Asset Management Strategy A Five-Year Plan 2018 - 2023

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Asset Management Strategy –A Five-Year Plan2018 - 202325 April 2018 (Final) Kent County Council Sessions House, County Hall, MAIDSTONE, ME14 1XQ

Asset Management Strategy 2018 – 2023Date:25 April 2018Document:AM Strategy 2018-2023 v.4.0Version:v.4.0Status:Draft for approval at P and R committeeAuthors:Mark Cheverton - KCC Strategic and Corporate ServicesApproved By:Not ApprovedDocument History:Version:Reason for Change:Author/Editor:Date:v 1.0Draft format – Gen2 BrandedMartin Stevens24 Feb 2017v 1.1First draft KCC BrandedMartin Stevens27 Apr 2017v.2.0Second draft for review by IMTMartin Stevens (Ed)11 May 2017v.3.0Review by DirectorMark Cheverton15 April 2018V4.0Review by CMMKaren Ripley25 April 2018V5.0Final document with and P and R changestbctbcReviewers:Version:Reviewer:Role:Date Reviewed:1.1Rebecca Spore; Victoria Seal;Rosalind Adby; Elizabeth Luxton;Victoria Kellett; Martin StevensRepresenting KCC as “Owner” ofStrategy and Gen2 as consultantservice provider27 Apr – 10 May20172.0Mark Cheverton; Rebecca SporeDirection change editor following anumber of issues arising during2017 drafting (e.g. Fire SafetyReportFebruary - April2018Approval and Sign-off:Version:Approved by:Role:Date:3.0Rebecca SporeDirector of Infrastructure20 April 2018Asset Management Strategy (1)Version 4.0 25th April 2018Page: 2 of 22

Asset Management Strategy 2018 – 2023This page is intentionally blankAsset Management Strategy (1)Version 4.0 25th April 2018Page: 3 of 22

Asset Management Strategy 2018 – 2023Asset Management Strategy 2018 – 2023ContentsPART 1 - Background and Context:5 - 10Introduction and PurposeContextStructure of the EstateProperty ServicesOperating ContextPART 2 - Asset Management, Vision, Mission and Policy Vision :11 - 12The Asset Management PolicyPART 3 - SIX Themes in Focus:13 - 19Action PlansDetailed Property Policies and ProceduresTHEME 1: INNOVATION AND CUSTOMER FOCUSTHEME 2: SAFE WARM DRY AND PROACTIVELY COMPLIANTTHEME 3: EFFECTIVE ASSET AND ESTATE MANAGEMENTTHEME 4: AN EFFICIENT ADEQUATE AND APPROPRIATE ESTATETHEME 5: MAXIMISE REGENERATION AND GROWTH IN KENT THEMETHEME 6: REDUCE THE ESTATE’S ENVIRONMENTAL IMPACT AND THEENVIRONMENT’S IMPACT ON THE ESTATEAsset Management Strategy (1)Version 4.0 25th April 2018Page: 4 of 22

Asset Management Strategy 2018 – 2023PART 1 – Background and ContextIntroduction and Purpose:Kent County Council is committed to creating an effective and efficient estate which providesvalue for money for the taxpayer, reduces our environmental impact, maximisesopportunities to generate income streams from its assets and supports transformation in theway that the council uses its estate to deliver it services. The Council’s Asset ManagementStrategy sets the strategic framework within which the corporate real estate portfolio will bemanaged over the next five years. It is intended to guide future decisions concerning theacquisition, use and disposal of property assets to meet the operational and strategic needsof the Council and its constituent directorates and directly feeds into the InfrastructureBusiness Plan.It seeks to ensure that the property portfolio is sustainably and efficiently managed, adaptedif necessary and remains fit-for-purpose for the future in support of frontline delivery and anincreasingly flexible workforce as we embrace new technologies and different commissioningmodels.Our property assets and the way in which we use and husband them are key in supportingand enabling us to transform the way in which we, together with our partners, deliver publicservices to meet the needs of our citizens. To achieve this, it is essential that we have anagile, innovative and forward thinking asset management strategy in place.Context:Scale: KCC’s estate compromises of 1816 property holdings.Diversity: The council operates a corporate landlord model (with asset resources being“allocated” and managed centrally); the Council as stated in its Constitution owns all propertyassets centrally and all decisions relating to their acquisition, holding and disposal are takenby the Cabinet Member for Corporate and Democratic Services (with appropriate delegatedauthority to the Director of Infrastructure). Property holdings range from administrative officebuildings, operational buildings situated in the community (such as schools and libraries),more complex operational sites (such as waste transfer sites and depots), custodian assets(like windmills and monuments) to income producing assets (such as business parks andbuildings let to tenants providing more community-based services. They are held on amixture of tenures, freehold, leasehold and licences. Increasingly as the Council hasembraced new commissioning and service models it also utilises assets through a range ofcontracting and grant agreements in the delivery of services.Asset Management Strategy (1)Version 4.0 25th April 2018Page: 5 of 22

