Asset Management Guide in LAs Scottish DoFs

7/31/2019 Asset Management Guide in LAs Scottish DoFs

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A GUIDE TO ASSET MANAGEMENTAND CAPITAL PLANNING

IN LOCAL AUTHORITIES

OCTOBER 2008

Local GovernmentDirectors of Finance

Section, Scotland


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Pages

Main Paper

1 Introduction 1Purpose of the Asset Management Guide 1Overview 2Future Developments 4

1 Asset Management: The Corporate Dimension 5

2 Asset Management: Data Gathering 11Introduction 11The Building Blocks of Asset Managment: Descriptions 12The Main Building Blocks of Asset Management: CONDITION 15The Main Building Blocks of Asset Management: SUITABILITY 21The Main Building Blocks of Asset Management: SUFFICIENCY 25The Building Blocks of Asset Management:

Accessibility, Running Costs and Value 28The Improvement Service Screening Survey 30Summary 30

3 Asset Management: Interpreting the Main Data 31Data Recording 31Quality Assurance 35Creating a Baseline Position 36Summary 39

4 Developing a Decision Making Framework 40Populating Asset Management Plans 40Creating a Strategic Outline Business Case (SOBC) for Investment 47The Corporate Asset Management Plan 49Summary 50

CONTENTS


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Appendices and Workbook

Appendix A - Suggested Corporate Process for Capital Planning

Appendix B - Features and Good Practice Behind CreatingAppendix G - the Right Corporate Vision

Appendix C - Suitability Template for Collection of Property Asset Information

Appendix D - Sample Corporate Standard for Office Space Utilisation

Appendix E - Model of Asset Management Data System

Appendix F - Checklist of Asset Types

Appendix G - COPROP Property Management Initiative:Appendix G - Property Performance Indicators

Appendix H - Examples of Key Asset Management Drivers

Workbook

I am delighted to welcome this guide which provides an excellentcontribution to the important drive to improve public sector asset

management in Scotland.


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FOREWORD

Councils in Scotland have assets in excess of 20 billion in value. These assets are integral to theservices delivered to the people of Scotland and the manner in which they are managed impactson the ability of councils to meet their aims and objectives. Asset Management, therefore, is acrucial aspect of the management of resources, underpinning the effective delivery of services andcan be a route to delivering efficiency gains. Audit Scotland has stressed the need for more focuson a corporate approach to asset management, taking account of all assets held by councils, andhas embarked on a study to evaluate how well councils manage their assets, the extent to whichthey use them to contribute to high quality service provision and whether they achieve value formoney. The Convention of Scottish Local Authorities has recognised the strategic importance of

asset management and is taking forward a range of measures to strengthen the management ofassets by councils. One such measure is the preparation of guidance on asset management andcapital planning and the CIPFA Directors of Finance have prepared the guidance contained in thispublication in conjunction with CIPFAs commercial arm, IPF, and the work has been funded by theImprovement Service.

The purpose of this guidance is to provide councils with practical advice on how to create assetmanagement plans and capital investment plans for all assets. This is done through establishinga framework, which will help councils to collect the right information and have the right systems

in place for effective asset management. It also offers guidance in ensuring that assetmanagement planning is fully linked to service planning, capital planning and financial planning.The guide is not prescriptive as it is recognised that there needs to be flexibility in approachesadopted by councils but it is based on a standard framework, which can be adapted as required.

The gains to be accrued from effective asset management are substantial. The mere fact thatcouncils control assets of more than 20 billion suggests that there requires to be a structuredapproach to such a significant part of their balance sheets. A comprehensive asset managementplan will address many of the governance issues associated with the management of councils

assets. The plan will also identify in a clear way to councils the potential for better utilisation ofassets, the condition of its asset categories, the capacity of its assets, the priority needs in termsof investment and will also assist in determining which assets are surplus. If plans are fullyintegrated with service and financial planning there should be a clear route to optimising the useof assets and enabling councils to direct expenditure where it is most required. This will create thepotential to improve the services linked to these assets and to identify opportunities for councils tomake efficiencies. Taxpayers and service users will be the real beneficiaries.


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Purpose of the Asset Management Guide

The main purpose of this guide is to provide a common framework for the progression ofcutting edge asset management and capital planning arrangements and complementexisting asset management guidance.

The framework set out in this guide will assist Scottish local authorities to collect the rightinformation and have the right systems in place for effective asset management. Inaddition, it provides basic guidance in ensuring that asset management planning is fullylinked to service planning, capital planning and ultimately financial planning in asseamless a way as possible. Greater integration will lead to more effective use ofresources, greater transparency in decisions taken and will support new and more efficientways of providing services.

The issue of the guide is timely. Councils in Scotland are increasingly facing manychallenges in delivering services against the backdrop of a deteriorating financial climate,the increasing demographic need for services and the continuing trend of knowledgeablecustomers and residents. Councils are still expected to deliver high quality services withinthese parameters so the proper allocation of resources, and in some cases scarceresources, is becoming a critical issue. High quality asset management and capitalplanning helps to ensure that scarce resources are directed at the areas of highest priorityand greatest need.

The guide is not meant to be prescriptive, because the difficulties that a fixed andinflexible approach could bring are recognised. Naturally, to ensure focus, a particular,standard approach is adopted throughout, however this is only indicative of one goodpractice system and councils are free to tailor this approach or introduce their own systemas they see fit. For example, in the guide a 10 year planning period is suggested but somecouncils may feel this is too long a timescale and may wish to adopt a shorter period forintegrated asset management and capital planning.

This guide offers a one stop shop for integrated asset management and capital planning

that provides the simple building blocks for Scottish councils to create their own systemwithin the broad parameters set out in the document. This guide fully complements theseparate publication; 'Capital Planning and Option Appraisal - A Best Practice Guide forCouncils' (CIPFA Local Government Directors of Finance) which adopts a similar approach.

The Business case approach adopted in this guide is based on good practice and isspecifically tailored for the needs of Local Authorities. The general framework will be

INTRODUCTION


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Overview

The 32 councils in Scotland deploy a very large and valuable (several billions of pounds)asset base to deliver services and outcomes for their communities. The revenue cost ofassets (i.e. property, land, roads and transportation infrastructure, etc) is second only in

significance to human resources. It follows that any improvement in the strategic andoperational management of capital assets could have a real impact on the financialresources available to councils, as well as to other public sector bodies which might becollaborating with the council in Community Planning or in order to secure cross-publicsector efficiencies in pursuance of the Scottish Government's 'Efficient Government'agenda.

How councils manage their assets will impact directly in their ability to deliver key aimsand objectives. Therefore it is vital that councils' asset management plans are effectively

integrated with the rest of their policy making and corporate/service planning activities andfully complement, and be complemented by, the financial management processes of thecouncil. This integrated framework is a vital part of being an efficient and effective council.

Good asset management plans should include a strategy for dealing with acquisitions,disposals, lease negotiation and asset maintenance, as well as indicators to measure theperformance of a councils assets. Councils are also responsible for managing CommonGood assets and they should be incorporated in the plans within the appropriate assetcategory (para 1.7). The plans should be based on business and customer service delivery

needs, as the right assets in the right place can make the difference between good andpoor service delivery.

In the past, councils, in common with most other organisations in the public sector, havenot in any systematic way considered how their assets have been used and deployed.Questions around the condition of the asset, its fitness for purpose and long termsustainability were at best perhaps considered informally and at worst-not at all.Weaknesses extended to a poor focus on delivery outcomes and how assets werepositioned (community focus).

These weaknesses have been widely recognised and over the last few years changes havebeen introduced. Most councils in Scotland have started to embrace asset managementplanning as a compulsory requirement for not only the proper management and monitoringof assets but critically as a tool for robust and sound investment decision making.

