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A global presence the FCO's estate strategy 2010

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					A global presence: the FCO’s estate strategy 2010



Note: This strategy, agreed by the Board in March 2010 was updated in August 2010 to reflect the change of government and the FCO‟s new foreign policy
priorities.
Contents

Foreword by Sir Peter Ricketts KCMG, Permanent Under Secretary
Introduction by Alan Croney FRICS, Director Estates and Security
Overview
The FCO‟s foreign policy priorities
Strategic goals for the estate
A pragmatic approach
How we are going to achieve the goals:
          i.   Flexible
         ii.   Safe and secure
        iii.   Low cost and good value for money
        iv.    Modern
         v.    Functional
        vi.    Smaller
       vii.    Sustainable
       viii.   A platform for the whole of the Government‟s overseas operations


How estates decisions will be made: governance, accountability and responsibilities
Key priority actions to deliver the strategy
Facts and figures



                                                                                      2
Foreword
In February 2010 the National Audit Office issued a report (‘Adapting the Foreign and Commonwealth Office’s global estate to the modern
world’) which recommended that we should develop clear strategic priorities for the estate. This document is the response to that
recommendation.

The diplomatic estate is a unique and highly diverse public asset worth £1.6bn, covering 174 countries, ten overseas territories and 268
overseas posts. The diversity and extent of our estate mean that the changes we make to it will vary from place to place: one size does not fit
all. It exists because - even in an age of instant communication, digitised public services and the 24 hour news cycle - the UK needs overseas
buildings to act as a secure and long-term base for our international diplomacy and for the government‟s overseas operations more generally.

The FCO Board recognises that the demands we make on our buildings are increasingly complex: we want an overseas estate that is modern,
flexible (to accommodate changing functions, network shifts and staff numbers), environmentally sustainable, compliant with health and safety
standards, and secure for our staff and visitors. Many of our buildings are in difficult and dangerous locations. Finally the FCO is operating
the overseas estate at a time when public finances are under considerable pressure and unprecedented public scrutiny. We want our estate to
represent real value for money for the taxpayer.

Our aspiration is to provide a platform for the FCO and the whole of the UK Government‟s overseas operations in a way which allows us to
represent the UK effectively and efficiently overseas. This strategy describes our vision of the sort of buildings we need to do that. We
recognise that writing this strategy is a first step. The challenge now is to implement it. This will need the closest cooperation between
managers at all levels, in the UK and in our network of Posts.




Peter Ricketts
Permanent Under-Secretary




                                                                                                                                             3
Introduction by Director, Estates and Security
Having joined the Foreign and Commonwealth Office in May 2009 my brief was clear. To review and spell out estate issues (encompassing all
estate aspects – Facilities Management, Construction, Security and Estates) to ensure the FCO moved to achieving greater value for money,
and to start a strategic journey to deliver improved results both in estate terms and for our Government users of the overseas estates platform.
I am grateful to the FCO Board, other FCO colleagues and partners across UK Government, for their support in moving to an asset
management led approach as part of the solution.

This strategy is nonetheless part of a wider journey and sharing of information, and it is worth stressing some key aspects and strategic
challenges which the FCO faces:

   The government approach to the UK public sector estate is naturally UK-centric. Formally, Office of Government Commerce guidelines do
    not apply to the „diplomatic estate‟ and indeed many of these rules and approaches sit uncomfortably with the overseas estate of the FCO.
   Many views around our overseas estate stem from an erroneous presumption that UK land ownership and legal regimes apply outside the
    UK. Even across the EU, let alone further afield, property law is quite unrecognisable to a UK practitioner. In many overseas locations the
    concept of ownership of land/buildings and UK legal concepts around contracts (leases, funding, investment and recourse to dispute
    resolution) are totally different.
   While the FCO‟s estate has a high aggregate value it is highly dispersed across the globe. Our estate footprint in specific cities and regions
    is actually quite, or very, small (and, under this strategy, reducing). As a result there are demanding supply chain and support challenges
    which potentially constrain us in how we deliver the estate.
   Many British government estate locations in the UK are not „location sensitive‟ and many functions can be done outside London. Overseas,
    the picture is different: the FCO has to be in capital cities and often specific regional cities, such as economic hubs, to fulfil our
    departmental obligations. Hence we are location-inflexible.
   There are also many parts of the world in which the FCO operates, and hence has an estate, where even global multinationals have no
    estate footprint. These can include conflict zones and many countries with what we in the UK may see as underdeveloped property and
    legal frameworks.
   We are charged with providing a flexible estate for HMG. But high value and difficult locations impose on us a medium to long term
    planning horizon which the FCO, with other government departments, needs to address. Achieving a flexible estate will not happen quickly,
    and in particular efficient estates usage will vary as utilisation and local circumstances change: managing down estate use creates
    inevitable tensions in an organisation which must maintain a global presence.
   Finally, as noted by the National Audit Office, perhaps the biggest challenge remains the FCO‟s exposure to paying rent and other charges
    in local currency: our costs are subject to sterling‟s exchange rate movements which we have very limited flexibility to manage.

