Appraisal of accommodation projects

7.1 Introduction

7.1.1 The roles of client departments in accommodation projects, and those of DoF's Corporate Services Group (CSG), Central Procurement Directorate (CPD), and Land and Property Services (LPS), are explained in this section. It is generally consistent with guidance issued by Her Majesty's Treasury (HMT), at the instigation of the Public Accounts Committee (PAC), about the roles of client departments and other public bodies involved in undertaking appraisal of projects involving expenditure on accommodation.

7.1.2 This section should be read in conjunction with the Government Office Specification (GOS) which sets the standards for accommodation and furnishings in the Northern Ireland Civil Service. The purpose of the standards is to achieve efficient, economical and equitable allocation of the government office estate and to ensure that civil servants are housed in safety and in reasonable comfort.

7.1.3 The GOS is a reference document to be applied to the staff accommodation element of all projects. Departments and other public bodies should seek CPD advice in the development of the accommodation brief and demonstrate to CPD that the final project plan complies with the standards set out in the GOS.

7.2 The need for overall appraisal

7.2.1 A Green Book style strategic option appraisal should be conducted with proportionate effort in all cases, following the basic steps set out in NIGEAE.

7.2.2 Accommodation costs often represent a significant proportion of the total cost of a project and can therefore be a crucial factor in deciding whether or not the proposal should proceed. An appraisal must therefore be carried out which covers the cost of the project as a whole. The appraisal should refer to the (departmental) property strategy as maintained by the property centre manager (normally the departmental accommodation officer), which contains the definitive statement of the (department's) ongoing strategy for the meeting of operational need.

7.3 Responsibilities of departments, CSG, CPD and LPS

7.3.1 The client department or public body is in the best position to assess its requirement for accommodation. However, where Properties Division (PD) of DoF's Corporate Services Group normally provides accommodation to meet departmental requirements, it retains responsibility for the prioritisation and implementation of all projects concerned with new or replacement buildings. LPS, CPD and PD are well placed to assist in developing the various ways in which the accommodation needs can be met.

7.3.2 It is for the client department or public body to co-ordinate the appraisal effort and take responsibility for appraising the project as a whole, incorporating the contribution of CPD, LPS and PD. In-house economists can provide relevant general appraisal advice and should be part of the appraisal group.

7.3.3 Departments and public bodies should always begin appraisals concerned with the provision of new or replacement buildings with an analysis of the prior need for service provision. It is not sufficient for departments merely to list the defects of current accommodation or simply state a space requirement. Departments must also justify the need for continuation or development of the relevant service (for example, by reference to changes in policy, changing staff numbers and so on) before considering options to accommodate it. The amount of effort that should be devoted to such justification will vary depending on the nature of the case and is, therefore, a matter for judgement. In simple cases it may be sufficient to refer to a recent relevant report or policy document. In other cases a more sophisticated analysis of the appropriate level and/or quality of service may be necessary. Nevertheless, the question of need should always be addressed prior to the consideration of options.

7.3.4 Appraisals concerned with new or replacement buildings should always be initiated at the earliest possible moment. The decision whether to lease or purchase accommodation should be examined for each individual case and the following factors should be considered:

• value for money
• funding constraints
• time constraints

7.3.5 Appraisals concerned with the location of offices and other buildings may in some cases be constrained by policy aims expressed in terms of factors such as equal opportunity and urban regeneration. Such constraints should not always be taken at face value, and should be balanced against other considerations including cost. For example, if such factors suggest restricting options to relatively high cost city centre locations, it may be appropriate to consider options at other, lower cost locations so that the cost of pursuing particular policy aims is made explicit.

7.3.6 Following strategic option appraisal, alternative procurement options should be examined in accordance with section 5 of NIGEAE. There should be no predilection in favour of any particular type of procurement. The procurement route offering best VFM should generally be selected.

7.3.7 Accommodation needs rarely arise overnight. Proper forward planning, including early appraisal (that is, when the accommodation needs first appear, not at some later date when, for example, an attractive building happens to come on the market) should be conducted to minimise the extent to which urgency is permitted to constrain option selection by ruling out new build solutions.

7.4 Procedures for departments

7.4.1 At the outset of a project the client department should agree with CSG, CPD and LPS how the appraisal of the project will proceed. In particular it should be agreed what information should be exchanged, and when.

