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Emerald Group Publishing Limited
Copyright © 2010, Emerald Group Publishing Limited
Interview with Keith Jones
Article Type: Talking heads From: Journal of Corporate Real Estate, Volume 12, Issue 3
by Debbie Hepton
Keith Jones is a strategic property consultant and specialises in public sector property asset management. He has extensive experience of asset strategy and asset planning; property review, business cases and option appraisals; property and property service efficiency, corporate and service outcomes; organization, structure and process for asset management; property asset and service performance; capacity building, sourcing and change for asset management; and interim management.
He has been a Senior Manager in both the public and private sectors and has worked in property-related management consultancy since 1987.
Keith spent the first 17 years of his career in local government where he became an Executive Director and Deputy Chief Executive. In 1987, he joined the consultancy arm of DTZ Holdings plc (international property advisors) where he developed an extensive track record of undertaking major management consultancy assignments related to property. During his time at DTZ, he was the Director of Management Consultancy, Director-in-Charge of one of its regional businesses and was a member of the Group Executive with overall responsibility for customer relationship management, service quality and service development across the group. In 2004, he set up Performent Consulting which specialises in property-related management consultancy and in 2007 he was joined by Elisabeth Carter to form Performent Carter Consulting.
Over the last few years, Keith has been at the heart of the government’s performance improvement initiatives in the field of public sector asset management, working with central government, local government and higher education in the development of asset management and to achieve efficiency and effectiveness in property use. He has advised central government on asset management policy for government departments, non-departmental government bodies and local authorities.
He is Chairman of the RICS Public Sector Executive Group, is a member of the RICS Commercial Professional Board and is a Steering Group member of the government’s head of property asset management profession.
He often speaks at and chairs conferences on asset management and is an author and editor of a number of property asset management publications, notably the RICS Public Sector Asset Management Guidelines (2008) and the RICS Local Government Asset Management Guidelines (2009). He also developed Office of Government Commerce’s asset management plan template.
He has written many articles, for example on property asset management and performance management; management consultancy in property, managing public sector property; public sector outsourcing; public and private partnerships, urban regeneration and economic development; development control performance and organizational development and change in local government.
You are Managing Director of Performent Carter Consulting. Can you tell us a bit about this?
I set up a company called Performent Consulting about six years ago when I left DTZ – where I was the Director for about 17 years. I set it up specifically to deal with public sector property and asset management.
A couple of years ago, I was joined with Lis Carter, a former colleague from DTZ, who was at that time a Director/partner at GVA Grimley. We have a joint venture and we trade as Performent Carter Consulting.
She does very similar work to me and we sometimes work on joint projects, and sometimes we run separate projects. It is good to be able to work with another person rather than just on your own, especially when you have any issues that you would like to discuss. We also have a network of associated consultants and other companies that we regularly work with.
What made you decide to set up the company?
For a combination of reasons. DTZ wanted to move up the value chain, which meant that the public sector property work that I was interested in was not so interesting to DTZ. So, I decided to leave and set up Performent Consulting.
Can you also tell us about being chair of the RICS Asset Management Group and what this entails?
Going back in time (and I am going back two or three decades here), the RICS was probably dominated by transactional business and professional work, and it covered a wide range of things from, for example, mining surveying to auctioneering to investment property, a massive range of activities. Public sector property did not figure that greatly at that time. Then about ten-15 years ago, when public sector property began to emerge as significant strand of government policy, the RICS began to take a greater interest in it.
To begin with there was no public sector grouping within the RICS, so I chaired an initial cross-faculty group called the Public Sector Asset Management Group. One of the problems was public sector property matters would come into the RICS and, because there was no overarching body within the RICS to deal with public sector property matters generally, they would go into, for example, a valuation, or commercial agency or property management slot and were never really dealt with in coordinated way.
The RICS felt that it needed to do something about this, so about two years ago it set up the Public Sector Executive Group – a dedicated group of people drawn from both the public and the private sectors, with experience in public sector property, who would deal with the RICS’ involvement in these public sector property matters. At the same time, the general profile of public sector property matters was significantly raised across the RICS with, for example the chief executive taking a keen personal interest in them. Public sector property is generally viewed as a high priority now, in that the government is paying a lot of attention to it. It appears that there will be a lot of change here in the next few years, and because of the pressure that will be on the public sector generally – in terms of public sector debt– one imagines that there is going to be some fairly big solutions suggested for the public sector asset base, which will be interesting. Certainly, the RICS would like to be involved and offer its comments on possible solutions that are suggested.
Do you have any idea of what these changes and solutions could possibly be?