What ESD/FCO need to focus on:

Against this challenging background, Estates and Security Directorate will concentrate on:
                                                                                                                                                   4
      implementation of this strategy;
      developing detailed regional Asset Management Plans that ensure that the FCO‟s foreign policy priorities are met and estates priorities
       are driving spending;
      continuing a dialogue on the estate with all stakeholders whether within the FCO family or more widely to ensure it works for HMG as a
       whole;
      continuing to professionalise the FCO Estates function at home and overseas.




Alan Croney FRICS FRSA
Director, Estates and Security




                                                                                                                                                 5
Overview
The purpose of this strategy is to define the kind of diplomatic or overseas estate1 the FCO wants in future and set out how we aim to get there;
give clarity and long-term direction to our management of the FCO‟s global estate; to set out why we occupy the types of buildings we do
overseas, what they are expected to deliver, what the shortcomings and problems are, and how we will manage them strategically over the
coming years. The strategy is in six parts:

       a brief description of how the global estate fits in with the foreign policy priorities of the FCO;
       the top-level strategic goals set out by the FCO Board in late 2009/early 2010;
       what we are going to do to meet these goals;
       how we think the leadership and management of our estate needs to change;
       a summary of the priority actions we are taking to implement this strategy;
       some facts and figures on the global estate.

The FCO‟s foreign policy priorities
The purpose of the FCO's estate is to help deliver the FCO‟s and HMG‟s foreign policy priorities, agreed by ministers in July 2010:

Promoting Britain's Enlightened National Interest in a Changing World

Britain will pursue an active and activist foreign policy, working with other countries and strengthening the rules-based international system in
support of our values to:

       Safeguard Britain’s national security by countering terrorism and weapons proliferation, and working to reduce conflict.
       Build Britain’s prosperity by increasing exports and investment, opening markets, ensuring access to resources, and promoting
        sustainable global growth.
       Support British nationals around the world through modern and efficient consular services.




1
 The term „diplomatic estate‟ is used by central government to distinguish the government‟s overseas buildings from those in the UK which are subject to
different governance arrangements.

                                                                                                                                                           6
The government‟s requirement for Britain to pursue foreign policy issues globally, and to be able to respond quickly to crises and events
wherever they arise mean that the UK needs to maintain a worldwide presence, both in terms of our people and our buildings. This does not
mean that we will have „bricks and mortar‟ embassies everywhere, but it does mean that we need an estate which enables the FCO and our
partners to operate worldwide. In some cases we will continue the practice of having „non-resident‟ diplomatic staff operating from premises in
neighbouring countries.




                                                                                                                                                  7
Strategic goals for the estate
The FCO‟s buildings must be:


      (i)      flexible: to accommodate changing functions and staff numbers. It is essential that our buildings are future-proofed for needs
               and circumstances we cannot now foresee;
      (ii)     safe and secure. It is essential that our buildings are compliant with the relevant health and safety standards and as secure as
               possible against threats to our staff and their families, visitors and our information.
      (iii)    good value for money. It is essential, particularly as public spending faces tight constraints over the coming years, that changes
               to the estate mean that our buildings cost less and deliver better value for the UK and the taxpayer.


These three strategic goals are non-negotiable. There are five others which we will also seek to achieve as far as possible, according to
circumstances:


      (iv)     modern: we have a proud historical legacy, and will retain our most iconic buildings. But we want the rest of our estate to be
               modern and efficient, not grand or prestige.
      (v)      functional: we want buildings which are fit for purpose and in the right locations.
      (vi)     smaller: we want smaller building footprints and less floorspace worldwide, removing the surplus space we now have in many
               parts of the world;
      (vii)    sustainable: we want our buildings to comply with the UK government‟s sustainability goals, and they must comply with relevant
               legislation.
      (viii)    a platform for the whole of the Government’s overseas operations: we want our buildings to offer an attractive platform for
               the staff and operations of other UK government departments working overseas. That will deliver better value, and a more
               effective overseas presence, for the UK as a whole.




