New South Wales

Government

Government
Office Accommodation
Reform Program

Improved service delivery

Better workplaces
Savings in accommodation
Government Office Accommodation
Reform Program

This document outlines 12 key strategies, which are

designed to further improve planning and use of
accommodation resources in NSW.

These strategies emphasise the need for a whole-of-

government approach not only from the point of view of
more consistent planning and decision making across
agencies but also to maximise the Government’s position in
the marketplace.

The 12 strategies cover the areas of asset management and

planning, location, space utilisation, investment practices,
best use of Sydney CBD heritage assets, collocation and
lease rationalisation. Implementation of the strategies will
considerably reduce the Government’s accommodation
costs.

December 1998
DPWS report number 98165

© This work is copyright. Apart from any use as permitted

under the Copyright Act 1968, no part may be reproduced
by any process without written permission from the
Department of Public Works and Services.

Requests and inquiries about reproduction and rights should

be addressed to:

Director
Policy Services Division
Level 23, McKell Building
2–24 Rawson Place
SYDNEY NSW 2000

phone (02) 9372 8881

fax (02) 9372 8822
email colin.campbell@dpws.nsw.gov.au

NSW Department of Public Works and Services

Cataloguing-in-Publication data

New South Wales. Dept. of Public Works and Services.

Government office accommodation reform program

ISBN 0 7313 0724 0

ISBN 0 7310 0914 2 (set)
1. Office accommodation—Government—
New South Wales.
2. Total asset management—New South Wales.
I. Title. (Series : Total asset management manual).
354.944072
Prepared by
NSW Department of Public Works and Services
Information design by
Montague Leong Design Pty Ltd
Printed on 100% oxygen-bleached (totally chlorine
free) paper using vegetable-based mineral-oil-free inks.
Foreword
The vision of the New South Wales Government is
to create a world class public sector, one which can
adapt and change while continuing to provide
services to the people of the State. To make the
vision a reality the Government has embarked on
an ambitious program of reform in corporate
services across the public sector.
An integral part of the corporate services reform
is in the area of asset and accommodation
management. The Office Accommodation Reform
Program approved by Government is designed
to further reduce the financial burden on
government agencies and free up funds for
core services.
Adopting the Reform Program strategies will
bring about a best practice approach to asset and
accommodation management. It will reduce the
Government’s exposure to rent increases, lead to
better space utilisation and make the most of the
Government’s position as a significant player in
the real estate market.
Whole-of-government benefits will flow from
better overall planning that aligns decisions on
office accommodation with Total Asset Management,
as well as broader government objectives for
corporate services reform, urban planning,
transport and economic development.
I encourage all government agencies to review
their approach to asset and accommodation
management in line with the strategies of the
Office Accommodation Reform Program.

The Hon. Ron Dyer, MLC

Minister for Public Works and Services
Government Office Accommodation Reform Program 1
 Government
Office Accommodation
Reform Program
The New South Wales Government occupies
more than a million square metres of office
accommodation that costs around $385 million
a year.
The Office Accommodation Reform Program is an
integral part of the Government’s larger reform
agenda and it offers an excellent opportunity to
achieve savings without reducing staff numbers
or the level and quality of services delivered to
the people of New South Wales.
The accommodation reform commenced in 1997
with the Premier’s Memorandum, Government
Office Accommodation and Property Disposal, that
established space consumption targets and new
procedures for office accommodation management
and property disposal.
In this, the second stage, the Government has
developed strategies that will deliver:
• better planning
• better decision-making
• better and more cost-effective management
of acquisitions and disposals
• better management of leases
• better use of space through economies of scale.

