DTLR GO Training 2002 Capital Strategy and Asset Management ...

1. DTLR GO Training 2002: Capital Strategy and Asset Management Plan Assessment DTZ Pieda Consulting on behalf of DTLR

2. Content

Contextual background to Capital Strategies and Asset Management Plans

What is a Capital Strategy and Asset Management Plan?

Assessment of Capital Strategies and Asset Management Plans

3. Contextual Background to Capital Strategies and Asset Management Plans

4. DTLR Overview of the CS and AMP assessment process

Key Outcomes of Assessment

Better use of resources and assets

Progress

Fair and consistent assessment

Good and helpful feedback to support first two outcomes

5. DTLR Overview of the CS and AMP assessment process

Performance Measurement

- what are we looking for?

Corporate working illustrated

Cross-cutting and partnership working

Framework for performance measurement

Progress and change

6. Why all the Fuss about Capital and Assets?

Assets consume large amounts of local government revenue and capital

Increasing fixed public liabilities that government may not be able to meet (pensions, maintenance of the public estate)

Concerns that the service and financial returns from capital deployed in LAs may not be fully optimised

The Best Value/Modernisation/Change Agenda

Central Government desire to introduce new LA flexibilities (through the Prudential regime) - evidence of good practice in capital and asset planning would be a pre-requisite

7. Single Capital Pot: Purpose and Objectives

White Paper Modern Local Government - In Touch with the People (1998) promised new cross-service allocation of capital to LAs - single capital pot

A clear and transparent process

Rewards strategic planning and good performance

Balance between local decision making and national priorities

Improved outcomes and better services through:

better planning and greater predictability about funding

more LA autonomy, accountability and spending responsibility

improved corporate and strategic working

better use and management of assets

8. Performance Assessment Framework (White Paper, 2001)

Bulk of LA financial support will be distributed through the single capital pot

Comprehensive Performance Assessment (CPA) framework is the means for identifying LAs level of performance. To be introduced over late 2002/ to late 2003

AC developing methodology but will bring together

performance indicator data;

Service based inspections/assessments and audit reports;

corporate governance assessment undertaken in consultation with LA and incorporating some self assessment/peer review

LAs to be assessed under the CPA as falling into one of five categories (to be announced)

9. Performance Assessment Framework (White Paper, 2001) continued

High Performers will benefit from additional future freedoms - less financial ring-fencing, fewer planning requirements, lighter inspection regime, financial freedoms for borrowing, investing,trading, charging and setting spending priorities

As from 2002 no further AMP or CS required for LA scoring Good (although considered that they would still be needed for councils own purposes)

pPIs and basic property statistical data will still need to be submitted for CPA purposes

Capital Strategies will be a requirement under proposals for the future Prudential Code

10. DETR Research on Asset Management (1999): Overall Conclusions

Strategic asset management not yet well developed in LG

Few formal AMPs produced

Good practice in new capital prioritisation and capital projects

The deployment of existing capital is not often comprehensively challenged

Limited performance measurement

Recognition that information systems are a prerequisite for performance measurement

Limited consistency and fragmented data but this is being addressed

No significant difference in approach between types of local authorities

A strong case for good practice guidance

11. DETR Good Practice Guidelines (2000)

Contents:

Asset Management

Asset Management Planning

Capital Projects

Performance Measurement

Data Management

Quick Start

12. Hot Property (Audit Commission April 2000 )

Followed the Audit Commission Report in 1988 on Local Authority Property Management which was highly praised but largely ignored!