I think this was beginning to emerge before the election. However, the election has not only clouded things because we have had a change of administration, but it is clouded things because we have a coalition government and the policy context is inevitably new and is only slowly taking shape. If it had been a Conservative, Labour or a Liberal Democrat government then we would know because they would be implementing their manifesto, but the coalition is, out of necessity, having to create a new policy arena. Therefore, we do not quite know what is going to happen yet.
Collaboration is a very big issue. Public authorities collaborating together in the way they provide their services and in the way they provide their property, to produce efficiencies. I read that the principles of the Total Place Initiative are going to be supported by the coalition government, so we know that collaboration will be an important issue. It may well be that some radical public sector vehicles are set up to try and get greater efficiencies out of the public sector asset base, but we are in limbo – as with all other areas of public policy at the moment – until the coalition fleshes out exactly what the details will be.
Property is not a headline issue for the government at this early stage, but I believe that it certainly will become an important issue over the next three-six months as the details of public policy emerge.
You and Alan White, Lenborough Consultants, were editors of The RICS Guidelines, published in 2007. Can you tell us about these guidelines?
Yes, certainly. Reflecting what I said earlier about RICS and it is the heightened interest in public sector property, it was felt that there was insufficient guidance for practitioners in public sector asset management, both members of the RICS and non-members. Therefore, the decision was taken to produce the public sector asset management guidelines. We felt that the experts in the field should be involved in it, so a number of expert authors were asked to draft chapters within an overall framework that Alan and I had set. The RICS asked Alan and I to edit it all, and, in the end, we also ended up writing parts of it simply out of. It was a very good collaboration between the authors, Alan and I.
The guidelines seem to have been well-received, and government supports them as a good basis for public sector asset management. They are oft quoted in many circles, so we are pleased with the results.
When speaking about the Total Office cost Survey (TOCS), you are quoted as saying “If you are considering office rationalization and efficiency, this is a very useful and reliable source of data, which is not otherwise readily available.” Can you expand on this and tell us more about TOCS?
I was specifically asked to comment about the TOCS, but it also applies to data in general. One of the big issues, if you are going to look strategically at property, is having adequate data. This requires quite a lot of work because the sort of data that you need in asset management is high level, but it is often the aggregation of a lot of low-level data. Running costs, for example, is the aggregation of a lot of low-level data which is added together to enable us to see the full picture.
Getting all this data together is often quite difficult for public sector bodies, although they are getting better at it. Often, the costs are buried in all sorts of different budgets; the cleaning budget will be in one place, business rates might be elsewhere and then maintenance will be in yet another place. It is actually quite difficult to add it all together.
Data, like the TOCS enables you to at least have an estimate for senior decision makers on, for example, what the cost of each desk space is. Once you can start telling people that if they can reduce the number of desk spaces by 10 per cent by, for example, using smarter working, then you can tell them that how much money they might save. Decision makers need quick, punchy data that they can get their heads around that says “if we do that then we’ll get that.” Once they get that type of information, they can make decisions. It is a question of getting high-level data that is persuasive for senior decision makers to make good decisions on how they want to move forward.
You have been at the heart of the government’s performance improvement initiatives. A key part of this is public sector asset management. Can you give us a brief overview?
Historically, property in the public and private sectors was viewed as a machine that needed to be well oiled and well serviced. Although aged, and not particularly well suited for purpose, property management was seen in the role of keeping that machine running well, whereas asset management looks more strategically at property and asks questions, such as; do we need this property? Is it in the right place? Is it of the right quality?
As soon as you start to do that, you cannot just ask questions about public sector property, you have to ask questions about the core business and where a public sector business or organization is going and what it is trying to do. So, it is looking very closely at the links between the organizational goals and objectives of any public service and then what property it needs to deliver that service – and I say need rather than want because quite often people want certain types of property but they actually do not need it. It is addressing the fact that they can achieve the outcomes without spending quite so much money on their property, and getting the key relationship between where the business is going and what property it consequently needs. Property is illiquid and does not change very quickly, and often it is much easier just to soldier on with what you have got, than to change it. There are long lead-in times with property. It takes a long time to change things.
It generally was not something that has caught the eye of senior decision makers in the past, but over the past ten years – first I would say in local government and now very much in central government as well – it has become a major issue and I think that politicians now feel that the public sector asset base consumes a lot of public sector resource and consequently this needs to be done with utmost efficiency. That is not to say that you can get rid of it all, because you cannot, but it is to say that there may be more efficient ways in which property could be used which would release capital and reduce running costs, whilst at the same time keeping public services at their current levels or even enhancing them.
In what way can the government increase value for money from retained assets and property?
There are two ways. First of all, maybe by not using quite so much property, and second if you talk about what is retained after not using so much property, then you are talking about running costs and the efficiency with which you use the property that you are left with.
