Hampshire County Council

Buildings, Land and Procurement Panel Item

20 March 2007

Strategy for the Built Estate

Report by the Director of Property, Business and Regulatory Services

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 allocation of revenue maintenance, and capital repairs, which are detailed in separate reports elsewhere on the agenda.

1.2

The scale of the built estate is significant extending to 4,300 buildings on 1,200 sites with an estimated capital value of £2 billion and maintenance liabilities of over £300 m. The continuation of the Council's strategic approach to the maintenance and condition of its built estate remains as relevant as ever.

Recommendations

That the Buildings, Land and Procurement Panel advises the Executive Member for Policy and Resources that approval is given to:

1. Adoption of the strategy and objectives for 2007/08;

2. Proposals relating to the distribution of the capital repairs contingency towards Corporate Risk Assessment areas of work being presented to the Panel on 26 June 2007;

3. Further reports on the Strategic Property Review being presented to future BLPP meetings.

2

Strategy for the Built Estate

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. The key objectives remain relevant over the course of the next twelve months and beyond, with strengthening of budget strategies to make the most effective use of resources and a focus on ensuring the SLA with schools remains at the core of service delivery and the means by which schools access a corporate repair and maintenance service.

· To direct resources to the highest and most significant liabilities in

the permanent built estate, and to continue to develop long-term

strategies to address the backlog of maintenance liabilities;

· 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 maintain effective management partnership arrangements with all schools through the SLA 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.

2.2

The strategic objective remains that of delivering a comprehensive strategy, planned and implemented across all sectors, whilst providing value for money. The biggest challenge remains the liabilities associated with the non-education sector and the breadth and focus of the strategy remain the most potent responses to an ageing and increasing liability in the estate.

3

Strategy and Planning

3.1

Over the course of the next 12 months the Panel will receive reports on liabilities in the estate, particularly those associated with the non-education sector, together with the consideration of a plan to deal with maintenance liabilities across the estate. This will be a major report to the Panel's June meeting and will respond to the Audit Commission's recommendations in its Annual Audit letter that the Council should have a specific strategy for dealing with the backlog of maintenance liabilities.

3.2

In addition to the usual financial reports, Members will also receive reports on:

· review of progress against the Corporate Risk Assessment and order of priority

· procurement and value for money initiatives

· sustainability and energy conservation

· outcomes from the Strategic Property Review

· development of services to schools

4

Programme Management

4.1

The papers that follow on the agenda set out the proposed budget distribution for 2007/08. The total resources available over the next three years are summarised below together with last year's allocations for comparison purposes.

£000s

2006/07

2007/08

2008/09

2009/10

Capital Repairs (incl DSG)

16,777

16,92

18,643

16,690

1. Revenue Maintenance

14,130

14,933

14,933

14,933

2. NDS Condition

12,601

16,639

2. Devolved Capital (Schools)

20,688

21,723

21,723

21,723

1. At current rates and does not include passporting or inflation uplift.

2. 2007/08 includes £6.4m brought forward from later years. These sums are delegated directly to schools although the majority of the funding is used to undertake building work often through contributions for joint funded projects.

4.2

As with the last financial year Government funding for schools will be provided by a separate grant, the Dedicated Schools Grant (DSG). The differential in inflation allocations between schools capital repairs, at 7%, and non-schools, at 2.5%, widens the gap in available funding between these two areas still further.

4.3

Capital Expenditure

4.3.1

Capital expenditure has been managed tightly during the course of the last two financial years in order to build sufficient capacity to meet the major repair liabilities on Ashburton Court which will be undertaken as part of the major refurbishment. Contributions of £1m in 2008/9 and a further £2m in 2009/10 are planned. Some re-profiling of the allocation is proposed in the following report and this will enable targeted contributions to major corporate projects and initiatives associated with the new Contact Centre, Strategic Property Review and Recreation and Heritage sites.

4.3.2

The allocation in 2007/08 is £7.584 m and will be targeted at continuing to reduce maintenance liabilities, particularly in areas such as major engineering replacements, re-cladding and external decoration, to address the priorities identified through the annual review of the Corporate Risk Assessment and to contribute to major projects and policy initiatives. The Panel has the ongoing challenge of balancing the distribution of resources across an increasing number of work streams together with the need to address outstanding maintenance liabilities at a time of significant budget pressures.

