Performance Detailed Report. Date. Last saved: 12/10/ :18:00. Property asset management. Bristol City Council. Audit 2006/07

Transcription

1 Performance Detailed Report Date Last saved: 12/10/ :18:00 Property asset management Audit 2006/07

2 - Audit Commission descriptor to be inserted by Publishing- Document Control Author Filename Bob Baber Bristol CC asset Management report (draft1 to Council) BB03.doc Status of our reports The Statement of Responsibilities of Auditors and Audited Bodies issued by the Audit Commission explains the respective responsibilities of auditors and of the audited body. Reports prepared by appointed auditors are addressed to non-executive directors/members or officers. They are prepared for the sole use of the audited body. Auditors accept no responsibility to: any director/member or officer in their individual capacity; or any third party. Copies of this report If you require further copies of this report, or a copy in large print, in Braille, on tape, or in a language other than English, please call Audit Commission 2006 For further information on the work of the Commission please contact: Audit Commission, 1st Floor, Millbank Tower, Millbank, London SW1P 4HQ Tel: Fax: Textphone (minicom):

3 Property asset management Contents 3 Contents Summary Report 4 Introduction 4 Main conclusions 4 Recommendations 5 Detailed Report 7 Introduction 7 Background 7 Strategic direction 8 Decision making 10 Systems and internal controls 11 Implementation of asset management plans 13 Efficient, effective and economic use of property to deliver value for money 14 Appendix 1 Audit Approach 16 Audit approach 16

4 4 Property asset management Summary Report Summary Report Introduction 1 This document reports the Audit Commission's findings of a review of Bristol City Council s performance on managing its property assets. It contains an assessment of the Council's current performance on this and makes recommendations for improvement. 2 The findings will inform the appointed auditor's value for money opinion on the Council's accounts and the use of resources assessment in Main conclusions 3 The Council has made positive progress on strengthening its arrangements for managing its assets since the Audit Commission review of this function in Most significantly, it now recognises strategic management of its property assets is an essential organisational discipline to delivering value for money and meeting business objectives. It is also starting to explore the potential for deriving wider community benefits from its property portfolio that go beyond mainstream service delivery. 4 Fundamental to this improvement has been the adoption of a policy for treating assets as a corporate resource belonging to the organisation rather than individual services. This approach is led from the top, with active engagement in strategic asset management by senior management and councillors. From this have flowed organisational arrangements to support the corporate management and decisions on assets. The Council is starting to challenge the need, purpose and contribution its assets make to the Council's priorities. It is actively trying to gain more value from its assets, by identifying and disposing of what it does not need and taking better care of what it keeps. 5 The Council has many property schemes that are completed or in the course of implementation that involve rationalisation and improvement of its assets. For example, the rationalisation of the allotment sites resulted in a better and more used facility for local people, and the money from land sales has been invested in other service improvements. A similar rationalisation of open space land is currently being explored and a major review of its commercial estate is starting. 6 There remain a few areas where progress has been limited. Most significant of these is rationalisation of the Council's offices where the pace of delivery is slow, not only on buildings but also on some of the employment practices and modern technology that support efficient use of office accommodation. 7 There is also scope to build upon progress to date by ensuring that the top- down approach to asset management is complemented by fully encompassing the property related issues arising from the long-term business plans of the service departments and of other local service providers.

5 Property asset management Recommendations 5 Recommendations 8 In order to address the areas for further improvement identified in the detailed report the Audit Commission recommends that the Council should do the following. Recommendation R1 Continue to strengthen its arrangements to assure that the Council's property assets deliver value for money and enhanced community benefits by: providing a corporate challenge to the size, form, mix and distribution of the current asset base through the continuation of its programme of property reviews of assets; ensuring that the plans for assets fully encompass the long-term business plans of the service departments and those of other local service providers; engaging with other local service providers on long term strategic asset management; setting out a clear plan for the rationalisation of the office accommodation; and clarifying its plans for improving the condition of its property assets. The expected benefits of this recommendation are: the development of a fit for purpose property portfolio that provides value for money; and provides better outcomes for the local community. Recommendation R2 Adopt a performance management framework covering the performance of the property assets by: establishing a set of performance indicators that measure the contribution property makes to corporate performance, user satisfaction, management practices, cost and efficiency; setting targets that stretch the Council to improve value for money from its property; expanding the benchmarking of the performance of the property portfolio against other service providers; using feedback, compliments and complaints information from occupiers and visitors to buildings to identify improvements; and undertaking regular monitoring and reporting of performance. The expected benefit of this recommendation is:

