Best Value Toolkit: Asset Management - Audit Scotland
Best Value toolkit:AssetmanagementPrepared by Audit ScotlandJuly 2010
ContentsIntroduction2Auditors’ evaluations5The Audit of Best Value2The Best Value toolkits4Best Value toolkit: Assetmanagement6Using the toolkits41
IntroductionThe Audit of Best Value“Achieving Best Value is about ensuring sound governance, good management, public reporting onperformance and a focus on improvement”The duty of Best Value applies to all public bodies in Scotland. It is a statutory duty in localgovernment, and in the rest of the public sector it is a formal duty on Accountable Officers.Best Value has already been a powerful force for improved performance and accountability in localgovernment, and it will play an important role in supporting the Concordat and the development ofSingle Outcome Agreements between the Scottish Government, councils and their partners, and instreamlining and coordinating the scrutiny of public services. It also has the potential to underpin theNational Performance Framework and the ‘management scorecard’ elements of Scotland Performs.On behalf of the Auditor General and the Accounts Commission, Audit Scotland has identified a set ofprinciples that form the basis for a consistent approach to the audit of Best Value across the publicsector, although its application will differ to reflect factors such as the different accountability regimesand reporting arrangements in place in different sectors. This will enable us to apply a consistent setof expectations across all the bodies that we audit, and to reflect and support the reality of partnershipworking between organisations.The Best Value toolkits are a key part of the practical application of the BV audit. They provide anevaluation framework that will help auditors to reach robust judgements on how public bodies aredelivering Best Value. However, they cannot generate Best Value judgements on their own. Theycover only part of the process. Judgements about Best Value also involve consideration of servicestandards and performance, outcomes and how effectively continuous improvement is beingachieved. The framework through which the various elements of the Best Value audit are broughttogether to arrive at an overall conclusion on the extent to which an organisation is achieving BestValue is outlined below:2
Exhibit 1Framework for a BV audit of a public bodySource: Audit ScotlandAs the diagram demonstrates, Audit Scotland’s approach to the audit of Best Value entails bothcorporate assessment and performance assessment elements. The former focuses on how anorganisation plans and conducts its business and manages its resources while the latter looks at thequality of those services and the outcomes for service users.Audit Scotland is committed to ensuring that Best Value auditing across the public sector adds valueto existing arrangements, is risk-based and builds on our existing knowledge of individual publicbodies, and that of our scrutiny partners. Specifically we aim to: report on the delivery of outcomes for people who use services protect taxpayers’ interests by examining use of resources put an increasing emphasis on self assessment by public bodies with audit support and validation work collaboratively with other scrutiny bodies to ensure our work is aligned and preventduplication.3
The Best Value toolkitsThe Best Value toolkits are a series of audit diagnostics, which will help reviewers to establish theextent to which public bodies’ arrangements are designed to achieve, and are actually delivering, BestValue. They have been developed to support the corporate assessment process around the fivecorporate assessment areas noted in Exhibit 1, and the two cross-cutting themes of equalities andsustainability. However, as each toolkit also incorporates a series of questions on the impact of thearea under review, they will also provide some evidence to support the assessment of serviceperformance and outcomes.The Best Value toolkits have been developed as audit tools in consultation with specialistpractitioners, and representatives of public bodies and professional groups.The toolkits take the form of structured key questions, with a matrix of possible levels of performance,ranging from basic to advanced practice. The matrices cannot of course capture all of the ways inwhich a public body may address the requirements of Best Value, so there is clearly scope for auditorsto exercise balanced judgement and for public bodies to respond flexibly in demonstrating how the keyareas of challenge are addressed. Individual evaluations are made about the level a public body hasattained in each question or area. However, these have not been weighted and it is not intended thatthese be used to determine an overall scoring for any toolkit. They are designed to contribute tosound professional judgements, not to replace them.Using the toolkitsThe toolkits are designed for application by Audit Scotland’s auditors when carrying out Best Valueaudits of public bodies. In practice, the toolkits will be applied as part of an audit process, whereby theauditor makes enquiries, seeks supporting information and forms conclusions based on the evidenceobtained.Audit Scotland recognises that bodies may find the toolkits helpful in carrying out generalorganisational reviews or specific service reviews and are therefore available in the Audit Scotlandwebsite www.audit-scotland.gov.uk. It should be stressed however that public bodies using thetoolkits do so at their own discretion. The toolkits are designed principally as audit tools that are part of4
