Resource Management Guide No. 501 - Property Management Planning Guidance

Resource Management Guide No. 501

Property Management Planning Guidance

July 2014

ISBN: 978-1-922096-64-7 (Online)

With the exception of the Commonwealth Coat of Arms and where otherwise noted, all material presented in this document is provided under a Creative Commons Attribution 3.0 Australia ( licence.

The details of the relevant licence conditions are available on the Creative Commons website (accessible using the links provided) as is the full legal code for the CC BY 3 AU licence.

Use of the Coat of Arms

The terms under which the Coat of Arms can be used are detailed on the following website:

Questions or comments about this guide should be directed to:

Policy and Advice Branch

Department of Finance

John Gorton Building

King Edward Terrace

Parkes ACT 2600

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This guide contains material that has been prepared to assist Commonwealth entities and companies to apply the principles and requirements of the Public Governance, Performance and Accountability Act 2013 and associated rules, and any applicable policies. In this guide the: mandatory principles or requirements are set out as things entities and officials ‘must’ do; and actions, or practices, that entities and officials are expected to take into account to give effect to those principles and/or requirements are set out as things entities and officials ‘should consider’doing.

Effective from <date of effect of the Guide> / Topic heading –RMG<XX> | 1

Contents

Audience

Resources

Summary

Overview of property management plans

Purpose of this planning guidance

Purpose of property management plans

Level of complexity

Accountability and responsibility

Frequency of reviews

Better practice property management planning

Better practice property management plans

Setting of property objectives

Use of performance indicators

Risk management

Internal procedures

Property management plan coordinator

Sources of information

Record keeping

Accommodation manual

Structure of a property management plan

Template content

Content detail

Appendix A: Glossary

Appendix B: Property profile – better practice templates

Appendix C: Gap analysis – better practice template

Audience

The Commonwealth Property Management Framework (Property Framework) requires Public Governance, Performance and Accountability Act 2013(PGPA Act) Non-corporate Commonwealth Entities (entities) to establish a property management plan.

The Property Management Planning Guidance (the Planning Guidance) has been developed to assist entities under the Property Framework to produce property management plans.

Resources

This guide is available on the Department of Finance website at

This document forms part of the guidance to entities under the Property Framework. The published suite of documents form part of the Resource Management Guidance series issued by Finance including:

RMG No. 500Overview of the Commonwealth Property Management Framework
RMG No. 502Guidance for the Two Stage Capital Works Approval Process for
Australian Government Construction Projects
RMG No. 503Whole-of-Life Costing for Australian Government Property Management
RMG No. 504Commonwealth Property Management Framework Lease Endorsement
Process
RMG No. 505Funding arrangements for Commonwealth Property

Additional guidance is available from the Commonwealth Property Management Framework webpage at or by contacting .

Summary

An entity’s property management plan is to be approved by the entity’s Accountable Authority (or an official authorised by the Accountable Authority) and in place by
1 October 2010. The property management plan is to apply to properties leased or owned by the entity within Australia (including external territories).
A property management plan is an internal planning document designed to assist the Accountable Authority (or an official authorised by the Accountable Authority) to promote the efficient, effective, economical and ethical use of Commonwealth resources in the delivery of the entity’s property requirements.
Property management planning is one of the five Commonwealth Property Management Principles. The other key principles are: value for money; efficient and effective design; appropriate accountability measures; and cooperative Commonwealth property management measures.
Property management relates to the effective operation of an entity’s workplace and infrastructure and coordination with its business activities, officials and stakeholders. The range of property management responsibilities will vary across entities depending on size, diversity of operations and changing functions. However, property management will generally encompass the following:

acquisition (including leasing);
repairs and maintenance;
refurbishments (fit-out and capital improvements);
lease management;
health and safety;
energy and sustainability management; and
facilities management (including security and cleaning).

Overview of property management plans

Purpose of this planning guidance

This planning guidance is intended as a better practice tool to support a structured approach to property planning. The planning guidance should help entities to:

set property objectives and define performance indicators;
assess performance within the property portfolio using relevant performance indicators;
ensure that the quantity, functionality, quality, cost and availability of property are appropriate;
identify opportunities for property to better support the strategic direction and business needs of the entity;
assess options for the acquisition, sharing, renovation and disposal of property, and associated change management; and
manage the frequency of reviews and updates.