6 6 Property asset management Recommendations to raise the standard of performance of the property portfolio; and to allow the Council and others to measure success and assure delivery on its asset management strategy.

7 Property asset management Detailed Report 7 Detailed Report Introduction 9 This review and report focuses on the strategic management of the Council's property assets. It is not a review of the Council's project management or procurement arrangements for maintaining and developing its land and buildings. The review covers five principal areas of asset management: strategic direction on managing assets; decision making structures; systems and internal controls; implementation of asset management plans; and efficient, effective and economic use of property to deliver value for money. Background 10 The council has a significant property portfolio. It is the largest land owner in the city and its property has an estimated value in excess of 1.4 billion. 11 The Audit Commission last undertook a review of the Council s management of its property assets in The review concluded that the Council was making variable progress. It found there had been some achievements in some areas such as putting in place processes to promote effective asset management, compiling data on the property portfolio, developing performance indicators and benchmarking performance against other councils. The 2004 review also reported the Council had underdeveloped asset management arrangements in some key areas. Most significant among these was the lack of plans to address the large maintenance backlog, the low levels of satisfaction with the Council s property activities, and lack of progress to rationalise the use of office accommodation.

8 8 Property asset management Detailed Report Strategic direction Areas of strength 12 In the last few years, the Council has come to recognise strategic management of its property assets as an essential organisational discipline and it now directs more effort to this function. The Council is focussing more on establishing a policy and organisational framework to guide its development of its asset base. Asset management now commands senior management and councillor attention. This is starting to result in strengthened corporate arrangements to provide an asset base that is fit for purpose and delivers value for money. 13 Councillors engage on property matters well, with a strong emphasis on strategic direction. They recognise the strategic importance of the Council's asset base in delivering the Council's aims and are well versed in the opportunity cost of its property. Councillors are proactive in providing strategic direction, challenging performance and are supportive of the move towards managing assets as a corporate resource. 14 The foundation of the policy framework for its property is a clear strategic asset management plan that sets out the Council's plans for its assets and the organisational mechanisms it is using to support this. Most importantly, the plan includes a policy decision that the property asset is a corporate resource and that it will be managed accordingly. This fundamental philosophy is progressively moving the Council from a compartmentalised, departmental and service driven approach to management of its assets to an organisation-wide approach. The asset management plan supports the new approach by establishing a framework of organisational systems, processes and responsibilities for asset management. 15 Each of the Council's main service areas has a service specific asset management plan. A corporate team of property specialists coordinate the asset management process and make the corporate connections between the asset plans from the various services. 16 Strategic planning on individual property assets encompasses most of the Council's property assets. This consists of individual asset plans for each property and in most service areas, long-term plans for the development of property to meet business needs are in the course of either implementation or development. These include schools, libraries, leisure, social care, open spaces, office accommodation, social housing and its investment portfolio. 17 Asset related strategies and plans show how the Council will fund and implement its asset management plan. Principal among these is its capital strategy that identifies the sources of funding available to the Council and how much it can afford to spend on addressing the deficiencies in the asset base.

