By Jonathan Burbee
In general, the purpose of government, at all levels, including publicly funded sectors such as health, education and crown corporations, is to provide services for the benefit of the public. This work typically requires the support of facilities management and real property teams as a necessary enabling function. Institutional real property is often designed and built with care and serves as a source of pride and identity for the community. Typically, sod-turnings and ribbon cuttings for construction projects provide tangible evidence of action by public entities. However, beyond the initial construction, it is imperative for public sector leaders, as guardians of public funds, to exercise judicious and responsible financial stewardship of their investments.
Real property as assets, not just a cost centre
The reason that institutional assets need strong stewardship is that the financial construct is different than other real property classes such as commercial, residential, and industrial. In these other settings, the value proposition of the acquisition and operating costs is often made in comparison to market considerations. Institutional assets, while they may of course be re-purposed for other public use, tend to be held for the long term, often to the full life expectancy.
Public benefit derived from services delivered in effective buildings is evident upon observation in a way that is apparent in a financial statement. Another way in which the built environment adds value to the organization is through how buildings manifest community values. This message can be positive or negative and can inspire or discourage the public’s trust and confidence in the entity.
While it’s tempting to be distracted by the size of operational budget lines, real property should be viewed as a valuable asset that contributes to an organization’s strategic goals. So outcomes are realized, it helps to take the view that the true value of buildings lies not in their physical structures, but in the services and experiences they facilitate for occupants and stakeholders. The pandemic also revealed opportunities for optimization.
Here are three approaches public officials can use to meet their professional obligations as stewards of critical, resource-intensive physical assets in this time of change.
Consider the Portfolio The onus is on leaders to ruthlessly and objectively examine the demand on facilities with a view to optimization. On a portfolio scale, there may be a need to consolidate locations of institutional facilities.
Create an environment that is open to innovation Occupations that make up the real property workforce from fields of building technicians, legal, administrators, procurement and finance experts are typically creative and collaborative problem-solvers. Simultaneously, through necessity, especially in the public sector context, these same players must be careful in the execution of their work. It is suggested that there is no time like the present to learn more about new ways of working to get the best value for public funds.
Communicate Real property practitioners need to find a way to articulate the value of public services being realized through the provision of the particular asset to stakeholders.
The pandemic was a crisis that globally impacted human health and the economy in many ways. It also changed how public sector leaders and facilities practitioners used institutional real property. Given the significant costs associated with constructing, maintaining, and operating real property assets, it is imperative for public sector leaders, as guardians of public funds, to exercise judicious and responsible management of their investments. Real property should be viewed as an asset that contributes to an organization’s strategic goals, rather than merely liability and a cost centre that drains resources. Three ways of approaching the challenge include taking a portfolio approach, remaining open to innovation, and communicating differently about public assets to convey the value. Governments need buildings to effectively administer and support the needs of the public, but they need the optimal scale and with good stewardship.
Jon Burbee is the director of Business Development for Capital Planning at Gordian.
[This article originally appeared in the July/August 2024 edition of ReNew Canada]
Featured image: (Government of Nova Scotia)