective 49improved, benefits 50

engaging key internal decision makers 50identifying and engaging external stakeholders 50

Strategic asset management (SAM) 5land and buildings 6–7

Strategic Benchmarking (Watson, G.H., 1993) 37Successful Delivery Pocketbook, 2006 25, 26Successful Delivery Toolkit 26sustainability

benefits 59building impacts

building-in-use phase 61construction phase 61environmental impact of buildings 60life-end phase 61social impact of buildings 61sustainable assets 61–62

context 59criteria approach for asset management

action for asset manager 62considerations in respect of demolition versusrefurbishment decision 62–63management and valuation 63promoting sustainability during procurementof buildings 62

definitionssustainability and the triple bottom line 59–60sustainable development 59

summary of principles for asset managers 63–64

U

USA 71, 76, 78policy comparisons 79–80

V

Value for Money Evaluations in Complex Procurements 28

W

Websites 31

89

Index

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.

RICS (Royal Institution of Chartered Surveyors) is the leading organisation of its kind in the world for professionals in property, land, construction and related environmental issues. As part of our role we help to set, maintain

and regulate standards – as well as providing impartial advice to Governments and policymakers. RICS has 140 000 members who operate out of 146 countries, supported by an extensive network of regional offices

located in every continent around the world.

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 it’s perhaps not surprising that the letters RICS represent the mark of property

professionalism worldwide.

The Royal Institution of Chartered Surveyors12 Great George StreetParliament SquareLondon SW1P 3ADUnited Kingdom

T +44 (0)870 333 1600F +44 (0)20 7334 [email protected]

Documents

RICS Public Sector Asset Management