Improving Asset Management in Government Departments


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Improving Asset Management in Government Departments

  1. 1. Improving Asset Management in Government Departments A report on improving the capability and capacity of managing property assets in central civil government Office of Government Commerce March 2006 A report by: Andrew Howarth National School of Government 01344 63 4255 14th March 2006
  2. 2. Contents Page 1. Executive summary with recommendations 3 2. Background to the study 9 3. What is asset management? 11 4. Property management in civil government 12 5. Research findings on capability and capacity 16 6. Embedding asset management capability 22 7. The Way Forward 30 Annex A Terms of reference Annex B List of interviewees Annex D References/Bibliography 14th March 2006 2
  3. 3. 1. Executive summary 1.1 Sir Michael Lyons’ report Towards Better Management of Public Assets uses the term Asset Management in its wider interpretation of encompassing both tangible and intangible assets, rather than just land and buildings. However, the scope of the OGC research project looks specifically at property assets - which translate as land and built assets - across the civil estate. 1.2 The research project, led by Professor Steven Male of Leeds University, has been based on completion of questionnaires, one-to- one interviews, extensive study of best practice models from around the world, and an intensive two and a half day workshop with selected senior estates managers, has established that Asset Management, in its wider interpretation, is a function of strategic thinking at the corporate resource planning level. Business decisions at this level, which identify assets as a corporate resource, require appropriate support at a strategic level. ‘Strategic Asset Management’ is therefore identified as the means by which business strategy is translated into the management of physical assets: ”Strategic Asset Management, in relation to property (land and built assets), is a structured, holistic and integrating approach for aligning and managing over time service delivery requirements and the performance of property assets to meet business objectives and drivers. 1.3 Strategic asset management is both about how organisational change impacts upon land and built assets and how these, in turn, create opportunities for organisational change. Figure 1 shows how the role of property is moving away from being largely reactive towards a more strategic role. 1.4 The research on skills and capabilities has primarily focused on investigating the current intelligent client function in property and facilities management. This has provided information on the current situation and recommendations have drawn on this to determine the potential for advancing strategic asset management across central civil government. 1.5 In general, there is much to be positive about in the quality and experience of property teams. The responses to the questionnaires and the face-to-face interviews do not raise serious concerns over a lack of ability or a shortage of resource in managing the estate at a tactical level. 1.6 Property management skills and competencies are in evidence across central government organisations and there does not appear to be a capacity problem, even though the numbers per organisation managing 14th March 2006 3
  4. 4. property portfolios and functioning at the intelligent client level are probably much lower than a decade ago. 1.7 As was expected, the research reveals a diversity of estate models and a corresponding diversity of management structures to support them. Those departments with a substantial property portfolio typically have professionally qualified staff and teams to manage the estate and support services. In more modest-sized organisations, there is also evidence of qualified staff. This is not to say that professional qualifications alone are indicators of effectiveness. Many estate managers have a wealth of experience of both the civil service in general as well as property matters more specifically, irrespective of holding a qualification. However, whilst qualifications per se are not indicators of effectiveness, they do provide evidence of systematic study and practice. 1.8 There are, however, pockets where there appears to be little property management experience or skill. Sometimes this is mitigated by advice and guidance from, for example, a sponsoring department in the case of some NDPBs. But there have also been responses which have raised concern about intelligent client capability. 1.9 Responses to the questionnaires show that estate managers recognise property asset management as a ‘strategic’ function. Far fewer see it as ‘optimising’ the use of assets to benefit the service. Some respondees to the questionnaire and interviews were able to identify opportunities to enhance delivery of organisational objectives but said they were rarely called upon to challenge existing approaches or invited to contribute, in a proactive way, to business thinking. The task is often to ‘keep the ship on its current course’ rather than look at alternative routes. This is not a criticism so much as an observation. 1.10 Others responded that they did not think that property strategies needed to become more integrated into corporate strategic planning, either because they were satisfied there was already sufficient access to senior management level or because simply there was no corporate asset management strategy in place. This is a structural issue which the broader aims of the embedding process seeks to address. 1.11 The gap between current practice and the ideal appears to be a lack of awareness of the strategic value of property assets at senior management level. This in turn suggests a lack of performance data being used in a coherent way by those collecting it and communicating it upwards. There was not a unanimous positive response to questions on costs in use data on capital investments, for example. 1.12 My recommendations for embedding asset management awareness and associated skills across government mainly focus on ensuring that asset management becomes an intrinsic component of mainstream strategic thinking and financial management through the Professional 14th March 2006 4
  5. 5. Skills in Government initiative. Sir Michael recommends wider understanding in para 1.22 of Towards Better Management of Public Assets: “Improved deployment of asset management expertise within the public sector.” 1.13 Although property asset management may appear to be the natural domain of property specialists - and indeed they are in good position to understand the opportunities and limitations of property assets - property professionals freely admit that it would be incorrect to assume that they all see themselves as forces for influence at the business strategy level. Equally, those senior managers who are not property professionals but are in positions of strategic influence and have come from a Policy or Operations background will probably have little understanding of property asset performance. Their knowledge is likely to be limited, perhaps on the basis that there are people ‘who do that sort of thing already’ and that property is largely seen as a passive respondent to the business rather than a contributor to future thinking. Professor Meziane Lasfer of the Cass Business School says: “It is ironic that in Business Schools the management of property is rarely covered. Managers may think that since property management was not covered in their MBA course, there is no need to treat it as a cost asset and should not be discussed in the boardroom” Cass Website 12th October 2005 14th March 2006 5