9 Property asset management Detailed Report 9 18 The capital programme includes the largest secondary school building programme in the country, one of the largest housing stock retention programmes, and a 100 million investment in culture and leisure facilities. On maintenance, the Council has committed to invest an extra 800,000 each year for the next three years on reducing the backlog of repairs. The ambitious capital programme is largely dependant on capital receipts of approximately 40 million from the sale of land and buildings. The strategy recognises the potential tension between the need to create income but at the same time to derive wider community benefits from its property. 19 The Council considers how its assets can be used to deliver benefits for the local community that are wider than the mainstream services delivered from its land and buildings. It recognises that as the largest landholder in Bristol, that its asset base has a key role in shaping the places where people want to live, work and visit. It is alert to the national political agenda and guidance on managing public assets. For instance, it is starting to consider the government's agenda for the transfer of public assets to the voluntary sector in the context of its own assets. Area for development 20 There is scope to make the link between asset management planning and service business planning more explicit. The hierarchy of asset management plans - corporate, departmental and property - are to a large extent compiled from factors and issues derived from the fitness and performance of property. The influences on the development of service property to meet long-term service and corporate business plans or to deliver wider community outcomes are not detailed in the hierarchy of asset management plans. These business considerations and the implications they have on property developments are generally contained in separate business plans and strategies for services. Therefore, while property related drivers and business drivers on the assets are covered, because they are separate, there is a risk that the connections between them might be missed. 21 While it is commendable that the Council has a strategy to improve the condition of all of its property, its plans for achieving this lacks detail. The ten year maintenance strategy to 2015 identifies the problems, promotes the need to invest more money in repairs and to reduce demand for maintenance by replacing poor quality buildings. However, it falls short of committing the Council to actions, standards and targets that make it clear how or when the backlog of repairs will be reduced to a manageable level. There are plans to replace some of the poorer quality buildings as part of major capital projects, such as Building Schools for the Future, but for the remainder of the stock, the lack of commitment and clarity in the strategy does not provide certainty for improvement.

10 10 Property asset management Detailed Report 22 The integration of the Council's own plans for its assets with the plans of other local service providers is improving but is not yet fully developed. There is some joint strategic planning on assets with the PCT, and it is developing many property schemes in partnership with other organisations, but there is scope to work together to explore opportunities to derive even greater benefits from joint working. Working with partners, including the third sector, on long term strategic plans for property does not feature strongly in the Council's plans or activities on asset management. Closer working with partners on long term planning for assets would open up opportunities for gaining better value for money from colocating services and enhanced customer access from seamless services. 23 Similarly, the views of users and non-users of the Council's buildings do not feature strongly in the Council's plans for its assets. Feedback from visitors to the Council's services about the accessibility and quality of the buildings does not directly inform strategic asset management planning. Most importantly, the views of people generally from across the communities the Council serves do not inform strategic asset management planning. Decision making Areas of strength 24 Responsibilities for assets are clearly designated to functions and roles within the organisation and follow the policy for managing the property assets as a corporate resource. The Council has a designated corporate property officer and a team of staff with specific responsibility for strategic asset management activities. There is a corporate asset management group that provides direction to the Council on property related strategies. It is notable that this group is chaired by the Chief Executive and it also has representation from finance, property and the service departments. As a result, this group has significant status and influence within the organisation. In addition, property asset management has councillor representation on the Council's Executive. 25 The Council's financial planning and strategic asset management are closely integrated. This is evident in the various internal working groups and planning documents where property and finance issues are represented and aligned. The inter-dependency of the two disciplines and the link to corporate objectives is well understood. 26 The Council has robust processes to prioritise its capital spending on property assets according to relative needs and maximum benefit against its corporate priorities. The demand for capital spending on property exceeds the amount the Council can afford so it uses bidding and decision making processes to ration spending. Each year, departments are invited to bid for capital funding for investment in property schemes using a pro forma. Bids are required to state what outcomes are expected. A corporate group who follow set criteria assesses these. The process is clear and transparent.