There have been several key influences in the development of asset management plans:


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G Audit Scotland allowed councils some breathing space in the period 2005 to 2008 to putin place proper asset management and capital planning decision making frameworksand for a full audit of such systems to be arranged post 2008. It is expected that the needfor asset management plans will be rigorously pursued by auditors seeking evidence ofBest Value for all investment decisions. An integrated asset management and capital

planning framework will be a key principle in ensuring Best Value i.e. all investmentdecisions are considered within an overall systematic appraisal system that includes theuse of business cases and option appraisal. Good asset management planning can assistcouncils to contribute to the achievement of sustainable development and continuousimprovement which are key principles of the Best Value regime.

G In the public sector, there has been a movement away from annual budgeting,comprising bids for capital expenditure and adjustments to previous year's provision formaintenance, towards medium to long-term capital planning in some cases up to 10

years.

G Asset management is one of the five work streams within the Scottish Government's'Efficient Government' agenda. This initiative cites the better management of assets byall parts of government as a key element in the drive for efficiency gains.

G More recently the UK audit bodies have developed a publication entitled 'VfM in PublicSector Corporate Services'. The purpose of this document is to help organisationsacross the public sector to understand, compare and demonstrate the value for money

performance of their corporate services. The publication contains a section on 'EstateManagement' that proposes a suite of high-level performance indicators (although inScotland FPS Scotland in conjunction with Audit Scotland have produced a set of localperformance indicators covering asset management. These indicators are also used bythe asset management planning benchmarking group supported by two thirds ofScottish Councils and facilitated by IPF).

Asset management is a key element of achieving Best Value. Councils have a statutory dutyto deliver Best Value. This has significant implications for asset management, as councils

must:

G Ensure that management arrangements secure continuous improvement;G Balance quality and cost in relation to the procurement and use of assets;G Ensure asset management decisions contribute to sustainable development.

The appropriate use of assets in the right location can make the difference between good


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Future Developments

As we are all aware, nothing stands still for long and this is true for asset managementplanning. There are a number of potential future changes that will have implications andthese are summarised as follows:

G Local Authority Transport Infrastructure AssetsA review commissioned by H M Treasury and Department for Transport, looking atEngland, Scotland, Wales and Northern Ireland, has been undertaken by CIPFA. Theobjective of the review was to evaluate the issues associated with implementing an assetmanagement plan based approach to accounting, managing and financing local authoritytransport infrastructure assets.

G Convergence to International Financial Reporting Standards (IFRS)

The timetable for the convergence to IFRS has been set for local government; a newIFRS-based SORP1 will be produced with local authorities preparing their accountsfollowing IFRS from 1 April 2011 (this date reflects the 1 year deferral) with comparablefigures being produced for 2009/10. The convergence to IFRS may have implications forasset management planning i.e. some operational leases may be classed as financeleases and as a consequence appear on council balance sheets under InternationalAccounting Standard (IAS 17). Under the recognition and measurement of PrivateFinance Initiative (PFI) arrangements more assets may appear on councils balancesheets and finance costs will be capitalised which is required by International Accounting

Standard (IAS 23) but is forbidden by Central Government's Financial Reporting Manual(FReM) and not generally practiced by local authorities. The actual implications on assetmanagement plans will not be known until CIPFA has concluded its review, inconjunction with HM Treasury, of the applicability of IFRS on local authorities.

G RICS leaflets on Asset ManagementThe Royal Institute of Chartered Surveyors (RICS) will shortly be publishing a series ofleaflets (8 in total) on asset management for Local Authorities each addressing a keyarea. The 8 areas are:-

G Sustainable Communities and Property Assets

G Transfer of Assets to Community Ownership and Management

G Procurement and Commissioning


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There is no intention to duplicate this work in the guide. The guide specifically addresseshow to construct the building blocks of asset management and how to use theinformation collected to construct asset management plans and how they link to capitalplanning.

G Audit Scotland SurveyAudit Scotland has conducted a national survey of asset management by councils inScotland as part of its national study of asset management in Local Government. Thestudy focuses primarily on property assets. The study evaluates how well councilsmanage their assets, the extent to which they use them to contribute to high qualityservice provision and whether they achieve value for money. They intend to makerecommendations that will assist councils own efforts to improve in this area. The mainfocus of the study is to determine how well councils look after their manageable assetsin order to improve the delivery of their services.

1. ASSET MANAGEMENT:1. THE CORPORARTE DIMENSION

1.1 Before the specific building blocks of asset management are considered, it is worthconsidering the importance of the corporate drivers behind asset management.

1.2 There are numerous benefits flowing from good asset management in anorganisation. The main ones are listed below.

G Set defined levels of service and measure performance against them;

G Understand and track over time condition and performance of assets and cost ofholding them;G Ability to predict consequences of particular funding levels and strategies;G Whole life cost based resource prioritisation - a stitch in time instead of worst

first;G Better informed/more transparent decision making - policy as well as

investment;


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Vision

1.3 Asset management planning needs some consistency of approach and practice.COSLA suggests a corporate view to asset management is essential. The visionneeds to make clear what is required of asset management for service provision and

support to achieving sustainable communities. This view can either be driven fromthe corporate plan or encapsulated in the corporate objectives agreed by members.Asset management is not an operational discipline. It is crucial to the effective useof resources and should be handled as part of the strategic process.

1.4 For the fixed assets such as property, buildings and land, the vision may beexpressed in terms of the operational and non-operational estate.The fixed asset estate is important because:

G the highways (includes for the purposes of this document other transportationinfrastructure such as marine infrastructure and airfields), property, land, andbuildings represent a significant physical resource;

G property provides facilities for service delivery today and in the future;G highways provide a major infrastructure resource for transportation and access

for communities and services;G non-operational property may be a contributing value as to future needs, either

for wealth creation or capacity, or yielding value for investment immediately or ata future time;

G capital investment in the infrastructure through highways, property and buildingsis often the major part of the capital programme requirements;

G other capital investment is in equipment and portable assets such as vehiclesand computers;

G renewals and replacement of equipment together with running costs andmaintenance of the estate is an important element of the revenue budget;

G environmentally and socially, assets contribute to sustainability of communities.

The corporate influence and overview ensures the longer term plans and

aspirations are effectively met.

1.5 The governance and decision-making processes and systems are essential toconnect the vision and the strategy to the plans and programmes required fordelivery. The corporate planning and management of property and fixed assets isusually assembled in the corporate asset management strategy which shows howthe vision will be achieved (the corporate asset management plan in turn takes its


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1.6 The governance of asset management as a core element of the performancemeasurement of the public body needs leadership and direction that is visible androoted at the corporate management team/Council member level. Key decisions forthe property estate and highways network will be around the amount of valuederived from non-operational assets, capital/investment programmes and the

revenue allocated to maintain and repair operational assets. These will need to beput in context by linking them to corporate, community and service plans andstrategies. Governance responsibility will need to understand and agree with thenature and delegation of authority to manage and deliver the resultingprogrammes. This may include asset management and capital investment groupswith delegated powers to act across service areas.

A Suggested Corporate Approach

1.7 This guide recommends the creation of a corporate asset management plan as adocument directly supporting the relevant aims and objectives flowing from thecorporate plan. The corporate asset management plan could act as an umbrelladocument for subsidiary asset management plans. This guide suggests LocalAuthorities classifying assets under 6 generic categories.

G Property;G Open Spaces;

G Roads, structures, lighting and water related infrastructure;G Housing;G Fleet (and Plant); andG ICT

This is best represented in the diagram below.

Corporate Plan

Corporate Asset Management Plan


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1.8 Asset management plans should be prepared for assets under each of thesecategories. In later sections, the guide will go on to discuss the contents of theseasset management plans and the overarching corporate asset management plan inmore detail. Some councils may wish to group assets by service and integrate theprocess with their service planning and this is another valid way of delivering a

comprehensive asset management planning framework.

1.9 Of further critical importance is how asset management planning links with thecapital planning framework and resourcing available over the longer term. Againthis will be covered in later sections but it is important to make the point that assetmanagement is not an isolated activity. It must be clearly embodied in overallcorporate working. The next diagram shows how asset management interacts withother corporate frameworks as part of the bigger picture.