2 Government Office Accommodation Reform Program

Whole-of- Strategy 1
Government Asset
government Management Committee
coordination
Critical to the success Whole-of-government
of the Government’s perspective
accommodation A high-level forum will be
reform strategies is convened, bringing together
the Government Asset central agencies and asset
experts to ensure the Govern-
Management Committee, ment’s reforms occur within
reporting to the Budget the whole-of-government
Committee of Cabinet. context.
This body will provide In this way, the Committee
will be able to incorporate
broad coordination and the Government’s Total Asset
oversee the changes. Management requirements in
the wider resource allocation
process.
The Premier’s Department,
NSW Treasury, Department of
Public Works and Services,
Roads and Traffic Authority
and the Attorney-General’s
Department will make up the
membership of the Committee.
They will be represented by
their Chief Executive Officers.
Government Office Accommodation Reform Program
Strategy 2
Government Asset
Management Committee’s
terms of reference
How the
Committee
will operate
The Committee will work with
agencies to sustain the reform
process and they will have a
framework for the planning
and coordination of asset
management throughout
New South Wales.
The Committee will advise the
Budget Committee of Cabinet
on:
• the appropriateness of
agency asset management
strategies
• strategic issues involving
more than one agency
• regional office
accommodation plans
• major investment strategies
• performance standards for
asset and accommodation
portfolios.
3
 Investment
The Government’s
investment decisions
have to be based on
long-term strategies
that are consistent
with other government
initiatives and fit
into the Total Asset
Management process.
The decisions need to
take into account the
issue of owning or
leasing property,
the best use for heritage
buildings and the
balance of cost against
value of other objectives.
4 Government Office Accommodation Reform Program
Strategy 3
Criteria for appraisal
of acquisition or
disposal decisions
Own or lease?
The Government manages Rigorous financial appraisal,
$300 billion worth of public in accordance with NSW
assets. There is almost as much Treasury guidelines will, in
office accommodation (47%) in future, underpin decisions to
government-owned buildings own or lease accommodation.
as in leased premises. The criteria will cover:
There is an ongoing debate • service needs and objectives
on the benefits and drawbacks • projected costs for
of owning and leasing 10–15 years
accommodation, with recent • whole-of-life costs and
reports suggesting that long- benefits, including capital
term needs may be best improvements and
satisfied with a portfolio of refurbishment
buildings owned by the
• cost of capital
Government.
• property market fluctuations
However, experience suggests
• return on investment.
that a balanced portfolio of
owned and leased premises
achieves the best long-term
results.
It is essential to develop a
government investment
policy on whether office
accommodation should be
owned or leased, recognising
competing demands for
investment eg. education or
health facilities.
 Strategy 4
Best use of heritage buildings
Maintaining
our heritage
The Government owns a
significant number of heritage
buildings, especially in the
Sydney CBD. Whatever their
aesthetic and historic merit,
these buildings are not always
suitable to meet the needs
of a modern office.
To ensure the preservation
of these buildings, the
Government will establish a
plan to realise their optimum
long-term use.
Strategy 5
Determine the cost-
effectiveness of lease
pre-commitments
Lease pre-
commitments—
better value for money
Agencies can sometimes
obtain purpose-built offices at
good locations by agreeing to
take leased space before the
construction starts. These
arrangements usually involve a
significant amount of office
space and require long-term
leases.
The Government may obtain
benefits by pre-committing to
private sector office
developments:
• by reducing the developer’s
risk, the profit margin can
also be reduced and more
favourable terms agreed
• government-owned land can
be developed with a smaller
capital outlay
• agencies may be able to
reduce the cost of fitout.
Given their complexity, these
arrangements will require the
approval of the Budget
Committee of Cabinet.
Government Office Accommodation Reform Program 5
 Location
Central to the reform is
determining the location
of government office
accommodation. Not all
services will need to
remain in the costly
Sydney CBD Core and
some agencies could
move from the centre of
the CBD or even out of
Sydney.
6 Government Office Accommodation Reform Program
Strategy 6
Reducing Sydney
CBD Core costs
Minimising exposure
to high rentals
The Government has a
significant presence in the
Sydney CBD, both in buildings
that it owns and in leased
premises. Rent costs in this area
are high and the Government’s
client base has spread well
beyond the city.
Traditional arguments for
maintaining services in the
CBD Core are no longer
justifiable as information
technology allows agencies to
operate further away from
central government.
Several agencies are already
operating successfully outside
the high-cost CBD Core,
especially in Sydney CBD
South and Parramatta.
Agencies will require a business
case if they wish to remain in
the CBD Core.
Strategy 7
Preferred locations for
agencies seeking to remain in
the Sydney metropolitan area
are CBD South and Parramatta
Office accommodation
aligned with wider
urban planning
strategies
In 1995, two strategies1,2 were
released outlining plans for the
more rational development of
Sydney and its hinterland. This
strategic focus will ensure that
development will meet:
• the needs of the
Government and its
customers and stakeholders
• economic and regional
development objectives
• urban planning
requirements
