by David Jenkins and Stuart Gronow
Local government property managers have recently been on the receiving end of outspoken criticism from the Audit Commission, and subsequently from various media commentators. Such criticism has been the spur to a quiet but profound change in the management of a national asset worth in excess of £100bn.
Present-day detractors, however, may have failed to give credit to the changes taking place in management techniques and in particular the application of information technology (IT). This article attempts to redress the balance by showing some of the initiatives property managers have taken, and describes how IT strategy is paving the way for new valuation tools and a new service.
Recent exchanges in the correspondence columns of this journal may well leave readers perplexed as to the true competence of the managers of the UK’s substantial local authority property portfolio. In particular, there would appear to be some confusion about the extent to which local authorities have responded to change by the adoption of modern management techniques and information technology.
The Audit Commission reports on the management of property in local authorities, A Management Handbook and A Management Overview were published in February 1988 and produced findings which were not complimentary. Property owned by local government was “a largely hidden and undermanaged resource”.
But, the picture was not gloomy everywhere: indeed the commission pointed to many examples of good practice which should be emulated. Moreover, broad participation in the commission’s study and wide dissemination of preparatory contributions has given authorities almost two years to respond to the stimulus.
Perhaps a definitive picture of progress can only be given by the commission, who in the conduct of its 1989 Value Improvement Prize and analyses by district auditors, is currently reviewing the service: But the signs of progress are visible everywhere, and it would not be too difficult for serious commentators to obtain a balanced perspective.
A review of the appointments pages in the professional press is instructive: most large authorities appear to have some form of strategy group or review team. Many councils have been specifically requiring computer literacy and business skills in addition to professional qualifications and experience. Some are appointing professionals to undertake asset valuations, planned maintenance programmes and direct service property audits, often for the first time. These are precisely the areas in which the commission found deficiency.
Underneath this surface activity, however, there are more substantial changes under way in both management culture and information management. John Kirkwood and Jim Padden’s early commentary(1) on the upheaval caused by the commission’s report was correct to point to the cultural changes that would be required. They stressed the need for skill training and computer literacy, but what could not have been appreciated at that time was the extent of the pressure forcing cultural change emanating from within local government.
Since the commission report, local authorities have had to adapt to the rigours of competition for an increasing number of services: the financial regime has been transformed; the Chartered Institute of Public Finance and Accounts (CIPFA) had detailed new methods of capital accounting; and there has been a general movement toward modern corporate management.
Property managers have not escaped the wind of change blowing through local government: some, indeed have been taking the initiative. Nowhere is this clearer than in relation to IT. But to put these developments in perspective it is useful to look at the context of IT development within the profession.
IT and the profession
The slowness of the profession to adopt IT is not open to question. John Kirkwood, in particular, has attempted to create an awareness of what IT can do for property professionals. Yet at the “Property Information Systems” conference in July, he was convinced that IT penetration of the property profession had at best been moderate.
In reality, of course, the situation is uneven. There has been a market for estate agency packages for many years and appraisal tools have been with us for a long time. Larger companies and financial institutions with in-house research facilities along with new specialist agencies have developed sizeable databases and quite sophisticated analytical techniques. Justifiable commercial secrecy will obscure the real state of affairs in the wider profession for some years, but while many smaller practices have much ground to make up the profession has entered a new era: a “post anti-IT world”. The development of evermore powerful, friendly and flexible technologies will accelerate this trend.
IT: recent progress in local government
The Society of Information Technology Managers produces an annual report on the extent and type of IT penetration in local government, which makes it clear that while there is valuable data on suppliers’ software choices and management of IT there is no breakdown of where the investment is going in terms of function. One thing is certain: the level of investment is rising and exceeded £500m in 1988. Property management agencies should be (and are) pitching for a larger share of this budget.
Unfortunately the Local Authority Valuer’s Association (LAVA), has done little work in the area of IT, though it has prepared papers and held discussions on key aspects of the Audit Commission report, and is set to carry out a study of the requirements for asset valuations in conjunction with the Asset Valuation Standards Committee of the RICS. Clearly this work will have IT implications. The Association of Heads of County Property Departments (COPROP), by contrast, has established a computer applications group which has produced some interesting reports and an insight into recent progress(2).
A comprehensive list of “property data sets” has been developed as an elaboration of the original suggestions of the commission, along with a breakdown of the extent to which participating authorities have progressed with the data sets. As a user specification the document is incomplete — though by design. Its intention was to set out “the ingredients, not the recipe”. A further document provides a detailed breakdown of software used by COPROP authorities(3).