  6. 6. Fig 1: Source Tim Lloyd, Consilian 14th March 2006 6
  7. 7. I have taken the view that asset management is a challenging activity which needs to be incorporated into business thinking. Although not currently a profession in its own right, it is not unreasonable to see asset management ultimately being recognised as a professional skill, encompassing as it does a range of management competencies as well as technical skills. 1.14 My recommendations are therefore based on integrating asset management skills into training and development activity for all staff, not just those who are technically qualified already. But there are two audiences who I feel would benefit particularly from focussed interventions: • Senior managers who by virtue of their position have an influential role in the strategic direction of Departments, Agencies, etc; • Professionally qualified, or otherwise experienced, property managers. The objective for senior business managers would be to raise awareness of asset management as a strategic corporate resource, whilst the aim for property specialists would be to encourage wider strategic thinking. 1.14 The recommendations are therefore based upon two key themes to ensure integration into mainstream civil service staff development: 14th March 2006 7
  8. 8. To ensure that Asset Management is recognised as a strategic resource: • awareness of asset management to be raised through suitable coverage in development programmes for senior civil service managers; • the Professional Skills in Government framework to recognise asset management both as a professional aspiration as well as a key component of the strategic thinking and financial core skills; • a ‘Head of Asset Management’ to be appointed to act as a champion for asset management in the same way as other Heads of Profession represent their communities. To ensure that Strategic Asset Management skills and competencies are developed: • strategic asset management skills and competences to be formally identified by OGC and appropriate training and development interventions selected/designed to support the embedding process. Ideally, a developmental outcome should be through one or more of the following: a) the achievement of a formally recognised qualification; b) a recognised period of development; c) demonstrating significant relevant experience. • training and development routes which seek to professionalise estates management and facilities management staff to be reviewed to take account of the wider strategic and business aims of asset management; • OGC to play a quality assurance role in the development of asset management skills and competencies interventions to ensure quality standards and application of appropriate best practice; • OGC to recognise those operating in the field of property management by incorporating property/facilities management skills and competencies into its Successful Delivery Skills family. 14th March 2006 8
  9. 9. 2. Background to the study 2.1 In 2004 Sir Michael Lyons published his report ‘Towards the Better Management of Public Assets’. The report focused on the need for government to pay more attention to its assets and to ensure that its investments provided an effective and efficient rate of return in terms of value for money. The financial targets set were £30 billion capital receipts across the wider public sector from asset disposals and projected savings of £760 million per year by 2010 from central civil government if effective asset management strategies were put in place. 2.2 Whilst Sir Michael’s report considered the wider definition of assets (roads, infrastructure and intangible assets) there was an emphasis on property assets. 2.3 Property portfolio management represents a considerable proportion of an organisation’s outgoings, often second only to staff payroll. Property, held either as freehold, leasehold or through PFI, is a major investment. In order for a return to be realised, investment in property is not often a short-term term decision. Acquiring property is a major decision and disposal is often a time-consuming process. Lease terms may be reducing in length, and the inclusion of break options in lease terms may be increasing, but such flexibility comes at a cost. After all, landlords need to generate a return from their own investments too. 2.4 Property not only provides a roof over the heads of the workforce but is also a unit of production. It is a delivery vehicle for providing services to the public, such as benefits offices, jobcentres, hospitals, and so on. As such, it is an integral part of the delivery of an organisation’s business. 2.5 Despite the growth in information and communications technology (ICT), which is enabling alternative ways of working to the traditional office-based model, we have not yet arrived at the situation where all organisational property has been rendered obsolete. The healthy state of the construction industry indicates a widespread need for new buildings and redevelopment. Office buildings are where the majority of business is carried out and staff have increasingly high expectations of the quality of their work environments. Indeed, this is now considered to be an essential element in attracting and retaining the best staff, adding to the importance of property strategic business resource. 2.6 The evidence to date, though largely anecdotal, has been that property, if considered at all, has been seen as a passive responder to business strategy rather than a contributor. Whilst property and working environments play important roles in change programmes, such as relocation, or refurbishment, they tend to be considered as an afterthought. There have, of course, been some encouragingly notable examples within the public sector where property has been seen as a 14th March 2006 9