7.4.2 At the same time PD will be able to consider:

1. who is responsible for funding:

• if an accommodation project is wholly business driven by a department, they have sole responsibility for providing all associated funding for the new accommodation as well as funding the liability of any existing accommodation that is vacated
• if an accommodation project has shared business drivers between PD and the client department then funding for the project may be shared
• if an accommodation project is wholly business driven by PD then they have responsibility for providing all associated funding for the new accommodation as well as funding the liability of any existing accommodation that is vacated

2. if the request is compatible with standard office accommodation
3. if the need fits in with broader accommodation plants in the particular area
4. whether any existing accommodation exists (or may become available) that can be utilised to meet the requirement

7.4.3 There should be continuing liaison and mutual exchange of updated information as the project develops. Departments should consult PD on accommodation matters during the course of an appraisal, and they should consult other technical experts such as CPD, LPS or departmental economists as appropriate.

7.4.4 Departments should note that contracts, such as to lease or purchase buildings, should not be negotiated or signed prior to the completion and approval by the appropriate authority of a satisfactory appraisal.

7.4.5 Where DoF Supply approval is required for accommodation projects, it remains the responsibility of CSG to seek the necessary approval. However, in cases where accommodation is required to meet a new service or development of an existing service, separate Supply approval is required and it is for the client department to seek it. This applies to all appraisals that cover proposed service changes as well as accommodation requirements. In such cases, the client department's submission to Supply should indicate clearly that PD has been consulted throughout on the accommodation options and has approved that element of the appraisal.

7.4.6 It is the responsibility of the client department to provide the additional capital and other resources to meet the accommodation cost.

7.5 Dispersal of civil service functions

7.5.1 Within accommodation appraisals departments must also carry out a rigorous examination of the feasibility of dispersing the functions to a location outside the greater Belfast area in accordance with guidance issued by DoF. In November 2007 the Executive sought an independent review of the policy on the location of public sector jobs. This review, known as the 'Bain Review', was published on 30 September 2008 and made a number of recommendations on the location of public sector jobs in Northern Ireland. The review recommendations are yet to be formally adopted by the Executive, however departments should ensure that any new accommodation proposals consider the implications of this report. A methodological framework for doing so is provided in annex B of Framework to underpin decisions on the location of public sector jobs (DFP, November 2007). The Bain Review suggested that a suitable approach would be to update and adapt this framework to reflect the criteria established by the review, and to provide a consistent basis for relocation business cases which ensures that longer term non-monetary as well as monetary benefits receive consideration.

7.6 Office accommodation leases

7.6.1 In 2015, DAO (DFP) 06/12 was revised to introduce a requirement for DoF approval for any lease renewal/uptake requests from all departments, business areas, agencies and arm’s length bodies. This approval should be sought through the submission of a proportionate business case.

7.6.2 Sponsoring departments must now submit a business case to DoF Supply when requiring the extension of an existing lease or the take up of new lease agreements.

7.6.3 The sponsoring department should contact DoF’s Reform of Property Management (RPM) project team as early as possible in the process, preferably one year in advance of the lease end. For leases already in this timeframe, contact should be made immediately. This will allow consideration of all appropriate options. DoF Supply are required to seek advice from the RPM project team to ensure that all relevant options are considered and that the business case is consistent with the objectives of the asset management strategy (AMS). DoF Supply will not normally approve a lease business case without agreement from RPM.

7.6.4 It may be necessary to consider short term extensions or interim relocation to other government leased accommodation with existing spare capacity where no other viable option exists in the immediate future; for example, one to three years.

7.6.5 The uptake of a new lease will only be considered in exceptional circumstances. Lease extensions or new leases will only be granted for a period of up to five years unless there are exceptional circumstances to consider otherwise.

7.6.6 In cases where the lead times are limited, departments may wish to ‘hold over’ their current lease arrangements. Before any holding over arrangements are entered into, agreement must be sought from DoF Supply. Approval for these will be time limited and conditional on full agreement with RPM.

7.6.7 To further assist departments in implementing this requirement, supporting guidelines have been developed. These guidelines include an engagement process summary, outlining the steps departments need to take. In addition, an office accommodation leases business case proforma has been produced and will assist business areas in the development and completion of the required economic appraisal.