Improved Asset Management and the Location of Public Sector Organisations

Report setting out the Scottish Government's policy covering better asset management. The policy applies to the core Scottish Government, its Agencies and NDPB's and those parts of the Health Service, with a national remit, that require office-based headquarters accommodation.


Flow Chart

The Scottish Government is committed to making better use of its existing assets. This commitment means that when public sector organisations are considering their future accommodation requirements there should be a presumption in favour of suitable solutions from within the Government estate. With its strategic overview of public sector accommodation holdings, the Facilities & Estates Services Directorate ( FES) is well placed to assist public sector organisations throughout this process.

Once a preferred solution has been identified it has to be submitted to the Cabinet Secretary for Finance and Sustainable Growth. Before the Cabinet Secretary will sign off on any new commitments (leases and acquisitions) or location decisions he/she will require evidence that solutions from within the existing Government estate have been given proper consideration.

This policy of better asset management operates within the context of the Government's Purpose and the five strategic objectives and is set out in detail on the Scottish Parliament's website.

The policy applies to the core Scottish Government, its Agencies and NDPBs and those parts of the Health Service, with a national remit, that require office-based headquarters accommodation.

Asset Management Plans and ePIMS
Following the 2007 Asset Management Review, all Scottish Government organisations are required to lodge an Asset Management Plan ( AMP) with FES. These Asset Management Plans should set out the organisation's office requirements, and aspirations, over a 10 year period.

The Asset Management Plans, or the Business Plans from which they are derived, highlight events such as: lease breaks or terminations, requirements to undertake significant capital investment to deliver the organisation's accommodation needs, forthcoming Policy & Financial Management Reviews ( PFMR) and/or organisational restructuring.

Under the new policy of better asset management, events of this nature trigger a review of the organisation's current accommodation holdings, how it expects to deliver its future accommodation needs and what efficiency gains might be achieved.

By considering these issues well in advance, FES can develop office property solutions that work to the benefit of both the organisation concerned and to the wider Scottish Government. Much of this work is informed by information held on the ePIMS (electronic Property Information Mapping Service) database and therefore it is vital that organisations ensure that these records are kept up-to-date.

Business Needs Analysis
In order to help determine suitable accommodation and location options, the organisation should first undertake a Business Needs Analysis ( BNA). This comprises a review of the organisation's business functions, how these are delivered and to what extent any of them are location dependent. It includes a review of staffing, IT and accommodation considerations.

The information required from this exercise is set out in the Business Needs Analysisform, copies of which should be submitted to both the organisation's Sponsor Division and to FES.

Option Appraisal
Having received comments on their Business Needs Analysis submission the organisation can consider which accommodation and location solutions are most appropriate to their business needs through an Option Appraisal.

It is central to the new policy that priority will be given to the efficient use of the existing estate and to solutions that represent best value-for-money for the Scottish Government as a whole - providing that this meets the needs of the organisation and unless clear reasons for an alternative are agreed and articulated by Ministers.

Opportunities to share services, improve environmental performance and/or save energy will also form part of the appraisal process.

Because of its strategic role, FES is well-placed to provide advice on accommodation options and best practice guidelines on space management. Therefore, it is essential that the organisation establishes contact with FES at an early stage, and works closely with the Directorate to identify and develop suitable accommodation solutions.

The organisation should provide its analysis of these solutions, with respect to its business needs, in its Option Appraisal document that it submits to its Sponsor Division and to FES. The submission should identify, and justify, the organisation's preferred option and a "fall-back" option - that will be pursued in parallel with the main negotiations.

The Sponsor Division will undertake its own analysis of the information provided in order to satisfy itself that the organisation's preferred option is appropriate. This will require an appraisal and evaluation to be undertaken in accordance with the requirements of the Scottish Public Finance Manual ( SPFM). This appraisal will consider the real economic cost of each option as well as qualitative aspects and any associated risks. This will allow an informed decision to be made based on both economic sustainability and operational needs.

Organisations should take account of this in the preparation of their Option Appraisal and ensure that their Sponsor Division is provided with all of the data necessary to undertake such an analysis. Guidance on the principals, techniques and procedures used are available in HM Treasury's Green Book.

The Sponsor Division's analysis, including input from FES, will then be presented to their Portfolio Minister. Once the Portfolio Minister has agreed a location option for the organisation they will write to the Cabinet Secretary for Finance and Sustainable Growth for the accommodation and location solutions to be signed-off or for any disputes relating to the existing estate to be resolved. With the exception of any commercially sensitive data, all location and asset management decisions will be made public.

While the new policy is based fundamentally on the efficient use of the existing estate, Ministers retain the right to consider the relocation of organisations in certain cases. Where relocation is pursued, it will be for Ministers to determine the new location of the organisation following an open and transparent process.