ASSET MANAGEMENT - BUILDING BLOCKS

Integration with Financial PlansCapital Strategy, Coordinated AMPManagement, Service Plans, and

Revenue expenditure budgets

Performance Objectives and FrameworkScottish benchmarking, COPROP, SG and RICS measures

Value for Money, Use of Resources

VISIONCommunity and Corporate objectives for use and application of operational and non-operational Assets

Connect to knowledge of what is available, future requirements, sustainability of community and assets, andaffordability of strategy

Property Asset Management StrategyService Plans and Programmes

Policy, property review, challenge,forwardplans, priorities and allocations

Programmes disposal and acquisition,capital investment and maintenance including

routine and reactive repairs

OrganisationCommunity, area and collaborative

working arrangementsProfessional service structure and

autonomyHow the strategy, plans andprogrammes are delivered

KNOWLEDGE OF ASSETS& WHAT IS TO BE DONE

HOW ITSDELIVERED


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1.10 With specific reference to capital planning, asset management must be set againstthe backdrop of available resourcing (this is also shown as one of the bigger picturebuilding blocks shown above). Local Authorities have to operate against a backdropof not only increasing demands and expectations from users and the localpopulation but also from Government. Meeting statutory requirements, addressing

backlog maintenance and initiating new developments can never be reconciled withavailable funding.

1.11 Consequently, the outputs from asset management plans will lead to investmentrequirements that will likely outstrip resourcing available. It is critical that thepriorities identified by these plans are assessed in a transparent and objectivemanner (as far as possible). A later section will cover this in more detail but thereshould be a structured corporate prioritisation process that aligns availableresourcing with those areas of greatest asset management need. The diagram at

Appendix A describes a suggested corporate process for capital planning followingthe completion of service and corporate asset management plans.

1.12 While the guide takes a category based approach to the management of assets, it isrecognised that some asset categories may cut across different service planningareas in a council. It is important that good communication takes place between theresponsible asset manager and service directors/managers in order that individualasset management plans and relevant business cases are signed off by allrelevant service directors/managers and the impact quantified in service plans. This

could be combined with a more formal approach of responsible servicedirectors/managers being given the opportunity to attend asset management groupmeetings (see below) when necessary.

1.13 In addition to a corporate asset management plan that has been agreed bymembers, there should be in place a professional service structure andorganisation proportionate to the property asset management required as well asnominated personnel for the other asset management areas. With particularregard to property, the autonomy and responsibilities will be appropriate to the

demands and organisational structure of the corporate body, services, jointarrangements and communities. The key responsibilities are to guide and setpolicy, develop and manage plans and strategies, establish programmes of requiredworks and procurement of assets for investment, acquisition, release and sale,repairs and maintenance, review of property rentals and income, and ensure theappropriate resources are available to deliver the aims and objectives. Thedetermination of what resources to use will be subject to matching in-house


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G Facilitating and providing a focal point for a corporate approach to assetmanagement;

G Strategically managing the asset management processes and programs;G Being responsible for the development of the corporate asset management plan

and subsidiary asset management plans and ensuring these are kept up to date;

G Ensuring that consultation on asset management is undertaken with all relevantstakeholders;

G Be responsible for the development and management of a performanceframework for asset management;

G To ensure that basic information on assets is held along with details of theircondition.

1.15 Property and other asset managers should meet as a group along with othernominated council officials to monitor asset management progress in each of the

individual asset management areas but also for the purposes of reviewing the linkwith capital planning. A suggested format is shown in the diagram below.

OFFICERS CAPITAL WORKING GROUP

Capital Planning andAsset Management

Strategy Group

Sub Groups- Property

- Open Space- Roads

- Housing- IT

- Vehicles


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1.17 The groups should be governed by a formal remit and meet regularly. Arrangementsshould be in place for the Officers Capital Working Group to report to members onprogress with asset management and capital planning. Members should be able toscrutinise and challenge the work of the Officers Capital Working Group eitherdirectly through occasional attendance at working group meetings or through

formal reports and presentations to a full council meeting or nominated sub-committee.

1.18 Some features and good practice behind creating the right corporate vision andgetting the right asset management organisation in place are shown at Appendix B.

Summary

1.19 This section outlines how asset management and capital planning fits into theoverall corporate framework. An approach is recommended whereby the corporateasset management plan acts as an umbrella document for subsidiary assetmanagement plans dealing with assets in 6 distinct categories. Some diagrams areprovided to show more clearly the various links that can exist between assetmanagement and other corporate frameworks. A key requirement of this section isto ensure the reader has an understanding of the complex environment in whichasset management operates and the essential corporate links that must exist.

2. ASSET MANAGEMENT:2. DATA GATHERING

Introduction

2.1 This section provides information on the crucial building blocks required toconstruct an asset management plan and to assimilate the facts in order thatdecisions can be made.


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The Building Blocks of Asset Management: Descriptions

2.4 The data required to formulate asset management plans will be similar in eachorganisation although it will vary in emphasis and detail. The main drivers behindasset management are listed in the following diagram.

KEY DRIVERS OF ASSET MANAGEMENT

2.5 The diagram lists the most prominent drivers. There are others such as:-

G Environmental performance including CO2 emissions;G Asset usage in hours;G Energy usage (consumption costs);G Asbestos content;G Health and safety surveys;G Water hygiene information;

SufficiencySuitability:

Purpose

Sufficiency:Demand

Condition

Condition: Physical

Suitability

Value RevenueCosts

Accessibility


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2.7 By collecting this and properly recording this data, the organisation can assemblecritical information about the performance of its assets. There are no universaldefinitions for the key asset management drivers but full descriptions are shownbelow.

Key Driver

Condition

Description

It is essential that councils understand thecondition of all their assets and should carry outsampled surveys or full 100% surveys to form areliable picture. Usually, a graded system isused to categorise the condition of assets. The %

level of surveys carried out will be dependant onthe number of assets involved and theircomplexity. It can also differ between assettypes. For example, a full 100% survey of a largeroad network to assess condition is probablyunrealistic in terms of assessing conditionalthough this information may be critical forproper operation of a vehicle fleet especiallywhen the failure of one vehicle to meet proper

standards could mean the loss of the council'soperator license.

Related to condition would be an assessment ofbacklog maintenance requirements. This isusually done in priority bandings although moreinformation on this is shown further below.

Suitability Sometimes called the 'fitness for purpose' test.

Many organisations find it difficult to assesswhether an asset is delivering returns for thepurpose for which it was intended. It goes waybeyond any question of condition and is purelyconcerned on how well the asset is suited to itscurrent purpose. An example might be old headoffice premises that are in good condition but


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Key Driver

Sufficiency

Description

This is about demand and sustainability of theasset. Sufficiency is concerned with asset useboth now and in the future. It is critically

important because it helps to identify underutilised assets that can be identified for possibledisposal or reconfiguration. It is primarilyconcerned with asset capacity v asset use andagain taking the example above of the headoffice premises, it may have a capacity of say300 people but is currently occupied with sayonly 100 meaning an occupancy rate of only 33%.In the case of this particular asset this would be

the key sufficiency indicator.

Revenue Costs

Accessibility

Obviously the costs of operating the asset areimportant. The asset management plan needs toinclude the revenue costs of running the asset inorder that maintenance costs and heat and lightcosts along with water and sewerage costs arenot only controlled but within ranges the councilwishes to pay. In theory these costs should be in

line with the condition rating for the asset butinformation on the two should assist in decidingthe relative merits or otherwise of continued,economic asset use.

This can be on two levels. The first is linked toDDA (the Disability Discrimination Act) and howmuch the asset is accessible to people withdisabilities. The second is concerned with

accessibility generally. For example, there maybe a special piece of computer equipment thatcan only be used by suitably trained councilpersonnel. In this case it would be useful toensure that operatives are correctly identifiedand appropriate cover is in place (avoiding thesituation of reduced usage-sufficiency-because


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2.8 The guide will now look at some practical guidance on collecting data around theseasset management drivers for each of the 6 generic asset management planheadings for the main drivers of condition, suitability and sufficiency.