  10. 10. major contributor to a change programme, such as the Met Office move to Exeter and the MOD Main Building refurbishment project. 2.7 Local Authorities have been paving the way in best practice asset management over the last six years. Since the publication of the DETR (now ODPM) report in 1999 Measuring Performance in the Management of Local Authority Property and Hot Property, published by the Audit Commission in 2000, Local Authorities have undergone a major change in the way they manage their varied property assets. There are now several Beacon Councils which can demonstrate excellence in the management of their corporate property assets and Sir Michael Lyons now sets the same goals for the rest of government. 2.8 Sir Michael has indicated that responsibility for asset management should lie at Finance Director level. This makes sense because of the obvious link between organisational investment plans, the bidding process, and access to board-level thinking. In order to maximise the return on investment from assets it is necessary to ensure that the assets are tied into departmental delivery objectives. 2.9 Investment of capital and the ongoing measurement of efficiency savings will be a feature of CSR 07. The Treasury has made it clear that the preparation of Departmental Asset Management Strategies will underpin the process (Dear Finance Director Letter 3rd March 2006). From a skills point of view also, the Treasury, through its Financial Management Initiative, is enabling Finance Directors to achieve professional accounting qualifications, thereby embedding the necessary financial skills and countering any potential criticism of lack of knowledge. By doing so, this will also ensure that the underlying aims of Professional Skills in Government (covered further in this report) are met. 2.10 By raising the profile of property assets Sir Michael has ensured that asset management becomes a key contributor to business thinking. Disposal targets aside, good asset management contributes to the ongoing effective management of an organisation’s business. Good asset management means challenging the status quo in order to seek better ways of doing things. 14th March 2006 10
  11. 11. 3. What is Asset Management? 3.1 There are several definitions which seek to clarify its purpose and the Leeds’ Report provides extensive coverage of these. Here are two: “Asset management is a key part of business planning which connects at a strategic level decisions about an organisation’s business needs, the deployment of its assets, and its future investment needs” (para 6.5) Sir Michael Lyons Towards Better Management of Public Assets: “The optimum way of managing assets to achieve a desired and sustainable outcome” The Institute of Asset Management (IAM) 3.2 From the definitions above, it is obvious that we are dealing with a new approach in central civil government towards asset management in the wider sense and, in turn, asset management as it relates to property. Sir Michael’s report emphasises that ‘asset management needs to be joined up with wider strategic thinking on resource allocation’ (1.21) and that ‘good asset management planning must complement an organisation’s strategic or business planning’ (4.4). 3.3 Further clarification comes from the Institute of Asset Management which states that “modern asset management is integrated and holistic; is the result of cross-disciplinary thinking and optimisation; and embraces complex issues e.g. human factors, whole life planning, risk etc.” Also, that “The role of Asset Manager bridges traditional boundaries; implies a different and wider ranging set of competencies; and that greater strategic capability is essential”. 3.4 The OGC research project and embedding programme is focused specifically on property assets in the central government sector. Whilst this helps to define the scope of the work there is a risk that by using the term ‘property’, asset management will be subject to the traditional misunderstandings and prejudices with which property management has come to be associated. Asset management, in its wider sense, needs to be seen as a contributor to core business resource planning so as to ensure that the physical asset base is aligned with organisational objectives. 3.5 Asset management’s strong links with investment planning means that it sits comfortably within the Finance structure, where financial tools can be applied to test business options and, through the Corporate Finance Director, has direct exposure to the Board. 14th March 2006 11
  12. 12. 4. Property Management in Government 4.1 Traditionally, estates and property management have had a low profile, playing a largely reactive role as far as business strategy has been concerned. Sir Michael Lyons recognises this in his report (para 6.9). 4.2 Facilities management, which has grown as an independently recognisable adjunct to property management over the last ten years, has also suffered from this mindset. There is a view that support services, and the corresponding need to manage those service contracts, are not sufficiently important to influence future business planning. The fact that the property and facilities’ budgets are often second only in size to the payroll has not always been seen as a reason for essential strategic involvement. 4.3 However, before this is seen solely as a lament for a lack of recognition for those engaged in property and facilities management, it is important to say that technical expertise in estates and property management does not of itself automatically translate into an awareness of the ‘bigger picture’ and the capability required to be influential at senior level. This is not to say generally that property specialists are unable to contribute to the business strategy nor are capable of ‘raising their game’; but it seems that in the majority of cases they are simply not asked to contribute by those who are in senior management positions. There also seems to be little aspiration to seek senior positions beyond the comfort zone of their familiar technical specialism. 4.4 Whilst specialist knowledge or technical competency is very important to the everyday running of property and estates, asset management, as proposed by Sir Michael, implies a wider understanding of the part property can play in the delivery of the organisation’s primary objectives. There are therefore differences between the property management view of assets and the asset management view of property (see Figure 2). 14th March 2006 12
  13. 13. Asset Management Property Management Client/customer relationship management – Book-keeping of property expenditure and focus on stakeholder satisfaction income Corporate financial prioritisation and Energy management and energy efficiency of property expenditure consumption (including control of CO2 emissions) Corporate property data management and Facilities management (eg cleaning, information sharing porterage, security reception, post and common services) Cross departmental co-ordination of property Implementation of planned maintenance work matters programmes Developing an Asset Management Plan Mechanical and electrical engineering work Department/NDPB/EA wide co-ordination of New build and major refurbishment work property matters Getting all parts of the department/NDPB/EA Project management of building of projects involved in asset management as appropriate Leadership on orchestrating and changing Property and estates management (eg rent the asset base to achieve Departmental/Non reviews, lease renewals, landlords’ Departmental Public Bodies’/Executive responsibilities, tenant responsibilities, Agencies’ goals and objectives valuation, acquisition, disposal) Organisational development – developing Reactive repairs capacity to undertake asset management and property management Performance management – property Using and keeping up to date property objectives, PIs, monitoring and improvement management databases and providing inputs to asset management databases Strategic resource management – when Working and co-ordinating with outside necessary orchestrating all other key contractors/consultants resources in concert with property – ICT, human, capital and revenue including strategic procurement Fig 2: Source: Keith Jones’ Report to OGC Improving Asset Management in Government February 2004 4.5 Asset Management properly lies at the level of corporate resource management. It is a feature of thinking at a strategic level, which means matching future capabilities to a future environment in order to achieve defined outcomes. Asset management therefore aligns itself with strategic resource and ICT management at the business thinking level. Decisions to utilise property assets as an enabler to business planning stem from this level and manifests itself as strategic property management. As Professor Steven Male of Leeds University puts it: “Strategic Asset Management A structured and holistic approach to aligning and managing the performance of physical built assets as an organisational resource to meet business objectives and drivers. It is a top down policy drive and bottom-up needs verified approach.” See Figure 3. 14th March 2006 13