Small Units Initiative
Ministers remain committed to the principle of job dispersal where the benefits derived are commensurate with the costs incurred. This appears to be more readily achieved with smaller-scale relocations and consequently the Small Units Initiative remains an element of the policy of improved asset management.

Sponsor Divisions are asked to keep under review opportunities for Small Unit relocations from within their business area. Decisions on the location of Small Unit relocations will be taken by Ministers on the basis of recommendations made by the Facilities and Estates Services Directorate. In making its recommendation, FES will take account of the business needs of the unit and fit with other rural initiatives. When considering appropriate receiving communities, particular weight will be given to those deemed remote, rural or fragile.

Where Sponsor Divisions believe that they have spare capacity within an office in such an area they should bring it to the attention of the Facilities and Estates Services Directorate in order that matches with suitable Small Units can be considered.

Once a decision has been reached on the location of the organisation FES will provide support to ensure a successful implementation.

Where an organisation is remaining in its existing accommodation this may simply take the form of advice on how the available space could be used more efficiently or how other efficiency savings could be delivered.

Where an organisation is moving to new premises FES will provide support with respect to negotiations on the lease (open market private landlord) or on the MOTO (Memorandum Of Terms of Occupation - public sector).

The principles of mainstream asset management outlined above will apply to all accommodation reviews across the Scottish Government estate including those properties that fall within the scope of defined initiatives such as SEARS (Scottish Environment and Rural Services).


The Scottish Government's Purpose

The overarching purpose of the Scottish Government is to increase sustainable economic growth.

The Five Strategic Objectives

The Scottish Government's purpose is underpinned by five strategic objectives -

  • a wealthier and fairer Scotland
  • a smarter Scotland
  • a healthier Scotland
  • a safer and stronger Scotland; and
  • a greener Scotland.

Asset Management Plan

The Asset Management Review provided the following template which outlines the essential information that should be included in any Asset Management Plan:


A statement of the business aims and objectives of that organisation and how they help to deliver the government's strategic objectives.


A description of the property assets and a link to that organisation's asset register recording all the assets (buildings and adjacent land) owned, managed, leased or occupied by that part of government.

e.g. the organisation is located in towns (A) and (B). The (A) office of (*)m 2NIA, houses (x) staff, is modern, ideally located and entirely meets the needs of the organisation.

The two (B) offices of (*)m 2 and (*)m 2NIA, have a staff complement of (y) and (z) respectively. Each is operationally adequate but were never designed for modern day requirements and the operation of both is inefficient.


The function of each asset within the organisation - i.e. what each property is used for now and in the future. A statement setting out how the management of its assets does and will provide workspace in which the business of the organisation can be carried out most efficiently and effectively.

Responsibilities/ Accountabilities:

The organisational arrangements for asset planning, decision making, implementation and risk management - i.e. named individuals - who does what.


The links between financial planning and asset planning. What budget provision has been made for known key events and likely impact of planned changes. Certain provision for possible unforeseen events.

Performance Monitoring:

The performance management and monitoring arrangements, including targets and benchmarking.

Future Development Programme:

The programme of planned and intended asset development, including acquisitions, sharing, disposals and maintenance.

Policy and Financial Management Reviews ( PFMR)

Policy and Financial Management Reviews ( PFMR) are the mechanism by which the Scottish Government ensures that public bodies accountable to it are delivering its policies and priorities in an economic, effective and efficient manner. They are concerned with the delivery of the Scottish Government's policies, not the policies themselves.

The 2001 report "Public Bodies: Proposals for Change" set out a requirement for PFMRs to be carried out at least once every five years with the aim of improving public service delivery.

PFMRs are undertaken in two distinct stages:

  • The first stage examines whether or not the functions of the body are still required and, if they are, whether or not the existing governance model continues to be appropriate for delivering those functions.
  • The second stage is only carried out if the first stage concludes that the functions are still relevant and that the body remains the appropriate delivery mechanism. In this second stage the efficiency and effectiveness of the body are examined in more detail.

electronic Property Information Mapping Service ( ePIMS)

The Office of Government Commerce's ( OGC) electronic Property Information Mapping Service ( ePIMS) is a database of the Government's civil estate occupations. It displays the precise location and outline of department's properties, holdings and occupations on computerised maps and is available over the Government Secure Intranet.