4.3.3

Earlier in year the DfES announced that it will make an additional NDS allocation to Hampshire in 2007/08 of which £6.4m will be directed at condition improvements. While this is welcome news the value of this additional sum will reduce future NDS allocations. The DfES has also asked that special consideration be given to using the allocation on sustainability initiatives and school kitchens. The principal areas for NDS investment are informed by the asset management plan and corporate risk assessment and the NDS Condition Programme has therefore been planned to address the following liabilities:

· External walls and windows

· Mechanical and electrical services

· Roofs

· External redecoration

4.3.4

Opportunities for investment in school kitchens is currently being assessed, although this is unlikely to be a significant area as, unlike many other authorities, Hampshire has retained facilities to prepare and serve hot meals in its schools. Given the liabilities associated with the schools' estate (over £300 million) it is proposed to continue to invest in areas, noted below that have the greatest impact on addressing the backlog of repairs and maintenance. It should be noted that much of the programme makes a positive contribution to energy and CO² reduction. For example, SCOLA recladding which to date has provided the opportunity for realising savings of over 18m KWh of energy and 3,600 tonnes of CO² emissions a year.

Priority Areas

SCOLA Re-cladding

Flat Roofing/window replacement

Boilers/Mechanical System replacements

Fire Precautions/Electrical Safety

External Works & Drainage

External redecoration

General building engineering and structural repairs

Other work including temporary classroom replacement and contingencies

4.4

Revenue

The bulk of the budget, over 60%, is committed to planned engineering servicing and maintenance and will continue to be the most significant part of the new Service Level Agreement with schools. The contracts, through which these services are delivered, have been re-tendered and will be re-let in the summer. New performance targets will be incorporated into the contracts in order to ensure the minor repairs elements remain tightly managed. Less than 30% 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, where it is estimated that future annual maintenance costs have reduced.

5

Policy Management and Improvement

5.1

Procurement Initiatives

5.1.1

The Panel has received regular progress reports on procurement initiatives and a detailed report covering current activities and proposals for a number of procurement developments for 2007/8 and beyond is included later on the agenda.

5.1.2

Over the last twelve months a total of £80 million of construction work has been committed through the department, not including the Ashburton Court redevelopment contract which is due to be finalised in April. This is significantly lower than during 2005/6 in line with the County Council's Capital Programme and the conclusion of the Enhance project.

5.1.3

In 2006/7 approximately 69% of the overall value of the project work was procured through collaborative procurement arrangement with the remainder procured through conventional tendering. The level of commitment through collaborate procurement arrangements is within the ceiling set for best value procurement approved by Cabinet in September 2004 of 70% as a proportion of the overall value. This is due to be reviewed in the coming months and any proposals to change to the current ratio will be subject to approval by the Executive Member for Policy and Resources.

5.1.4

The County Council's major framework agreements were for an initial 4 year term with the option to extend for a further 2 years. The initial term comes to an end in August 2007. However it is not proposed to take up the option to extend the agreements, instead it is proposed that future major schemes are procured through the SECE Framework for Major Schemes and Tier 2 Framework.

5.1.5

The use of SECE Frameworks will play a major role in the procurement and delivery of Hampshire projects in the future. Work in the next 12 months will concentrate on establishing 2^nd and 3^rd tier frameworks based around clusters of authorities within the SECE region. The Hampshire cluster includes:

· Hampshire County Council

· Southampton City Council

· Portsmouth City Council

· Hampshire Police

· Hampshire Fire & Rescue Authority

· Eastleigh Borough Council

5.1.6

It is also intended to review the consultancy framework arrangement currently in place and to replace these with proposals currently being considered with SECE.

5.2

Corporate Risk Assessment

5.2.1

As in previous years, the review of performance was undertaken in line with the corporate timescale by December 2006, with key outcomes summarised below in section 5.2.1. This review of performance and progress is a key aspect to establishing the relative priority for future action and resource allocation. Whilst the report on the proposed distribution of Capital Repairs allocates resources to specific CRA categories of work as in previous years, in order not to anticipate the outcome of the review it is proposed to retain a contingency within capital repairs. Proposals relating to the distribution of the contingency will be brought forward to the 26 June Panel meeting.

5.2.2

The annual review of strategic risks provided minimal change to the scope of risks and relative rank order. Senior managers act as role models to apply risk management consistently and thoroughly across the department and can provide evidence year on year of positive and sustained improvement, to include the use of resources.