  14. 14. Organisational Business Planning Flux Feedback loop Asset Management HR Management ICT Management Size of Organisation Asset Management Plan Asset Base Capex, Opex, Disposal PFI/PPP Delivery Strategy Leasehold Freehold Mixed Estate Strategy MOTO Facilities Workspace/ Management Workplace Fig 3: Asset management decision-making in relation to Estates Strategy Source: Professor Steven Male (adapted) 14th March 2006 14
  15. 15. 4.6 Workplace 4.6.1 The traditional view of property management, which conjures up images of dull office buildings with everybody sat at their desk for the whole of the working day, is beginning to disappear. This is most clearly seen in the way the office environments have responded to changing working practices, driven largely by advances in communications technology. Audits of workplace usage show that the nature of people’s work patterns are changing: we are more often away from our desks than at them; we are attending more meetings, both on and off-site; we may be working in other organisations’ premises; we may be working from our own homes or in ICT enabled ‘hot spots’; or we may even be working whilst travelling, on the train or in the air, for example. Technology provides these flexible ways of working and in doing so allows us to re-think how the workplace can be used more effectively. 4.6.2 The alternative use of the terms ‘workspace’ or ‘workspace’, as opposed to ‘property’, is not just to make it more appealing. It widens the debate about delivery solutions which need not always be bound by the concept of bricks and mortar. Flexible working practices, distance working, virtual solutions, such as video links, e-connectivity or even ‘off-shoreing’ are a reality of business delivery and are changing our understanding of the workplace. 4.6.3 There are already well publicised examples in central government which provide evidence that the workplace plays an important part in change programmes and that staff expectations of their working environment are rising. Economies in space budgets are being offset through more pleasant work environments which in turn are factors in recruiting and retaining quality staff. 4.6.4 The fact of the matter is that greater attention is now being paid to the workplace than hitherto. Value for money is not only a matter of efficiency but of effectiveness too, measured in terms of increased productivity or staff satisfaction. 14th March 2006 15
  16. 16. 5. Research findings on Capability and Capacity 5.1 The research shows that staff engaged in the management of property across central civil government bring a variety of skills and experience to the role. There is a mixture of those who are professionally qualified and those who, by virtue of time in office, have sufficient experience to carry out their role as effectively as their qualified counterparts. 5.2 Few departments provide career streams specifically for property professionals. Those that do are typically those which have large portfolios, either of a specialist nature, such as courts, or where business delivery is tied implicitly to property, such as prisons, benefits offices, jobcentres etc. But office buildings and administrative functions typically characterise the majority of the central civil estate. Of 86 questionnaires issued 48 were returned with meaningful responses, representing a 56% sample. The capability and capacity section focused on current practice and included six questions covering organisational structure, client intelligence, qualifications and staff development. 5.3 There was a disappointing lack of information from respondees to the questions which asked for written descriptions of the current situation in their organisations. The responses indicate that there is much use of agents to carry out the operational side of estate and facilities management across central civil government but there was not much information provided on the level to which organisations had overtly invested in skills and knowledge to justify their intelligent client status. 5.4 Information on relevant qualifications was available although some organisations clearly did not know how many staff had which particular qualification, merely providing a general list of available professional expertise. The answers to the question which asked for information on skills development often showed that training was an adhoc issue rather than a conscious plan to up-skill. Further comments against each of the questions follows below. 5.5 Property Management within the structure of the organisation(Q7.1) 5.5.1 Not all respondees provided an organisational chart to illustrate the position of property management within their organisation but there was generally sufficient description within the questionnaire to see the various hierarchical structures. In the majority of cases the property and facilities management function lies within the Finance discipline, although there was at least one example where facilities management came under Human Resources. ‘Corporate Services Directorate’ is a popular home for property management along with other operational resources, such as HR and ICT. Occasionally there is a direct link to the management board but more often than not this is via two or more intermediate levels. Though there 14th March 2006 16
