Property Management. Guidelines For Office Space. Property Management. Issued by The Minister of State Services. CENTRE of E X P E RT I S E

Transcription

1 Property Management Guidelines For Office Space Issued by The Minister of State Services Prepared by G O V E R N M E N T Property Management CENTRE of E X P E RT I S E

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3 Property Management Guidelines For Office Space Issued by The Minister of State Services Prepared by G O V E R N M E N T Property Management CENTRE of E X P E RT I S E These Guidelines are updated from time to time. To ensure you have the most recent version please check the website at:

4 August 2012 ISBN (Print) ISBN (Online) Crown copyright 2011 This work is licensed under the Creative Commons Attribution 3.0 New Zealand licence. In essence, you are free to copy, distribute and adapt the work, as long as you attribute the work to the Crown and abide by the other licence terms. To view a copy of this licence, visit Please note that no departmental or governmental emblem, logo or Coat of Arms may be used in any way that infringes any provision of the Flags, Emblems, and Names Protection Act ( Attribution to the Crown should be in written form and not by the reproduction of any such emblem, logo or Coat of Arms.

5 Contents 1. Introduction Government goals Government expectations of Crown Agencies Purpose of the Property Management Guidelines Role of the Property Management Centre of Expertise Role of agencies Reporting Property Management Guidelines content and structure Expectation relationship matrix Planning Introduction and purpose Key considerations Acquisition Introduction and purpose Key considerations Design and fit out Introduction and purpose Key considerations Design Key considerations Fit out Lease management Introduction and purpose Key considerations Facilities management Introduction and purpose Key considerations Disposal Introduction and purpose Key considerations...38 Appendices Appendix 1: Key consideration/government expectation cross-references...40 Appendix 2: Expected crown lease covenants...49 Appendix 3: Other references...50 Appendix 4: Agency roles and policies on energy and emissions Glossary Page 1

6 Property Management Guidelines For Office Space 1. Introduction 1.1 Government goals In establishing the Property Management Centre of Expertise (PMCoE) 1, the Government has confirmed its desire to achieve specific goals for Crown property management. These goals are to: realise efficiency and effectiveness gains in Crown property management build property management capability within departments and Crown agencies maximise the use of the Crown property portfolio build collaboration and co-operation between Crown entities in property and property related activities. 1.2 Government expectations of Crown Agencies To support the achievement of its goals, the Government has provided seven clear expectations for departments and Crown agents (agencies 2 ) with regards to how they manage their property portfolios and how they contribute to the Government s property management goals. 3 These expectations are that agencies will: have national property plans provide productive, flexible, cost-effective workspaces adopt cost-effective options to manage energy consumption and emissions reduce the total, life-cycle cost of occupancy; including working towards an office space occupancy density 4 goal of between 12m 2 and 16m 2 per FTE (full-time equivalent staff member) behave and negotiate with due regard to the impact on other Crown agencies operating in the same market take a whole-of-government perspective when considering lease options, including as a priority considering surplus space available from other government agencies and co-location opportunities only enter rental contracts that limit performance and price risks. 1 CAB Min 11 14/14 (see the PMCoE s shared workspace) 2 For the purpose of these guidelines the common descriptor agencies will refer to both government departments and Crown agents. 3 CAB Min 11 14/14 (see the PMCoE s shared workspace) 4 Occupancy density has been defined for the purpose of these guidelines. Calculation details can be found under Occupancy Density Ratio in the Glossary. Page 2