Asset Management Strategy 2018 – 2023No. of Properties by Held under Licence37Church Schools58Local Agreement4Mixed and ‘Other’307Total:2,2301,816The Council is a Local Education Authority and runs community schools where repair andmaintenance are devolved to the schools themselves. KCC also holds a number of leasearrangements following statutory transfers to academies, foundation trusts and diocese. Theportfolio split is as follows:No. of Properties by ,2301,816The School Estate is split as follows:No. of School Sites byTenure:2013:Freehold6172017:394Leasehold14Church Schools56No Legal Interest108Mixed & ‘Other’154Total:Asset Management Strategy (1)617Version 4.0 25th April 2018726Page: 6 of 22

Asset Management Strategy 2018 – 2023Financial and Policy Performance: The Estate’s Investment portfolio has increased in sizesince the last asset management strategy was written 5 years ago and now contributes in theorder of 2.3m per annum (As of March 2018). In accordance with its previous assetmanagement strategy and in recognition of a significant proportion of our income producingassets being let to enable community based services to operate, the investment portfolio wasdivided to separate “commercial investment” assets and “policy / social return assets. Whilstits investment portfolio comprises more traditional assets such as business space, officesand workshop accommodation for example, the policy return portfolio comprises spaces forcommunity activities, nursery accommodation and even sports facilities (Cyclopark forexample).In the last few years as the investment Portfolio has been maturing, KCC has beenimproving the way it monitors investment performance through the adoption of standardpractices of investment management and this improvement is continuing where it will beusing the data to develop key performance indicators which will drive better management ofthe portfolio. The policy return portfolio may not yield the same financial returns ascommercial investments, the assets provide a means to the delivery of valuable services inthe County and work is ongoing to determine how this can be quantified in a meaningful wayin property terms to develop objective measures of performance; in the meantime, policyoutcomes are being identified and recorded for each asset (e.g. number of nursery placescreated for assets let to nurseries).Condition: The condition of the council’s assets varies considerably, and the portfolios holdbuildings from newly built assets to some which are several hundred years old and subject toheritage interest. The Fire Safety report undertaken during the latter half of 2017 identified onthe whole that the Estate’s condition had suffered as public sector resources have erodedand that whilst basic statutory compliance and health and safety along with basic “wind andweather tight” elements too is, in the main, being addressed, this is coming under strain andKCC faces significant challenges in this area during the period of this asset managementstrategy. General decoration and work to enhance operational service delivery from assets isbecoming critical in a significant proportion of the portfolio and the review process now beingundertaken to consider use of assets is looking at how best the portfolio can be realigned toaddress this issue strategically.Utilisation: The County Council is transforming itself towards a Commissioner of servicesrather than a provider of them. In addition, the world generally is moving on in how it wouldlike its services delivered with for example greater emphasis being demanded for deliverythrough technology. Having said this, the Council needs to balance such expectations withthe core requirements of needing physical space to deliver certain services. This is asignificant challenge and likely to become one of the biggest change factors in the comingasset management periods to drive the size, shape and resource requirement for the estate.With the nature of property, change takes time to achieve and with budget constraints,innovation driving an expectation to improve and the current baseline where changes to theestate compared to its size have been minimal. As this review progresses it is clear thatutilisation of the estate can be significantly improved, and operational use rationalised.Structure of the Estate:Since the last Asset Management Strategy, the Estate has been re-stacked into 3 portfoliosand these are then further broken into sub-portfolios to ensure that they are considered interms of an assets key features and performance requirements.Asset Management Strategy (1)Version 4.0 25th April 2018Page: 7 of 22