Purpose of property management plans

Property management plans are an important strategic planning tool for entities. A property management plan should enable the Accountable Authority (or an official authorised by the Accountable Authority) to establish that the entity’s property is appropriate for the size and nature of the entity’s existing and future business needs.
Property management plans should be treated as dynamic and flexible documents that can be adapted to support Government initiatives and entity objectives.
Property management plans should be prepared in conjunction with and directly linked to an entity’s broader strategic plans, including business and corporate plans. The linking to strategic plans will ensure that property management is closely aligned with other entity objectives and that property management issues are well understood and given appropriate consideration by the accountable authority within the entity.
Where entities have capital asset management plans or other relevant plans for the management of property, reference to these plans or inclusion of key details in the property management plan can prevent duplication of planning activities.
Property management plans should consider the short and long-term challenges faced by property managers, as well as the longer-term property requirements of the entity. Some of these challenges include:

monitoring and managing the performance of the property portfolio;
managing property risks (including business continuity risks);
aligning property arrangements with the entity’s business needs;
identifying opportunities and selecting and implementing strategies for improvement;
assessing market forces and economic cycles that affect leased properties, and planning the timing of critical property decisions accordingly;
managing employee participation and input;
reducing energy use and environmental impacts;
complying with relevant legislation and Government policies; and
managing any requirements to have properties in certain geographic locations (e.g. through legislation, community service obligations or other mandate) while maintaining an efficient property portfolio.

Level of complexity

The complexity of a property management plan should reflect the size, nature and risk profile of an entity’s property requirements. For example, an entity that manages diverse operations in various locations would normally require a more detailed property management plan than an entity with a small number of leases and few changes in its property requirements.

Accountability and responsibility

Property management plans should outline clear lines of accountability and responsibility for: the development, approval, implementation and review of the property management plan; delivery of specific projects listed in the property management plan; and the ongoing maintenance of the entity’s property.

Frequency of reviews

Property management plans should be reviewed and updated on an annual basis, or more regularly if circumstances require, to allow the plan to remain aligned with the objectives of the entity. Where entities have less dynamic or complicated property portfolios, it may be appropriate to review and submit the plan to the Accountable Authority (or an official authorised by the Accountable Authority) for approval every two or three years.
Property management plans should also be reviewed and updated whenever an unforeseen event occurs that is significant enough to have a major impact on the property requirements of the entity. Examples of events that may trigger a review include:

Machinery of Government changes;
updating of interrelated strategic plans;
movement of head office or a major function to a new location;
a major refurbishment or fit-out;
significant organisational restructures or changes in entity function; or
new policy proposals.

The property management plan can alert the Accountable Authority (or an official authorised by the Accountable Authority) to changes that would trigger an immediatereview.
Whenever material updates are made to the property management plan, the revised plan should be submitted to the entity’s Accountable Authority (or an official authorised by the Accountable Authority) for approval.

Better practice property management planning

Better practice property management plans

The content and format of property management plans are to be determined by each entity and should reflect the property requirements of the entity concerned. However, as a better practice guide, property management plans should:

set out the time period covered by the plan and the timing of future reviews;
analyse business needs;
provide an account of the existing property portfolio;
identify any future requirements (including any gaps to be filled);
be aligned with the needs and future direction of the entity (including corporate or business plans);
identify significant risks related to the entity’s property and set out mitigation strategies, including any associated actions;
identify opportunities and strategies to meet property requirements;
outline how strategies will be implemented;
provide for monitoring of the property portfolio against relevant performance indicators;
identify performance goals and how achievement will be measured; and
provide clear lines of responsibility and accountability.

See the section below on the structure of a property plan.

Setting of property objectives

Property objectives should be determined by the entity after taking into account the functions and business needs of the entity, the purpose and use of each property, all relevant Government policies and other planning and management issues facing the entity.

Use of performance indicators

Performance indicators should be used by entities to measure and compare the performance of their properties. They are aligned to goals and objectives. Well set performance indicators should help the entity to improve the performance of its properties and assist property managers to demonstrate progress towards, or achievement of, the entity’s property objectives.
Entities may wish to consider using the performance indicators listed below in property management plans. Use of these indicators can assist with trend analysis, comparison between similar properties or property portfolios and allow for assessment against market conditions and forecasts.