Certainly, one of the big issues right now is collaboration. In other words, public sector bodies, in this case property services, working together to share property, offices and public service delivery points, with the idea of using less property. There have been numerous studies that generally agree that by collaborating there will be significant property benefits and also public service benefits.
That is one thing. On the other hand, let us not have any illusions that collaboration is easy. It is rather like if you stop and ask someone directions in your car and they say to you “well, if I wanted to get there I wouldn’t actually start from here.” I have been with a number of organizations who have often said to me “if we are going to collaborate then why aren’t we just one organization, wouldn’t that make it easier?” There is some truth in that, but we are where we are and we do start from here, rather than elsewhere.
John McCready, the Head of the Property Unit within the Shareholder Executive, has been tasked with coming up with some innovative public sector property solutions, and there has been talk of public sector property companies. We just have to wait and see what government policy emerges. Certainly, there can be no doubt that like all other public services, the pressure on public sector property in terms of efficiencies will be significant.
What are the key features of a good asset management system? Are these the same for both private and public sectors?
That is an interesting question. Let me take it in reverse if I may.
In a way they are the same for both the public and the private sectors in that the principles and techniques are the same, but the language is very different and the balance between finance and socio-economic benefits is rather different. For example, in the public sector, finance goes hand in hand and, if anything, it is subservient to public service benefits, whereas in the private sector cost and finance are the drivers. Businesses are basically in business to make money, although increasingly social responsibility is becoming an element in their thinking. So, the language is different and the emphasis is different, but the techniques and the approach are broadly the same.
The key features are those that are described in the RICS Guidelines. I was just reading a report that stated you can wrap up the key features of public sector asset management in many different ways, but essentially they come down to effective strategy and vision, leadership, effective implementation, effective procurement, etc. Another report stated that, actually, there are not that many proven linkages between vision, practice and outcomes. In other words, even if you have great vision and practice you do not necessarily get the right outcomes. You need to get a good link between your strategic vision, practice and outcomes. I also read that something like 80 per cent of organizations are reasonably proficient at producing strategy and only 20 per cent of organizations are good at implementing strategy. Often strategies are produced and then they are put on the shelf and not much is done about them.
Getting a real focus on outcomes is a really important issue. Saying at the outset what it is that you are trying to achieve and then subsequently testing whether you have actually done it; have you reduced your costs by the amount you planned, have you improved user satisfaction, have you reduced the size of your asset base by the amount you planned, etc. I think it is actually quite difficult in the public sector for all sorts of reasons, particularly at the local level where the community often only sees change as a bad thing rather than as an improvement in service – even though it may be because you are moving from a relatively outdated pattern of provision to a much more modern and better pattern of provision.
It is getting that key relationship between those three things; the vision, the practice and the outcomes.
What is the role of FM and real estate management in realizing workplace performance improvements?
The role is fairly significant. You can give everything labels like FM and real estate management, but public sector asset management is all about understanding the relationship between FM and real estate management and the quality of the workplace. In terms of what the user experiences, they do not differentiate between those things, they want their office clean, they want it properly maintained, they want the fit-out done properly, and they also assume that the leases will be renewed at the right time or property will be bought and sold at the right time and so on.
People are often the driving force behind most industries and organizations, and if you do not look after those people in terms of FM and real estate management then you are in trouble. In workplace solutions you have got to look even wider than that. You have got to get FM, estate management, HR, ICT, change management and strategic decision making all right. Workplace management and performance improvement are not about a property or FM solution. They are about a business solution, a corporate solution, and so the whole organization has got to be behind it and implement it.
It is often seen by the organization as, essentially, a property and FM matter, so it is often led by property and FM people. To their surprise, they have to manage HR, ICT and corporate change at the same time, and I think that is a particular challenge for the Strategic Asset/Facilities Manager to be in the middle of a corporate change project when they think of themselves as property people or an FM specialists.
Do you think that it is right that they have this responsibility?
That is an interesting question. If I take off my RICS hat and my Chartered Surveyor hat, I could say that it does not matter as long as it gets done, but the reality is that property and FM are so central to workplace performance improvement that it is difficult to exclude those people. When it comes to implementing the changes, it is actually a physical solution where you have to move people from one property configuration to another, so I think it probably is right for FM and asset management people to be at the heart of it – if not leading it. If they do get to lead it then they will need to widen their skills because there are no prizes for getting it wrong.
It is critical in terms of business continuity so you have to get it right. However, it is a corporate activity and I think that organizations with the attitude that it is just a property project and that the property people should just get on with it are making a mistake. Effectively senior managers are doing two things:
they are underestimating the complexity of the whole thing; and
they are failing to understand that it is a corporate change project rather than a property change project.