7 1.3 Purpose of the Property Management Guidelines To support agencies in meeting its property management expectations, the Government directed the PMCoE to develop and document Property Management Guidelines 5 for issue by the Minister of State Services. These guidelines have been drafted at a high rather than at a detailed level. We suggest agencies consider the overall intent of the guidelines when they apply them within their organisations. An agency s size and the complexity of its property portfolio will influence how it applies them. The guidelines are not: prescriptive intended to supersede existing property management practices or approaches agencies have in place where they support the Government s expectations applicable to buildings for highly specialised functions such as schools, hospitals, prisons, etc. The guidelines do: outline the key considerations agencies should regard as expected practice when operating towards the achievement of the Government s property management expectations specifically focus on areas that are important for agencies in delivering the Government s property management goals apply to all office space 6 occupied by departments and Crown agents, whether owned or leased require agencies to match their response to their organisation s scale and operating environment. 5 CAB Min 11 14/14 (See PMCoE shared workspace) 6 Office space is office accommodation, whether leased or owned, including those properties which are office in nature, even if they are not used for desk based activities (e.g. some justice sector facilities, service delivery or public interface facilities etc). We expect that, as these guidelines are used, we will find opportunities to enhance or improve them. Therefore, this document is living, in the sense we expect it to evolve as the Crown property management capability and community grows. 1.4 Role of the Property Management Centre of Expertise The PMCoE provides tools, information and guidance on property management best practice. It is the central repository for the cross-government property database. It identifies and facilitates cross-government approaches to accommodation, co-location and collective procurement opportunities. Its mandated 7 roles and responsibilities are to: provide leadership through working with agencies to identify and promote opportunities to drive efficiency and effectiveness gains in property management, and to recommend property management expectations for approval by Cabinet provide guidance and support by documenting and publishing best practice, working with agencies to move towards best practice, and identifying agencies with strong property management expertise willing to advise and support their peers monitor performance by collecting and collating office property measurements and information, and publishing an annual report on property provide a brokerage service to match Crown agencies seeking space with those who have surplus space, to investigate the shared contracting of property related supplies and facilities management, and to support the co-location of agencies (including identifying common barriers to co-location and developing solutions). 7 CAB Min 11 14/14 (see PMCoE shared workspace) Page 3

8 Property Management Guidelines For Office Space The PMCoE is also responsible for maintaining the Property Management Guidelines. To support the use of these guidelines, the PMCoE has developed a shared workspace as the repository for practical guidance, templates, examples and case studies. The shared space is also an online facility for discussion and the exchange of information between agencies. We encourage agencies to arrange for their property management personnel to register for access to the shared workspace by contacting the PMCoE. The guidelines, supplementary guidance material, and other activities of the PMCoE can be seen as a tiered model below. 1.5 Role of agencies Agencies are accountable for delivering the Government s property management goals and outcomes. Agencies are responsible for: establishing office accommodation requirements according to service delivery needs complying with applicable legislation managing their property portfolios efficiently and effectively meeting Government expectations and ensuring they are incorporated into their operating principles and practices, with consideration of the Property Management Guidelines. Agencies can draw on the services of the PMCoE and the expertise of other agencies at any time. They are also encouraged to support the building of the Crown Property Management community by actively participating in and using the PMCoE s shared workspace. Cabinet Government policy Seven expectations of agencies in regard to property management Four roles of the PMCoE PMCoE Expected practices Property management guidelines Reporting of agency property information PMCoE shared workspace Recommended practices Supplementary guidance & advice Templates, examples & case studies Community of practice Page 4

9 1.6 Reporting Cabinet requires the PMCoE to publish an annual report detailing the state of the Government s property portfolio, and the progress made towards achieving the Government s property management goals. In addition, the PMCoE will provide reporting and data on an ad-hoc basis to support agencies strategy development and decision making. The PMCoE will use its centralised property database for all such reporting and agencies will be asked to periodically update their agency information. We also encourage agencies to build reporting against their progress in meeting the seven Government expectations into their existing internal reporting templates. 1.7 Property Management Guidelines content and structure These guidelines recognise agencies are at varying levels of capacity and capability in their property management activities. It is acknowledged that some agencies have access to a wide range of experience and expertise that informs good property management practices, and others do not. As stated in 1.3, the guidelines are drafted at a high level. They: outline the key considerations agencies should regard as expected practice when operating towards the achievement of the Government s property management expectations act as a prompt for agencies to examine their current property management approach and tools to ensure they will support the delivery of the Government s property management expectations. The guidelines have been drafted to reflect the property management cycle as depicted in the model below. The content for each of the six elements draws on the best practice and experiences of New Zealand and overseas public and private sector organisations, supplemented by professional input from the New Zealand property industry. Each of the six elements has a separate section in the guidelines. For consistency we have used the following generic format: Introduction and purpose a brief outline of the key focus of the section and background into what the particular section was designed to achieve or support. Key considerations concise statements of expected property management practice, plus commentary and suggestions for further supporting materials as appropriate. Planning Acquisition Design & fit out Lease management Facilities management Disposal Page 5

10 Property Management Guidelines For Office Space 1.8 Expectation relationship matrix For clarity the table below outlines the relationship (significant, moderate or low) between the sections of these guidelines and the seven expectations of Government. In addition, the key considerations in each section of the guidelines are cross-referenced to the expectation(s) they support (see Appendix 1). Cabinet expects Agencies to: Planning Acquisition Design & Fit Out Lease Management Facilities Management Disposal Have national property plans Provide productive, flexible, cost-effective, workspaces Adopt cost-effective options to manage energy consumption and emissions Reduce the total, life-cycle cost of occupancy Behave and negotiate with due regard to the impact on other Crown agencies operating in the same market Take a whole-of-government perspective when considering lease options Only enter rental contracts that limit performance and price risks Key Significant Moderate Low Page 6