Asset Management Strategy 2018 – 2023The structure of the estate is illustrated below:Portfolio – Operations:This portfolio comprises all assets which are used to deliver services and administrate. Thekey objectives of this portfolio are: Provide adequate and appropriate space for the service (Including maintenance andrunning)Optimise occupancyEnsure statutory complianceMinimise expenditureExamples of the types of property in this portfolio include: Administration and frontline offices,depots, children centres, Country Parks, Waste Management sites and Gypsy Traveller sites.Portfolio – Policy Return:This portfolio comprises all assets which are occupied by non-KCC services and tenantsperforming a community function or where the asset has been transferred under statuteunder a peppercorn, retaining its “public use”. The key objectives of the portfolio are: Mitigate holding costEnsure the terms of the tenancy arrangement are fulfilledEnsure statutory compliance is undertaken (by KCC / tenant / landlord / occupier,depending on terms of occupation)Maintain & improve KCC’s overall property holding positionEnsure management is appropriate to occupier / arrangement in place.Asset Management Strategy (1)Version 4.0 25th April 2018Page: 8 of 22

Asset Management Strategy 2018 – 2023Examples of this type include Academies, Long leaseholds, Services commissioned withleases or another type of occupational arrangement, small holdings, Community grouptenancies, Nursery leases, Managed housing acquired as caretakers’ houses or CPO.Portfolio – Investment and Development:This portfolio comprises of assets which are being held by KCC solely for the purposes ofincome generation, future development from which it may derive a return and disposalproperty where the capital raised is used to reinvest in other investment/development orsupport the Council’s capital investment programme to modernise / improve its servicedelivery. Objectives are essentially: Increase and optimise incomeMitigate holding costEnforce the terms of the tenancy arrangement in accordance with the leaseMaintain & improve KCC’s overall property holding and value positionBalance a resilient income producing portfolio within acceptable risk parametersOptimise capital value and development return within risk parameters.These assets include commercially tenanted assets, operational assets where part is let outat market value, Land, Surplus assets for disposal / development, Ransom strips.Property Services:The Councils property service function sits within the Infrastructure Division with Strategicand Corporate Services. The Infrastructure division includes property and technologyservices along with the business service centre. The council asset base has an estimatedasset value for its accounting purposes of 1.87 billion overall, annual resource spend ofthose properties in the corporate landlord including rates, rent, maintenance, utilities is inexcess of 18.3 million. Alongside the management of the Councils property portfolio thefunction is responsible for the delivery of the council’s capital.During the last asset management strategy period, the property function was realignedtowards the Council’s vision to establish itself as a Commissioner of services. Strategicservices are now retained in house which establishes and defines KCC’s property need inrespect of assets and their management. It commissions its management requirement forestate and facilities management, repairs, maintenance and statutory compliance assurance,asset disposal services including agency etc. and capital programme and projectmanagement to Gen2 (KCC’s wholly owned Property Management Company), its TotalFacilities Management Contractors and other specialist organisations as required. During thisAsset Management Strategy period, the commissioning of all these services will be reviewedand where appropriate re-commissioned in line with the Councils policies. A Categorystrategy will be developed with the strategic commissioning function which will support thedelivery of the Asset Management Plan.Operating Context:The council has set out its strategic objectives in the council’s 2015 – 2020 StrategicStatement – Increasing Outcomes, Improving Opportunities. The way that the Council isdelivering its services and the way that we want to work are changing as we introduce newtechnologies and drive new commissioning and delivery models. The Councils estateremains a key enabler in driving business change across the Council.Asset Management Strategy (1)Version 4.0 25th April 2018Page: 9 of 22