5.3

Services to Schools

5.3.1

Members will know that revenue repair and maintenance services are bought back by all community schools through a comprehensive SLA and that a new five year agreement was presented to schools last October. It is very pleasing to report that once again 100% buy back of community schools is anticipated together with a 60% increase in full buy back from voluntary aided schools and a 40% buy back from foundation schools. The table below summarises the position as at 20^th February 2007:

SLA Status Table as at 20 February 2007

School Category

Total Number

(#)

2002/07

Buy Back(#)

%

2007/12

Buy Back

%

Community

·

Secondary

56

56

100%

52

(93%)

·

Primary/Special

399

399

100%

363

(91%)

Sub-total

455

455

100%

415

(91.%)

Aided

·

Secondary

2

1 (Full)

50%

2

(100%)

1 (Eng)

50%

·

Primary/Special

54

21 (Full)

39%

50

(93%)

33 (Eng)

61%

Sub-total

56

22 (Full)

39%

52*

(93%)

34 (Eng)

61%

Foundation

·

Secondary

13

6 (Full)

46%

5

42%

·

Primary

7

1 (Full)

14%

1

12%

Sub-total

20

7

35%

6

30%

Totals

531

485 (Full)

91.3%

473

89%

34 (Eng)

6.4%

12 (Nil)

2.2%

Notes

· * of the 52 Aided school returns, 30 previously had Engineering only option and 22 had `full buy back'.

· # total number adjusted to reflect currently operational schools as at 1/1/07

Footnote: to act as a reminder to those yet to reply, a polite reminder e-mail was issued 6/2/07 since when 108 positive responses have been received.

5.3.2

The new SLA comprises a number of new services, most notably accessibility workshops together with model documentation, a project warranty scheme and practical support for managing building related health and safety risks including the new Fire Regulations. In addition the engineering term contracts, have been re-tendered with a greater focus on performance and capacity to undertake minor school-funded projects and will be re-let in the summer.

5.3.3

The continued high level of buy-back is a significant achievement and importantly will enable the strategic approach to the maintenance and improvement of the Council's built estate to continue. The partnership with schools has been highly successful in developing a joint understanding and approach to asset management and this is demonstrated by the number of joint-funded and school funded projects that are undertaken ensuring that the best use of resources continues to be achieved. The 100% buy-back also presents a considerable challenge and the department now has to ensure it is positioned to meet the expectations of schools in delivering the new SLA and enhanced range of services.

5.4

Strategic Property Review

5.4.1

Work is nearing completion with the consultant firm, Mace, to create a business case for rationalising the corporate office estate. The viability of the consultant's conclusions is being tested and considerations that will be key in reaching a conclusion over the way forward will include the:

· potential for releasing capital against the costs of consolidating the

estate;

· opportunity for developing a more flexible and economic office

platform while releasing revenue resources;

· timescale for the implementation of such a major task; and

· scope for multi-agency working which such an undertaking could

generate.

A report will be submitted initially to CMT on the issue in March.

5.5

Sustainability Initiatives

5.5.1

In terms of sustainability the challenges that lay ahead must relate to engagement with the Government's national and global agenda on climate change and that of reducing carbon dioxide (CO²) emissions.

5.5.2

It is estimated that buildings in the UK account for some 46% of CO² emissions in the country. Given the Panel's remit for overseeing the management of one of the largest built estates in the Country, it is proposed to review the opportunities for reducing carbon emissions from the built estate and report to the Panel in May outlining options for managing down the carbon footprint from the built estate.

6

Developing the Strategy and Value for Money

6.1

The key workstreams in Appendix 1 set out the main programme areas for the strategy. The capital receipt programme (£60 million in 2007/08) and the strategy for the Built Estate are at the heart of the Council's Asset Management Planning. Taken together they represent the most significant improvement to our asset base of any programme.

6.2

They also lie at the heart of our Value for Money programme, particularly through the procurement policy and action plan reported elsewhere on the agenda. The contribution of specific projects (e.g. Hantsdirect and Discovery Centres) and the combination of landlord and schools resources are particular examples on how the strategy contributes to corporate and service objectives.

6.3

The regular review of our asset liabilities and the part that risk management plays in setting budgets for each year ensures that the Council has a comprehensive strategy to improve and maximise the contribution that our assets make to our services and performance. Developing this approach remains central management task for future years.

LINK(S) TO CORPORATE STRATEGY

Yes

No

Hampshire safer and more secure for all

X

Maximising well-being

X

Enhancing our quality of place

X

This proposal does not link to the Corporate Strategy but, nevertheless, requires a decision because: N/A