Report to Portfolio Holder Property,
Finance and Commissioning
21 March 2014
Subject:
Property Management Information System Procurement
Status:
Open
Report Ref:
Ward(s):
N/A
Key Decision:
No
Key Decision Ref:
Report of:
Kevin Jaquest, Head of Resources
Mike Bovis - Property Manager
01256-845360
Email mike.bovis@basingstoke.gov.uk
Nicholas Collins – Asset Manager
01256 845350 Ext 2350
email nicholas.collins@basingstoke.gov.uk
Contact:
Gwyneth Gundry – Systems Accountant
01256 845517
Email Gwyneth.gundry@basingstoke.gov.uk
Appendices:
Papers relied on to
produce this report
Cost estimate – Appendix 1 (Confidential)
None
SUMMARY
1
This Report
1.1
The purpose of this paper is to brief the Portfolio Holder on the business case
for the purchase of a property management system. This has been
established as follows:
-
Undertaking a “gap analysis” of current systems, processes & outputs, that
relate to the property portfolio. This has been carried out by officers from
Property Services, Exchequer, Accountancy, Internal Audit, IT and
Procurement. Background as to how a new property system could
overcome these gaps is also provided.
-
Process mapping a number of key workflows, identifying both current time
spent on particular tasks and anticipated time savings resulting from the
implementation of a property management system.
-
Investigating how a new property management system could address the
areas of concern highlighted by Internal Audit in their assessment of the
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current records and databases used for the management of the property
portfolio.
2
Recommendation
It is recommended that the Portfolio Holder
2.1.1
Notes the work undertaken to date
2.1.2
Endorses the way forward as set out, with specific regard to the purchase of a
new property system, that provides integrated finance functions and the basis
for, and flexibility in, interfaces with the current and any future corporate
finance system.
2.1.3
Approves the commencement of the procurement process
2.1.4
Notes that Officers will investigate any opportunities for shared procurement
2.1.5
Agrees to release the capital budget for procurement of a Property MIS and
delegates the procurement decision to the Head of Resources, in consultation
with the Portfolio Holder for Property, Finance and Commissioning.
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PRIORITIES, IMPACTS AND RISKS
Contribution to Council Priorities
This report accords with the council’s Budget and Policy Framework and directly
supports the Council Plan priority/priorities of Improving economic vitality and also
accords with the council’s Policy and Budget Framework and supports the
development of an effective and efficient council.
GLOSSARY OF TERMS
Term
Definition
MIS
Management Information System
GIS
Geographic Information System
CAD
Computer Aided Design
MAIN CONSIDERATIONS
3
The Proposal
3.1
The proposal is to progress the procurement of a new integrated management
information system for property, to more effectively manage the council’s
significant property portfolio.
3.2
The council has very different requirements for the management of its
property portfolio compared to most other councils, due to the size of its
commercial property holdings. The portfolio has a capital value of
approximately £300 million and rental and service charge income of
approximately £17 million a year, the rental income element equating to
approximately 28% of the council’s annual revenue, excluding housing
benefit. It represents one of the largest local authority income producing
investment property portfolios in the UK.
3.3
The existing system within Property Services was purchased and
implemented as a general database solution across the council and has
significant limitations in terms of managing a commercial property portfolio,
including:

A standard package with little flexibility to adapt to our specific
requirements.

No basis for two way integration with the corporate financial system,
Aptos, which currently provides and controls all property related debtor
invoicing, purchase orders, creditor invoices, payments and financial
management information.

Limited/inflexible capacity to hold any records relating to maintenance
programming or detailed condition surveys data, particularly the “whole
life cost” projections or linkages to CAD

Limited inbuilt ability to analyse the performance of the portfolio and
none to combine information from separate sources.
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3.4
3.5
3.6

A rigid functionality to provide a diary of key events affecting the
portfolio, such as rent reviews & programmed maintenance. Ad hoc case
work including tenant instigated matters (assignments, sublettings) can
only be recorded once complete. Rent reviews are only generated when
the previous one is completed.

