DTLR GO Training 2002 Capital Strategy and Asset Management Plan

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					DTLR GO Training 2002: Capital Strategy and Asset Management Plan Assessment
DTZ Pieda Consulting
on behalf of DTLR

Content
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Contextual background to Capital Strategies and Asset Management Plans

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What is a „Capital Strategy‟ and „Asset Management Plan‟? Assessment of Capital Strategies and Asset Management Plans

Contextual Background to Capital Strategies and Asset Management Plans

DTLR Overview of the CS and AMP assessment process
Key Outcomes of Assessment Better use of resources and assets Progress Fair and consistent assessment Good and helpful feedback to support first two outcomes

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DTLR Overview of the CS and AMP assessment process
Performance Measurement - what are we looking for? Corporate working illustrated Cross-cutting and partnership working Framework for performance measurement Progress and change

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Why all the Fuss about Capital and Assets?
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Assets consume large amounts of local government revenue and capital

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Increasing “fixed” public liabilities that government may not be able to meet (pensions, maintenance of the public estate) Concerns that the service and financial returns from capital deployed in LA‟s may not be fully optimised
The Best Value/Modernisation/Change Agenda Central Government desire to introduce new LA flexibilities (through the Prudential regime) - evidence of good practice in capital and asset planning would be a pre-requisite

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Single Capital Pot: Purpose and Objectives
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White Paper Modern Local Government - In Touch with the People‟ (1998) promised new cross-service allocation of capital to LA‟s - single capital pot A clear and transparent process

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Rewards strategic planning and good performance Balance between local decision making and national priorities Improved outcomes and better services through:
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better planning and greater predictability about funding more LA autonomy, accountability and spending responsibility improved corporate and strategic working better use and management of assets

Performance Assessment Framework (White Paper, 2001)
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Bulk of LA financial support will be distributed through the single capital pot

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Comprehensive Performance Assessment (CPA) framework is the means for identifying LA‟s level of performance. To be introduced over late 2002/ to late 2003
AC developing methodology but will bring together
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performance indicator data; Service based inspections/assessments and audit reports; corporate governance assessment undertaken in consultation with LA and incorporating some self assessment/peer review

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LA‟s to be assessed under the CPA as falling into one of five categories (to be announced)

Performance Assessment Framework (White Paper, 2001) continued
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„High Performers‟ will benefit from additional future freedoms less financial ring-fencing, fewer planning requirements, lighter inspection regime, financial freedoms for borrowing, investing,trading, charging and setting spending priorities As from 2002 no further AMP or CS required for LA scoring „Good‟ (although considered that they would still be needed for council‟s own purposes)

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pPI‟s and basic property statistical data will still need to be submitted for CPA purposes
Capital Strategies will be a requirement under proposals for the future Prudential Code

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DETR Research on Asset Management (1999): Overall Conclusions
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Strategic asset management not yet well developed in LG Few formal AMP‟s produced Good practice in “new” capital prioritisation and capital projects The deployment of “existing” capital is not often comprehensively challenged

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Limited performance measurement Recognition that information systems are a prerequisite for performance measurement Limited consistency and fragmented data but this is being addressed
No significant difference in approach between types of local authorities

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A strong case for good practice guidance

DETR Good Practice Guidelines (2000)
Contents:
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Asset Management Asset Management Planning Capital Projects Performance Measurement Data Management Quick Start

Hot Property (Audit Commission April 2000)
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Followed the Audit Commission Report in 1988 on Local Authority Property Management which was highly praised but largely ignored!

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A very clear guide about what the AC is looking for in terms of improving performance in asset management

Hot Property (Audit Commission April 2000)
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Recommendations for Managers
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build understanding of the strategic importance of property identify responsibility for strategic asset management prepare council wide asset management plans property should be considered in every service BV review challenge the need to hold non-operational assets use property in the wider corporate interest consider innovative new working practices in office/other accommodation subject property services to BV review and challenge investigate joint use and exploit the use of ICT

Hot Property (Audit Commission April 2000)
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Recommendations for councillors
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ensure property contributes to continuous service improvement make property a cabinet level issue promote property sharing with other organisations

Hot Property (Audit Commission April 2000)
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Recommendations for Government
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ensure departments pursue a “joined-up” approach to asset management incorporate a few asset national best value indicators accelerate alternatives to the existing system of capital controls

What is a ‘Capital Strategy’ and an ‘Asset Management Plan’?