  17. 17. appears to be a high level of access to the top of the organisation this may only be an indicator of the property portfolio’s financial weight rather than its strategic muscle. Question 4.3, which asks whether there is a need for property asset management to become more integrated into corporate asset management planning, was largely answered in the negative. This was a surprising result, given that the thrust of the asset management initiative is primarily to raise the profile of property management in organisations as opposed to its traditional low status. Interpretations of this result could mean any of the following: i. there is currently no corporate asset management plan into which property matters can feed; ii the existing arrangements are to the satisfaction of the estates department and that no further emphasis is necessary; iii. there is a reticence to make changes to the current arrangements for fear of increased workload or additional responsibilities. The answers to the above may only become apparent when the ‘Routemap’, as a vehicle for the asset management embedding programme, is put in place. This will require departments and agencies to map their progress over time across a number of key areas. A maturity matrix, for self-analysis purposes, will also be produced to enable progress to be monitored. The overall target of increasing the effectiveness of the government estate through more focused performance of property assets will tease out where weaknesses may lie. 5.4 Property advice to sponsored bodies (Q7.2) 5.4.1 As expected, there was a small number of departments which responded in the affirmative to this question. The question was asked to determine the extent to which organisations provide client intelligence to smaller bodies. It was evident from interviews with those departments which had such a role that sponsorship did not automatically imply the provision of an intelligent client service. Given the large number of NDPBs and the limited number of organisations which could be invited to participate in the research, it is not possible to draw on the factual status of property management of this group. 5.5 Provision of client intelligence (Q7.3) 14th March 2006 17
  18. 18. 5.5.1 This question sought to establish the extent of the in-house capability. The Devolution of the Civil Estate initiative in 1996 mandated that departments, agencies and NDPBs should retain intelligent client status and not outsource their strategic decision-making to commercial consultants and contractors. 5.5.2 Since that time there have been significant changes to the way some departmental estates have been managed, such as the introduction of PFI as a solution to managing large scale property and facilities management portfolios. Whilst this has increased the need for contract management skills there has been a reduction in the number of people employed directly in departmental property teams across the government. Sometimes this has been the result of TUPE transfers or through internal restructuring. Although a reduction in numbers does not in itself imply a loss of effectiveness, a general diminution of ‘in- house’ intelligence across government has not gone unobserved – a recently published report by Ernst & Young, Good Britain Great Britain (, comments on the reduced intelligent client status of central government over the recent past. 5.5.3 Responses to the question 7.3 reveal that, overwhelmingly, the operational activities associated with property and facilities management are carried out by external agents. Not all responses were sufficiently detailed to allay concerns. Some merely responded that they “use managing agents” or, more worryingly in one case, that the supplier advises on the monthly sum to be paid over to them! 5.6 Number of property management staff (Q7.4) 5.6.1 There are a few organisations which have large numbers of professionally qualified resource. Those that do tend to be the ones which have large construction projects or a sizeable operationally biased property portfolio. An interesting discovery was the number of staff designated as being responsible for managing facilities. Over the 48 organisations there were 1,237 staff identified as having a facilities management role, as opposed to being service providers. This exceeded those in estate management (215), though this is probably due to management structure in which estates managers often head FM teams. The figures also take into account dispersed/regional structures in the case of some departments. 5.6.2 There does not appear to be a direct correlation between the overall annual cost of estates and facilities management and the number of staff employed in the team. Organisations with similar running costs have different staffing numbers. However, the number of property holdings and the distribution of the estate across the country appear to account for the difference. 14th March 2006 18
  19. 19. 5.7 Range of property-related qualifications (Q7.5) 5.7.1 Despite the continued presence of property professionals across government since the devolution of the civil estate in 1996 this group has not enjoyed the same level of recognition as other skills communities over recent years, notably those engaged in Programme and Project Management, and Procurement. This may in part be explained by an interpretation of property management as a skill-set of procurement. But the omission from the OGC guidance document Successful Delivery Skills, of property/facilities-related skills has not assisted the sector’s ability to speak from a position of strength. 5.7.2 Not all the qualifications quoted are specific to property but indicate the academic level to which some individuals have devoted time and effort, often as part of their career development – such as Masters degrees in Business Administration. The most common qualifications quoted are BIFM (British Institute of Facilities Management), RICS (Royal Institute of Chartered Surveyors, NEBOSH, and the BTEC 1 in Property & Estate Management in Government. 5.7.3 The growth of the professional procurement community has no doubt been helped over the recent decade by the 1995 Report Setting New Standards, which stated that 70% of those involved in procurement- related roles across government should be professionally qualified. Thus it is that a CIPS qualification is often quoted, although not as much as property-related qualifications above. One organisation, which operates a substantial property PFI, favours the CIPS qualification since the scenario depicted is said to be more one of contract management than estate management. 5.7.4 Actual numbers for each type of qualification are impossible to determine from the questionnaires but there is certainly a significant gap, for example, between those classing themselves as Facilities Managers and those possessing a relevant qualification. 5.7.5 The range of qualifications is encouraging, though this does not mean that a lack of qualifications is in itself an indication of lack of capability. There are many career civil servants operating within property management and they bring an equally respected dimension to the role. 5.8 How staff are developed in their role (Q7.6) 5.8.1 This question sought to elicit information on whether there was a structured approach to staff development. The responses were poor in 1 The BTEC qualification in estates management dates from 1998 and was sponsored by the PACE (Property Advisers to the Civil Estate) and delivered by a consortium of the then Civil Service College, Water Training International, and the College of Estate Management, Reading). It was created to provide accreditation to members of the property management community who did not already enjoy a professional property qualification. 14th March 2006 19