The Main Building Blocks of Asset Management: Condition2.9 Most guides on asset management almost exclusively concentrate on property when

describing tools and techniques for assessing condition. This guide will attempt toalso consider the other generic asset management areas on how condition shouldbe rated.

2.10 This is best described in the form of a table.

Asset Types

Property

Condition

The standard way of defining and measuringcondition of public property assets is theundertaking of full condition surveys to RICSstandards and parameters, This generatesdetailed data on all major components and sub-components of the building (elemental

analysis). This in turn is used to generate asummary assessment of conditions andmaintenance requirements. Such full surveysare expensive. Around 1,500 to 1,800 iscurrent market price for the average sizedoperational council building and over 35 millionper cycle across all 32 Councils. TheImprovement Service is recommending ascreening system to help reduce cost and

target resources to those property assets thatneed most attention.

Core/basic data on property should be collectede.g. location, property type, age, ownership,covenants, occupancy, valuation, listed buildingstatus and preferably UPRN (unique property


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Asset Types

Property

Open Space

Condition

A: Good - performing well and operatingefficiently

B: Satisfactory - performing adequately butshowing minor deterioration

C: Poor - showing major problems and/or notoperating adequately

D: Bad - life expired and/or serious risk ofimminent failure.

When work is required to bring the element upto standard, then construction estimates shouldbe prepared and prioritised using the followingscale:-

1 Works required within 1 year2 Works required within 1-2 years3 Works required within 3-5 years4 Works required outwith the 5 year window

This grading system can be used in conjunctionwith a backlog maintenance grading system orused to deal separately with condition issues notrelated to backlog maintenance (e.g. expenditurerequired within 1 year to enable the asset tooperate more efficiently).

Open Spaces will include; country parks, publicparks, formal sports provision, amenity greenspace, play space and play equipment, greencorridors, cemeteries, war memorials andwoodlands. The list is not exhaustive.

It is good practice for the Council to have anopen space strategy and to have conducted anopen space audit to collect information on all


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Asset Types

Roads, Structures,

Condition

If possible, a condition survey of the open spaceassets held in the Open Space AssetManagement Register using a team of in-house

surveyors should be undertaken. Assets locatedin amenity grass areas and parks include:concrete bedding/shrub containers; dog wastebins; litter bins; seats; shrub bed areas;synthetic grass pitches and fences. Assetsshould be assessed according to details of type,material, condition, upgrading work required,frequency of activity and timescale to replace.

In addition to this survey, equipped play areasshould be checked on a regular basis to identifyand remedy any health and safety risks. Surveysshould also be undertaken of non-carpetpitches. The surface condition, size, activitiesthey cater for, condition and presence of lightingshould be recorded.

A headstone safety survey should be initiated to

assess the condition and safety of headstones.

Woodlands infrastructure will more than likelybe the subject of a separate woodlands surveyresulting in management plans for that part ofthe current asset.

A simple condition grading of GOOD/FAIR/BADcould suffice for most of the open space assetsalthough separate grading systems may berequired for play equipment and similar assetswhich should be graded based on life-span withparticular emphasis being placed on those itemsof equipment requiring immediate removal.

The road and infrastructure network is the


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Asset Types Condition

G Carriageway conditionG Street Lighting repairsG Street Lighting columns (age)

G Traffic light repairsG Bridges-road network restrictions.

Performance indicators for water related assetsare in the early stages of development.

Guidance documents on asset management andasset valuation are produced by CSS/Tag andsupported by the UK Roads Board.

In 2002 and subsequent years the Society of ChiefOfficers of Transportation in Scotland (SCOTS)commissioned the Scottish Road MaintenanceCondition Survey (SRMCS). This is a machine-based survey using a technique to measurerutting, surface texture, longitudinal profile andcracking of roads (although the latter is notincluded in the Statutory Performance Indicator).

This provides consistent information on roadcondition over time. The entire non-trunk 'A'Class road network is surveyed every year, 50% of'B' roads and 15% of the remaining roads.Condition is rated on a traffic light system.

The portion within the RED band is indicative ofthe length likely to require early maintenancetreatment.

The portion in the AMBER band reflects thelength likely to require maintenance in themedium term.

The portion in the GREEN band indicates theroad is in a serviceable condition, although


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Asset types

Housing

Fleet

Condition

traffic light sysem for Roads or the A to Dgrading system used for property. In any case, themain criteria for grading should be the impact on

public safety.

The condition of a council's housing stock isgenerally derived from a stock condition survey.This is typically initially prepared on a samplesurvey basis with the move to 100% verified datacompleted over time. In most cases, the initialcondition survey is conducted by externalsurveyors. Under the Scottish Housing Quality

Standard (SHQS), councils must ensure that alltheir managed housing is in good condition andsafe and secure.

In typical surveys, no overall rating is given to thestock other than whether it meets or does notmeet the SHQS standard. Capital and Revenuemaintenance details are usually supplied on awhole life basis showing a range of expenditurefrom catch-up repairs to asbestos removal.

Some councils have already developed specificasset management rating systems for theirhousing stock. This involves creating a matrixusing cash flow and sustainability information tocategorise their housing stock on a traffic lightsystem. These systems attempt to link stockcondition with ongoing viability and are designedto offer a more informed way of makinginvestment decisions.

Fleet typically includes vehicles and plant. Fleetcondition is usually secured to a minimumstandard through the annual MOT test and tosatisfy compliance with the requirements of the


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2.11 Backlog maintenance issues must be considered at the time of condition surveysand identified for most of the asset categories shown above. It is usual they areshown in the following priority bandings:

Asset Types

ICT

Priority Banding

1

2

3

Condition

There should be an ICT asset managementdatabase. This includes hardware, software,network devices, all contracts, enterprise

agreements and maintenance agreements. Theidentification of all such operational overheadsprovides a more accurate life cycle costing andtotal cost of ownership model for ICT.

This should not only record details of assets forsecurity purposes but also be used to recordestimated useful lives of existing ICT equipment.The remaining life of Council ICT assets should

be graded and investment decisions prioritisedaccordingly.

Description

Works required in the next year that will preventimmediate closure of premises or the failure ofanother asset type and/or address an immediatehigh risk to health and safety or remedy a seriousbreach of legislation

Works required in year 2 that will prevent seriousdeterioration of the fabric of buildings or thecondition of service assets and/or address amedium health and safety risk and/or remedy aminor legislation breach.

Work required within 3-5 years that will prevent


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The Main Building Blocks of Asset Management: Suitability

2.14 Suitability is about fitness for purpose and the assets continued use for thepurpose intended. Suitability is a crucial asset management driver. If properlycategorised, it can result in scarce investment not being directed at assets whose

purpose may no longer be adequate for the relevant service delivery. The differencebetween condition and suitability is crucial and it is important they are notconsidered in isolation (the same applies to all the other asset managementdrivers).

2.15 Like condition, suitability is addressed in the following table for each of the 6 assetmanagement areas.

Asset Types

Property

Suitability

Suitability ratings developed a high profilefollowing the first school estate assetmanagement plans in 2003. Suitability is aboutensuring that a property is suitable for itscurrent use and supports efficient and effectiveservice delivery both now and in the future.

Suitability assessments should not be carriedout by the property professionals (although theywill be heavily involved in the design of thesuitability forms) but by the service managersoccupying each property. The propertyprofessionals do have a role in mediating theresults from each of the services to ensure thatthe results are fairly produced and reflectcurrent fitness for purpose. In schools, it isnormal that the suitability assessment iscompleted by the head teacher although his/herwork will still be subject to mediation.

Suitability should focus on the following factors:G Location;G Internal environment;


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Asset Types

Open Space

Suitability

A: Good - performing well and operatingefficiently. The buildings support the delivery ofthe service and are considered suitable for usenow and in the future.

