Hampshire County Council

Buildings, Land and Procurement Panel Item

5 April 2005

Strategy for the Built Estate

Report by the Director of Property, Business and Regulatory Services

How the conclusion in this report fits with the Corporate Strategy

This report impacts on the delivery of all the Corporate Aims in particular:

Aim 1 - maximising life opportunities - by providing a good quality and well maintained built estate for the community to enjoy

.

Aim 2 - stewardship of the environment - by ensuring the built estate is well maintained and provides an environment in which people want to live

Aim 5 - improving services - by providing good quality buildings that enable improved service delivery

1

Summary

1.1

The purpose of this report is to identify the key objectives against the Strategy for the Built Estate for the coming financial year and against this framework to set out the proposals for the revenue maintenance, capital repairs and NDS funds, which are detailed in separate reports elsewhere on the agenda. This report takes a strategic look at recent workstreams and brings together the key work strands for implementation over the next 12 months. Progress on the different workstreams has been significant.

1.2

The scale of the built estate is significant in terms of buildings (over 5,000), sites (over 1,000), occupancy (some 300,000), and liabilities. A modern and effective approach to the estate requires the Panel to plan a budget around the key activities identified in Appendix 1. Steady (but not equal) progress is required in each of those activities. The Panel has the annual task of balancing progress across the different workstreams and allocating funds over time to particular programmes. Even this annual appraisal does not do justice to the complexity of the task. Progress will always have to be measured over years and planning done over similar timescales. Perhaps what is more important is the steady building up of resources for maintenance and the progress seen through to much of the estate.

2

Strategy for the Built Estate - Key Objectives

2.1

It is customary at the start of the financial year to review and confirm the Council's Strategy for the built estate. The strategy establishes the framework by which the County Council manages its priorities with regard to asset and maintenance liabilities:

· to direct resources to the highest and most significant liabilities in the permanent built estate;

· to maximise the opportunities for planned maintenance regimes as opposed to reactive `patch and mend';

· to ensure that the buildings are accessible and safe to occupy and a robust corporate Health and Safety Strategy and Corporate Risk Assessment exists;

· to maximise the value of particular levels of investment through effective procurement regimes and longer term planning;

· to establish effective management partnership arrangements with schools and to maximise the opportunities to integrate government, local and school funding; and

· to ensure that sustainability is at the heart of property management policies.

3

Strategy and Planning

3.1

During the last 12 months the Panel has considered major reports on liabilities in the estate, many related to the priorities that continue to emerge from the Corporate Risk Assessment, and initiatives developed to maximise value-for-money through procurement and to ensure that schools' resources are integrated wherever possible. It was agreed last year to take a longer-term view in planning and implementing the various programmes and to ensure that resources are earmarked beyond 2005/06 to address a range of issues, particularly in the County Council's Headquarters buildings.

3.2

During the course of the 2004/5 financial year the basis for monitoring and reporting capital was changed from a starts basis, under which the full value of a Scheme was included in the year the commitment was made, to an expenditure basis where the actual value of work done in each year is counted against that year's allocations. This change in the accounting mechanism has enabled the capital allocations for the next three years to be profiled in order to address a range of issues which are likely to need significant resources in the next three years including:

· Contribution towards the redevelopment or significant capital repairs to Ashburton Court

· Investment to maximise future capital repairs

· Uncertainty over NDS funding in the longer term

· Provision to support potential strategies associated with the expiry of long-term leases in 2006/7 and beyond

· Contributions to future capital projects and investment in infrastructure

· Replacement of key property-related IT systems

· Priorities emerging from the CRA particularly relating to Fire Management and Legionella

· The need to commence a phased upgrade of Register Offices

· Funding maintenance work associated with the Enhance project.

4

Programme Management

4.1

The papers that follow on the agenda set out the proposed budget distribution for 2005/06. The total resources available over the next three years are summarised below together with last year's allocations for comparison purposes:

4.2

It is interesting to note that the resources delegated to schools continue to increase and are now at levels greater than made to the landlord for condition work. This position will remain over the course of the next three years with schools receiving devolved funding of over £59m. Capturing that funding and applying it to maximum effect and value remains a key activity.

4.3

Capital Expenditure

4.3.1

The Capital profile indicated in the table above proposes that expenditure is managed tightly during 2005/06 in order to build sufficient capacity in future years to accommodate the pressures identified in section 3 above, particularly those relating to Ashburton Court. Some adjustment to this profile may need to be considered at the meeting in June when the CRA progress report and future work plans are considered.

4.3.2

The allocation in 2005/6 is £11m and will be targeted at continuing to reduce maintenance liabilities particularly in areas such as major engineering replacements, re-cladding and external decoration and to address the priorities identified in the Corporate Risk Assessment.