A very clear guide about what the AC is looking for in terms of improving performance in asset management


Recommendations for Managers

build understanding of the strategic importance of property

identify responsibility for strategic asset management

prepare council wide asset management plans

property should be considered in every service BV review

challenge the need to hold non-operational assets

use property in the wider corporate interest

consider innovative new working practices in office/other accommodation

subject property services to BV review and challenge

investigate joint use and exploit the use of ICT


Recommendations for councillors

ensure property contributes to continuous service improvement

make property a cabinet level issue

promote property sharing with other organisations


Recommendations for Government

ensure departments pursue a joined-up approach to asset management

incorporate a few asset national best value indicators

accelerate alternatives to the existing system of capital controls

16. What is a Capital Strategy and an Asset Management Plan?

17. Capital Strategy and AMP submission requirements

Documents required:

Context Sheet

Capital Strategy

Asset Management Plan, including 5 national pPIs

Timetable:

Submission date 31st July 2002

GO assessment completed end October 2002

Single capital pot allocations end December 2002

Written GO feedback to LAs by 20th January 2003

18. Capital Strategy and AMP Whats new for 2002?

Upgrading of some secondary criteria to primary criteria and new, additional secondary criteria

Stronger focus on performance and outcomes whilst still needing processes

Evidence of member and corporate management involvement

Efforts to refine and define:

Proportionality

Consistency in assessment

19. Context Sheet

High level contextual, statistical and financial information

Maximum 2 sides A4

Gross and net revenue budgets

Fixed assets info and analysis as per consolidated balance sheet in statement of accounts

Number, GIA, type and value of assets by main service areas

Backlog maintenance value by main service areas

Summary 3-5 years capital programme and capital sources

LAs likely future approach towards unsupported borrowing

Brief details on area, population and characteristics of LA area

20. Capital Strategy

Purpose:

Should provide clear strategic guidance about the councils capital objectives, priorities and spending plans and demonstrate how the deployment of capital resources (including capital in assets) is directly linked to and contributes to the achievement of the councils corporate and service objectives

A key document which pulls together all the key strategic capital requirements emerging from service strategies

Determines priorities between capital needs and looks for opportunities for cross-cutting, joined up investment

Maximum 6 sides A4

21. Capital Strategy

Covers:

Statistical and financial information on assets and capital spending plans

All aspects of capital expenditure including where LA has significant influence on others

Revenue implications of capital investment

Framework for management and monitoring of capital programme

Informs bidding for additional capital resources and LAs approach to external funding opportunities

Corporate wide procurement policies

Links to partners (public and private sectors) and the community

Links to service plans and best value reviews

Processes (eg generation, appraisal and prioritisation of capital project options; monitoring and evaluation of projects; corporate property review to increase efficiencies and release resources)

22. Asset Management Plan

Purpose:

The LAs corporate document detailing existing asset management arrangements and outcomes and planned action to improve corporate asset use.

The AMP process enables the CPO to define and provide for the longer-term corporate need and to challenge existing asset use.

Describes the AMP processes

Covers all property interests excluding details of housing and education assets, highways and transport infrastructure, vehicles, plant and equipment

Maximum 20 sides A4


Corporate requirements of AMP and the CPO role

To address the role and contribution of the LAs property assets as a a corporate resource supporting the delivery of corporate and service objectives

Clear understanding of LAs business and service aims supported by a clarification of the contribution assets make to these aims

Considers major corporate drivers for future change and their property implications. A planned programme for dealing with anticipated changes that is achievable, costed and appraised

Plans ahead for future property use and need, includes revenue consequences of capital decisions and whole life costs

Develops and implements appropriate performance measures (national and local)


Format

Organisational arrangements for corporate asset management

Consultation - how stakeholders views inform asset management

Data management - how asset data is collected, recorded, managed and used to support performance management

Performance management and monitoring - how asset management information is used to deliver performance improvements and is linked to corporate and service objectives

Programme and plan development and implementation

Performance information - national pPIs and local PIs

25. National Property Performance Indicators

Excludes Highways and transport infrastructure, vehicles, plant and equipment from all pPIs

Housing and schools excluded from all pPIs except pPI 3

LA property organisations involved in annual preparation of pPIs

As quality and comparability of pPI information improves the pPIs may be integrated within Best Value measures

26. National Property Performance Indicators

Condition

1A % gross internal floor-space in condition categories A-D

1B Backlog of maintenance by cost expressed as a % in priority levels in 1-4 and by value

IRR

2A,B,C Current internal rate of return (IRR) for the portfolio expressed as an average for A Industrial, B Retail and C Agricultural investment property