Audit Scotland’s overall Best Value audit methodology and are not expressly produced for selfassessment purposes.Any organisation using the toolkits to inform their own corporate or service-based self-evaluationprocesses will need to consider the local context when applying them, and also the indicative ratherthan conclusive nature of the findings when interpreting the results. The toolkits were designed to elicitcontextual information and provide evidence for arriving at professional audit judgements. They arenot intended to be, and cannot be, used in a “tick-box” fashion.The Best Value toolkits are generic in nature, in that they are not specific to any one type of publicbody or to any one sector and are designed so that they can be applied to all public bodies. Auditorswill require to be sensitive to the differences between organisations both in terms of different sectorsand varying scales of operation.This toolkit forms part of a suite of audit products that will be applied, over time, to support astructured, evidenced based, judgment on an organisation’s approach to the use of the resources withwhich it has been provided and its achievement of Best Value.Auditors’ evaluationsThe toolkit takes the form of a series of questions based on identified good practice. It then offers foursets of descriptors, these being:Does not meet basicrequirementsAn organisation may not yet demonstrate the basic practice level in anyparticular category.Basic practicesMinimum acceptable standards, which would be sufficient to allow anorganisation to demonstrate sound performance.Better practicesAs basic, with some elements of good or even best practice, but not on aconsistent basis.Advanced practicesConsistently demonstrating good or best practice and contributing toinnovation.5
Best Value toolkit: Asset managementHow well does the organisationplan economic, efficient andeffective use of its assets?To what extent has the organisationdeveloped an asset managementplan?To what extent does the assetmanagement plan display aspects ofgood practice?How well is the asset managementplan aligned with the organisation’sfinancial plans?To what extent does theorganisation have acquisition anddisposal policies or guidelines?To what extent does the organisationcarry out joint asset planning withother public sector partners?To what extent does the organisationconsider sustainability issues inprocuring assets?To what extent does the organisationconsider sustainability issues inongoing asset management?Asset managementHow well does the structure ofthe organisation support effectiveasset management?How well are roles andresponsibilities in relation to assetmanagement clearly identified?How well does the organisation’smanagement structure supportdelivery of effective assetmanagement?To what extent are capitalinvestment projects robustlymanaged both at strategic andindividual project level?How well are staff involved in assetmanagement trained and how doesthe organisation promote the sharingof asset management knowledgeand experience?How well does the organisationwork with stakeholders, bothinternal and external, in managingits assets?To what extent are stakeholders(both internal and external) involvedin asset planning, including assetredesign and improvement plans?To what extent are feedback andcomplaints procedures monitoredand acted upon?How well does the organisationconsider equality and diversity issuesin asset procurement and ongoingasset management?How much equality and diversitytraining is provided to staff involvedin asset management?How well does theorganisation manage theperformance of its assets?How well does the organisationmanage its data collection andcollation to support the planning andmanagement of assets?To what extent does the organisationhave performance indicators andtargets for asset management?How well does the organisationunderstand its relative performancein how it manages its assets?How well does the organisationactively manage its maintenancerequirements?To what extent does theorganisation consider workforceplanning issues in relation to assetmanagement?6