Over recent years significant resources have been redeployed from core maintenance activities to support:

· Access work

· Fire Management

· Health and Safety projects

· Asbestos Management

· Contributions to Libraries and Discovery Centres

Outside the Education Sector, where there is no additional funding such as NDS to support maintenance, pressures will continue to grow.

4.4

Revenue

The bulk of the budget, over 60% is committed to planned engineering servicing and maintenance and forms the most significant part of the Service Level Agreement with schools. Each year as part of the engineering term contracts around 4,000 items of mechanical and electrical equipment, including gas safety checks, fire alarm installations, catering equipment, intruder alarms and ventilation systems are serviced. In addition, more than 17,000 breakdowns, system failures and call-outs are attended to in an average year. Only 27% is spent on reactive maintenance such as roof leaks and vandalism. The continuation of major capital programmes such as the SCOLA re-cladding is having the impact of reducing maintenance liabilities, specifically external redecoration and repairs.

4.5

Nursing Care Accommodation

The progress report later on the agenda details the scope of planned maintenance work that it is proposed to undertake in the seven existing residential homes as part of the current finance project. In view of the pressures on capital resources, it is proposed to defer the decision on funding pending consideration of other priority work in the Social Care Sector. The position will be reviewed in June when the review of the Corporate Risk Assessment is known.

4.6

NDS Investment

NDS distribution and implementation of NDS Condition (some £69 million so far) is aimed, exclusively, at permanent school buildings with the largest liabilities. Given the remaining maintenance liability at schools (over £250 million over the next 5 years) the spending priorities previously established remain relevant and once again have been used as the base for allocating NDS and landlord's funding in 2005/06. The table below summarises the impact planned NDS programmes have had over the last four years:

Priority Area

£'000

Number of Schools projects

SCOLA Re-cladding

14,750

58

Flat Roofing/window replacement

13,125

149

Boilers/Mechanical System replacements

8,500

157

Fire Precautions/Electrical Safety

8,300

161

External Works & Drainage

1,290

54

External redecoration

7,810

207

General building, engineering and structural repairs

3,660

21

Other work including temporary classroom replacement and contingencies

11,215

*

69,000

807

The summation of local, devolved and national resources has created unprecedented progress in schools.

5

Policy Management and Improvement

5.1

Procurement Initiatives

5.1.1

Over the last 12 months procurement of construction work has continued at a very high level, with £110m committed, 60% of this through a best value approach, as opposed to lowest price tendering. Since establishing the major Frameworks in 2003, the method used to procure the Enhance project, overall performance has improved by 10% against a range of measures.

5.1.2

Critically, the development of new methods of procurement has been key to creating the capacity to deliver the major capital programmes.

5.1.3

Work in the next 12 months will be focused on developing Frameworks suitable for small and medium size enterprises and projects with a value up to £2.5m. The renewal of the engineering term maintenance contracts, through which all servicing and routine maintenance is procured, will be another key area of work. This will need to be coordinated with the Service Level Agreement renewal discussed below.

5.1.4

The County Council is leading the development of the building workstream for the South East Centre of Excellence and it is hoped will be successful in gaining financial support for this activity.

5.1.5

A full progress report on procurement appears later on the agenda.

5.2

Sustainability

5.2.1

The report later on the agenda sets out the key actions in the coming year to support the UK climate change agenda. It is proposed to concentrate on secondary phase schools, and undertake detailed investigations of the 13 schools with poor levels of energy performance. In addition the Building Research Establishment's (BRE) smart waste system is being trialled on five major capital projects with the reducing waste and increasing recycling.

5.3

Corporate Risk Assessment for the Built Estate

5.3.1

The agenda includes reports on Fire Safety, Sprinkler Systems and Legionella. There are significant resource implications associated with these issues which will add to the pressures outlined earlier in section 3.

5.3.2

The Panel will receive a detailed report on progress against the implementation of the Corporate Risk Assessment and an update on current performance using the previously agreed `traffic light' system in June. This review of performance and progress is key to establishing the relative priority for future action and resource allocation. It is necessary therefore, at this stage, to maintain the approach agreed in earlier years in order not to anticipate the outcome of the review and to retain a contingency within capital repairs. Proposals relating to the distribution of the contingency will be brought forward to the June Panel meeting.