• transport strategies.
To meet planning strategies and
government objectives,
decisions on office
accommodation should
consider:
• two key areas, Sydney CBD
South and Parramatta
• if agency head offices
relocate, they should go to
areas where there is adequate
infrastructure and access to
public transport
• office relocations have an
impact on regional
economic growth
• if agency head offices are
already located in secondary
centres, such as Bankstown
or Liverpool, they should
stay there unless there is a
business case for relocation.
 Strategy 8
Regional development
opportunities
Accommodation
to serve rural
development
In 1997 the New South Wales
Country Summit discussed
how to improve access to
government services. This led
to the development of the
Integrated Service Delivery
Management Plan which
identifies opportunities to
relocate government jobs to
rural and regional NSW.
If an agency cannot be
relocated from the Sydney
metropolitan area, jobs still
might be moved to regional
centres.
Agencies will annually test
the viability of a move to
regional areas as part of their
accommodation planning.
The test will examine whether:
• the agency provides services
critical to regional business
development
• there is scope to place staff
at regional locations
• any withdrawal of agency
staff from regional locations
will affect the quality of
service to clients or the
regional labour market
• agency activities are similar
to prospective private sector
activities in regional
locations
• there is scope to place staff
in regional locations to
complement private sector
developments.
1
Compact Cities
The Department of Urban
Affairs and Planning released
Cities for the 21st Century,
Integrated Urban Management
for Sydney, Newcastle, the
Central Coast and Wollongong.
The document sets out a
strategy for the integrated
management of transport, the
economy and environment
for the Greater Metropolitan
Region.
Its emphasis is on creating
“compact cities” and it
identifies the central business
districts of Sydney,
Parramatta, Newcastle and
Wollongong as primary
centres, and North Sydney,
St Leonards, Chatswood,
Hornsby, Blacktown, Penrith,
Bankstown, Liverpool and
Campbelltown as secondary
sub-regional centres.
The Government will
support these centres by
developing infrastructure,
such as transport, and by
concentrating government
employment.
Government Office Accommodation Reform Program
2
Integrated Transport
Strategy
Integrated Transport Strategy
for the Greater Metropolitan
Region was released by the
Department of Transport.
It recognises that rail
corridors converge on
Sydney and Parramatta and
that further decentralisation
of workplaces to any areas
other than the central
business districts of Sydney
and Parramatta would mean
more people using their cars
to drive to work.
The effectiveness of public
transport has already been
reduced by residential
growth on city fringes, the
relocation of government
agencies and a trend to
decentralise employment.
The result has been an
increase in the cost of
infrastructure and services,
and environmental problems
in their wake.
Public servants have
traditionally been heavy
users of public transport.
This trend has been reversed
when agencies moved away
from places easily accessible
by public transport.
7
 Space
utilisation
The Government wants
to maximise savings
from applying its space
utilisation target of an
average of 18m2 per
person and it will assist
agencies to achieve it.
To achieve this target,
new accommodation
will need to be designed
at 15m2 per person,
subject to business
functional requirements.
8 Government Office Accommodation Reform Program
Strategy 9
Agency space utilisation
performance
Reducing square
metres per person
over the next 10 years
In 1996 the average space
consumption figure in the
New South Wales public sector
was 24m2 for each person,
higher than the average of the
Australian private sector and
the international public sector.
If the public sector reduces the
average space per person, the
savings will be considerable.
There are already examples of
government agencies reducing
the average amount of space
for their employees without
detriment to productivity or
effective service delivery.
In the long term, all govern-
ment agencies will have to
reduce their space consumption
and the Government Asset
Management Committee will
monitor progress.
In order to achieve the
Government’s space utilisation
targets, all new accommodation
will be designed at 15m2
per person or better, subject
to the functional requirements
of the agency.
Strategy 10
Office Accommodation
Workspace Guidelines
Assistance
for agencies
Traditional office
accommodation no longer
suits contemporary working
patterns. Offices now have to
accommodate telecommuting
and provide flexible arrange-
ments that require less space.
The Department of Public
Works and Services will issue
guidelines which will:
• include a range of office
accommodation space
standards
• highlight alternative
workplace models that
support different modes
of working
• provide guidelines for
buildings that allow more
efficient workspace layout.
Purchasing Strategy 11
Lease consolidation
power
Better planning and Benefits from
better management will rationalisation
allow the Government to The New South Wales
use its purchasing power Government as a whole is
effectively. a large player in the office
accommodation market and
can exert market leverage and
buying power to get better
value for the Government
dollar.
There are at least 50 buildings
which house more than one
government agency. They
have separate leases and often
different lease arrangements.
At least $1 million a year can be
saved if multiple leases within a
single building are consolidated
into one “head” lease. That
lease would then be managed
on behalf of all tenant agencies.
Government Office Accommodation Reform Program
Strategy 12
Collocation opportunities
Benefits from
shared resources