B: Satisfactory - performing well but with minorissues. The buildings generally support thedelivery of services and would be consideredsuitable. There is room for improvement incertain areas but the property is fundamentallyokay.

C: Poor - showing major problems and/or not

operating optimally. The buildings impede thedelivery of services and would not be consideredsuitable.

D: Bad - does not support the delivery ofservices at all. The buildings seriously impedethe delivery of services and would definitely notbe considered suitable.

Where time and resources allow, a wider view onthe suitability of properties for service deliveryshould be obtained, with a particular emphasisplaced on not only the views of current serviceusers but potential service users also. Themethodology for collecting property suitabilityinformation will continue to evolve to meet bestpractice.

A simple example of a suitability template forthe collection of information is shown atAppendix C.

Suitability is one of the most important aspectsto consider when evaluating the open spaceportfolio. The ability to deliver efficient and


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Asset Types

Roads, Structures,Lighting and WaterInfrastructure

Suitability

G Location (e.g. play areas, parks,cemeteries, sports facilities, etc.)

G External environment (e.g. contaminatedland, water issues, etc)

G

Safety and securityG Image/qualityG FacilitiesG Space and layoutG Future developmentsG Future trendsG Revenue and capital costsG Legislation

A typical approach when conducting theassessment is to split the council's geographicalarea into settlements and by allocating eachopen space within each settlement a score of1-5 (low to high) for each of the assessmentcategories:-

G Function (diversity of use, legibility,adaptability, user value, accessibility)

G Quality (entry points/barriers, materialquality, character/identity, signage/interpretation, biodiversity interest,continuity/enclosure)

Service managers and staff should be involved inthe rating process although it is also importantthat the views of service users are taken onboard in order that an accurate picture isavailable.

By their very nature, these assets are difficult tomeasure for suitability purposes. With the roadsnetwork especially, a roads fitness for purposeis usually down to its condition more than


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Asset Types

Housing

Suitability

Suitability can also be measured for other typesof roads infrastructure assets such as roadtraffic lights, street lighting, traffic signs, etc. Animmediate example is a badly positioned traffic

sign or traffic light. It could be argued that itwould not be fit for purpose and hence shouldbe graded accordingly and timetabled forcorrection.

It is accepted that the volume of road assets andinfrastructure may not allow full suitabilitytesting due to resourcing. In this case a riskbased approach should be followed only gradingthose infrastructure assets where fitness forpurpose issues are known to exist.

Suitability, condition and sufficiency areinterlinked in housing. Again, this makessuitability assessments difficult to formulateusing a formal grading system. Emphasis needsto be placed initially on current and futuredemographic changes. For example, how doexisting stock types satisfy current and futuredemand requirements? How will any new buildhousing and other measures seek to addressthese deficiencies? For example if there is goingto be an increase in a particular household type- how will this be accommodated?

Moreover, if the condition of the housing doesnot meet the SHQS standards then it could beargued that council properties are not fit forpurpose irrespective of whether they satisfy theneeds of users based on demographic demand.

Again, a grading system could be used forparticular house types and house areas althoughthis is probably best handled by the housing


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2.16 When designing suitability assessment questionnaires and conducting suitabilityassessments, it is imperative that the process is not driven centrally or seen to bea centrally driven one. Service buy-in is critical as day to day users will know thestrengths and weaknesses of the assets they are working with. However, serviceled assessments should be mediated centrally in order that the process remainsbalanced and within realistic parameters.

The Main Building Blocks of Asset Management: Sufficiency

2.17 Sufficiency is all about current and future demand for assets. A key focus ofsufficiency is to assess existing capacity against existing use as well as futureexpected capacity against anticipated future use. These projections are essential inorder that a council is not left with excessive capacity in its asset base.

2.18 The table below again covers sufficiency against each of the asset managementareas.

Asset Types

ICT

Suitability

A grading system should be applied to ICT kit.The suitability ratings could be stored on theasset management database along with thecondition ratings and unique asset register

number. Again, criteria will need to be devisedfor assessing ICT assets against their currentuse. Staff users input will be essential whendesigning the suitability questionnaire.

Asset Types

Property

Sufficiency

In schools, comprehensive population trendsand projections can be used to assess projectedschool rolls up to 10 years in the future and thiscan be matched with existing and expected


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Asset Types

Open Space

Sufficiency

G Workspace;G Support (stores, meeting rooms, printing

areas, libraries, reference areas);G Ancillary (reception, circulation, toilets,

maintenance and space allocated tomember areas)

The average space per person is calculated bydividing the total of workspace and support bythe number of staff using that office.

Offices used by the public such as libraries andlocal offices should be monitored to ensure thatexisting demand meets the capacity available.Infra-red counters can be installed in suchoffices to ensure automatic counting. Trends inlocal office and library use should be used toestimate expected demand in the future.

Appendix D gives one council's approach toestablishing a corporate standard for officespace utilisation and is a good example of thetype of areas to be covered. The document theyhave produced is currently being fully updatedand reworked for modern work practices suchas flexible working. Sufficiency calculations canthen be derived based on projected FTE levels.This in turn allows an assessment of officeproperty requirements in the future. Ifinsufficient space will be available thencalculations such as these can promptauthorities to consider home-working and hot-

desking as alternatives to traditional officeworking.

Open Space usage should be monitored througha number of regular checks and assessments.Measures can be developed to sample user


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Asset Types

Roads, Structures,Lighting and WaterInfrastructure

Housing

Fleet

Sufficiency

Road traffic demand information should beavailable for the council area over the next 10years. This should allow calculation of theexpected future maintenance requirementflowing from additional traffic over this period.This should also allow the quantification of theimpact on other roads infrastructure such asstreet lighting and traffic lights and the expectedcost.

Discussions should take place with ScottishWater and other utilities on their futureexpenditure plans in the council area in orderthat any impact on council water-infrastructureand other infrastructure can be planned for.

The council will have access to full populationtrend information (by demographic range) wellinto the future (in some cases this should beavailable up to 2024). The demographic agerange is particularly crucial in determiningwhether the council's existing stock will meetfuture housing requirements. Any cumulativeshortfall in housing type should be quantified bytime period in order that steps can be taken toreconfigure the existing housing stock orconsider new build housing (either by thecouncil directly or through a housingassociation/developer) in order that specificdemand is met.

There should be an attempt to match the supply

of vehicles and plant to the work requirementsof the council. This means measuring averageutilisation per vehicle/plant and by class ofvehicle/plant. Such data could help to identifyunder-used vehicles for reprovisioning ordisposal. Additional data could include


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The Building Blocks of Asset Management: Accessibility,

Running Costs and Value

2.19 While the main drivers of condition, suitability and sufficiency are crucial in makingasset management decisions, the other drivers have to be considered as part of theoverall mix. They are covered generally below rather than being broken down to anindividual asset category level.

2.20 Accessibility is primarily concerned with access audits involving property but can

relate to the other asset areas too.

2.21 An access audit comprises a visual assessment of the premises in terms of theirsuitability and/or deficiencies in respect of access for disabled people andlegislation appertaining to disabled access. The audit should embrace the needs ofpeople with a broad range of disabilities and should involve a detailed appraisal of

Asset Types

ICT

Sufficiency

The sufficiency (usage) of the ICT stock alsoneeds to be established and categorised usingvarious indicators that could be:-

G Network utilisation rates (% of workingtime the network is operational)

G Network capacity v network useG PC capacity v PC useG Future estimated PC demand etc

These kinds of demand calculations can bereplicated for all major ICT assets and shouldhelp to identify assets where use is not beingmaximised or where they are stretched to fullcapacity. Keeping specific performance data onthis from an asset management perspectiveshould reap benefits.


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2.23 Each inspection is to include:G The route by which a person would arrive at each building on the site, including

access, where applicable, from/to the public transport points (both sides of road)closest to the site entrance and from any car parking provided for use inassociation with the site;

G Entry into the premises; and,G Circulation and use of facilities within the premises.

2.24 Generally audits will follow a set of questions determined prior to the inspection toestablish the standards against which the audit is being conducted.