  20. 20. the main, often quoting an ‘as and when’ approach to training requirements. However, some organisations cited CPD (continuing professional development) as well as formal training programmes, such as those supported by the British Institute of Facilities Managers (BIFM). As stated earlier, the lack of a qualification does not of itself suggest a lack of ability, but it may suggest, for example, unsuccessful bids for training funds or that priorities for development exist elsewhere in the organisation. 5.9 Overall impression 5.9.1 Although there appears to be a good understanding of what asset management is (Q1.2) it is not easy to determine whether this is followed through in practice. The impression is that connections still need to be made with wider strategic planning. 5.9.2 The responses to the capability and capacity section of the questionnaire give the current state of play. They only provide a snapshot of how property is currently managed and the make-up of the people who manage it. In addressing whether there is a skills gap between what is current practice and what is ideal it is necessary to draw on impressions gained from the 30 or so face to face interviews held by the Leeds University team, some of which I also attended, and the results of the two and half day intensive workshop held at Kenilworth. 5.9.3 The picture is of a government estate which is generally being managed well at a tactical level. The staffing complement matches the requirement and professional skills are generally commensurate with the organisational context. There are one or two examples of very good asset management practice, in terms of recognition of property as a business enabler, but these tend to be the larger organisations where property is directly linked to operational delivery. 5.9.4 The overall impression is that the property people are self-effacing and have become accustomed to seeing their role as responding to, rather than proactively becoming involved in, the business planning process. This is in part due to property not being recognised as a strategic resource, and partly due to a property community which neither chooses to promote itself in the same way as strategic HR or ICT nor aspires to move beyond its professional boundaries. 5.9.5 In short, it is a community which ‘does not speak the language of the Board’. Several times during discussions with the Leeds University team, mention was made of the benefit that could be gained from increased understanding of business issues, such as through studying for a Masters Degree in Business Administration (MBA) or similar higher education courses. For some time, the RICS has been supportive of such development programmes for estate professionals as a way of broadening their experience. But for this to happen, it 14th March 2006 20
  21. 21. would require a change in the traditional mindset of those engaged in property management – and it may be that the motivation is simply not there. 5.9.6 The asset management initiative does provide an opportunity for the property community to raise its profile. Technical competencies alone do not answer the call to better asset management. An understanding of strategic planning is essential. The Professional Skills in Government initiative, recently launched by Sir Gus O’Donnell, is a timely opportunity to engage in new ways of thinking. 14th March 2006 21
  22. 22. 6. Embedding Asset Management capability 6.1 In order to embed asset management capability, the following questions arise: what is asset management best practice? how should it manifest itself within the organisation? is asset management a job role, which means the arrival of a newly created practitioner? or is it a business approach, requiring the formation of a new decision-making structure reporting to the main board? 6.2 The research has shown that there are different models of managing property assets across central civil government. There are some exemplar organisations where asset management practices are being carried out even though the term is not expressly used. The existence of a decision-making process at senior level, which focuses on strategic resources and has direct access to the main board, would already be a demonstration of good practice. 6.3 Although the links with finance are strong, seeing asset management as purely function of finance is, however, to run the risk of continuing the process of silo thinking within organisations. What is clearly needed in the future is a joint decision-making process that links all the strategic corporate resources. This in turn implies a clear understanding by all contributors at, or to, board level of the need to integrate all the organisational knowledge and skills available. Main Board Corporate Resource Management ICT HR AM Director Director Director £ Fig 4: Asset Management as strategic corporate resource 6.4 Asset Management Skills and Competencies 6.4.1 Asset Management is currently not a profession in its own right. It is not a single skill but a term which describes a strategic process or activity which requires supporting skills and competencies. 14th March 2006 22
  23. 23. 6.4.2 The Institute of Asset Management (IAM) has identified 45 topics associated with asset management and these are distributed under 7 main headings: Business Context •Business management •People management •Information management •Risk management 45 topic areas Asset Management Processes & Life Cycles •Create/acquire assets •Operate/maintain assets •Dispose of/renew assets 6.4.3 Although the IAM reveals its engineering background in the specific detail of the 45 topics it is possible to make generic associations with property assets. 6.4.4 The recognition of skills more typically associated with mainstream management development, such as risk management and people management, is also to acknowledge that ‘technical’ competencies are not sufficient in themselves. This also demonstrates that asset management is not the sole preserve of the property management community. Whilst technical competencies are an advantage, the real key to asset management is an appreciation of the impact property assets can have as part of the bigger organisational picture. 6.4.5 My own interpretation is that best practice asset management relies on the integration of the following: • Knowledge/understanding/experience of how property assets can contribute to business planning, such as acquisitions, disposals, workplace strategies, refurbishments, benchmarking etc • Experience of developing a business strategy which meets the delivery requirements of the organisation and takes into account all resource impacts: human (staffing), asset-based (property) and economic (funding). • A thorough understanding of the economic tools for ensuring that the right financial decisions are taken, such as business case preparation and option appraisal, whole life costing and performance measurement. 14th March 2006 23
  24. 24. The following diagram seeks to illustrate this concept: 1 Facilities Management Estate Management Efficiency Delivery Measurement Business AM Economic Strategy Controls 2 Vision Investment 3 Mission Appraisal Goals Forecasting Effectiveness Economical Fig 5: Interlinking facets of asset management 6.4.6 Currently, I would suggest that across government there is a more of a connection between 1 and 3, and perhaps 2 and 3, than there is between 1 and 2. However, the model which integrates all three, either through the medium of a single individual or through a decision-making process reporting to the main board, is, according to the current research, a rarity. 6.4.7 Asset management skills and competences broadly cover the following areas: Data management • Compilation of Asset registers • Ensuring validity of data • Scope, storage and retrieval of data • Analysis of data Property performance management • Benchmarking of KPIs • Contract management and monitoring performance • Customer/ stakeholder management Strategic Business Planning • Business drivers and strategy thinking • Corporate Real Estate strategy • Asset Management Plans • Risk management • Project & Programme management • Sustainability 14th March 2006 24