The picture given is very different from that portrayed by Mr Greenly in several letters published in this journal. It shows that much preparatory work is being done to improve efficiency and a growing range of applications is emerging: it also shows that, as in the private sector, the rate of progress is uneven. Larger and better resourced councils are creating a competitive edge. Several of these are already shipping software.
Robert Greenly is, in fact, addressing some of his competitors, but his fire is misdirected. It can be argued that he could no more assist authorities in providing a positive answer to his questions than they themselves can. That is because the primary source of any weakness in their information management is not the software but the data preparation.
Professionals have long been able to carry out residual and other valuations using spreadsheets. It is within the reach of many local authorities to develop their own valuation software from spreadsheet modelling. It may not seem sensible to re-invent the wheel, as it were, but modern system building tools make it ever easier. Similarly, the development of databases for many property management tasks is straightforward using the latest generation of development tools: the main prerequisite is that property managers and systems analysts enter a dialogue.
The first difficulty of the council property managers consists in identifying, collecting and verifying the data on which to base their calculations and build their databases. In this area great strides are being made, precisely the point made by the Audit Commission and the emphasis of COPROP.
Of course Robert Greenly is correct in saying that more is needed. Other critics make the crucial point that local authorities ought to have reached the stage of discussing how their property information systems could be exploited, instead of being still stranded defining the basic elements. In fact, as outlined below, these stages can overlap provided that there is a clear vision of priorities.
IT strategy
The source of these priorities and the difference between progress and planned systematic progress will be a business plan, and harnessed to it will be an information technology strategy.
The business plan will consist of a series of objectives for the management of the portfolio, a list of priorities allied to the objectives, and probably a list of specific targets.
The IT strategy will flow from the business plan. A rigorous analysis of the functions of the property department will establish those priority areas susceptible to automation. This is a repetitive procedure which will flush out the main application areas before proceeding to define detailed user requirements for specific applications.
It is hardly necessary for detailed examination of all potential applications in preparing the strategy: both the business plan and IT strategy can evolve. It is perfectly possible to obtain an overview without falling into the trap of a big bang solution. By all means identify all the data that needs to be collected — but collect only the data that is necessary for the development of priorities. The Audit Commission’s core database is only a guide. Better for morale and efficiency, too, is avoiding long gestation periods in delivering the first system.
Having selected the priority application areas, a review of potential solutions is conducted, in-house and off-the-peg and cost-effectiveness estimated. A full user-specification will follow.
Fruits of an IT strategy
At Cardiff, it was realised early on that the good practices identified by the commission and much of the traditional work of the land and valuation department could be automated cost-effectively.
The task was embarked on two years ago. A business plan, known as the City Estate Report, is updated annually. Underlying the plan is the theory that the productivity of existing staff will be improved by investment in new technology, releasing them for the positive management role envisaged by the commission. The strategy was developed by two “analysts”, one a computer professional, the other a property professional.
An exhaustive search of the market found no existing software sufficient to match requirements in priority areas. A presumption in favour of in-house development is qualified by regular reviews of developments in the market: as a consequence, several databases have been developed in-house, others have been bought in. To release resources for positive management, then, “bread and butter” applications were developed first.
A system which administers the sale of council houses, holds survey descriptions of them, acts as a comparable database, and via mailmerge, produces all correspondence has been operating for 18 months. It has greatly increased productivity.
A large portfolio of residential freehold reversions which was consuming valuation and administration time has been automated. The database is capable of hundreds of investment valuations in moments: it calculates fees and costs, provides offer letters and instructions to solicitors. In place of a backlog, there is now an efficient marketing tool.
A commercial property register is to be launched shortly. A comparable database for commercial property is able to interface with spreadsheets permitting conventional and DCF analysis. Off-the-peg acquisitions include a time/cost accounting package and an estimating package for building surveyors. Mainframe applications include a property terrier and an income management system. Time has been created for research and development: a pilot Geographic Information System is at an advanced stage and a valuation tool using “Crystal”, an expert system shell, will be introduced in 1990.
These developments are contributing greatly to efficiency. They have enabled the authority to devote time and energy in the direction of positive management without an increase in manpower. With difficulties in recruitment of professional staff, progress would have been much slower without the investment in IT.
Indeed, in the face of ever-increasing pressures on the property manager in local government and the requirement for ever more sophisticated valuation and analysis and informed decision-making, it is difficult to see how property managers will cope without information technology. A promising start is being built upon, and confidence in the local authority property manager will return.
(1) “What the Audit Commission did not tell us” Estates Gazette, October 22 1988, p 24.
(2) Property Information System Development, COPROP.
(3) Analysis of Computers and Computer Applications in Member Authorities, COPROP, June 1989.
