Getting the most from your second biggest asset
by Simon Walker, National Director – Public Sector
For most organisations, particularly the public sector where many have large estates to support their operations, their second largest investment after their people is their property assets. As long-term occupiers the public sector has the opportunity to be model owner occupiers of these assets, through adopting a strategic approach to their management and maintenance.
All too often there is a reactive, rather than proactive, approach to property asset management despite the significant cost ramifications to the organisation.
What can be done? In reality it needs a combination of the right strategy and effective implementation of an asset management process.
Property needs to be a board/cabinet level function where priorities are clearly established and aligned with the organisation’s objectives. As the RICS states in guidelines published in 2022 “Strategic asset management can be defined as the activity of aligning property assets with the strategic aims and direction of the organisation and adding both financial and non-financial value to the organisation as a result.”
There is a real opportunity here for the public sector – to develop an effective asset management strategy providing the roadmap for achieving optimum value from physical assets. The value will be delivered by optimising and managing cost, risk and performance across the asset lifecycle.
Planning and data
With a strategy in place to deliver the value there are two key tactics to be adopted by a typical public sector organisation so that assets are managed in alignment with the strategy. The first is structure and planning and the second is data.
It requires clear leadership on asset management, the right culture and the right internal property function – balanced with external expertise where required. This should support delivery of effective asset management through proper planning.
To support effective planning each organisation needs accurate, timely and consistent data. Data must be gathered regularly to understand the assets’ condition and usage. That data must be analysed to produce meaningful performance indicators – and most importantly life cycle costs must be understood.
An asset management system must be in place to provide outputs that inform tactical and strategic decisions, and not be merely a repository of data as is often the case. In organisations demonstrating best practice MI data drives better investment decision making to optimise asset lifecycles and to deliver value from those assets.
This approach maximises asset availability, manages condition and backlog risk, ensures premises are safe and compliant and supports risk management, assurance and governance.
Watts Group has provided similar support to a wide range of organisations including, from the private sector, an example of long term asset management support in the Co-op Group with whom Watts have enjoyed a 25 year relationship providing support across the 8,000 properties they own across the UK.
For further reading the RICS guidelines are a valuable resource: https://www.rics.org/profession-standards/rics-standards-and-guidance/sector-standards/real-estate-standards/strategic-public-sector-property-asset-management-3rd-edition
For more information please contact Simon Walker on +44 (0)161 831 6180.