Management costs

3A,B Annual Management costs per sq. m.GIA expressed as an average for A operational property and B non-operational property

Running costs

4A,B,C,D Annual revenue costs per sq. m. GIA for operational property expressed as an average for A repair and maintenance, B energy, C water, D CO2 emissions in tonnes of carbon dioxide per sq. m. GIA

Capital projects (Counties, Mets & Unitaries>100,000 and Districts, Boroughs>50,000)

5A % of project costs where outturn falls within +/-5% of the estimated outturn, expressed as a %age of the total projects completed in that financial year

5B % of projects falling within +5% of the estimated timescale, expressed as a %age of the total projects completed in that financial year

27. Other Service Delivery Assessments

LAs to be graded on service performance in Transport, Housing, Education and Social Services

Grading on a five point scoring scale (SS may retain current starring system):

Well below average 0

Below average 1

Average 2

Above average 3

Well above average 4

28. Other Service Delivery Assessments

Means of service assessment:

Transport - LA LTP and annual progress report

Education - School AMP

Housing - Housing Strategy and Business Plan

Social Services - new DOH performance assessment framework

Services to be weighted to reflect the relative size of SCP contributions. Weightings yet to be announced.

Total LA service assessment score = sum of weighted service performance scores

29. Exercise 1: Benefits of better capital and asset management planning

List your perceptions and expectations of how LAs performance and service delivery should improve through the better planning and management of their capital and property resources.

30. Assessment of Capital Strategies and Asset Management Plans

31. Assessment Basis of CS and AMP

Assessed by GOs as one of the following:

good

satisfactory

poor

Assessment based upon pre-set primary and secondary requirements (further supported by the Interpretation Guide)

Grading system:

Does not meet all primary criteria = POOR

Meets all primary requirement criteria but meets less than 75% of the secondary requirement criteria = SATISFACTORY

Meets all primary requirement criteria and meets more than 75% of secondary requirement criteria = GOOD (so long as at least one criterion in each group of secondary requirement criteria is met)

32. Assessment Criteria: Capital Strategy


Primary Requirements

provides clear strategic guidance about the councils capital objectives, priorities and spending plans and demonstrates that these are directly linked to and consistent with key corporate and service objectives; identifies council-wide cross-cutting activity and initiatives

describes the framework in place for ensuring the CS is a corporate document

identifies all key aspects of capital expenditure within the LA and in those areas where the LA is able to apply significant influence on others use of capital resources


Primary Requirements (continued)

explains the approach for prioritising capital project proposals

explains how revenue implications of capital investment are taken into account

is informed by outcomes of BVRs and other relevant reviews and improvement/development plans

identifies how relevant stakeholders and partners views are sought and inform the working and development of the CS

identifies key partners and describes partnership working


Secondary Requirements

sets out sufficient information to inform all bidding for capital resources

outlines the LAs approach to PPP/PFI and to other means of alternative capital funding

addresses corporate policies on procurement strategies (ref BV guidance and Egan report)

identifies how partnership working is being processed with other councils and relevant organisations


Secondary Requirements (continued)

Evidence that:

performance measures and benchmarking are used to describe and evaluate how deployment of capital resources contributes to the achievement of corporate and service objectives

the results of performance measurement and benchmarking are communicated to stakeholders where relevant

results of performance measurement and benchmarking are used to seek service improvements and target service delivery

performance measurement activities relate to capital projects and to the influence of grants and partnerships

a corporately agreed 3 year strategy explaining the LAs approach regarding the effective management, measurement and monitoring of the councils capital programme


Secondary Requirements (continued)

Evidence of:

development and/or delivery of key priorities and targets to achieve cross-cutting objectives such as regeneration and sustainable development

cross-cutting activity leading to improved outcomes, including consideration of and, where appropriate, adoption of innovative solutions