11 2. Planning 2.1 Introduction and purpose Good plans shape good decisions. That s why good planning helps to make elusive dreams come true. Lester R. Bittel, The Nine Master Keys of Management Organisational outcomes How does property impact the delivery of outcomes The Government expects agencies to adopt a strategic approach to how they manage property. This approach is expected to be: How should our property portfolio perform? How does our property portfolio perform? clearly built on and integrated with organisational service delivery strategies and accountability document planning processes 8 in accordance with the Treasury s Capital Asset Management (CAM) practices and expectations (see the PMCoE s shared workspace for further information). Without well-conceived, documented property management plans, agencies risk providing accommodation solutions that are not fit for purpose or do not pursue opportunities that would benefit the agency or wider groups of agencies. Property plans help organisations to work through the link between organisational outcomes and the assets required to most cost-effectively support these outcomes. This can be illustrated at a high level as shown in the following diagram. For the purpose of these guidelines, we refer to property plans as incorporating the strategic and operational aspects of property. Larger organisations may well have separate documents covering property strategy, operational plans, policies and procedures. What is our plan to manage performance gaps? Property Plan Similarly, for the purpose of these guidelines, we distinguish between property plans (for managing the assets) and resource plans (for managing the property management functions). The Property Management Guidelines do not cover the latter. The PMCoE s shared workspace has: guidance on the development of a property plan, including a suggested structure and approach to developing the plan s content links and further information on the Treasury s Capital Asset Management expectations. Agencies are encouraged to use this information to test their existing planning approach and their documentation, adapting the guidance material to suit the size and nature of their property portfolios. 8 Accountability documents are the formal reports produced by agencies for external reporting purposes (e.g. the Annual Report and Statement of Intent presented to the House of Representatives). Page 7

12 Property Management Guidelines For Office Space The purpose of the Planning section is to: provide best practice property management planning advice to ensure property decisions support organisational service delivery highlight the key considerations needed to ensure the organisation s property portfolio meets current and future needs provide a suggested framework/structure for property management planning. 2.2 Key considerations Property plans should be based on an understanding of how property can have an impact on the successful achievement of organisational and wider government outcomes The process of building a property plan is as important as the plan itself. Agencies need to ensure they develop and maintain a clear understanding of organisational goals and desired outcomes. This can only be developed through a structured engagement with business groups and participation in strategic conversations. The agency will then be in a position to determine what gap, if any, exists between current provision and future organisational needs Property plans should cover a strategic timeframe and be interpreted into an operational timeframe Property decisions are generally long term in nature, so the context these decisions are taken in should be commensurate. This longer term understanding of needs enables agencies to identify key opportunities for planning and implementing portfolio changes to meet future requirements. As a guide, a strategic timeframe would be 5 10 years and an operational timeframe 1 3 years. Longer term views may be desirable for complex or large property portfolios Property plans should remain dynamic and current, being reviewed for any significant changes to operating conditions The internal and external environment is rarely static. Property plans inform day to day property management decisions and need to remain current. Agencies need to proactively identify significant changes in operating conditions and reflect them in their property plans. Best practice suggests a minimum review period of a year is likely for most organisations Property plans should be unambiguously stated and clearly measurable To be useful, property plans need to be structured, achievable and clearly aligned to the organisation s wider strategic direction. They must be measurable in terms of progress towards outcomes. Agencies should ensure regular reporting against the property plans is integrated into standard internal business reporting The property planning process should be integrated into the organisational planning processes for accountability documents 9, capital planning and the Estimates of Appropriations Property planning does not exist in isolation. Agencies should fully integrate their property planning processes with other organisational and Government planning activities. This will ensure the principles of other planning regimes are not over looked (e.g. better 9 Accountability documents are the formal reports produced by agencies for external reporting purposes (e.g. the Annual Report and Statement of Intent presented to the House of Representatives). Page 8