Thankfully that is often not the case. Senior managers do latch on to it, not least because they are often moving from modular offices to open plan offices, which gives them a lot to think about anyway!
Do public bodies organize their services in such a way that property is used effectively?
Property is not an end in itself, it is a strategic resource that is deployed to help the organization get where it wants to get to. So, first you ask: where does the organization want to get to? Then you ask is the property being used effectively?
In answer to the question, do public bodies do it? Yes and no. It is getting better. It has got a lot better in most parts of the public sector over the last few years, but there is no room for complacency, it is certainly not perfect yet (although you never get to perfection do you?) and there is still a lot of work to do. A lot of it is to do with the institutional complexities of the public sector, and so that needs to continue to be worked on, especially at a time when the expectation will be that property, in common with all other resources and services, will offer up efficiencies.
How would I improve them? Well by all the things that we have been talking about – a better strategic handle on the way property is deployed. That is not having a go at property people, it is really a comment about the organization as a whole, needing to get a better strategic handle on the way it uses property. Some have got that, some maybe have some way to go yet.
What impact do you think that the global economic downturn has had on CRE, in both the public and private sectors?
I am not an economist, but my impression is that the private sector has – without any question – gone through a significant downturn over the last two or three years, and private sector property has been a real challenge. I have no doubt that costs have been a massive issue, as they always are in the private sector. When things are bad, companies look at their costs, when things are good they look at their income, and so there is a cycle. During good times, income/revenue is very important and costs are perhaps allowed to rise a little more than they would do otherwise, and people do not look at them quite so closely. Whereas when there is a recession people look at costs very closely because their income/revenue side is suffering.
One of the problems with property is that the lead-in times are long, so if you really want to reduce your property costs or the way you use property, you are looking at three-year minimum lead-in times. You cannot just turn the tap on and off quite so easily with property as with other resources. As to what long-term decisions they have made in terms of property, we will not know until things unwind over the next two or three years, but in the short term I am sure that they have had to take a pretty radical approach to reduce costs to keep businesses going.
The public sector has not had quite that pressure up to now. Its recession, I venture to say, is now coming up. Public expenditure has been used to keep the economy buoyant and so high levels of public expenditure from very high levels of borrowing have meant that public sector expenditure has continued, deliberately, over the last few years. I think that the public sector recession, if one can use that term, is likely to come over the next few years as the government now wrestles with public sector debt.
So, there has been a delayed reaction in the public sector. The private and public sectors have not run together in my opinion.
Keeping what you have just said in mind, do you think that the private sector has turned a corner and is now showing signs of improvement?
I can only give you hearsay, as I do not work in private sector property, but from what I do hear from talking to colleagues is that the really difficult period has now passed. That is not to say it is easy right now, but major issues have been addressed, cost issues have been addressed and now there is a slight optimism that we may be coming out of it. There are still challenging times for the private sector, but I think that overall there is now more optimism in the private sector that the economy is now slowly turning. But we just do not know yet. Once the public sector expenditure efficiencies start to bite we do not know whether that is going to take some steam out of the fragile recovery, and so everybody is just waiting to see how the World and UK economy unfolds over the next year or so.
It is one of the biggest wait and see games that I can recall. It is so difficult to call, simply because we have never indulged in such support for the economy by the public sector before, and we do not quite know how that is going to unravel.
Many organizations see sustainability issues as becoming increasingly strategic in the world of business. Is this the case for local, as well as central governments?
The simple answer is, yes. Probably, more so for government than the world of business, and that is not to say that the world of business is not beginning to see its importance, but government certainly does see it as very important. I see government departments and local government adopting rather more ambitious targets for carbon, for example.
Generally speaking, many people now realize that sustainability issues – not just environmental sustainability, but financial, environmental and social sustainability – are really very important, and that government and EU legislation and guidance are all going to tighten. I am guessing here, but it seems that many western governments – certainly European governments – see it as important for them to lead the way and show by example, rather than to tell everybody else that they have to do it. By leading by example, I think the hope may be that other countries, who are also beginning to contribute significantly to global warming, will follow suit.
And finally, do you have any closing comments that you wish to make?
For me there are two main issues that this interview has highlighted. First of all, how difficult it is at the moment to call the future. We have just had a new government and we do not know where the economy is going yet, so there is a sense of “let’s wait and see what happens over the next few months.”
Second, in property, there are long lead-in times that have got to be thought about, so if you really want to get benefits from property you need to start planning for them now, then in three years time they will start to kick in and deliver. The trouble is that everybody wants action this year or at the latest next year – three years time seems a long way away.
If you keep adopting the short-termist argument you never actually address some of the property challenges that need to be addressed, so my final thought is that even though lead-in times may be long, planning and beginning to tackling property issues now means that the benefits will come through probably when you really need them!