Capital Strategy and AMP submission requirements
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Documents required: Context Sheet Capital Strategy Asset Management Plan, including 5 national pPI‟s
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Timetable:
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Submission date 31st July 2002 GO assessment completed end October 2002 Single capital pot allocations end December 2002 Written GO feedback to LA‟s by 20th January 2003

Capital Strategy and AMP What’s new for 2002?
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Upgrading of some secondary criteria to primary criteria and new, additional secondary criteria

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Stronger focus on performance and outcomes whilst still needing processes Evidence of member and corporate management involvement Efforts to refine and define:
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Proportionality Consistency in assessment

Context Sheet
High level contextual, statistical and financial information
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Maximum 2 sides A4

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Gross and net revenue budgets Fixed assets info and analysis as per consolidated balance sheet in statement of accounts
Number, GIA, type and value of assets by main service areas Backlog maintenance value by main service areas Summary 3-5 years capital programme and capital sources LA‟s likely future approach towards „unsupported borrowing‟ Brief details on area, population and characteristics of LA area

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Capital Strategy
Purpose:
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Should provide clear strategic guidance about the council‟s capital objectives, priorities and spending plans and demonstrate how the deployment of capital resources (including capital in assets) is directly linked to and contributes to the achievement of the council‟s corporate and service objectives A key document which pulls together all the key strategic capital requirements emerging from service strategies Determines priorities between capital needs and looks for opportunities for cross-cutting, joined up investment Maximum 6 sides A4

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Capital Strategy
Covers:
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Statistical and financial information on assets and capital spending plans All aspects of capital expenditure including where LA has significant influence on others Revenue implications of capital investment Framework for management and monitoring of capital programme Informs bidding for additional capital resources and LA‟s approach to external funding opportunities Corporate wide procurement policies Links to partners (public and private sectors) and the community Links to service plans and best value reviews Processes (eg generation, appraisal and prioritisation of capital project options; monitoring and evaluation of projects; corporate property review to increase efficiencies and release resources)

Asset Management Plan
Purpose:
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The LA‟s corporate document detailing existing asset management arrangements and outcomes and planned action to improve corporate asset use. The AMP process enables the CPO to define and provide for the longerterm corporate need and to challenge existing asset use.

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Describes the AMP processes Covers all property interests excluding details of housing and education assets, highways and transport infrastructure, vehicles, plant and equipment Maximum 20 sides A4

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Asset Management Plan
Corporate requirements of AMP and the CPO role
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To address the role and contribution of the LA‟s property assets as a a corporate resource supporting the delivery of corporate and service objectives Clear understanding of LA‟s business and service aims supported by a clarification of the contribution assets make to these aims

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Considers major corporate drivers for future change and their property implications. A planned programme for dealing with anticipated changes that is achievable, costed and appraised Plans ahead for future property use and need, includes revenue consequences of capital decisions and whole life costs
Develops and implements appropriate performance measures (national and local)

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Asset Management Plan
Format
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Organisational arrangements for corporate asset management
Consultation - how stakeholders views inform asset management Data management - how asset data is collected, recorded, managed and used to support performance management

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Performance management and monitoring - how asset management information is used to deliver performance improvements and is linked to corporate and service objectives
Programme and plan development and implementation Performance information - national pPI‟s and local PI‟s

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National Property Performance Indicators
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Excludes Highways and transport infrastructure, vehicles, plant and equipment from all pPI‟s

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Housing and schools excluded from all pPI‟s except pPI 3 LA property organisations involved in annual preparation of pPI‟s
As quality and comparability of pPI information improves the pPI‟s may be integrated within Best Value measures

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National Property Performance Indicators
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Condition
1A % gross internal floor-space in condition categories A-D 1B Backlog of maintenance by cost expressed as a % in priority levels in 1-4 and by value

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IRR
2A,B,C Current internal rate of return (IRR) for the portfolio expressed as an average for A Industrial, B Retail and C Agricultural investment property

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Management costs
3A,B Annual Management costs per sq. m.GIA expressed as an average for A operational property and B non-operational property

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Running costs
4A,B,C,D Annual revenue costs per sq. m. GIA for operational property expressed as an average for A repair and maintenance, B energy, C water, D CO2 emissions in tonnes of carbon dioxide per sq. m. GIA