                                                                                                                                                  8
A pragmatic approach
Achieving these goals across our estate will be a challenge, and we
                                                                                    Using the strategy
recognise that we will have to make difficult choices. The goals are a
strategic framework not a straightjacket, and our approach will be
pragmatic. Some of the main constraints on us, and our preferred                    One of the aims of this document is to provide decision-makers
                                                                                    with guidance on the kind of buildings we want. The strategy is
direction on key issues, are listed below:
                                                                                    not, however, a substitute for existing guidance, e.g. the
                                                                                    Treasury Green Book, FCO Guidance on estate management
     we accept that we will be operating in a context where financial              and procurement, or centrally-mandated sustainable operations
      resources are limited. Funding constraints will mean we will not be           guidance. This is especially important where such guidance
      able to do all we want or should do to achieve the „ideal‟ global             refers to legal obligations, e.g. under the Climate Change Act,
      estate;                                                                       the Disability Discrimination Act or EU procurement rules.

     we will continue to prioritise security-driven projects: protection of
      staff, information and assets is of the highest importance;

     we will also aim to prioritise spending on maintenance, compliance and refurbishment of existing properties rather than large new builds;

     we will adapt our approach, including adopting temporary estates solutions, in the light of any future decisions by ministers about our
      long-term presence in individual countries;

     in certain locations, e.g. where British commercial or other interests are advanced through a high profile public presence, we will seek to
      fund head of mission residences as business hospitality spaces to the highest standards; in other places the model will need to be one
      of practical functionality;

     in certain difficult locations overseas (e.g. conflict zones) it will not be possible to run projects to UK standards; but we will be
      transparent about when we do not meet UK standards;

     we will set aside capital each year to fund the adaptation of current space in embassies as the UK‟s global footprint evolves.




                                                                                                                                                      9
How we are going to achieve the goals
The following sections look more closely at what each of these goals means in practice, the gap
between reality and our aspirations and what we are going to do to achieve them. The strategic goals      ‘A flexible, global network’
are linked, and in most cases where decisions on estates change are needed, there will be more
than one consideration to weigh up. For example, in ensuring that new builds are effectively              Achieving flexibility on a regional or global
designed, with appropriate technical input to protect our staff from the threat from terrorism and our    scale is a particularly difficult challenge given
information from the espionage threat, the FCO will hence need to spend more on its buildings than        that we are obliged to have premises in capital
other organisations would for office buildings in the UK. Similarly, as we work to make our estate        cities in order to meet the expectations of
more sustainable, we will seek at the same time to achieve running cost savings. It will be rare that     foreign governments, and in order to be
                                                                                                          effective. It is unlikely to be open to us to
only one of the strategic goals applies to a particular estates challenge, but we expect all those
                                                                                                          take decisions on where we need buildings in
dealing with estates issues to be aware of them and apply them to their work.                             a particular region purely on value for money
                                                                                                          grounds alone. Operating embassies in high-
                                                                                                          cost environments (Afghanistan, Iraq, some
1.       Flexible                                                                                         parts of the Far East) will continue to be
                                                                                                          necessary.
The estate must be flexible enough to accommodate changing functions and changes in staff
numbers - whether these are the result of planned strategic changes by HMG, or shifts in business         Decisions on the best location for staff and
models by the FCO or other departments operating overseas. Flexibility is key at the building level       functions have in the past been made
and the strategic (country or regional) level and is integral to ongoing management of buildings.         relatively quickly leaving the estate to be
                                                                                                          developed or rationalised later, if at all.
Static, cellular office buildings are inherently inflexible and fail to make the most of modern ICT or
                                                                                                          Examples of this include the strategic shift of
allow staff to adopt modern working practices. There are also larger-scale external changes which         FCO staff from our European posts to
we are obliged to take account of, but over which we may have little control, such as the actions of      elsewhere in the network in 2007-2009 and
foreign governments (the re-designation of a new capital city, or a new requirement that foreign          the UK Border Agency's consolidation of its
embassies should be in a particular part of town). There are also international trends which mean         worldwide visa operation into a "hub-and-
that buildings which were suitable for use in previous years are less so today. Examples of this          spoke" model in 2008-2009. While such
include:                                                                                                  changes are operationally necessary and
                                                                                                          produce efficiencies in staff running costs and
        trends in global travel which may mean a need for a greater consular presence outside of         the effective provision of public services, it has
                                                                                                          proved harder to achieve flexibility in our
         capital cities;
                                                                                                          buildings.
        new markets opening up for British business which require a change to where UKTI staff
         need to work;
        changes in a country or region‟s economic circumstances which affect the need for a base for
         DFID staff to carry out development or humanitarian work;
        shifts in the global terrorist threat which require a presence where one did not exist before.