11 Property asset management Detailed Report The Council demonstrates from its actions that it takes difficult decisions on implementing its asset management plans. The Council is prepared to close services or dispose of its assets where the business case supports it. In recent years, this has included some tough decisions on the closure of swimming pools, allotments and area housing offices in the face of considerable opposition. These types of decisions were made a little easier by robust data about the quality, costs, needs and demand for the services. Area for development 28 There are no significant areas for development on the Council's decision making arrangements. Systems and internal controls Areas of strength 29 The Council responds well to external challenge on its property portfolio. It conducted a far reaching best value review of this activity following the Audit Commission's report on its arrangements on asset management in The best value review resulted in the Council adopting a new approach to asset management, supported by a medium term improvement plan. Some of the main changes that flowed from this was a move to corporate ownership of property, putting in place strengthened organisation wide support, robust decision making arrangements and a culture of challenging the historical basis of its assets against current needs. 30 Challenging the performance, benefits and rationale for holding property is a key feature in much of the Council's work in this area. This ranges from a programme of geographical reviews, where the performance of all service property in an area is reviewed, to functional property reviews. The latter includes a review that is underway of the Council's considerable investment portfolio. External consultants are being used to explore the options for deriving greater value and benefits from its commercial estate. 31 Councillors are actively involved in challenge, scrutiny and review of the property portfolio. There is a good degree of participation in strategic decisions and they make connections between schemes that go beyond their ward boundaries. Scrutiny is active in this field and it receives regular reports concerning property issues. For example, the asset management plan and review of the commercial estate is channelled through scrutiny and select committees. 32 The Council also learns from other organisations on asset management practices that might help it make improvements to its own arrangements. It is alert to best practice guidance in public sector asset management and makes efforts to learn from other organisations. The best value review involved visits to other councils that have Beacon status for asset management.

12 12 Property asset management Detailed Report 33 The Council is driving continuous improvement in its asset management. This is supported by a service improvement plan. The improvement plan contains a review of previous progress against targets and new forward targets with responsibility and timescales allocated. Key issues and risks to delivery are clearly described. 34 The Council fulfils its corporate governance role for property. It provides specialist support to local service managers to help them fulfil their stewardship responsibilities for providing safe and secure buildings that meet corporate standards. This is in the form of an extensive range of guidance, standards, training and monitoring covering a range of property management related topics, including health and safety. Work to buildings is controlled by authorisation procedures and an on-site log is maintained. 35 It has comprehensive information about its property assets to support the Council's decisions on investment and priorities. For most properties, this includes data on the condition of its buildings and standard of facilities to support service delivery. In the case of school buildings, the data extends to information on the capacity of the buildings. Much of the data the Council has about its buildings is collected using structured surveys of the buildings to assess condition, hazardous materials, suitability and ease of access. Digital maps and drawings of site and floor layouts provide a graphical platform for data making it easy to cross-reference data to a location. An external assessment last year found deficiencies in the quality of some asset data on schools but the Council has now resolved this problem. Areas for development 36 While the Council collects some information about the performance of its property assets, there is scope to expand its knowledge in this area to provide a better strategic over-view and management tool. Intelligence on the performance of its property assets, such as on its utilisation, efficiency and user satisfaction, are not routinely used as a performance management tool. The Council is starting to collect this information as part of its geographical property reviews of all of its stock but there are still some gaps in its knowledge about the performance of the rest of its property portfolio. 37 Although the Council subscribes to a national benchmarking club for asset management services this is providing limited help in driving performance improvement. It knows how various measures compare with others but the underlying analysis about what the comparisons mean, and its use to drive performance is under-developed. The exception to this is its benchmarking on energy and water consumption, which is used as an effective performance management tool. At a macro level, on the size, form, mix and distribution of its property portfolio it has limited knowledge about how its compares to other similar service providers.

13 Property asset management Detailed Report 13 Implementation of asset management plans Areas of strength 38 The Council has delivered many large-scale initiatives that have resulted in rationalisation of its property assets. Some of these are part way through delivery, such as its school replacement programme and the office accommodation review. Others are complete, and now provide a better value service from the rationalisation of assets, such as the allotment sites. 39 Although the Council reports a high level of repair work required to its property, incidents of building component failures that result in interruptions to service delivery are infrequent. There are very few incidents of building closures, complaints or accidents resulting from defective premises. Where they do occur they are dealt with promptly to minimise disruption to service delivery. 40 The Council is making good progress on providing disabled access to its buildings. It has removed nearly all physical barriers to its buildings for public access by people with a disability I. This level of access compares to the best performing councils. On the few public buildings that do not have full disabled access the Council can provide justification where it is impractical to alter the buildings. 41 The Council is a leading authority on reducing carbon emissions and the contribution to this from its use of buildings are a key component of this work. It collects data on energy and water consumption for virtually all its service property and uses this information to target building improvements aimed at making reductions at properties with the highest levels of consumption. It has a 900,000 programme of energy conservation schemes, and savings in revenue costs are recycled into further improvements. It is aiming to do more and is part way through a council wide environmental accreditation audit and is publicising the energy and environmental performances of its core administrative buildings using display labels fixed to the buildings. I The Disability Discrimination Act 1995 requires all physical barriers to be removed where reasonably practicable by October 2004.