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Capital projects (Counties, Mets & Unitaries>£100,000 and Districts, Boroughs>£50,000)
5A % of project costs where outturn falls within +/-5% of the estimated outturn, expressed as a %age of the total projects completed in that financial year 5B % of projects falling within +5% of the estimated timescale, expressed as a %age of the total projects completed in that financial year

Other Service Delivery Assessments
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LA‟s to be graded on service performance in Transport, Housing, Education and Social Services

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Grading on a five point scoring scale (SS may retain current
starring system):
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Well below average Below average Average Above average Well above average

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Other Service Delivery Assessments
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Means of service assessment:
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Transport - LA LTP and annual progress report Education - School AMP Housing - Housing Strategy and Business Plan Social Services - new DOH performance assessment framework

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Services to be weighted to reflect the relative size of SCP contributions. Weightings yet to be announced.

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Total LA service assessment score = sum of weighted service performance scores

Exercise 1: Benefits of better capital and asset management planning
List your perceptions and expectations of how LA‟s performance and service delivery should improve through the better planning and management of their capital and property resources.

Assessment of Capital Strategies and Asset Management Plans

Assessment Basis of CS and AMP
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Assessed by GO‟s as one of the following:
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good satisfactory poor

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Assessment based upon pre-set primary and secondary requirements (further supported by the „Interpretation Guide)

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Grading system:
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Does not meet all primary criteria = POOR Meets all primary requirement criteria but meets less than 75% of the secondary requirement criteria = SATISFACTORY Meets all primary requirement criteria and meets more than 75% of secondary requirement criteria = GOOD (so long as at least one criterion in each group of secondary requirement criteria is met)

Assessment Criteria: Capital Strategy

Assessment Criteria: Capital Strategy
Primary Requirements
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provides clear strategic guidance about the council‟s capital objectives, priorities and spending plans and demonstrates that these are directly linked to and consistent with key corporate and service objectives; identifies council-wide cross-cutting activity and initiatives

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describes the framework in place for ensuring the CS is a corporate document identifies all key aspects of capital expenditure within the LA and in those areas where the LA is able to apply significant influence on others use of capital resources

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Assessment Criteria: Capital Strategy
Primary Requirements (continued) explains the approach for prioritising capital project proposals explains how revenue implications of capital investment are taken into account

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is informed by outcomes of BVR‟s and other relevant reviews and improvement/development plans identifies how relevant stakeholders‟ and partners‟ views are sought and inform the working and development of the CS
identifies key partners and describes partnership working

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Assessment Criteria: Capital Strategy
Secondary Requirements
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sets out sufficient information to inform all bidding for capital resources

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outlines the LA‟s approach to PPP/PFI and to other means of alternative capital funding addresses corporate policies on procurement strategies (ref BV guidance and Egan report)
identifies how partnership working is being processed with other councils and relevant organisations

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Assessment Criteria: Capital Strategy
Secondary Requirements (continued)
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Evidence that:
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performance measures and benchmarking are used to describe and evaluate how deployment of capital resources contributes to the achievement of corporate and service objectives the results of performance measurement and benchmarking are communicated to stakeholders where relevant results of performance measurement and benchmarking are used to seek service improvements and target service delivery performance measurement activities relate to capital projects and to the influence of grants and partnerships a corporately agreed 3 year strategy explaining the LA‟s approach regarding the effective management, measurement and monitoring of the council‟s capital programme

Assessment Criteria: Capital Strategy
Secondary Requirements (continued)
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Evidence of:
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development and/or delivery of key priorities and targets to achieve cross-cutting objectives such as regeneration and sustainable development cross-cutting activity leading to improved outcomes, including consideration of and, where appropriate, adoption of innovative solutions