BEST VALUE TOOLKIT: ASSESSMENT MATRIX – ASSET MANAGEMENTBasic practiceBetter practiceAdvanced practice1. Strategies, policies and plans – How well does the organisation plan economic, efficient and effective use of its assets?1.1 To what extent has theorganisation developed anasset management plan?Asset management plans are in place forall types of relevant assets. This may bedefined by value, number or importancefor service delivery.The asset plans for each type of assethave been combined into a singleasset plan, or joined through anoverarching corporate asset strategy.Risks to not achieving the corporateasset plan and plans for each type ofasset are identified and monitored andaction taken to minimise the risk ofnon-achievement.1.2 To what extent doesasset management plandisplay aspects of goodpractice?The asset management plan includes:The asset management plan alsoincludes:The asset management plan alsoincludes information on: clear links to (or incorporates) theorganisation’s capital/procurementplan how it links with, and will support,other key strategies and plans (eg riskmanagement or sustainability strategy,service/departmental plans, workforceplans) organisational arrangements for assetmanagement strategic objectives for assetmanagement that clearly link withcorporate objectives in the corporate plan medium-term (3-5 years) needs basedon the direction of travel for theorganisation the condition and performance of thecurrent asset base and any risks forcontinued use details of how assets will be retained,acquired or disposed of an action plan that specifies timescalesand those responsible for delivery. Theaction plan should specify short-termactions (1-3 years), but may have somemedium-term (3-5 years) actions. long-term (5-10 years) needs basedon the direction of travel for theorganisation the gap between the current andfuture asset base, and the way this willbe addressed in the form of assetacquisitions and disposals, by eachasset category plans for efficiency savings byidentifying underused assets andassets no longer required. It identifieshow the organisation will use thesesavings how performance managementinformation will be used to informrevisions of the asset managementplan a risk management plan how the organisation will work withits external partners on assetmanagement. asset performance measures details of key risks toimplementation of the plan.7
BEST VALUE TOOLKIT: ASSESSMENT MATRIX – ASSET MANAGEMENT1.3 How well is the assetmanagement plan alignedwith the organisation’sfinancial plans?Basic practiceBetter practiceAdvanced practiceThe plan includes a budget that:The plan also sets out the means bywhich the organisation will considerdifferent options for future assetexpenditure, eg new procurement,leasing etc.The plan also links to service plans. Itidentifies any risk areas where therequired funding may not be availableand it presents different options fordifferent scenarios. The plan identifiesthe use of whole-life costing for assetmanagement. identifies capital and revenueexpenditure on assets currently predicts likely future expenditure onassets and any potential savings. asset expenditure and savings tie inwith the organisation’s financial plans.1.4 To what extent doesthe organisation haveacquisition and disposalpolicies or guidelines?Workforce needs (in respect of theoperation of new assets) and widerresourcing issues are recognised inthe plan (and also in other strategicplans).The organisation has acquisition anddisposal policies/guidelines that specifythe requirements of UK and EU legislationand standing financial instructions.The policies/guidelines refer torelevant national programmes (eg eProcurement) and ScottishGovernment guidance.The policies specify the criteria andsupporting information necessary formaking a decision to acquire or dispose ofassets. This includes the use of optionsappraisals.The policies/guidelines provideguidance on consultation withstakeholders before decisions onacquisition or disposal are made.The policies/guidelines provideguidance on carrying out evaluation ofoutcomes following acquisition ordisposal, eg surveys of staff to find outwhether their working conditions haveimproved or the measurement of anyfinancial savings made.Staff responsible for asset procurementand disposal are aware of the policies andguidance and comply with them.1.5 To what extent doesthe organisation carry outjoint asset planning withother public sectorpartners?The organisation has identified servicedelivery partners with common assetneeds.The organisation has investigated thecost-effectiveness of using the assets ofother organisations rather than acquiringor retaining its own. It has put in placeformal arrangements to do so where thisis cost-effective and mutually-beneficial,eg leasing an empty building from apartner organisation.There are formal arrangements inplace with at least some of thesepartners to jointly manage commonassets, specifying the responsibility ofeach partner for ownership, use,maintenance, financing, eg the use ofjoint asset registers.The organisation has explored colocation of premises with partners andhas some examples of where this hasbeen achieved.There is a joint asset managementstrategy in place, supported by a jointboard or joint asset managementplanning group. The strategy hasdetailed plans for how assets will beshared or co-located and has agreedperformance measures. The strategyoutlines how outcomes will bemeasured such as better services forpeople through the use of one-stopshops.8