No interface with our valuation system. This has been investigated but
rejected by the supplier of the current MIS

Limited ability to distinguish between different portfolio holdings, if for
example, the council managed property on behalf of another authority.
As there is no central comprehensive property database this has resulted in a
myriad of spreadsheets being maintained separately by Property Services,
Exchequer and Accountancy. Significantly, this results in:

Inefficiencies due to the manual duplication of records being maintained
and manipulation of data extracted from separate systems.

The inconsistency risk of the same data being manually uploaded in
more than one system

An on-going operational risk to the council due to the multitude of data
sources held in spreadsheets.

No unified back-up mechanism for data in the event of system failure or
file corruption.

No unique identifier which can be allocated to a property record across
the systems/organisation to facilitate flexible property management
(reporting, inspecting, valuations etc.).

An inadequate base for analysing the performance of the property
portfolio, key to any successful investment strategy.

An inadequate platform for providing a shared property portfolio
management service for other authorities, should this be explored in the
future.
The Asset Management Plan 2011 approved by Full Council on 13 October
2011 also identified the following reasons for implementing a new system:

The council needs accurate data and management information on all its
property to enable effective asset management.

Data should be held in the minimum number of places with each data
element having an “owner” responsible for accuracy.

Data needs to be held in a way to facilitate the sharing of asset
information (including spatial details) with the public sector, to enable
better area asset planning over time. Appropriate summary information
should also be available to the public.
The principle of a new system was supported by SLT in December 2011,
subject to further investigation with suppliers and other Local authorities and a
business case being agreed.
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3.7
Audit, Governance and Accounts Committee requested an update on the
Property MIS on 12 November 2012. The committee were supportive of the
work carried out to date but anxious for more rapid progress in terms of
implementation.
3.8
DTZ have been appointed to help the council develop a property investment
strategy.
3.8.1
The DTZ report identifies the need for improved MIS and flexible reporting on
performance and provides examples of “good practice” management
information and includes the following statements:
“The difficulty with extracting the information is due to legacy systems that are
in place”
“BDBC needs the MIS to produce information that is relevant to its needs. It is
likely to be a mixture of:
•
data that underpins the delivery of the strategy and supports buy/hold/sell
decisions
•
data that supports the day to day management of the assets within the
Commercial Portfolio”
3.9
Progressing the work on the Investment Strategy in 2013 has helped inform
and refine the specification for a new MIS.
4
Options Analysis
4.1
A property system that provides integrated financial functions could enable
considerable improvements to the effective management of the council’s
property portfolio over and above a case management information system.
This has been illustrated during visits to various organisations, including local
authorities and other organisations that have significant sized property
portfolios. The gap analysis particularly illustrates the potential areas for
improvement with regard to the ability of an integrated system to enable
comprehensive financial reporting based upon a single database governing
the portfolio. This is essential in informing sound strategic decisions to be
made about the future holding of elements of the portfolio.
4.2
The process analysis supports this conclusion and illustrates the potential
efficiencies and also the opportunity to change the emphasis in the way the
management accounting function is utilised. An improved case management
based information system without interfaces and linkages with the corporate
financial system would bring much more limited improvements.
4.3
The main benefits arising from a new property management system are
summarised as follows:

Overall Improvements
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comprehensive reporting &
improved access to property
records and management
information to support strategic
and operational management,
including decision making,
planning and forecasting
Process / Operational Efficiencies

The ability to better understand
portfolio performance at a
granular, segment and total
level and report to Members
appropriately, including
forecasting

a change in emphasis from
manual processes to financial &
performance analysis

reduced operational risks

time savings / releasing
capacity; providing increased
functionality and workflow;
reducing manual processes,
duplication, maintenance of
separate spreadsheets and
manipulation of data extracts;
automation of current manual
processes; use of a common
property reference; providing
the basis for interfacing with
corporate financial systems and
restructuring these as required