2.25 Accessibility will have an impact on open spaces (disabled facilities in public parks),housing (disabled access), fleet (adjusted controls for any disabled staff, facilities forspecial needs children, restrictions on who can drive certain vehicles), and ICT(accessibility could cover details of general access to PCs and the network; do allstaff have an e-mail account? What % have internet access etc? Do all staff haveaccess to a PC? What % use a laptop?).

2.26 It can be concluded that while property access audits form the majority ofaccessibility issues, careful thought is needed to how accessible the other assetareas are with particular emphasis on ensuring effective asset use by all users.

2.27 Running costs. A key requirement of good asset management is to develop a lean,well maintained portfolio of assets allowing the authority to operate within available

budgets by effectively managing asset running costs along with ensuring no surpluscapital is tied up in under-utilised assets. Reduction in running costs is one of thetop ten areas of ensuring value for money in asset deployment (source: VFM leafletto be published by the RICS). The types of typical costs involved in each of thegeneric asset areas are shown below.

G Property (water and sewerage, heat and light, repairs and maintenance, facilitiesmanagement, rent , rates, premises insurance, security, furniture and fittingswhere funded by maintenance)

G Open Space (playground maintenance, ground rents, grounds maintenance,woodlands upkeep, cemetery maintenance, sport facilities upkeep, etc).

G Roads and Infrastructure (roads maintenance, gulley cleaning, lighting repairs andreplacement, road sign maintenance and replacement, recycling costs).


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2.28 Value. Appropriate valuation information should be recorded not only as part of thestatutory accounting requirements but also for other purposes such as insurance.The different types of valuation should be recorded on the asset register. To ensurethat the full range of values are available, the following valuation bases should berecorded for all significant assets:

G Valuations required as part of the capital accounting aspects of the SORP;

G Insurance valuations;

G Market valuations for lease or sale;

G Rating valuations;

G Replacement costs (particularly important for fleet decisions and transportationinfrastructure);

G Valuations for compulsory purchase and statutory compensation;

G Historical cost.

2.29 Some valuations are fraught with difficulty. The road network and open spaces beingexamples of areas where valuations may require professional advice. It is alsoaccepted that collecting valuation information needs to be cost effective. Councils

should adopt a common sense approach and consider the time and effort involvedbefore finalising their approach to the range of valuation information they wish tocollect in each of the 6 asset groups.

The Improvement Service Screening Survey

2.30 While this guide outlines the data gathering requirements before assetmanagement plans can be prepared, it is recognised that the costs (both in time and

financial resource) are often the reasons the information is not fully available,particularly with property assets.

2.31 With particular emphasis on property, the Improvement Service is recommendingways of simplifying and taking cost out of the assessment of condition, suitabilityand capacity. It is intended this is done through the use of a 'screening' survey


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3. ASSET MANAGEMENT:2. INTERPRETING THE KEY DATA

Data Recording

3.1 It is important that once the data is collected, it is properly recorded on preferably asingle asset management system. In order that asset management information iscollected, maintained and stored effectively, councils should ensure:

G They have an up to date asset register;

G Have an up to date property terrier;

G Develop a corporate property asset management database;

G Have a commercial property asset management software system to manage thirdparty tenant leases, rental payments and rent arrears; and

G Have current layout plans for all properties.

3.2 Most councils have a number of disparate systems to manage these requirements.

While such systems may work well, it should be an aspiration to move to a singledata system to record asset management information. A model of such a system isshown at Appendix E. The link to key employees in the value chain is also shown.

3.3 The Asset Register should provide a record of all assets on the council's balancesheet as well as their Common Good assets, together with some other basicinformation such as use, size, value and occupying service. Responsibility formaintaining and updating the Asset Register usually rests with PropertyManagement.

3.4 The council's records of all of its land and property ownership interests should beheld centrally on a GIS database known as the Property Terrier (shown in AppendixE) which contains both spatial information and factual information relating to eachindividual ownership or lease. In addition, it should link to a database containinginformation on where all of the relevant legal documentation is retained.


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3.6 But as we have seen in this guide already, property is only one part of the assetmanagement jigsaw. The likelihood in councils is that very few will have a single assetmanagement system for all asset types. A single asset management system may exist forproperty, but the common position will be for individual systems to be operated for theother asset areas (open space, roads and infrastructure, housing, fleet/plant and ICT).While such a set-up provides major logistical and resourcing problems, it should be a longterm goal to move to such a system in order that all assets are held on a central databaseand as such have a single point of reference for information such as condition andsuitability. A useful checklist for all the different asset types shown by asset category isshown at Appendix F.

3.7 At the very least, identifying data for all the various asset types should be recorded in aconsistent and systematic manner in order that comprehensive information is held for allcouncil assets. The table below outlines the kind of information that should be held by assettype.

Asset Types

Property

Open Space

Roads, Structures,

Asset Recording Details

Core/basic data on all properties e.g. location,property type, age, ownership, covenants,occupancy, valuation, listed building status andpreferably UPRN (unique property referencenumber).

Best done through an open space audit. Recorddetails and location of play equipment, seats,dog waste bins, litter bins, rose bed areas,fences, rural paths, adopted hard landscapeareas, greenways infrastructure, woodlands,memorials, country parks, local parks, syntheticpitches, non-synthetic pitches, contaminatedland (bings), water courses and cemeteries. The

system usefulness will be enhanced greatly ifthe open space audit information is linked to aGeographical Information System (GIS)database.

Information should be held on:-


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Asset Types

Fleet/Plant

Housing


Roads should be recorded showing type of road,location and maintenance history. Street lightingshould be identified through column type andlocation. Specialised information for bridges andwater infrastructure should be supplemented byeach element being linked through a tieredhierarchy. The system should hold details ofeach piece of inventory detailing connectivityissues that exist between elements such aspiers and spans, elements and segments.

Vehicles should be identified in the databasethrough registration number, tonnage (if over3,500kg), chassis number and vehicle make and

type. Details of the service department wherethe vehicle is used should also be recorded.Record plant by type, serial number, location,purpose and log any special health and safetyrequirements.

Information should come from the stockcondition information but properties should beseparated as follows:-

G Permanent mainstream rented housingG Leased housing accommodationG Direct supported housing and careG Indirect supported housing and care (for

external providers such as an RSL)G Sheltered housingG Very sheltered housing

All housing stock should be included in adedicated housing management database basedon Unique Housing Reference Numbers(UHRN's) covering all main Housing information,including full details of tenants and repairs andcomprehensive details on the full housing stock


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Asset Types

ICT


Most organisations will have a significantnumber of IT assets. A comprehensive list isshown below:

G Datacentre facilities (Data Rooms, ServerRacks, Air Conditioning, UPS)

G Communication Lines and networkequipment (including Cabling, Switches, hubs,etc.)

G Servers (Applications)G Servers (Enterprise Applications -Servers e.g.

Web, email, content management, Firewall,etc.)

G Storage ServerG PCs, Laptops, Apple Macs, handheld devices,

printers, scanners etc.G Software Applications and systemsG Software Licences, Contracts and Certificates

- Enterprise (Microsoft EnterpriseAgreement, Security, Domain Names,Security Certificates, etc.)

G Software Licences - Application e.g. MSOffice, Academy, etc.

G Shared Network devices e.g. NetworkPrinters, etc.

G Data and Information

To ensure consistency across the organisation,the following information, as a minimum, mustbe retained on each of the above;

G Device/Asset Type -

hardware/software/contractG Serial NoG Asset IDG Asset DescriptionG Owner/custodianG Location


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Quality Assurance

3.8 Once all assets have been surveyed and recorded on the system, the key asset managementdriver information collected should be quality assured against existing information sourcesand data. This should be done by the responsible asset manager for each of the asset areasand provides a reality check of the data collected. If the asset manager was responsible forcompiling the results then another colleague should be used to quality assure (this peerreview process of quality assurance is known to work well in many areas of the public andprivate sector). This is an important stage as investment decisions will eventually be basedon the asset management building blocks.