13 business cases guidance, capital intentions reporting, and Cabinet Office circulars) Effective plans are based on measuring the performance of property assets, as this performance has an impact on organisational objectives In addition to measuring progress towards the delivery of the property plan, agencies should incorporate goals and measurements relating to the performance of their property assets. Measurements should be timely, relevant, comparable, and measurable, covering not only cost efficiency but also effectiveness (contribution to organisational outcomes). Ideally, agencies should undertake performance benchmarking within their portfolios. The PMCoE will be facilitating benchmarking of performance across government, and will be asking agencies to participate A whole-of-government and sectorial perspective should be maintained when developing plans This perspective is relevant at all levels of planning from the strategic to the site-specific levels. In particular, agencies should recognise the significant role property plays as an enabler of change strategies at the wider government level. The PMCoE has a role to co-ordinate cross-government activity, and we encourage agencies to share opportunities and plans via the PMCoE s shared workspace. Agencies should also ensure the PMCoE is aware of individual property plans so it can maintain a cohesive view of changes to the Government s property portfolio Property plans will take account of government policy and (where practical) pending policy Agencies should give due regard to: any government policy that affects property decisions government s seven property management expectations any government policy affecting property or procurement strategic property management principles developed by the PMCoE. Agencies should be aware of any initiatives (e.g. sharing of services or delivery) that could have a significant impact on property portfolios, and where practical allow for these as contingencies. The PMCoE encourages agencies to use the shared workspace to discuss the implications of wider government policy on property decisions Property strategies should challenge the past and be future focussed Property decisions are long term in nature, and the built environment can have a significant impact on internal and external occupants. Once built, property can be inflexible to change and polarise processes and cultures. A good property strategy is based on understanding the current accommodation performance and suitability coupled with a clear view of future state possibilities. Property strategies developed from a sound understanding of the future needs of the organisation and of how property contributes to organisational outcomes provide opportunities to define and test new environments. A check sheet for whole-of-government analysis is available as well as advice and discussion forums on the PMCoE s shared workspace. Page 9

14 Property Management Guidelines For Office Space Operational plans should be expressed in terms of gap analysis Property plans should be specific about actions or initiatives to be undertaken. They should be based on a clear articulation of a preferred future state (which demonstrably optimises organisational outcomes), and reflect a clear understanding of the performance and risk of the existing assets Measurement of cost effectiveness should be expressed in terms of whole of life Agencies should be adopting good practice principles on cost benefit analysis and whole of life considerations. Guidance and advice is available from the Treasury at govt.nz/publications/guidance/planning/ costbenefitanalysis/h Property strategy should be considered at a strategic level, and integrated into HR and ICT strategies Property can be an enabler of change, and a catalyst for cultural reform. Agencies should develop and maintain a coherent view of how property can have an impact on their organisation. Generally, property assets do not operate in isolation of the occupants or technology platforms. It is important to ensure property plans are cohesively linked with ICT and HR strategies and plans. Agencies should ensure good governance is in place to enable such links to be realised. Policy options During the asset planning process agencies are likely to identify areas where their ability to improve value-for-money is constrained by current policy settings. Identify changes to existing policy settings which could improve value-for-money. Page 10

15 3. Acquisition 3.1 Introduction and purpose Overseas experience, particularly in the United Kingdom, has shown that significant reductions in property holdings can be made through a whole-of-government approach to property acquisition and use. The Government, through the seven property management expectations, has expressed a clear intention to: reduce the Crown s property portfolio move agencies towards more collaborative and co-operative working relationships with regard to property. The Government is seeking compelling business cases for all property investment decisions. The Better Business Case guidelines 10 provide specific guidance on the business case process and expectations. In particular, an Indicative Business Case (IBC) focuses on the strategic drivers for the investment and the benefits in return. As a result, each agency needs to undertake a robust analysis to understand and articulate the key drivers for the proposed investment. The diagram below is a recommended way of starting this process and addressing the requirements of the IBC. It will help agencies to explore the underlying organisational drivers for the project and to build a robust set of requirements. Note: It is important for agencies to defer the planning phase until the investigation, linking and briefing is completed. The purpose of the acquisition section is to: provide good practice advice on the acquisition of workspace highlight the key factors agencies should consider in meeting changing needs provide guidance on the integration of whole-of-government thinking into property acquisition processes. The recommended planning process Best practice start point for projects Typical start point for projects Investigation Linking Briefing Planning Premises brief Search and evaluation process Engagement with organisation High level drivers Building upgrade brief Fit out brief Building upgrade design Preliminary design Implementation Change brief Communications plan 10 betterbusinesscases Page 11