Released capacity can be
refocused
in the following areas:
Savings

estates management

property maintenance

financial management, including
debtors and management
accounting
Process mapping suggests
significant efficiencies could be
made in both processing of
transactions and time spent in
gathering performance data.
Given the absence of a
quantified “as is” situation, it is
hard to identify specific posts
that will be most impacted and
during implementation,
business process review will be
required, which should generate
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efficiency savings
Opportunities

providing a system better
placed to manage the existing
portfolio and future additions to
the portfolio,

Enable analysis of the portfolio
performance at granular level to
enable assets to be sold and
purchased to implement the
emerging investment strategy

providing the foundation for
managing other property
portfolios including shared
service opportunities

help desk approach for property
maintenance issues to enhance
customer service

Ability to carry out a wide range
of performance analysis, to
inform investment property
retention, disposal and
acquisition
4.4
It was previously considered that one option would be to join forces with the
County who are looking at their own management system. HCC and Surrey
CC have jointly procured new asset management software and BDBC is
named in the agreement and hence we could buy into this system. Council
data would be hosted by the two counties. However, investigations lead
officers to conclude that this is more focussed towards their operational
portfolio and is not a property management system with integrated finance
functions. It does not therefore meet the requirements of the council’s
portfolio.
4.5
It is possible that other local authorities with significant commercial portfolios
might want to share the procurement, which could be beneficial but not if it
adds significant delay. Officers will investigate this as part of the procurement
process.
4.6
The option to “do nothing” is available but would not deliver a step change in
MIS nor address the concerns of Audit and AGA as the existing range of
different databases would continue.
4.7
It is therefore recommended to tender for a property management system with
integrated finance functions to:

provide the basis for comprehensive financial reporting on all aspects of
the property portfolio
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
4.8
provide the basis and flexibility for interfacing with the corporate financial
system in the most efficient way
The fully detailed project has yet to be scoped and this will be done if the
Portfolio Holder agrees to progress the project. The envisaged high level
timescale of the project steps is set out below for this OJEU compliant
procurement;
PQQ Issue
37 days
Evaluation
14 days
ITT
40 days
Evaluation
14 days
Standstill period
10 days
Implementation planning
30 days
Implementation
TBA
4.9
Key resources will include Property Manager, Asset Manager, Systems
Accountant, Business Analyst, Procurement Manager, ICT Business Analyst.
Year end will impact the availability of most of the resource input required and
hence the project plan will need to be developed to reflect availability. The
cost estimate includes an allowance for project management.
4.10
Internal work on process mapping and gap analysis has been carried out and
a summary of conclusions are set out below:
4.10.1 Good performance management is very difficult given the size of the property
portfolio and current disparate systems / records. The gap analysis has
illustrated that there is no single system which shows the current status and
complete picture of each property, in terms of tenancy details, rent, value,
service charge and maintenance status. Good estates and investment
management relies upon the ability to measure the performance of a property
in terms of the present and future income (rent and service charge) and cost
(maintenance, unrecovered management, void costs etc) profile.
4.10.2 The gap analysis demonstrates that there are key areas within both Property
Services, Exchequer and Accountancy where considerable operational
improvements could be made to create a more cohesive and robust approach
to portfolio performance and analysis which could lead to a better strategic
understanding of the portfolio, enabling informed strategic decisions to be
taken on future direction. Scenarios need to be easily generated.
4.10.3 The initial demonstrations of integrated systems have illustrated that there is
capability to overcome these gaps and it has been established that there is a
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need to consider property systems which include elements of integrated
financial functionality. This would:

provide the basis and flexibility for interfacing with the corporate financial
system in the most efficient way