Business Needs Analysis

Business Needs Analysis

Business Needs Analysis

Business Needs Analysis

Business Needs Analysis

Business Needs Analysis

Business Needs Analysis

Space Requirement Questionnaire

Space Requirement Questionnaire

Space Requirement Questionnaire

Space Requirement Questionnaire

Space Requirement Questionnaire

Space Requirement Questionnaire

Space Requirement Questionnaire

Space Requirement Questionnaire

Space Requirement Questionnaire

Option Appraisal

The organisation's Option Appraisal should be based upon the Business Needs Analysis - taking account of any feedback received from the Sponsor Division and/or the Facilities and Estate Services Directorate. There should be a clear link between the findings of the BNA and the property solutions explored in the Option Appraisal.

The property solutions under review should be considered in a wide context using SPFM and Green Book appraisal methodologies. Quantifiable and non-quantifiable benefits should be considered and any risks associated with particular solutions should be highlighted.

Issues that should be considered include:

  • whether or not the property forms part of the existing Government estate.
  • is it the right size (consider future organisational/operational developments) and does it provide flexibility of layout that would be supportive of new ways of working? What type of staff amenities are provided?
  • is it in a suitable location with regard to proximity to stakeholders? How is it served by public transport and what car parking is provided? What is the anticipated level of staff retention should there be a move to this location?
  • is it available (and could any necessary works be completed) within the required timescale?
  • how does it perform with respect to Disability Discrimination Act ( DDA), security, Health & Safety and environmental performance considerations?
  • what are the costs of adopting this solution - running costs, remodelling and repair costs, lease liabilities, opportunities to adopt shared services and costs associated with the level of IT flexibility and any infrastructure works.
  • what are the terms of the lease/agreement on offer with respect to duration, flexibility, obligations and liabilities?

Scottish Public Finance Manual ( SPFM)

The Scottish Public Finance Manual is issued by Scottish Ministers to provide guidance to the Scottish Government and other relevant bodies on the proper handling and reporting of funds.

Further information on SPFM Appraisal and Evaluation processes can be found via the following link - (

'Green Book'

HM Treasury's Green Book provides an overall methodology that allows the user to undertake an economic assessment of the social costs and benefits of all new policies, projects and programmes.

The Scottish Public Finance Manual ( SPFM) requires public bodies seeking to invest in new accommodation to undertake Green Book appraisals in order that Ministers can be presented with a range of options - including the status quo. A Net Present Value ( NPV) should be prepared for each option in order to facilitate a consistent comparison of the costs and benefits that accrue over the lifetime of the asset.

The Green Book recommends that all spending proposals should be accompanied by a proportionate and well structured business case. Guidance is provided on the preparation of businesses cases for the public sector.

The Green Book is available via the following link -

Net Present Value

Net Present Values ( NPV) are the discounted values of either future costs or benefits. The term Net Present Value is used to describe the difference between the present value of a stream of costs and a stream of benefits.


Organisations will be considered for relocation only if they are deemed suitable and if Ministers have indicated that they wish to pursue this option.

Organisations will be deemed suitable for relocation only when, following a review of their requirements, it is deemed that:

  • Ministers have the necessary powers to determine the location of a body,
  • it is likely to realise efficiencies and/or benefits to the wider Scottish Government,
  • it will not lead to compulsory redundancies,
  • the organisation should be able to operate effectively from another location, and
  • it can be afforded.

The Cabinet Secretary for Finance and Sustainable Growth, in conjunction with the Ministers with policy responsibility for the organisation, will determine the location following an open and transparent process. This process will include the involvement of management and union representation from the organisation.

In selecting a location, greatest weight will be placed on the following factors:

  • suitability of the location for the organisation's identified needs including business continuity, potential for recruitment/match with local employment trends, skills-sets and available local housing,
  • availability of suitable property on site at reasonable cost and available within reasonable timescale (in some cases this may imply that an organisation will require to inhabit interim accommodation in the location),
  • potential to achieve efficiencies and achieve value for money.

Consideration will also be given to:

  • opportunities afforded to contribute to/demonstrably stimulate local regeneration/ economic growth,
  • potential to contribute to the development of a local centre of excellence,
  • opportunity to achieve a potential reduction in carbon emissions and to contribute to the Greener Scotland programme,
  • other factors relevant to the specific relocation as announced by Ministers at the outset of the location search: these factors may include geographical parameters for the location search.

Property available on the Open Market

The Facilities and Estates Services Directorate ( FES) of the Scottish Government operates the Scottish Public Sector Property website on behalf of Scottish Ministers. Its purpose is to help participating Scottish public sector bodies dispose of their surplus properties quickly and efficiently, and to help potential buyers locate who is marketing particular surplus properties.

Memorandum of Terms of Occupation ( MOTO)

A MOTO is an administrative term describing a standard internal agreement between Government departments.

Similar principles can be applied between the Government and Non Departmental Public Bodies and Agencies through a Memorandum of Terms of Understanding ( MOTU).


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