16 Property Management Guidelines For Office Space 3.2 Key considerations Agencies are usually prompted to consider acquiring new space or reconfiguring existing space by either an impending lease expiry or some form of organisational or structural change. While agencies are still responsible for providing accommodation solutions that best suit their business needs, the Government expects wider whole-of-government thinking to be built into the decision making process. This applies to both an agency s approach to seeking space and its behaviour in the property market. Overall, agencies are expected to look for opportunities to reduce the Government s property portfolio over time. This may well mean some agencies increase and some decrease their accommodation, as integrated solutions are developed. The following acquisition guidance is broken down into two areas: planning and implementation. Planning The need to acquire new premises should be founded in strategic analysis The acquisition of new premises should be the outcome of good property management planning at an agency and a wider government level. In developing a property management plan an agency needs to: engage with business groups within their organisation and sector to understand their strategic goals, direction and future property needs clearly identify and validate the business changes that drive a need for additional or alternate space. Having identified a high level business need through planning, agencies need to develop a more detailed picture of requirements with which to test planning assumptions. This requires further engagement with sector and organisational groups to develop a detailed accommodation brief. Examples of questionnaires and accommodation briefs can be found in the PMCoE s shared workspace. It is important for agencies to fully test and in some cases challenge the accommodation requirements being sought. At this stage of the process, new design/layout ideas and the Government space use expectations can be factored into the final accommodation brief Re-test strategic assumptions before acquisition Agencies should test their initial thinking on the most appropriate option to meet their accommodation needs, as the property market and circumstances may have changed since the initial plan was developed. Property strategies are dynamic and the operating environment is subject to change. Before making any changes to an agency s portfolio, strategic assumptions should be tested, including any whole-of-government considerations Specifications should be based on a measurable contribution to organisational outcomes The specification for a new acquisition should be driven by strategy and organisational needs that have been interpreted into property terms. The specification should allow an assessment of the relative success of options to meet organisational outcomes. Page 12

17 3.2.4 Acquisition of space should reflect cost effective options A key issue is to ensure property is cost effective. It is important to develop an awareness that planning is multi-dimensional and to recognise there is a cause and effect relationship between several variables. An example of how a small change in each variable can make a significant impact on the outcome is illustrated below. The purpose of this example is to show there is an opportunity to challenge requirements (and therefore cost) at all key decision points in the process. A relatively small change in multiple variables can provide cumulative improvement Robustly consider the marginal benefit of change To ensure the cost effectiveness of new premises, agencies should robustly assess the marginal benefit of new premises compared to the status quo and the practical minimum solution. Guidance on these principles can be found on the PMCoE s shared workspace Robustly consider the cost benefit of lease vs. own A whole of life approach should be taken in all new projects. The decision to own or lease an asset is affected by various factors including timeframe, specialisation, quality, cost, risk, and control considerations. Frameworks for the analysis of the cost-versus-own decision have been developed within government. Guidance is available on the PMCoE s shared workspace. Option Number of Staff Space Per Person (m 2 ) Rental Cost ($/m 2 ) Fit out Cost ($/m 2 ) Total Cost Per Person Option ,000 $25,500 Option $20,250 Change 11.7% 10% 10% 20.6% Page 13

18 Property Management Guidelines For Office Space Robustly question the need for additional space The Government wants to reduce its overall accommodation portfolio. An agency considering additional accommodation should first look in its own and the wider government property portfolio for cost effective solutions that do not involve acquiring additional space. Agencies should consider: Whether the new activity to be housed can be done via outsourcing or collaboration with another government agency. Whether other activities within the organisation could be consolidated or moved to create space to meet the new need. Whether the current property portfolio can be reconfigured to release space to meet the new need. There is a wealth of information and material available on options for the better use of existing space, including activity based layout, hot desk/hoteling, maximising shared workspace/minimising dedicated space. Examples and case studies can be found on the PMCoE s shared workspace. Whether new ways of working could be introduced to create spare shared workspace capacity for the new need. Research shows that, on any given day, 20 30% of workstations are vacant due to leave, sickness, training, meetings etc. Examples of organisations tapping into this as a space resource can be found on the PMCoE s shared workspace Robustly challenge location requirements Location decisions can have a significant impact on rental rates, as well as wider economic, social and environmental implications (e.g. increased commuting time and costs for staff). Challenging the required location(s) should be a specific step in developing property management plans, to ensure each option has been properly evaluated. When considering accommodation options, early planning should challenge locations and demonstrate all options have been considered and robustly evaluated. A location assessment framework, example questionnaires and accommodation briefs can be found on the PMCoE s shared workspace. Key components of analysing a location decision are to establish: Which groups need to be located in the traditional government locations (e.g. proximity to Parliament in Wellington or a city s CBD, or adjacent to other agencies or groups). This is based on an assumption that non-cbd based office accommodation solutions often cost less than CBD-based ones, particularly in metropolitan centres and in Wellington s Parliamentary precinct. For CBD properties, what potential is there for non-centre facing staff to be employed away from the region altogether. What are the adjacency issues for each business group. It is important to engage early with the PMCoE, to ensure business cases for new space take account of the whole-of-government and the agency s fiscal position, and the business needs and options are as inclusive as possible. Page 14

