Magazine article Public Finance

How to Make the Most of Your Assets

Magazine article Public Finance

How to Make the Most of Your Assets

Article excerpt

The public sector has faced severe fiscal pressures for some years. Dealing with budget reductions and cuts to services has encouraged innovation to deliver savings and provide efficiencies through changing working practices.

It is often stated that property is the second highest cost to a business after staffing. The government's operational efficiency programme in 2009 referred to a total book value of £370bn and annual running costs of £25bn - so delivering even small percentage savings can yield significant sums.

Property management and use is a strategic issue for any business, and the public sector should be no different No business would knowingly make decisions about such a valuable resource without fully understanding the costs and implications, yet this happens in many public bodies.

The spotlight is on public property assets - challenging how much is held, how it is being used, how much it is worth and how much is it costing to run. While a knee-jerk response to financial pressures maybe to sell assets to reduce the size of the portfolio and release immediate savings, the lack of a strategic approach could cost an organisation dearly over time.

All public organisations are different, and the way that property services are provided and portfolios managed will differ. Some organisations operate in a coordinated and centralised way, whereas others are more fragmented. Those in this latter category run the higher risks and offer the greatest opportunities to deliver efficiencies through more corporate working practices.

Because organisations are structured, governed and work differently, there is no single model that can be adopted universally to best effect The following top 10 tips will help you manage the property assets more effectively, efficiently and in the best interests of the organisation as a whole.

1 EMBED A CORPORATE I CULTURE

Centralised property management (aka the corporate landlord approach) can require a cultural change in public organisations where service areas have traditionally operated autonomously. It is essential that senior officers and elected members buy in to this change, ensuring the message is spread, understood and effectively embedded across the whole organisatioa

2 ESTABLISH ROBUST GOVERNANCEAND CLEAR RESPONSIBILITIES

It is vital to set up clear, strong and high-level governance arrangements. These must be consistently communicated across the whole organisation, and enforced if necessary. If property-related activities are centralised and roles change, there needs to be clarity about the new structures to avoid grey areas. Gaps in the management of property functions, such as statutory compliance, can have catastrophic as well as financial consequences.

3 PROMOTE STRATEGIC ASSET MANAGEMENT

Strategic asset management must have a voice at the highest level. The public sector primarily holds property for the purpose of delivering services to communities, and any changes in how services are provided have to be understood and reflected in the organisation's asset strategy. Property is a relatively illiquid resource, so active engagement in developing the vision for the organisation is essential if the property estate is sustainably to support the organisational needs.

4 KNOW WHO IS INVOLVED

Map out all property-related activity across the organisation. It is often surprising how many nonproperty staff in service directorates have some property-related involvement This includes tasks such as ordering cleaning supplies, arranging repairs, negotiating terms of occupation or even project managing delivery of a new building. …

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