provide the basis for comprehensive financial reporting on all aspects of
the property portfolio
4.11
It should be noted that detailed work will be required to establish compatibility
with our financial accounting and process requirements. This will also involve
establishing the nature of interfaces between a new property management
system and the corporate financial system and the balance of functionality
operated in each system.
5
Corporate Implications
5.1
Financial Implications
5.2
Following agreement to the recommendation and release of budget, the
project team, in liaison with internal officers, will produce a specification
geared towards tendering an integrated package, to include provision of all
software, installation, training and consultancy. Bids will be assessed against
legislative and operational / technical requirements. The EU threshold is
£172,514 for services and supplies, including initial provision and installation
together with an annual licence, so it is likely that this threshold will be
exceeded. There is no select list or framework agreement for this type of
service so the tendering of this system requires a procurement procedure
under the OJEU rules.
5.3
Cost estimate – see confidential appendix 1
5.4
There will be no change in on-going costs for the existing corporate finance
system (annual licence / support fee) and this will be met from within the
overall business unit budget.
5.5
Once implemented, process efficiencies will be identified but it is likely that the
savings will be spread across Property Services, Exchequer and
Accountancy. The potential time saving on the management accounting side
would enable greater strategic and option analysis as well as provide resource
to assist in investment appraisal of new/changed investments.
Risk Issues
5.6
Internal Audit
5.7
The 2011 audit report has already been mentioned in the context of the 2011
Asset Management Plan. A further audit report undertaken in March 2012
reiterated the risks previously identified and which remain unaddressed.
5.7.1
Specifically the audit report stated:
Internal Audit is able to offer Substantial Assurance* that there are adequate
controls in place to ensure the integrity and operation of the strategic
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management of the land and property portfolio but considers that it is only
able to offer Limited Assurance* in respect of the adequacy, efficiency and
effectiveness of the records and databases used for the day to day
operational management of the Property Rents system.
The absence of a single database for all land and property assets is a
weakness that should be addressed as a matter of priority given the value of
the council’s land and property portfolio. The use of electronic systems within
the PFM business unit should be rationalised to a single comprehensive
property management system that incorporates the functions currently
provided by Uniform, the KEL Sigma valuation system, and the plethora of
spreadsheets and access databases. Such a system could also facilitate the
use of a single UPRN for land and property assets, thereby eliminating the
duplication referred to above.
5.7.2
The simplification of property referencing across existing systems should be a
key part of the new property system implementation project. The current
arrangement whereby there is no common thread between the various
systems carries a “merits attention” warning in the audit report. It is
considered that a solution which negates the need to manually manipulate
data between the property management and finance functions would
significantly improve the process.
5.7.3
In summary, either system type would improve the current issues identified by
Internal Audit, although given the reduction in manual input / update arising
from the integrated system, this would be the preferred option.
5.8
Consultation - Audit and Governance Committee
5.8.1
At the request of AGA, a presentation was given to the committee on 12
November 2012. Members were supportive of the work carried out to date and
the anticipated way forward. They did express concern at the time this
implementation was taking and required swifter progress.
5.9
HR Issues
5.9.1
Temporary project implementation support will be required funded from the
project budget.
5.10
Equalities
5.10.1 None identified at this stage
5.11
Legal Implications
5.11.1 None identified at this stage
5.12
Any Other Implications
5.12.1 The Head of Resources will be considering options for the replacement of the
existing APTOS main finance software in the near future which will be subject
to a business case review
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5.12.2 It is not necessary to delay the Property MIS but a key requirement in the
procurement process will be to ensure and new Property MIS is capable of
interfacing with a wide range of accounting packages via a standard interface.
6
Communication and Consultation
6.1
Discussions and workshops have taken place with members of Property
Services, Exchequer, Accountancy, Internal Audit and Procurement but
further work in this area will be required.
7
Conclusion
7.1
The support of the Portfolio Holder for Property Finance and Commissioning is
sought for the principle of investing in a new Property Management
Information System and a decision to progress the procurement process
releasing the capital funds currently held in the budget to enable the
procurement to complete.
7.1.1
The Procurement decision to be delegated to the Head of Resources, subject
to consultation with the Portfolio Holder
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