3.9 A selection of quality assurance requirements are shown below under each of the assetmanagement driver headings.

G Condition: The responsible asset manager (or a relevant colleague) in each of the assetcategories should sense check the A-D ratings (or whatever condition ratings areeventually used) based on existing asset information. This can include complaints,maintenance expenditure, persistent failures, history of maintenance related closures orbreakdowns, visual inspections and on the ground intelligence. A good technique toidentify assets for review as part of the quality check is for whoever is carrying out thequality check to score their own version of asset condition based on their own knowledgeand expertise. This should be done making no reference to the condition ratings gatheredas part of the asset management exercise. The results should then be compared against

the actual condition ratings and anomalies investigated with the officer who carried outthe condition ratings. This peer review challenge will help to ensure that the resultseventually recorded are in line with existing information and collective experience.

G Suitability: As suitability is usually carried out by service managers on the ground who knowtheir assets well, there is a danger that too pessimistic (or conversely too optimistic) a view maybe taken of an asset's fitness for purpose. An example may be an old school which is completelyunfit for purpose based on current educational standards but whose layout may havesentimental appeal to the head-teacher. This might secure a higher suitability rating than

should be the case. Another example may be a local council office that has maintenance issuesor issues of heat retention (too hot/too cold syndrome), that is fit for the purpose for which it wasintended (i.e. as a location that the community can interact with the council to pay rents, counciltax, etc) but may be scored lower in suitability terms because its heating systems are not goodbut are fixable. To combat this situation the asset management working group should form asub-group to mediate suitability scores. The mediation should be done in a transparent manner


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G Revenue costs: Running costs should come from the finance system but will needto be checked by the responsible asset manager to ensure they are correctly codedand appropriate to individual assets.

G Accessibility: Access audits should be cross checked against the views ofstakeholders which more than likely will be staff and members of the publicentering council buildings. Other accessibility issues for the other asset areasshould be checked by consultation with service managers and staff and members ofthe public. For example, a public park may be deemed as fully accessible by all themembers of the public and be reported as such in the accessibility survey, but befound to have too many narrow footways for wheelchair access once the views ofaffected stakeholders are sought.

G Value: Insurance values, where significant and determined locally, should beagreed with the council's insurers. Market values provided for each of the asset

areas must be backed up by either professional valuation reports/certificates or bycomparison against equivalent products being used in the marketplace.Replacement values should be evidenced against appropriate trade journals andprocurement guides. Derived valuations should be discussed with the council'sfinance teams.

3.10 The list above provides some examples of how the initial data collected can beverified for accuracy. The overall approach should be to identify third party evidenceto vouch for the initial data collected. The results of the data gathering exercise

should feel and seem right. Where service managers are involved in data gathering,unusual results should be investigated further and mediated by a separate assetmanagement sub-group. Peer review should be employed to cross-check resultswith colleagues not involved in the original data gathering.

Creating a Baseline Position

3.11 When the data has been collected and quality assured for relative accuracy, each

asset manager should seek to build a baseline position for their particular assetarea and compare against expected need in the future (up to 10 years in the futureshould be considered). This establishes the direction of travel needed to meet futuredemand and expectations flowing from aims and objectives at the corporate andservice levels. It also helps to formulate investment plans quantifying theinvestment to meet future requirements.


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3.14 This initial categorisation outlines a very simple baseline on which the overallcondition of the council's properties can be assessed. Further detail can be obtainedon each property type by examining the information contained in the assetmanagement system. The example above is based on number of properties.

3.15 The position can then be developed one stage further by calculating performanceindicators for the particular asset management driver. For example, the AuditScotland/FPS and NaPPMI indicators establish grades by gross internal floor space.Again sticking with condition indicators, the figures shown are examples and thistime shown for all Council property assets.

Asset/rating

Schools

(would be further splitbetween primary andsecondary)

Main Offices

Local Offices

Libraries

Commercial Properties

Public Amenities

Total

A

5

0

1

0

0

0

6 (6%)

B

10

1

5

6

10

0

32 (34%)

C

20

3

2

3

5

5

38 (41%)

D

3

1

0

2

1

10

17 (18%)

Total

38

5

8

11

16

15

93


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3.16 Once the base position is accurately established, attention should be turned tocalculating the estimated need over the next 10 years for each asset area.Information on estimated need should be collected from the Council's corporate

plan as well as the service plans for each of the asset areas affected as well asexisting sufficiency calculations. Some departments may have a crossover into anumber of asset areas so careful dialogue needs to take place with services toensure future requirements are captured in their entirety.

3.17 The individual area asset managers should then scope out the proposed targets for

% GIA by gradeAB

CD

Required maintenance by costTotal maintenance requirement (10 years)Total % cost of priority levels 1 to 3 (next 5 years)% of priority levels 1 to 3Overall cost per sq m (GIA - assume 400,000 sq m

Annual % change to maintenance spend overprevious year

Total spend on maintenance in previous financialyear (capital and revenue)

Total spend on maintenance per sq m GIA

% split of maintenance between reactive and planned

All Council Properties

6%34%

41%18%

45,000,00020,000,000

44%112.5m2

+2%

3,000,000

7.5m2

80/20


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3.19 Naturally these are simple examples to illustrate the process. More detailedexamples for most of the key asset management drivers are shown at Appendix H.

3.20 With careful thought in each of the key asset management areas, a clear baselineposition can be created along with future requirements also quantified. The sceneis then set to incorporate the information into a formal asset management plan for

each category of asset. This is considered further in the next section.

Summary

3.21 This section provides guidance on how collected data should be recorded; the

% GIA by gradeAB

CD

10 YEAR TARGET

Required maintenance by costTotal cost of priority levels 1 to 3 (next 5 years)Required Expenditure in 5-10 year period

Overall cost per sq m (GIA)

5 YEAR TARGET (balance of priority maintenance)10 YEAR TARGET (balance of all maintenance remaining)

% split of maintenance between reactive and planned

10 YEAR TARGET

All Council Properties

6%34%

41%18%

Graded C


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4. DEVELOPING A DECISION MAKING2. FRAMEWORK

Populating Asset Management Plans

4.1 The data collected should now be used to create an asset management plan foreach of the six asset categories. The asset management plan is not an isolateddocument. It should be prepared in conjunction with the service plans for each ofthe asset areas even when there are a number of different departments involved.This ensures service challenge and review and means specific service initiativesthat have an impact on either existing assets or the creation of new assets areincorporated into the asset management plan and eventually the strategic outline

business case (SOBC).

4.2 The asset management plan should be split into two clear areas. The first is theestimation of the baseline position based on the data collected for each of the assetmanagement building blocks. The second is the estimation of need and thequantification of the expected funding gap over a 10 year period. The estimation ofneed is based on a hierarchy of investment priorities that will be explained furtherbelow. It is from the estimation of need and any funding gap that drives theinvestment requirements through the business case process.

4.3 Each asset management plan irrespective of the type of asset should follow acommon format as much as possible within each council. Keeping the approachconsistent allows a smoother process for the preparation of SOBCs. The plans couldcontain sections on the following although the exact content will vary from councilto council:G IntroductionG Asset Management ObjectivesG Current Asset Management Performance

o The Building Blocks (condition, suitability etc);o The baseline position. Declare and interpret the results from the data

gathering exercise;o The Quality Assurance Process;o Data Management arrangements;o Stakeholder consultation;


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Introduction

4.5 By way of introduction, each plan should outline the council's Mission, Aim, Valuesand Guiding Principles. In addition, there should be direct reference to the councilarea's Community Plan/Local Plan and in turn, the key themes expressed withinthe Authority's Corporate Plan. In order to ensure appropriate linkage, how each

asset type's asset management plan supports the delivery of the council's strategicobjectives as expressed in the Corporate Plan must be explicitly outlined. Anoverview of the existing portfolio of assets within the relevant asset group (e.g. theProperty Portfolio) should also be outlined. The introduction should also give a briefoverview of governance arrangements around the asset management area.