Indicator type / Indicator
Property utilisation3 / Fit-out density (m2 / workpoint)
Occupational density (m2 / occupied workpoint)
Workpoint vacancy (%)
Costs / Rent per square metre ($ / m2 / p.a.)
Other property operating costs per square metre
($ / m2 / p.a.)
Total property costs per square metre ($ / m2 / p.a.)
Total property costs as a percentage of total operating expenses (%)
Work practices / Percentage of employees participating in formal desk-sharing or formal work from home arrangements (%)
Environmental sustainability / Energy usage per square metre (MJ / m2 / p.a.) - Base Building
Energy usage per person (MJ / occupied workpoint / p.a.) – Tenancy
National Australian Built Environment Rating System (NABERS) Energy rating (stars) - Tenancy and Base Building

When using any performance indicator to assess the performance of properties, consideration should be given to the level of influence or control that the entity has over that indicator. For example, where an entity is leasing/occupying part of a property, then this should be noted in the property management plan and taken into account when assessing performance against the indicators.
The performance indicators suggested for property utilisation are based on the whole-of- Government indicators developed as part of the Australian Government’s Property Data Collection (PRODAC). These indicators are applicable to office accommodation and are defined in the PRODAC specifications.
When using indicators relating to property costs it is good practice to note all of the specific costs included in any aggregate figures. This will enable more accurate cost comparisons over time or with other entities. These costs may include whole-of-life maintenance costs.
Performance indicators relevant to other Government policies may be useful to incorporate into the property management plan where considered appropriate (e.g. performance indicators relating to the environmental performance of a property or other performance indicators that must be disclosed or reported). Where an entity has an environmental management plan that includes targets for reducing water and waste, it may be appropriate to include such indicators in the property management plan. The inclusion of such indicators may enable performance or compliance against Government policies to be tracked over time.

Risk management

Risk management involves the systematic identification, analysis, treatment and allocation of risks.
Entities should ensure that they have appropriate risk management procedures in place so that all significant risks are identified and assessed. Relevant risks and strategies to manage and mitigate these risks should be outlined in property management plans.
Risks relating to property management may include:

changes to the entity’s role or property requirements due to machinery of Government, policy or budget changes;
failure to accurately identify space requirements (in terms of location, quality or quantity);
insufficient or inappropriate resources to carry out the entity’s property-related activities e.g. lack of employees with the necessary skills;
management systems not being able to identify inefficient use of space;
poor maintenance of records e.g. inadequate lease documentation, key documents not filed;
unduly onerous lease clauses;
failure to understand and enforce contract provisions e.g. failure to exercise a lease option within the trigger period;
inflexible property portfolio that cannot adapt to meet changing business requirements;
damage to buildings and other property assets from adverse natural events e.g. storms, flooding and fire;
exposure to hazards or environmental contamination;
loss of property due to damage;
failure of key infrastructure e.g. fire detection equipment; and
failure to support unique entity requirements, such as an uninterrupted power supply.

The extent of risk management required will vary depending on the likelihood of these risks occurring and their potential impact. Entities should have regard to the principles outlined in Comcover’s Risk Management Better Practice Guide and the options available under the Comcover Insurance Policy.

Internal procedures

Entities should establish internal procedures to facilitate effective property planning and management. Internal procedures can be included in an entity’s Accountable Authority Instructions or Operational Guidelines and be referenced in the property management plans. The property management planning procedures should reflect the nature of the entity and its property needs, and may include processes for:

seeking input, drafting, approving and implementing the property management plan;
reviewing and updating the property management plan;
formal communication mechanisms to coordinate property management activities within the entity, including scheduled meetings with senior executives in key functional areas such as human resources, information technology, procurement, legal and corporate;
formal communication mechanisms to coordinate property solutions across the portfolio or with other entities; and
maintaining accurate and up-to-date property records.

Property management plan coordinator

Entities may wish to appoint a property management plan coordinator to promote a coordinated approach to property planning across the entity. The coordinator’s responsibilities may include collating information, drafting the property management plan, submitting the property management plan for approval, advising relevant officials of their assigned responsibilities and managing reviews and updates.

Sources of information

Information for inclusion in the property management plan will need to be gathered from a number of sources. These could include:

property managers;
corporate services managers (including facilities management, human resources, legal and information technology);
relevant senior managers;
the Chief Financial Officer and associated group;
landlords and outsourced service providers;
lease agreements;
relevant Government policy documents;
planning and reporting documents such as staff surveys, corporate or business plans, portfolio budget statements, portfolio additional estimates statements and annual reports; and
market information from property and real estate associations’ reports or publications.

Record keeping

It is good practice to maintain records of the research and consultations undertaken when developing the property management plan. These records will:

provide an account of how the property management plan was developed;
document any decisions made relating to the property management plan and evidence the reasoning;
if it is not possible to meet the Government’s occupational density target in a particular tenancy (e.g. if the building design precludes a fit-out which enables the target to be met), record the reason why the density cannot be met and the approach taken to ensure the occupational density for that tenancy is as efficient as possible; and
assist with developing and updating the property management plan in future years.

Accommodation manual