  25. 25. Financial management • Resource accounting • Capital and revenue budgets • Whole-life costing • Business cases & option appraisals There is also a requirement for good leadership/people management skills. Leadership • Build up capacity & capability • Manage strategic change • Manage strategic performance • Take responsibility for professional resources The development of these skills and competencies over time will be a feature of the maturity matrix and the Routemap. 6.5 Assets are a strategic resource, just as staff and communications technology are strategic resources. It is the bringing together of these often disconnected strands which will be a major milestone in embedding better asset management. How this translates into organisational practice is something which will depend on the structure of the organisation and the extent to which assets feature in the delivery of its business. 6.6 Asset management must be seen as a process of challenging the status quo to see how things can be improved. Over time, as strategy flexes with external and internal demands there will be a corresponding need to check whether the existing models and approaches are appropriate. 6.7 Professional Skills in Government (PSG) 6.7.1 The PSG framework (see Figure 6) now being implemented, puts in place core skills for the senior civil service and will require people to demonstrate performance at common minimum standards. These core skills will act as ‘gateways’ to promotion and define the standards all staff are expected to meet. 6.7.2 The arrival of the PSG initiative provides an opportunity for asset management to become integrated into mainstream civil service professional development. As a strategic-based skill, asset management connects with both the ‘strategic thinking’ and ‘financial management’ core skills expected of senior managers. These are core skills required by every civil servant under PSG. 14th March 2006 25
  26. 26. Fig 6: The Professional Skills in Government Framework 6.7.3 PSG encompasses a set of core skills which the IAM also recognises as essential to the wider aims of asset management. Business Context •Business management •People management •Information management •Risk management The IAM suggests that there is balance between Strategic Business Skills and Asset Skills depending on the role. It differentiates between the What and the How. Determining what needs to be done at a strategic level is differentiated from the how it is to be implemented. This suggests that the further up the line one goes the more important it is to understand the overall business context. See Figure 7 below. 14th March 2006 26
  27. 27. Strategic thinking/ Business direction (WHAT) Strategic Asset Management Property & Facilities Strategy/ Operational delivery (HOW) Fig 7: Strategic alignment between business direction and operational property delivery 6.7.4 Incorporating asset management into PSG would be an opportunity to: • broaden awareness of the subject to all civil servants who, up to now, may not have had an appreciation of the importance of property assets to change programmes and business delivery; • help make connections with the professional cadre whose role it is to match property needs to business needs; • enable property specialists to widen their career opportunities by developing strategic and business skills. 6.7.5 For those professions already identified in PSG, the development of technical and professional skills goes hand in hand with development of essential management skills. Currently those professions which are recognised in PSG are lawyers, programme and project managers, procurement professional, economists, IT professionals, policy experts, scientist/engineers, social researchers, statisticians, veterinarians, lawyers and communicators. These professions are currently adopting representative ‘Heads of Profession’, individuals who can represent their professional body at a senior level. This seems to be a desirable objective for asset management since not only does it lend credibility to a specialist community, it ensures discussion at the highest level among equals. 6.7.6 Asset management does not automatically imply detailed technical knowledge but a balance between the needs of the organisation and the employment of physical assets to meet those needs. As such, the recognition of asset management within the PSG context would open up wider opportunities for development for property people beyond the specialist mainstream. 6.7.9 Fewer technical competencies are required when developing strategy but more are required to carry out asset management solutions. It suggests a two level approach to embedding asset management into career development. 14th March 2006 27
  28. 28. Strategic Resource Management HR ICT Asset Management Finance Asset Management: Definition and Business Impact Awareness level Asset Management: Skills and Tools Detail level Fig 8: Awareness and Detail levels of Asset Management as part of the embedding process Asset management skills and tools, such as business case creation, option appraisal and whole life costing, would need to be offered at a more detailed level than ‘awareness’, as outlined above. 6.8 OGC Successful Delivery Skills Framework 6.8.1 Successful Delivery Skills (SDS) provides guidance for individuals to map their current skills and potential for advancement through the achievement of qualifications and experience. SDS distinguishes certain delivery skills, accredited by qualifications and experience, and provides a framework for improving upon those skills. PSG, however, demands more than just technical excellence. 6.8.2 The Successful Delivery Skills Framework currently covers Project management, Programme Management and Procurement. These are also valuable skills within asset management portfolio. The framework, however, is currently too narrow in scope in that it does not recognise property-related skills. The framework should be supplemented by property and facilities management competences in the manner shown in the Figure 9 below. 6.8.3 It should be said that the inclusion of Construction Procurement within the SDS suite is more to do with the logical grouping of delivery skills than its role within asset management. Construction Procurement, for the purposes of this report, is seen as an ‘outcome’ of strategic asset management thinking rather than an asset management skill in its own right. The on-going process of managing and maintaining the property continues after completion of construction work. 14th March 2006 28
  29. 29. Fig 9: Diagram showing suite of property-related skills and competencies 14th March 2006 29