19 For Wellington-based head office decisions, the framework below sets out a definition and generic criteria outlining how each business unit could be classified, broken down into four groups. Group Definition Criteria Examples Group 1 Minister-facing Staff who are directly involved with the Minister or the Minister s office through face-to-face engagement Regular personal interface with Minister or Minister s office staff Hold 2 3 meetings a week with Minister s staff Advise on specialist/high level policy areas Chief Executive Deputy Chief Executives Executive Leadership Team Executive Steering Group Person-to-person interface to carry out position effectively Interact/engage with other government agencies frequently Group 2 CBD-based staff Staff who directly support the Ministerfacing group in the preparation of strategic policy, planning or execution; and other staff who need to be based in the CBD to operate effectively Regular personal interface with Group 1 members Hold 2 3 meetings a week with Group 1 members Subject matter experts required for Group 1 direct support Person-to-person interface with Group 1 to carry out position effectively Only occasional interface with corporate and administrative support staff Operational staff who need to be CBD-based Senior policy staff Strategy planning/ execution Senior functional staff (Level 2 managers) Operational level staff required to be in the CBD Group 3 Agency-specific corporate and administrative support staff; and non CBD-based operational staff Staff whose agencyrelated subject matter expertise allows daily functions to be carried out by the agency; and operational staff who do not need to be based in the CBD to operate effectively Does not require regular personal interface with Groups 1 and 2 personnel to carry out position effectively Has agency-related expertise that someone from a separate government agency (but same business unit) would be unable to fulfil without significant training and experience Operational staff who do not need to be CBD-based HR (agency-specific) Finance (agency-specific) IT (agency-specific) Corporate (agency-specific) Operational level staff (not required to be in CBD) Group 4 Agency non-specific corporate and administrative support staff Staff who provide non-agency-specific subject matter expertise that allows daily functions to be carried out by the Ministry Does not require regular personal interface with Groups 1 and 2 personnel to carry out position effectively Has non-agency-specific subject matter expertise similar in function to other government agencies like business units IT (business-as-usual) Payroll Property (office accommodation) HR (non-agency-specific) Corporate (non-agency-specific) The definition of each group requires a clear organisational understanding by an agency s senior management. This will ensure the agency s operational and functional effectiveness remains if personnel become physically separated. Technology and management solutions could be developed to mitigate this separation. Page 15

20 Property Management Guidelines For Office Space Robustly challenge single vs. multiple site requirements The location and size of the space required can have a significant impact on rental rates and contestability. The decision to split or aggregate the functions of agencies within site(s) or locations requires a complex analysis of, among other factors, adjacency links, proximity to stakeholders and business continuity requirements. This analysis is challenging but often significantly increases the range of options as well as the complexity of evaluation. The PMCoE s shared workspace contains guidance and case studies to help agencies to do this analysis Formally explore co-location options or the availability of surplus Crown accommodation Agencies are accountable for their own workspace decisions. However, the Government has set an explicit expectation for agencies to take a whole-of-government perspective when considering lease options, including priority consideration of other Crown surplus space or co-location options. Agencies should ensure their property decision-making processes and templates cater for this step. In addition, agencies should document the whole-of-government opportunities considered and the decisions made in their property management plans and/or business cases. Taking over spare space and physically defining the boundaries between agencies has been the traditional approach to using spare capacity in the Crown property portfolio. Increasingly, agencies are seeing co-location as a viable option. Agency responses to accommodation pressures after the Christchurch earthquake have validated this concept. Not all agency functions are suitable for co-location. However, when considering the co-location option, agencies should ensure any perceived barriers or legal constraints are robustly challenged to ensure their validity. Agencies should document the outcomes of solutions developed from such research for publication on the PMCoE s shared workspace, for reference by other agencies. When considering new premises, in particular CBD properties, a formal process should be undertaken to identify the organisational, sectoral and whole-of-government user requirements. This will help the agency to identify and evaluate any options for co-location. A suggested approach is outlined in the following diagram. Phase 1 Phase 2 Phase 3 Define organisational investment objectives, existing arrangement and business needs. Quantify the four functional groups and detail the group-specific business needs High level assessment of four generic options for the organisation Identification and engagement with Sectoral stakeholders Identification of AoG policy, strategy and property issues (property issues via PMCoE) Define high level Sectoral investment objectives, existing arrangment and business needs Identify all-of-government objectives, strategies, existing arrangement and opportunities High level assessment of two generic options for the sector/aog Identification and evaluation of long list Page 16