BEST VALUE TOOLKIT: ASSESSMENT MATRIX – ASSET MANAGEMENT1.6 To what extent doesthe organisation considersustainability issues inprocuring assets?Basic practiceBetter practiceAdvanced practiceBusiness cases and decision-makingprocesses consider:Business cases and decision-makingprocesses analyse the whole lifeenvironmental and social costs orsavings. These are linked to theachievement of national targets. Theseprocesses also consider the capacityof any partner organisations identifiedin joint asset management strategies.There is evidence that decision-makingequally weighs economic viability,environmental protection and socialjustice. The organisation actively seeksto purchase assets that have benefitsfor all three areas and which helpachieve national targets. There areorganisational targets for thesustainability of new assets. the organisation’s existing capacity whole life costs of assets to beprocured and their environmental impact whole life risks, including whether theperformance of the asset might becompromised over time improving efficiency.The organisation has developedsustainability criteria (financial,environmental and social), andconsiders these issues when procuringassets.Sustainability decisions have beenbased on the benefits for service userssuch as: providing facilities for a greaternumber of people improving user experience andincreasing client satisfaction reducing carbon emissions andimproving waste management.1.7 To what extent doesthe organisation considersustainability issues inongoing assetmanagement?The organisation considers financial,environmental and social sustainabilitywhen making decisions to enhance ordispose of assets.The organisation aims to achieve fullmarket value when selling assets, butconsiders the interests of the widercommunity (eg. selling the asset at lessthat market value to other public bodies).The organisation has developedsustainability criteria (financial,environmental and social), andregularly assesses the performance ofassets against these. The informationis used to decide when assets shouldbe restored or disposed of.The organisation uses sustainabilitycriteria to benchmark the performanceof its assets against other publicorganisations. It uses this informationto evaluate where it needs to improve.9
BEST VALUE TOOLKIT: ASSESSMENT MATRIX – ASSET MANAGEMENTBasic practiceBetter practiceAdvanced practice2. Structures, roles and responsibilities – How well does the structure of the organisation support effective asset management?2.1 How well are the rolesand responsibilities inrelation to assetmanagement clearlyidentified?The organisation’s corporate plans andstrategies refer to asset management.An asset management plan is in placewhich sets out roles andresponsibilities for asset management.This is communicated to all relevantstaff and regularly reviewed.Roles and responsibilities for allgroups/individuals involved in assetmanagement are clearly documentedand understood. These emphasise thata corporate view is to be taken which isthen supported by operational actionsat department/service level. The rolesand responsibilities are widelypublicised within the organisation.2.2 How well does theorganisation’smanagement structuresupport delivery ofeffective assetmanagement?An “asset manager” is identified for theorganisation’s asset portfolio.The organisation has dedicatedstructures/teams/officers tasked withdelivering effective and efficient assetmanagement.A strategic group (Board/Committee)oversees and challenges assetmanagement decisions. A specificasset management function is in placeand a corporate asset manager, andpeople with responsibility for assetmanagement at departmental level,help to drive the delivery of the assetmanagement plan to meet corporateobjectives.2.3 To what extent arecapital investment projectsrobustly managed both ata strategic and individualproject levelOption appraisal techniques are appliedwhen considering capital investmentprojects.The asset management plan clearlyidentifies surplus assets and futureneeds. This is used to inform capitalinvestment decisions supported byoption appraisal techniques.All relevant disciplines (estates,planning, finance, health and safetyetc) are involved in capital investmentprojects and associated optionappraisals. These are clearly linkedinto strategic needs via corporate plansand the asset management plan.10
BEST VALUE TOOLKIT: ASSESSMENT MATRIX – ASSET MANAGEMENTBasic practiceBetter practiceAdvanced practice2.4 How well are staffinvolved in assetmanagement appropriatelytrained and how does theorganisation promote thesharing of assetmanagement knowledgeand experience?Training needs are identified and
The asset management plan also includes: clear links to (or incorporates) the organisation’s capital/procurement plan long-term (5-10 years) needs based on the direction of travel for the organisation the gap between the current and future asset base, and the way this will be addressed in the form of asset acquisitions and disposals, by each asset category plans for .
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