5.4

DDA and Access

5.4.1

The Best Value Performance Indicator measures the percentage of buildings open to the public in which all public areas are suitable for and accessible to disabled people. The County Council was ranked top authority in 2003/4 with a BVPI of 74%. The target for 2004/5 is 75% which should maintain the County Council's excellent position in the top quartile. This year 16 public buildings have been improved with a range of initiatives including accessible WCs, powering of entrance doors, ramps, increase in accessible parking areas, redecoration of internal spaces to incorporate colour contrast and upgrades. In tandem with the improvements access audits at over 150 buildings, a third of which have been audited in partnership with local access groups, have been completed. In the coming 12 months further improvement work will be progressed.

5.5

Property Information Systems

5.5.1

5.5.2

The Panel has been provided with regular progress reports on the work to replace a number of key property information legacy systems. During February the replacement procurement system, PREMIS, (Property Expenditure and Management Information System) was successfully rolled out to 350 users within Property Services. The new system, using an integrated SAP solution, was completed on time and almost £200,000 under the original budget estimate of £600,000. The system has been well received and has improved upon some of the usability issues within the standard SAP system.

The completion of this project has enabled progress towards the integration of land and buildings information. The next two phases are to digitise the land terrier and to replace and integrate two core systems, the County Building record (CBR) and the Estates Property Information System (EPIS). Work on the terrier is being undertaken within existing resources and it is proposed to undertake work, estimated to cost £20,000, in order to produce a product definition before proceeding further with the EPIS/CBR replacement. Appendix 1 contains further detail relating to this proposal. The Panel will receive a further report at its next meeting following completion of the project definition stage.

6

Performance Review

6.1

Customer Services

While the department has been collecting customer views and publishing performance data for many years it had never conducted independent research among schools. The outcome of the research with Primary phase schools was reported to the October 2004 Panel and included:

· refocused management partnership meetings with regular follow- up and feedback actions

· best value procurement and other arrangements to speed up implementation

· review of communication channels and consideration of the role of the customer contact centre

Research with secondary phase schools is planned to take place up to the end of the summer term. The research will be conducted through face-to-face interviews with Headteachers and Governors. The outcomes will inform the development of the new Service Level Agreement (SLA) with schools which will come into force on 1 April 2007. Currently 100% of community schools and 8 Foundation Schools buy-back repair and maintenance services. This critical mass is essential in order to maintain some of the key aspects of the service which include:

· access to a full range of specialist technical advice

· coverage of all liabilities irrespective of cost

· integration of funding sources

· value-for-money particularly in relation to engineering contracting

· coverage of health and safety liabilities

· effective asset management

Early consideration of the improvements that are planned as part of the new SLA are likely to include:

· development of a schools capital team to deliver the increasing number of devolved capital projects

· in line with the above it will be necessary to review charging mechanisms

· improved engineering term-contracting arrangements

· introduction of a project warranty scheme

As these themes develop the Panel will be kept up-to-date with progress.

6.2

A review of performance in all areas is planned to be reported to the Panel once a full twelve months analysis becomes available.

7

Next Steps

7.1

There has been a steady build-up of resources for capital maintenance over the last four years or so, particularly since the NDS allocation came on line for schools - much needed and much welcomed. This, integrated with delegated resources to schools, has created a step change in workload. At the same time, several processes have been working in a different direction and have had the impact of diverting resources away from mainstream capital and revenue maintenance work. These are:

· the enormous increase in resources allocated annually for health and safety activity

· the support given to the Discovery Centre programme and the refurbishment of libraries

· capital contributions to mainstream projects

· increased resources to fund the sprinkler policy and fire management generally

· funds to support office accommodation projects and progress in Social Care schemes

· the real term effect of `tender price' inflation devaluing budget allocations.

The overall position has become slightly imbalanced, with an enormous increase in Education workload and improvement, significant support of capital projects but sometimes at the expense of our core maintenance activities. This latter impact has been obvious over the last decade.

7.2

In one sense this is good news - much has been achieved; in another sense the principal responsibility of the Panel is to maintain levels of investment in those programmes that do the most to reduce longer-term liability. The strategy paper argues that this should remain our core activity.

8

The next Five Years

8.1

In addition to the above, considerable staff resources have been committed to inspection and survey work in high-risk areas. Much is now known about the estate which should be assessed and distilled into future programmes. There are also a number of significant contributions required for capital schemes and Enhance which could not all be made at the same time.

8.2

The Corporate Risk Assessment for Buildings will be prepared for the June meeting, which will provide further information as to whether or not the `opportunity cost' of this work can be maintained.

Recommendation(s)

That the Panel advises the Executive Member for Policy and Resources that:

1

the strategy and objectives for 2005/6 be adopted;

2

the resources for 2005/6 are allocated in 2005/6 based on the strategic objectives and the programme, identified in Appendix 1.

3

The programmes and reviews for 2005/6 have as their principal objectives the reduction in long term liabilities within the estate.