Assessment Criteria: Asset Management Plan

Assessment Criteria: Asset Management Plan
Primary Requirements
Organisational arrangements CPO identified Roles and responsibilities of CPO clear, explicit and communicated CPO reports and is accountable to a strategic decision-making group at officer and member levels evidence of a cross-service, senior management forum including CPO, reps from major service areas and finance directorate forum has terms of ref including strategic management of LA‟s assets Forum: progresses AMP and ensures officer and council approval ensures AMP is informed by and supports key corporate and service objectives meets regularly
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Assessment Criteria: Asset Management Plan
Primary Requirements
Data Management a record is held and maintained of basic core data on all assets the validity of this information has been tested AMP demonstrates a clear understanding of data required to manage the performance of the property portfolio statistical information about condition and maintenance backlog is supplied
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Performance management, monitoring and information annual (min) property performance plan to members and chief officers AMP includes information on all five pPI‟s members are informed of capital programme progress and performance
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Assessment Criteria: Asset Management Plan
Primary Requirements
Programme and plan development and implementation AMP outlines the proposed programmes which are intended to meet the council‟s property related requirements a methodology exists for option appraisal and corporate prioritising between projects a 3 year capital programme including a forecast of capital receipts is developed output/outcome targets are set for programmes and plans requiring capital investment
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Assessment Criteria: Asset Management Plan
Secondary Requirements
Organisational arrangements for corporate asset management Evidence that the CPO/Asset Management Forum routinely challenges and reviews assets and property services to achieve the most effective management, planning and use of assets. Key findings reported to chief officers and council Evidence that the CPO/Asset Management Forum takes into account stakeholder information re property and property services cabinet member holds responsibilities for property resource CPO contributes to CS and other relevant corporate and business planning Reference to property assets in other corporate policies and strategies Evidence of cross service property use, shared use and/or colocation
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Assessment Criteria: Asset Management Plan
Secondary Requirements
Consultation Evidence that: processes being developed to obtain feedback from services, users and occupiers
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consultation findings are used to influence the continuous improvement of property and property services‟ performance

Assessment Criteria: Asset Management Plan
Secondary Requirements
Data Management full survey undertaken of future data requirements for property portfolio programme of necessary improvements is identified commenced development of data system for intermediate data UPRN system, or a preferred alternative, is in place approach is developed for the centralised co-ordination of property management information which integrates with financial information a review has been undertaken of users training needs and a system is in place for satisfying these needs
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Assessment Criteria: Asset Management Plan
Secondary Requirements
Performance management, monitoring and information Clear evidence that: local performance measures are being developed and used linking asset use to corporate objectives processes are being developed to compare performance and competitiveness of property and property services with other similar organisations and other providers performance measures and monitoring take into account stakeholder consultation and user findings performance measurement feeds into a process of continuous improvement local PI‟s are used for measuring and monitoring surplus property and space utilisation written report to members and chief officers on maintenance backlog actions information being collected on „suitability‟ of assets
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Assessment Criteria: Asset Management Plan
Secondary Requirements
Programme and plan development and implementation the property implications arising from council objectives have been identified there is a service wide understanding of the corporate ownership of assets a thorough investigation and analysis has been undertaken of the gaps between the future requirements and the current provision and performance of present property assets options for closing these gaps have been identified and appraised the AMP outlines the council‟s approved 3-5 year strategic action plan based on this gap analysis
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Exercise 2: Practical CS and AMP assessment
Take the example CS or AMP given and assess it as Good, Satisfactory or Poor using the: Assessment checklist Assessment „Training Notes‟ Assessment Interpretation Guide
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In groups Appoint group spokesperson Report back on flipchart good, satisfactory or poor explanation of assessment under each criterion group heading group observations about implementing the assessment process
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Consistency in Assessment
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Each GO to nominate a lead assessor officer responsible for developing CS and AMP consistency management process, to be submitted for DTLR approval The consistency process may adopt the following suggestions:

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Stage 1: Receipt of LA‟s CS and AMP submissions
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Strict application of deadline guidance GO‟s may request additional information from LA by telephone where considered necessary for amplification or clarification. This should always apply in the case of the potential failure of a primary criteria on account of inadequate detail or information.

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Stage 2: Contact with LA‟s
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Consistency in Assessment
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Stage 3: Consistency meeting in each GO
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General overview by lead assessor Second peer review of „Poor‟ and „Good‟ assessments General internal consistency meeting and final consensus, may be sent to DTLR for info.

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Stage 4: Draft final assessments to DTLR
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DTLR regional pattern overview and analysis Final agreement including any necessary moderation between regions
Single Capital pot timetable Proforma letter

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Stage 5: DTLR moderation meeting for lead assessor officers
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Stage 6: Feedback of assessments to LA‟s
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