38. Assessment Criteria: Asset Management Plan



Organisational arrangements

CPO identified

Roles and responsibilities of CPO clear, explicit and communicated

CPO reports and is accountable to a strategic decision-making group at officer and member levels

evidence of a cross-service, senior management forum including CPO, reps from major service areas and finance directorate

forum has terms of ref including strategic management of LAs assets

Forum:

progresses AMP and ensures officer and council approval

ensures AMP is informed by and supports key corporate and service objectives

meets regularly



Data Management

a record is held and maintained of basic core data on all assets

the validity of this information has been tested

AMP demonstrates a clear understanding of data required to manage the performance of the property portfolio

statistical information about condition and maintenance backlog is supplied

Performance management, monitoring and information

annual (min) property performance plan to members and chief officers

AMP includes information on all five pPIs

members are informed of capital programme progress and performance




AMP outlines the proposed programmes which are intended to meet the councils property related requirements

a methodology exists for option appraisal and corporate prioritising between projects

a 3 year capital programme including a forecast of capital receipts is developed

output/outcome targets are set for programmes and plans requiring capital investment



Organisational arrangements for corporate asset management

Evidence that the CPO/Asset Management Forum routinely challenges and reviews assets and property services to achieve the most effective management, planning and use of assets. Key findings reported to chief officers and council

Evidence that the CPO/Asset Management Forum takes into account stakeholder information re property and property services

cabinet member holds responsibilities for property resource

CPO contributes to CS and other relevant corporate and business planning

Reference to property assets in other corporate policies and strategies

Evidence of cross service property use, shared use and/or co-location



Consultation

Evidence that:

processes being developed to obtain feedback from services, users and occupiers

consultation findings are used to influence the continuous improvement of property and property services performance



Data Management

full survey undertaken of future data requirements for property portfolio

programme of necessary improvements is identified

commenced development of data system for intermediate data

UPRN system, or a preferred alternative, is in place

approach is developed for the centralised co-ordination of property management information which integrates with financial information

a review has been undertaken of users training needs and a system is in place for satisfying these needs



Performance management, monitoring and information

Clear evidence that:

local performance measures are being developed and used linking asset use to corporate objectives

processes are being developed to compare performance and competitiveness of property and property services with other similar organisations and other providers

performance measures and monitoring take into account stakeholder consultation and user findings

performance measurement feeds into a process of continuous improvement

local PIs are used for measuring and monitoring surplus property and space utilisation

written report to members and chief officers on maintenance backlog actions

information being collected on suitability of assets




the property implications arising from council objectives have been identified

there is a service wide understanding of the corporate ownership of assets

a thorough investigation and analysis has been undertaken of the gaps between the future requirements and the current provision and performance of present property assets

options for closing these gaps have been identified and appraised

the AMP outlines the councils approved 3-5 year strategic action plan based on this gap analysis

47. Exercise 2: Practical CS and AMP assessment

Take the example CS or AMP given and assess it as Good, Satisfactory or Poor using the:

Assessment checklist

Assessment Training Notes

Assessment Interpretation Guide

In groups

Appoint group spokesperson

Report back on flipchart

good, satisfactory or poor

explanation of assessment under each criterion group heading

group observations about implementing the assessment process

48. Consistency in Assessment

Each GO to nominate a lead assessor officer responsible for developing CS and AMP consistency management process, to be submitted for DTLR approval

The consistency process may adopt the following suggestions:

Stage 1: Receipt of LAs CS and AMP submissions

Strict application of deadline guidance

Stage 2: Contact with LAs

GOs may request additional information from LA by telephone where considered necessary for amplification or clarification. This should always apply in the case of the potential failure of a primary criteria on account of inadequate detail or information.

49. Consistency in Assessment

Stage 3: Consistency meeting in each GO

General overview by lead assessor

Second peer review of Poor and Good assessments

General internal consistency meeting and final consensus, may be sent to DTLR for info.

Stage 4: Draft final assessments to DTLR

DTLR regional pattern overview and analysis

Stage 5: DTLR moderation meeting for lead assessor officers

Final agreement including any necessary moderation between regions

Stage 6: Feedback of assessments to LAs

Single Capital pot timetable

Proforma letter

DTLR GO Training 2002 Capital Strategy and Asset Management ...

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