Collocating several government
services in the same building
provides benefits to the
community by offering a range
of services at one location.
There are also benefits for
agencies which can share
services and facilities such as
meeting rooms, training
facilities and some corporate
support services.
The collocation of agencies
will be encouraged to take
advantage of economies of
scale.
The Department of Public
Works and Services will
establish a “just-in-time”
office workspace trial in the
Sydney CBD Core and evaluate
its efficiency and cost-
effectiveness. The office will
work on the “hotelling”
concept, where users book
space as required on a user-pays
basis. The office will provide
facilities such as computers, fax
machines, photocopiers and
meeting rooms.
9
 What does this
mean for
government
agencies?
Building long-term financial
strategies will help agencies to
manage their accommodation
costs effectively. A proportion
of the savings will be returned
to the agencies to redirect into
core service priorities. Chief
Executive Officers will be
accountable for the
Government’s Office
Accommodation Reform.
The Government Asset
Management Committee
will work with agencies to
coordinate accommodation
management and to get the
best leverage out of a whole-
of-government approach.
Integrated strategies will
achieve savings and provide
opportunities to improve
service delivery.
Each year agencies will
complete their Strategic Office
Accommodation Management
Plans. These plans will be
reviewed by the Department of
Public Works and Services to
ensure government objectives
are being pursued. Agencies’
performance in asset manage-
ment will be reported by the
Department of Public Works
and Services to the Government
Asset Management Committee
which will provide advice to
the Budget Committee of
Cabinet.
10 Government Office Accommodation Reform Program
The benefits to agencies are: • if head offices remain in the
• better alignment of asset and CBD Core, consider moving
accommodation needs with jobs to regional centres
service delivery goals • reduce their space
consumption and work to
• clearer accountability for the
achieve the portfolio target
effectiveness of their own
of 18m2 per person at the
strategies
latest by 2006
• clearer criteria for making
investment decisions • apply the Office
Accommodation Workspace
• reduced accommodation
Guidelines to use space
costs.
creatively, in keeping with
Under the Reform Program, the opportunities offered
agencies will have to: by a modern office
• align asset and • consolidate leases within
accommodation needs the same building under a
with service outcomes “head” lease
• undertake financial • collocate to take advantage
appraisals if they consider of economies of scale and
acquiring accommodation shared facilities.
• review their portfolios to
determine whether their
properties should be sold or
retained
• gain approval for lease
pre-commitments
• consider moving their head
offices out of the Sydney
CBD Core to primary centres
• minimise exposure to
excessive rent
• if located in the Sydney CBD
Core, prepare a business case
to demonstrate the need for
their ongoing presence
 Role of NSW
Treasury and the
Department
of Public Works
and Services
NSW Treasury
NSW Treasury, together with
the Department of Public
Works and Services will review
existing accommodation
funding and management
policies to ensure they support
the objectives of best practice in
accommodation planning.
NSW Treasury will also:
• approve all office
accommodation proposals
for budget sector agencies
within the annual budget
process
• review the economic
appraisals for lease
versus own options for
accommodation proposals
for budget sector agencies
• seek confirmation of
compliance with Total Asset
Management guidelines for
Government Trading
Enterprises and for State
Owned Corporations.
Department of
Public Works
and Services
A coordinated whole-of-
government approach is
required to reduce the current
level of duplication and overlap
of functions that currently
occurs in the planning and
management of office
accommodation.
The Department of Public
Works and Services will be
responsible for this centralised
coordination role and will
advise the Budget Committee
and relevant Ministers on the
Government’s current and
future strategic property and
accommodation needs.
How to access
the Government
Asset Management
Committee
Specifically, the Department’s The Government Asset
roles and responsibilities Management Committee
include: (GAMC) Secretariat has been
• assistance to agencies in the established within the
preparation of their Office Department of Public Works
Accommodation Strategies and Services.
• monitoring the Agencies wishing to place issues
implementation of the before the Committee for
Government Office consideration can do so by
Accommodation Reform contacting:
Program including:
GAMC Secretariat
– the alignment of asset Level 23, McKell Building
and office accommodation 2–24 Rawson Place
resources with Sydney 2000
government’s service
delivery priorities phone (02) 9372 8889
fax (02) 9372 8822
– providing advice to
email gamc@dpws.nsw.gov.au
Government on the
appropriateness of agency
Total Asset Strategies
– development of office
accommodation strategies
for Sydney CBD and
regional centres
– consideration and
implementation of major
investment strategies
– development and
monitoring of
benchmarks and
performance standards
for asset and property
portfolios
• approval and coordination
of changes to leasing
arrangements, including
lease renewals and exercise
of options
• development,
implementation and
monitoring of government
policy relating to asset
management
• implementation of the Office
Accommodation Workspace
Guidelines
• maintenance of the
Government Office
Accommodation database.
Government Office Accommodation Reform Program 11
New South Wales
Government

Government
Office Accommodation
Reform Program