Asset Management Objectives

4.6 As outlined in section 2, the importance of expressing a vision which makes clearwhat is required of asset management for service provision and support toachieving sustainable communities is critical. For fixed assets such as property,buildings and land, the vision may be expressed in terms of the operational andnon-operational estate. Regardless, a high level vision should be expressed,together with the key challenges which will require to be addressed in order toachieve it. For example, for the property portfolio of assets, key challenges mightinclude:G Ensuring properties are managed effectively and demonstrate that they deliver

best valueG Maintaining and improving the portfolio of properties as required to meet the

delivery needs of the Council's services and its statutory obligationsG Ensuring that the property portfolio meets the future demands of an increasing

populationG Delivering significant efficiency savings

4.7 These challenges can then be broken down into an array of actions. In terms of thefirst challenge above, in order to achieve effective management and delivery of best

value, specific actions may include:G Ensuring the assets are managed as a corporate resourceG Regularly monitoring and reporting on the performance of the asset whilst

defining responsibility for continuous improvementG Ensuring that comprehensive asset management information is collected,

maintained and stored efficiently


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Current Asset Management Performance

4.8 Earlier sections have covered how the building blocks of asset management shouldbe collated, how they should be quality assured and finally how the baselineposition should be derived. The process gone through needs to be shown in the planwith the baseline position clearly identifiable using tables and graphs. The baseline

position should accurately identify all existing backlog maintenance.

4.9 The data management/recording process needs to be specified outlining the assetmanagement system(s) used and the type of information stored including how eachasset is identified in the system. The information held electronically and on paperbased systems for the asset management building blocks and asset recordingshould be specified.

4.10 The requirements of Stakeholders must be considered. Consultation with a number

of stakeholder groups will therefore be required. The views of the users of theassets will be a critical input to Asset Management Plans. Members and ServiceDepartments will also require to be consulted as to current issues with their assetsand their aspirations for the future. How the views of Stakeholders will beconsidered should be defined in each plan.

4.11 Inevitably, the acquisition, use and even the disposal of assets will have an impacton the environment which the council has a duty to consider. It is appropriate thatsuch considerations and the steps which the council are taking to help address

them are reflected in each Asset Management Plan. In respect of properties forexample, what strategies the council has in place for reducing energy and waterconsumption could be appropriately defined as could what measures if any, that thecouncil are taking to offset its carbon footprint or to ensure sustainability within itsasset portfolio. For vehicles, this could be how the impact on the environment isbeing minimised through the use of more environmentally-friendly fuels or by lesstravel/mileage being incurred through the exploitation of modern technologyleading to initiatives such as home-working.

4.12 It is important to recognise however that not only should the measures themselvesbe identified within the plan, but the arrangements which are in place formonitoring and reporting their outcomes should also be defined. Reference shouldalso be made to any formal working groups in place within the Council whose remitcovers such considerations as, for example, energy efficiency.


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4.14 There must be robust arrangements in place for the identification, monitoring andreporting of all surplus assets. There should also be formal arrangements for thedisposal of such assets and accounting treatment and use of receipts. How thesearrangements exist and work in practice requires definition within each plan.

4.15 When disposing of assets, councils must attempt to maximise the disposal value.

This is of obvious importance to high value assets and in particular, land andproperty. In respect of this asset group, councils have a statutory duty under theLocal Government (Scotland) Act 1973 to dispose of land at a value not less than thebest consideration reasonably obtainable i.e. market value. This may require somepre-emptive action such as adding value by obtaining a detailed planning brief,advertisement, accepting the highest offer submitted by closing date and throughformal reporting and ratification by appropriate decision-making bodies such as arelevant member committee.

Future Service Delivery Aspirations

4.16 The council's plans and aspirations for how its future service delivery will be madeshould now follow in the plan. This will be based on ongoing analysis of serviceneeds and opportunities for improvement of each asset group portfolio. Suchdefinition of future aspirations will help to identify future investment needs. Areview of cross-cutting service plans is essential when carrying out this work.

4.17 This is an area which will be highly bespoke to each individual Council and will beheavily based on local requirements and availability of opportunities. No twoauthorities will therefore be alike and as a result, the aspirations for future deliverymodels will be highly individual.

4.18 There are however some common areas where consideration will be applied suchas the potential for partnership working with health and other public organisationsand the impact this might have on the council's requirement for and use ofproperty, vehicles, IT infrastructure, etc. Partnerships may also be a key feature in

the future acquisition and funding arrangements for high-cost assets such asreplacement of the schools estate through PPP or other similar arrangements.

4.19 Each council's very own internal delivery structure may also be under considerationand recognition of potential changes, reorganisations, service mergers, etc isrequired.


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4.22 A key challenge in achieving the vision for assets is meeting the future demands ofan increasing population (if applicable). This may either be directly through havingto provide more houses, schools or minibuses or indirectly through the increase inIT equipment or vehicles required to support front-line delivery. Each plan musttherefore identify how such future demand will be met and what monitoring andreporting arrangements will be put in place.

4.23 From all this work an appreciation should be developed of the asset areaexpectations 10 years ahead. This work should percolate from what the visionshould be for the individual asset area to individual expected targets using thebaseline as a starting position. For example, in a property plan a council may havea goal of eliminating all 'D' rated properties from the property portfolio within 10years. This may be done using a combination of disposal, backlog maintenancework or refurbishment. Some of this may also involve service delivery solutionssuch as outsourcing or partnership working. If this is a main aspiration then this

should be clearly articulated in the plan.

Performance and Targets

4.24 Future aspirations should be transcribed into formal targets. The previous sectionprovided some examples of how the baseline position could be compared againstfuture targets. The targets should be clear and unambiguous. In setting targetstherefore, councils must demonstrate sufficient ambition to ensure that they are

challenging but additionally, must also maintain a level of realism, in terms ofinvestment capability.

4.25 How Best Value will be achieved will be a key consideration to be made whenformulating future delivery arrangements. Specific considerations will includeapplication of robust assessment tools, direction to achievement of qualitystandards and accreditations and potential benchmarking opportunities.

4.26 The plan for each group of assets must make explicit reference as to how the cost

and consumption of resources by each asset will be minimised in their utilisation.A key feature of this will be the requirement for regular and robust monitoring andreporting. Such a process requires to be formally defined however and the planshould in turn, reflect these formal arrangements. Other strategies for theminimisation of cost and other resources should be identified and defined. Forexample, any strategy or contract arrangements for the procurement of energy or


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4.28 For all groups of assets, key measures of performance will require to be developedin line with previously identified priorities over the 10 year period.

Investment Needs and Identification of the Funding Gap

4.29 An agreed framework should be established on which all future asset investment ordisinvestment decisions should be based. This framework needs to be appliedconsistently across all asset groups. The overall framework should be outlined inthe corporate asset management plan (see further below).

4.30 The asset portfolio must be suitable for its current use, fit for purpose in conditionand support efficient and effective delivery both presently and in the future.Therefore, each plan must regularly measure and report the suitability andcondition of the asset portfolio and prepare options for future investment that

address any issues arising.

4.31 Councils will need to take a structured, challenging and transparent approach todecision-making with regard to investment and disinvestment. A key feature of thiswill be through the employment of a Business Case approach.

4.32 Prior to preparing relevant business cases, councils should categorise futureinvestment needs in order that statutory and backlog maintenance requirementsare met over the 10 year period before considering 'new' investment.

G Baseline Statutory. This is the investment required to meet the council'sstatutory obligations. Depending on the level of expenditure or council policythis may need a business case.

G Baseline Backlog/Life Cycle. Investment requires to address any currentbacklog maintenance and bring all assets up to an appropriate condition. Oncethe backlog has been addressed, this will be the ongoing investment required tokeep assets in appropriate condition. Depending on the level of expenditure or

council policy, this may need a business case.

G Projec

Asset Management Guide in LAs Scottish DoFs

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