  30. 30. 7. The Way Forward 7.1 In this report I have set out how property asset management skills and competences can be embedded within the central civil government sector. I have explained how asset management is essentially a strategic activity which fundamentally challenges how assets are performing through knowledge of the opportunities and limitations of the assets themselves. 7.2 From a training and development point of view, I have identified two audiences who need to receive the message about asset management: • those whose role involves them in making strategic business decisions for the organisation; and • those within the property management workstreams who possess the technical knowledge associated with operating and maintaining buildings but require a broader understanding of strategic business thinking. 7.3 Promoting asset management skills as part of mainstream career development is the bigger challenge. The challenge is to place asset management as a key component of strategic business thinking in the manner in which Sir Michael Lyons envisages it in his report. 7.4 As illustrated above, the opportunity exists to raise the profile of asset management through Professional Skills in Government. There will be an increasing need for those aspiring to reach the top of the organisation to understand and experience career streams (Policy Delivery; Corporate Delivery; Operational Delivery) other than their own in order to have a broader understanding and therefore make more informed strategic decisions. 7.5 The Corporate Services Delivery career stream is mainly representative of the strategic resources and professional skills described in this report, since it encompasses Human Resources, ICT, Finance and other support functions. These resources exist to support the core business of the organisation. Their importance, in terms of the resources they consume and control, means that considerable expertise is required of those who have responsibility in these areas. 7.6 However, there is also a link with the Operational Delivery career stream where a collective overview can also be taken of all the strategic resources. PSG describes those in Operational Delivery as “those skilled in leading and managing people, often in large numbers, to build, run and deliver services”. An understanding of strategic asset management would be of benefit here too. 14th March 2006 30
  31. 31. 7.7 Having identified the key areas for development in this report the next stage will be to start the process of integrating asset management into mainstream development. This will mean liaising with representatives from other strategic resource areas across government to agree on a joined up approach to this initiative. The National School of Government, as a key delivery agent of PSG and senior management development programmes, will also need to be fully engaged the initiative to match the increased profile arising from the OGC. 7.8 Senior management’s reliance on the professional expertise of their staff in each of these skills areas is obvious. Good corporate decision making will depend as much on the questions being asked as the answers being given. 7.9 The continued existence of the in-house intelligent client capability remains fundamental to best practice across government. In the area of estates and property specialists, existing training programmes already support this requirement. Asset management awareness, skills and tools will also need to be incorporated into property/facilities management mainstream programmes. 7.10 Asset management provides a challenge to the way things are done and looks for options to improve delivery. Where assets are retained they need to be measured to ensure that they are delivering effectively; where they are inadequate they need to be replaced; where they no longer meet the business need they must be disposed of. Recognising opportunities for embedding the thinking processes that lie behind this approach has been the aim of this report. 14th March 2006 31
  32. 32. Annex A Terms of reference: To investigate the current level of asset management skill and capability available to central civil government departments, and propose a strategy for sustainable improvement, with particular reference to the management of property assets within the wider context of asset management. Objectives The objectives of the capability and capacity strand of the feasibility study are to: a) collect information and evidence on the current asset management skill and capability base available in central civil government; b) determine the gap between the existing level and distribution of these skills (capacity) and the ideal pattern needed to manage assets strategically to support business delivery, with particular reference to property assets; and c) propose a strategy for improving the level and distribution of asset management skills and capability so closing the gap between the existing and the ideal pattern. Information on both a) and b) will be gathered from response to a questionnaire targeted at Heads of Property and subsequent interviews held with selected individuals as agreed with the Researcher. Outcomes The desired outcomes of the research would be: • Identification of an outline training framework for people within the property and estates sector in order to support progress towards more strategic asset management and business decision making roles • A raised awareness of the professional skills of property management • Recognition of property asset management skills within the appropriate strand of PSG • Clarification of the links between technical property skills and generic asset management skills • Identification of existing mainstream qualifications or development programmes that should incorporate asset management skills, including the appropriate levels and types of skill • Draw conclusions on the resource (capacity) available within departments to reach the desired level of asset management excellence. 14th March 2006 32
  33. 33. Annex B List of those interviewed: Tony Edwards: Head of Buildings and Estate Management Unit, Home Office Emma King: Head of Property, The Arts Council Mike Acheson: Head of Procurement services Division, Department of Transport Ian Dougal & Christine Zammat: Heads of Property & Facilities Management, Cabinet Office John Belza: Head of Procurement and Property Services, DCMS David Gooda: The Woodhouse Partnership Ltd and Institute of Asset Management Bill Wilson, Learning Account Client for Corporate Services, HMRC Mike Cant: Vice Chair of the Facilities Management Faculty, RICS Ian Fielder: Chief Executive, BIFM Keith Jones: Performent Consulting 14th March 2006 33
  34. 34. Annex C References/Bibliography: Keith Jones Improving Asset Management in Government Departments Report for OGC January 2005 Working Without Walls OGC publication Leveraging the Benefits Report by Prof Virginia Gibson for OGC Cambridge CC Asset Management Beacon Council Open Day 25th October 2005 Good Britain Great Britain Ernst & Young Report Setting New Standards: A Strategy for Government Procurement (White Paper - CM 2840) - May 1995 Setting New Standards Treasury Report 1994 Institute of Asset Management’s website Property in Business – a waste of space? RICS report Measuring Performance in the Management of Local Authority Property DETR/ODPM 1999 Hot Property, Audit Commission 2000 Successful Delivery Skills Framework OGC publication 14th March 2006 34