21 Phase One: Analysis should be done as per the Better Business Cases framework, with particular emphasis on stakeholder engagement (including the PMCoE) and formal definition of the objectives, needs and existing arrangements in other agencies (sectoral and whole-of-government). Phase Two: As outlined in key consideration 3.2.8, the functions of the agencies can be grouped to determine the restraints on location (such as the need to be CBD located) and the opportunity for co-location with or without integration. Phase Three: The organisational, sectoral and whole-of-government investment objectives, business needs and existing arrangements and opportunities can be assessed at a high level against six generic options before the detailed analysis of specific options (the first four are agency specific and the final two involve wider groups of agencies): 1. Current state/status quo (as a baseline) 2. Practical minimum cost solution for the agency 3. Optimised single site solution 4. Multiple sites single agency 5. Co-location (part or whole) of agencies without integration of functions 6. Co-location (part or whole) of agencies with integration of functions (shared services) All changes to portfolio should be taken with consideration of current government strategy and policies Government policy in non-property areas such as procurement, service delivery and sectoral strategies can affect property decisions. In addition, from time to time, the PMCoE will develop property related strategies, policies and principles that aim to provide a whole-of-government perspective for agencies considering lease options. Information on such wider policy considerations can be found on the PMCoE s shared workspace Ensure full compliance with any government policy on safe and effective working environments Agencies should ensure any new premises fully comply with government policies such as accessibility and the current published earthquake standards. Information about earthquake policy as it relates to government agency buildings can be found on the PMCoE s shared workspace. Each of these six options can be evaluated using the Better Business Cases guidance to establish evaluative measures based on investment objectives. Agencies should contact the PMCoE early if they: identify surplus space within their portfolio wish to explore co-location as an option. Page 17

22 Property Management Guidelines For Office Space Leverage property projects for wider organisational change Changes in the property portfolio (expanding, reducing or reconfiguring), are ideal opportunities for agencies to leverage wider organisational or cultural change. It is important for agencies to consider this at the earliest point in the property planning process to ensure the property solutions support the organisation s desired changes. Examples include: An organisation with a siloed operational culture may want to create a more open, flexible, collaborative work environment to promote more co-operation between business groups. An organisation spread across a number of buildings with a degree of autonomy ( my space ) in space management may use consolidation into a single site as an opportunity to introduce a more standardised, consistent, modular ( our space ) space management approach. An organisation undertaking reconfiguration of a traditional one desk per person site may want to explore activity based design and alternate work options for staff (working from home, hot desking etc.). The PMCoE s shared workspace has New Zealand and overseas case studies of organisations successfully using property projects as a catalyst for wider change initiatives. Implementation Proactively manage transparency and co-ordination within government when engaging with the market Agencies should: advise the PMCoE of upcoming market activity to ensure a co-ordinated approach be mindful of the wider government implications of the precedent effect of lease terms avoid the use of confidentiality provisions which restrict the transparency of transactions within government (e.g. agencies not being excluded from using relevant market evidence for rental reviews) Obtain independent advice Agencies should ensure: externally sourced advice is free of interests beyond the provision of quality advice to the agency for the purposes contracted anyone providing advice has no vested interest in any particular option or outcome under consideration the advisor has no conflict of interest or significant relationship with other parties within the transaction. Page 18

23 Project and risk management disciplines should be applied commensurate to the scale and complexity of the project Agencies should: Understand the level of project management and risk management capability required to manage property projects with regard to the size, complexity and fiscal risks involved. Ensure personnel with the appropriate skills and experience are appointed to undertake this activity. This may not necessarily be a member of the property team, as the early stages of the acquisition process require a strong understanding of the public sector policy and processes for business cases and the appropriate approval levels Procurement, governance and probity principles should be applied commensurate to the scale and complexity of the project In undertaking new lease arrangements, agencies are committing the Government to long term arrangements and significant costs. Agencies should ensure: personnel selected to lead these activities have the appropriate skill set and knowledge appropriate levels of governance commensurate to the size and complexity of the project are in place Emphasise the value of the Crown covenant in negotiations Agencies should ensure the appropriate financial allowances are made for the relatively low risk associated with a Crown covenant in lease and construction contracts. This allowance should be transparent in calculations that use private sector comparative evidence Minimise performance and price risks in contract terms and documentation Specialist advice should be sought, commensurate with the scale and complexity of the contract. The expected lease covenants are included in Appendix 2, and guidance on performance and price risks in development agreements and agreements to lease is provided on the public sector intranet ( property/leaserisks). Case studies, sample documents and discussion forums are available on the PMCoE s shared workspace. Specialist advice on these matters can be obtained from the Ministry of Business, Innovation and Employment, the Office of the Auditor General and the State Services Commission. Page 19

