BCO CONSULTATION RESPONSE
SEPTEMBER 2004
IMPROVING THE MANAGEMENT OF PUBLIC SECTOR ASSETS
The British Council for Offices
Founded in 1990 the BCO exists to research, develop and communicate best practice
in all aspects of the office sector. It delivers this by providing a forum for the
discussion and debate of relevant issues and works to promote co-operation and
understanding between landlord and tenant, investor and developer, and owner and
occupier - therefore encouraging efficiency and innovation in the office sector. BCO
members are organisations and individuals involved in creating, acquiring or occupying
office space, in both the private and public sectors.
Introduction
In considering the questions posed in your invitation to comment, the BCO has chosen
to provide a series of views.
The BCO accepts that any question of 'best value' and 'effective use' of public assets
may naturally lead to an examination of the estate; the buildings occupied and the
land owned, and the current usage of this estate resource. Such a presumption may
well be founded upon the previous work which you have led for the Chancellor. Your
review of the public estate will obviously investigate the realms of occupation, use, and
facilities management, and it may conclude that some of the government's estate is
surplus to requirements and can be completely sold off. However in relation to the
public sector's office stock the BCO would suggest that the outright sale of surplus
estate may not be the best mechanism for realizing any hidden value.
Similarly in looking at what constitutes a public asset the BCO has reflected upon
some of its own research work to identify and ask how the hidden value that exists
within the public sector's primary asset, its personnel, may be realized. Therefore our
response presents two views:
[a] Firstly we argue that this review considers the possibility of 'usage innovation' in
relation to any surplus office space which may be identified as part of this review
process
[b] and secondly we believe that this review should consider the question of workplace
productivity in relation the public sector workforce, enabling the hidden value that lies
within the public sector's personnel to be realized.
In this respect this reply is founded upon our own recent research into the workplace
with Cabe. But it should be added that we have also taken notice of the contents of
the 2004 report entitled 'Working Without Walls' by the Office of Government
Commerce and DEGW.
Buildings Use
If this review identifies surplus estate or proposes policies which releases public assets
(for example by the movement of staff to other office locations) there is a resulting
possibility that public assets in the form of estate holdings will become fully or partially
vacant. The overall release of such property holdings at the heart of London and
elsewhere in the central business districts of other UK cities could offer the Treasury
an opportunity to 'innovate' in the management and usage of the public estate. This
surplus supply, be it whole offices or portions of office space, could be imaginatively
used and let to other office occupiers or business users. Security concerns aside, in
this way the government could adopt a mixed-use approach to its surplus space
realizing a very hidden asset value.
Usage innovation would allow for buildings that are only partly occupied by government
to be used in a variety ways generating a new rental incomes. By releasing this
public sector estate to the private sector, the Treasury would increase its 'landlord role'
to a number of tenant occupiers within primary pieces of the government's real estate
portfolio. In pursuit of this goal the Treasury would be particularly adept if it
encouraged a mixture of uses. The street level space of this surplus estate could be
used in a particularly innovative way enabling an expansion of a restaurant/retail space
within the government estate, in some very high value positions.
The concept of space creation within the public estate may offer opportunities for new
mixed-use applications being embedded within the public estate. In arguing for this the
BCO notes that many commercial office developers now view the ground floor of their
office space as premium retail area which can produce a worthy additional return.
Some parts of the government estate could offer retail opportunities with little structural
change to the actual building. In considering the task set by the Chancellor, the
realization of mixed-use opportunities and the leasing of surplus space within some
government buildings may be worthy of consideration because it will enable a very
fresh means for exploiting some of the hidden value which exists within the public
estate.
Taking this theme beyond the realms of Central London it is possible that greater
opportunities for leasing and estate innovation resulting in an exploitation of new hidden
value. Hospital buildings are a good recent example of where mixed-use ideas have
been applied and in taking this innovation wider within the context of asset
management, there appears to be no reason why the concept of 'mixed use lease out'
could not be applied in all sectors of the public estate, national and local.
Realizing the assets of the workplace
Today's public sector is being exposed to a host of new dynamics focused upon the
workplace. At the heart of Whitehall the question of the workplace has been
considered and reform of the way government works is being adopted through a series
of projects that are effecting physical alterations alongside integrated business,
organizational, and cultural change. In this way the working environment of Whitehall is
evolving and this presents an opportunity for the BCO's
research theme on the workplace and questions of productivity. A central theme of the
'Working Without Walls' report was workplace design and the BCO's research has
similarly focused on workplace design, and the interaction of the workplace with the
individuals who inhabit the 'working' space. The BCO would argue that the principal
asset which has an obvious hidden value yet to be extracted is the public sector
workforce.
If this view is acceptable, and taking in account the scope of our research work on
the workplace, the real goal for any review of the management of public sector assets
should be to improve the potential inherent value of its primary resource; the people
who run the public sector.
At this widest reach this perspective includes the senior civil service, through to the
government's regional offices, down to employees working at the 'coal face' in local
DWP offices and also in local government. The improvement of this public asset has
the potential to produce the best results, though it may require an element of
investment - investing in people. We would hope that this point would fall within the
context your statement, "I will be interested in the wider issues of asset management,
not only disposals."
People who work in offices are a central concern of the BCO. How they work, what
enables them to work better, more effectively and efficiency, are key questions which
we are investigating as the premier British organization existing to promote best practice
in the use of office space. A series of projects on the workplace and productivity have
been commissioned and the most important of these, jointly commissioned with Cabe,
has recently concluded.
The themes of this project in some ways parallel the ideas presented in 'Working
Without Walls' but our investigation was designed to examine the existing literature on
the relationship between the design of the workplace and business performance
identifying where possible those design factors which make office environments more
productive.
Our research shows that business operations can be decidedly influenced by the design
of the workplace, internally and externally, and the literature argues that the physical
workplace environment can make significant contributions to business efficiency and
business effectiveness. Moreover this literature clearly demonstrates that the physical
environment can communicate, or express, messages about an organization, its values
and goals, to both its employees and those who professionally interact with the
business.
The joint BCO - Cabe report contains a series of facts about the design of a
workplace and how design elements can positively influence the workforce and their
output. It provides a series of statements which are a general prescription for better
workplaces. These key conclusions summarized as follows:

Productivity, health and satisfaction variables are almost always linked to comfort the better the occupants think the indoor environment is, the more likely people
are to say they are productive, healthy and happy. Therefore improving the factors
which impact health and comfort in a building is the essential first step to
improving business performance.

Extremes of temperature have been found to have a negative impact on productivity
with decreases in the order of 30% being found in factories experiencing extreme
temperature conditions.

Attention to ergonomics has been found to have substantial positive impacts on
people's productivity as well as on the reduction in the healthcare insurance
payments for workplace related disorders. A 1990 study found a 23% increase in
computer-based data entry and editing when sub-optimal workstations were
replaced with improved workstations and ergonomic chairs.

Increases in productivity of between 2.8% and 20% have been attributed to
increased luminance levels.

Providing personal control over the local environment has been found to have two
main performance benefits. Firstly, individuals are found to be more tolerant of
fluctuations in interior comfort factors when they have control over them. Secondly,
occupants have been found to value the sense of control which is provided by
such responsive systems. (Individuals generally value control over heating, cooling,
ventilation, noise and lighting.)

Offices can be open, communicative and collaborative environments but the literature
also argues that offices need quiet spaces. These have the value of providing
occupants with space for uninterrupted concentration.

Open small-scale team environments increase the 'flow of information
employees view as fostering better quality work and faster decisions.

The space that an organisation occupies can convey messages to a wide range of
messages to internal and external parties, regardless of whether these messages
are recognised and managed by the organisation. The workplace may be used as
a means of transmitting messages between employees and employers.

Using plant and office layouts, designed to reinforce norms and ideals, is one of
the principal measures adopted by leading companies.

The interactions of staff with space create a sense of community and identity within
the organisation.

Real estate can help to keep an organisation, its products, and/or its services in
the public mind, as well as communicating the 'right' messages about these
products and services. It has been found that good urban design "allows projects
to rise above the general market. It bestows trademark value and it heightens a
developer's, owner's and tenant's market status.
that
These key findings are not a comprehensive design formula for workplace success,
rather they serve to demonstrate how the real hidden value of the public sectors key
asset, its staff, could be enhanced if one of this review's central conclusions suggested
that a combination of better designed offices and new working practices should be
adopted.
Conclusions
BCO research enables this organisation to respond to your request with this central
proposition - better designed government offices would be more productive. Given
recent developments in and across Whitehall, including the refurbishment of the main
Treasury and the Ministry of Defence buildings and the OGC report, we hope that our
response supports a theme that is currently in vogue and an emerging trend within
Whitehall itself.
The key ambition for our research in this field will be to produce a series of
authoritative outputs that will guide the office industry to create more productive office
environments across the UK. Therefore it is appropriate to conclude this response by
recording our keenness to partner the government’s efforts in the field of workplace
productivity both in respect of the actions arising from this review and in relation to
the Treasury’s wider remit of managing UK plc.