Asset Management Strategy 2018 – 2023The demand for property services continues to increase to meet service demand though thisis predominantly through the need to align the estate to ensure it remains relevant to KCC’soverall direction and drive change to meet the Estate’s management demands. The financialcontext from both a revenue and capital perspective continues to remain challenging with acontinuing drive to reduce operating costs and efficiencies.We have seen a shift in traditional property markets from commercial and retail to aresidential focus. Whilst the national market has showed signs of slowing the local market inKent has continued to perform strongly with the Council continuing to release vacantproperties for disposal.The Hackitt Review following the tragic events at Grenfell will, as it reaches its conclusion,likely direct changes in legislation and the operational property policies and strategies thatare required to manage assets and key statutory compliance areas. The council continues toexperience significant demand for school places and continues to have large school buildingprogramme to meet its statutory duty. This document has been prepared having regard tobest management practice as outlined in the Public Sector Asset Management Guidance andwill remain in place until 2023 (though kept under review to ensure it remains relevant to anysignificant change within KCC, statutory and best practice requirements), with the action plandeveloped annually as part of the Infrastructure Business Plan.Asset Management Strategy (1)Version 4.0 25th April 2018Page: 10 of 22

Asset Management Strategy 2018 – 2023PART 2 - Asset Management, Vision, Mission and Policy Vision:“A professional, ambitious and dynamic propertyservice, working in partnership with our customers,building occupiers, suppliers and partners tooptimise asset performance and income in thedelivery of our property services and solutions.Mission:“To be a leading Public Sector Organisation forasset management with a proactive approach todriving the best from its asset base and servicedeliveryThe Asset Management Policy:We are committed to managing our property assets in a way that will provide bestvalue to the people of Kent on a sustainable basis, supporting the delivery of servicesto the right place in an appropriate environment. We will seek to maximiseopportunities to generate income streams through our asset base.We will: embed a culture of innovation that maximises the use of technology that supportsnew ways of working and business case across the council. deliver our services in a customer focused way which is consistent with KCC’svalues and behaviours Keep our properties safe, dry and warm through theimplementation of a well-managed, rigorous compliance regime, clear maintenanceplans and efficient facilities management. Drive efficiency through the management of the estate to drive transformation tomeet the evolving and changing requirements of the organisation, ensuring the estateprovides the right space, in the right place and on the best terms. This also includesmaximising income and overall value from the estate through proactive portfoliomanagement. Manage our estate effectively using best practice, project and estate managementmethodologies, adopting clear policies and action plans to meet our strategic goals;developing clear reporting processes to involve and inform Members and internaldepartments in decision making.Asset Management Strategy (1)Version 4.0 25th April 2018Page: 11 of 22

Asset Management Strategy 2018 – 2023 Maximise regeneration and growth through effective procurement and linkingpublic sector requirements with regeneration opportunities. Protect the environment through best use of appropriate technologies, utilisingavailable financing to support implementation and meet the objectives of the KentEnvironment Strategy and the Carbon Reduction Action Plan.To deliver these outcomes we will: Complete the transfer of the remaining complex Directorate managed assets intothe Corporately managed estate in accordance with financial requirements tominimise the impact of budget changes, but to ensure particularly that KCC ismeeting statutory compliance duties and knows its position in this regard. Promote the Asset Management Policy, this Asset Management Strategy andAnnual Management Plan(s) Engage with internal departments, public sectororganisations, community organisations and other stakeholders to understandneeds and asset collaboration opportunities. Enhance and improve data integrity, management and reporting to support decisionmaking and enable best-in-class delivery of estate management and facilitiesmanagement services. Review and develop key policies and procedures to support delivery, protect theestate and ensure best practice. Take a holistic approach to the portfolio; understand the whole-life costs ofproperties and set clear performance targets for the operational and investmentportfolios. Understand and balance risks between the performance of our assets and theneeds of our service users and stakeholders. Introduce greater financial rigour into our processes in order that income ismaximised, and costs are mitigated without impacting on matters such as statutorycompliance and health and safety. Improve how matters of compliance in all areas are monitored and actionedparticularly in ensuring that across the Council its departments, devolvedmanagement arrangements, commissioned services etc. there is but ONE VIEWbetween them that is definitive as far as can be achieved through employment oftechnology amongst and evolved best practice. Adopt best practice in the use of planning proces

asset management periods to drive the size, shape and resource requirement for the estate. With the nature of property, change takes time to achieve and with budget constraints, innovation driving an expectation to improve and the current baseline where changes to the estate compared to its size have been minimal. As this review progresses it is clear that utilisation of the estate can be .

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