Property Asset Management Service: final report

Scottish Enterprise’s (SE’s) Property Asset Management Service (PAMS) portfolio aimed to transform Scotland into a world-class business location for overseas and domestic companies. The property portfolio contributed towards investment, by helping to create the right conditions for growth and ensuring companies and industries have access to property, markets and finances. The PAMS portfolio also ensured that effective business infrastructure is in place to support strategically important business developments. The evaluation aimed to assess the effectiveness, efficiency and economy of the current provisions for property asset management and consider options for the best value delivery of PAMS in the five year period following expiration of the current service provider contract.

The methodology consisted of: a document review; five face-to-face consultations with SE executives involved in management of the portfolio; and a group consultation with the current PAMS providers, Colliers CRE.

PAMS is core to SE's income generation, generating £30-£40 million per annum in capital and revenue to allow SE to deliver its frontline services.The report finds that the SE portfolio is continuing to evolve through a programme of rationalisation. Significant changes in the scale and structure of the portfolio are anticipated in the next 12-18 months. Opportunities exist to improve revenue generation and service levels through the incentivisation of portfolio management service providers. The report outlines a series of five options, covering a range of internal, external and combined service provision. The report identifies significantly higher costs for internal provision, given the requirement for TUPE staff transfer, service team establishment and resourcing, and investment in infrastructure and equipment. There are high levels of risk attached to a transfer to internal provision of services, in particular to: uncertainty over the continuing cost of the service; potential for discontinuity or disruption of service; limitations on revenue maximisation and service improvement due to restrictions on incentivisation of staff.

The report recommends that SE should maintain provision through the existing service provider through to the end of financial year 2011/2012, to allow the rationalisation of the portfolio to proceed and for re-tendering of management services to be based on a more representative scale and form of portfolio. In light of an EU ruling on the extension of existing contracts procured under the Official Journal of the European Union (OJEU) procedures, the evaluation recommends that the re-tendering process for portfolio management services should recommence in autumn 2009. This tender should provide for the provision of services over a two-year period to reflect the potential for scaling down of the portfolio by and after June 2012. SE should also retender and contract all external services on the basis of a clearly defined Service Level Agreement, with provision for incentivisation in relation to occupancy, revenue and cost reductions.