24 Property Management Guidelines For Office Space 4. Design and fit out 4.1 Introduction and purpose The Better Administration and Support Services (BASS) report noted that the 33 agencies measured for the 2009/2010 year spent a combined total of $205 million on property costs. It also noted there was a potential to save 25 35% of this cost if agencies were to use new design trends in maximising space utilisation. The Government expects Crown agencies will, over time, move towards an occupancy density ratio 11 of between 12m 2 and 16m 2 per FTE. This target is realistic and is being achieved by some agencies who have moved into new accommodation. Significant space savings have been achieved with relatively modest changes from the traditional approach to the design of shared workspace and the way shared workspace is used. To achieve the Government s utilisation targets, agencies need to challenge the: one desk per FTE standard approach allocation of dedicated rather than shared spaces preference for agencies to replicate facilities that could readily be shared. More efficient space utilisation will require agencies to embrace the new ideas for creating a flexible and innovative work environment. 11 Details about the calculation of the Occupancy Density Ratio can be found in the Glossary. The purpose of the design and fit out section is to: provide best practice advice in the design and fit out of both existing and new workspace introduce a consistent approach to achieving an occupancy density of 12 16m 2 per FTE provide information on current government requirements for energy efficiency and sustainability provide best practice considerations to support the change management aspects of introducing a flexible shared workspace environment and leveraging property fit out to support wider organisational change. 4.2 Key considerations Design Most agencies make significant decisions about changing or reconfiguring their premises once every years. This presents agencies with an opportunity to examine the way they operate and to ask questions about the nature of the work environment and how this might better support the agencies long term strategies. It is also the most effective time to consider incorporating options to reduce the life-cycle cost of operating the premises. These options include design features that support a reduction in energy use and emissions. The goal of workplace design is to provide spaces that allow people to do their jobs effectively and in comfort. For government agencies there is also an expectation of maximising the use of the space available and, over time, working towards achieving a 12 16m 2 per FTE occupancy density ratio. To support design decisions, agencies should develop a comprehensive functional brief that outlines the functions to be accommodated and the inter-relationships between functions. Page 20

25 The brief should also clearly draw the link to the agencies business strategies and objectives. Agencies are responsible and accountable for delivering a workplace design that best suits their business needs. However, the following key principles will strongly support the Government s occupancy density expectations. The principles have been drawn from the concept of activity based design and apply equally to new buildings or reconfigured existing spaces Design for flexibility To reduce the life-cycle cost of occupation, as affected by churn 12, agencies should: develop generic planning, space standards, a modular approach to furniture profiles and workpoints and the design of utilities and other shared workspaces minimise built fit out (e.g. solid partitioning or fix floor to ceiling screens) minimise the use of fixed, built in furniture items develop processes that focus on moving people not workpoints use a modular approach to all fit out elements to facilitate easy reconfiguration Design to optimise space and provide choice in work style Agencies should understand the work styles of occupants and teams as well as get competent professional advice on the configuration of the property. Principles to consider include: use boundaries that separate but do not divide restrict built fit out to the building core and reserve building perimeter areas for open plan staff occupancy plan support functions (utilities space, storage, beverage stations etc.) and shared workspaces (meeting rooms, team rooms, informal meeting spaces) as centralised hubs positioned adjacent to the building core design meeting rooms for flexibility and to cover a range of seating capacity, and consider a centralised suite of meeting rooms with movable walls to create a multi-purpose meeting space design to accommodate alternate methods of working or different work activities Design to support the work of people and teams Agencies should ensure the design focus is the business activities rather than the organisational structure or hierarchy and: design with sharing in mind, to encourage the concept of our space rather than my space for occupants incorporate design elements that encourage interaction and collaboration ensure the design process supports the identification of opportunities to improve work flow and work group relationships. 12 Churn is defined in the Glossary. Page 21