14 14 Property asset management Detailed Report Areas for development 42 The pace of delivery on the office accommodation review is slow. This was a finding in the Audit commission's review in 2004 and it is still the case. Six years ago, the Council reviewed its office accommodation and many of the initiatives that arose from this are still in the course development. Some of these relate to employment and technology practices that support efficient use of office accommodation, such as home working, hot-desking, electronic document management and mobile computer technology. Likewise, the pace on rationalising buildings and space utilisation has not moved forward very far. The progress it has made on this has to a degree been triggered by operational circumstances rather than following a coordinated strategic plan. However, there are some recent signs that the impetus on this is starting to grow. The Council has stated an aim to reduce the number of offices from 52 buildings down to 8 and it has this year moved 100 staff into fit for purpose efficient offices combined with modern working practices which it hopes will be the catalyst for similar schemes. 43 The level of user satisfaction with the Council's property service functions is not clear. The Council thinks it is performing well on this. The main service departments are generally satisfied with the support they receive on asset management and the schools, which form the bulk of the council's property estate, choose to buy support services on property management from the Council. The Council's own satisfaction survey of the property service also shows that users are generally satisfied. However, the Audit Commission s national school survey for summer 2007 shows that the Council s schools consider that the support they receive to help them manage their buildings is slightly below the average rating for other councils, although this is an improvement on the satisfaction rating the year before. Efficient, effective and economic use of property to deliver value for money Areas of strength 44 The Council recognises that its asset base is a key vehicle for it to deliver efficiency savings through property rationalisation and to create income from asset disposals. 45 It is quick to dispose of property it no longer needs to generate income and reduce costs. It keeps a register of surplus accommodation and there is a programme of planned property disposals with stretching targets. Last year the Council generated 27 million from disposals and this year the target is 19 million. The Council also maintains an opportunities register that identifies properties that have potential to deliver more value than its current use. Capital receipts from sales form part of the Councils main capital budget. The spending of capital receipts is managed centrally according to corporate priorities.

15 Property asset management Detailed Report Many of the Council's initiatives that involve property have an efficiency driver. This applies to the review of the commercial estate, the property review programme, the office rationalisation and service specific reviews that involve property. 47 The Council is beginning to adopt techniques to help it get optimum value from its investments in new capital schemes. For large property projects, option appraisals and life-cycle costing are increasingly used by the Council as an analytical tool to determine the optimum solution and achieving the best value in the long term from its building developments. 48 It is also putting effort into obtaining maximum value from its procurement of construction work to its assets. There are strong links between construction procurement in housing and corporate property with a coordinating role provided by the corporate procurement unit. The Council is currently exploring the scope to have single contracts for some high value maintenance contracts such as external painting and engineering under modern framework type contracts.

16 16 Property asset management Appendix 1 Audit Approach Appendix 1 Audit Approach Audit approach 49 This project comprised: an initial set-up meeting with the Council to agree the scope of this review project and the arrangements for conducting the work; a review of relevant documentation provided by the Council; a site visit to the Council's offices to conduct interviews of: - staff, managers and councillors engaged in and over-seeing the policy development and strategic management of the Council's property assets (operational and non operational); - specialist/professional property staff engaged in implementing some of the key initiatives arising from its asset plans (for example, property review, office rationalisation, sustainable buildings, non-operational property portfolio); - managers and staff in service departments engaged in service/business planning that involves land and buildings; and - manager with responsibly for capital investment in land and buildings; a presentation of the findings of the review to the Council in the form of a draft report for comment; and a final report.