                                                                                                                                                  10
                                                                                                            Asset sales

While some of these changes may only have a modest effect on the estate, the cumulative effect              A key tool in achieving all the strategic aims set out
can lead to real difficulties and pressures. A survey carried out on behalf of the National Audit           in this document, especially flexibility and a well-
Office (NAO) in August 2009 showed that 55% of overseas posts considered that their buildings               managed estate, is our programme to sell property
were very or quite flexible, with 31% saying they were inflexible. There is also a close link               assets which are surplus to requirements, and
                                                                                                            „recycle‟ the proceeds of sales back into the estate.
between flexibility and satisfaction with the size of office space, with 96% of posts who were
                                                                                                            This is normal practice and good asset
satisfied with the flexibility of their offices also reporting satisfaction with the size of their office   management. The FCO disposes of assets that
space. There did not seem to be any link between funding per m² and views on flexibility of                 are no longer required, fit for purpose or best
buildings – so we will approach this goal in terms of value for money and local need, not on                achievable value for money. Active management
simplistic space terms.                                                                                     of the estate involves frequent disposals, most
                                                                                                            often of staff accommodation or replaced offices.
We will achieve the goal of greater flexibility in the overseas estate by:                                  We do not publicise the details of such planned
                                                                                                            sales in advance due to local commercial sensitivity
     ensuring that business cases going to the FCO Estates Committee on new builds and                     and in order to maintain the impact of the eventual
                                                                                                            marketing campaigns for these properties.
      refurbishments specifically address flexibility at the building level and the country/regional
      level as appropriate;                                                                                 We will continue to keep our entire property
     making clear to our commercial partners (e.g. designers and architects) that flexible                 portfolio under review, ensuring it provides value
      design is important to us;                                                                            for money, fitness for purpose, and security for our
     identifying and communicating to posts incentives and obligations for them to reconfigure             staff. The FCO receives targets set by HM
      their estate;                                                                                         Treasury for asset sales: in the CSR07 triennium
     phasing out the requirement for all posts to have mini-strategies on their specific estate,           this was initially set at £18m per year. The FCO
      and instead introducing asset management plans by geographical regions agreed by the                  exceeded this, largely due to the sale of the former
                                                                                                            offices of the British Embassy in Madrid in 2008/09
      FCO centrally. We will still engage with posts on the basis of agreed plans so they know
                                                                                                            – our largest sale in recent years at £40m. To
      what is proposed.                                                                                     secure the best price we sold this in June 2008
     Better communication at all levels with our partners so their longer term planning for their          ahead of moving to new premises in July 2009. We
      overseas operations is understood at the post, regional and global level. We will support             were able to occupy our former offices rent free
      partners to implement Asset Management Planning in their own approach.                                until the move took place. Since 2004-05 the FCO
                                                                                                            has consistently met and exceeded the Treasury's
                                                                                                            asset recycling target and surplus fund generation.

                                                                                                            Other recent sales have been accommodation in
                                                                                                            Abidjan, Dar Es Salaam, Lilongwe, Lima and
                                                                                                            Victoria. Sales (and purchases) are reported to
                                                                                                            Parliament (the Foreign Affairs Committee) on a
                                                                                                            quarterly basis three months in arrears.

                                                                                                            All sales and purchases are considered on their
                                                                                                            individual merits. However, for commercial
                                                                                                            reasons we do not provide information on future
                                                                                                            asset sales. There is no intention to sell off
                                                                                                            prestige properties which are working well 11 us
                                                                                                                                                         for
                                                                                                            and for HMG.
Owned or leased accommodation?

The FCO currently owns approximately 55% of its property. There is a trade off between the control offered by ownership (e.g. over security, access,
branding rights, ability to alter or extend , ability to time maintenance expenditure, lack of dilapidations liability) and the flexibility offered by leasing where
contract duration can be matched to business need. Good practice in asset management suggests that we should seek to optimise our balance of core
(long term) and flexible (short term) accommodation by moving towards a higher proportion of leased property over time, to 60-65%, in order to reduce
overall costs „in use‟ and achieve a smaller global „footprint‟. In general, where we know that the size or functions of a post are likely to change, renting
accommodation will often be more efficient and this is the direction we will follow.

However, the diverse nature and breadth of our estate means that property procurement decisions are influenced or constrained by many different factors,
whether strategic, legal or to do with local property markets overseas. As such, there is no universal set of criteria that can easily be applied to lease/buy
decisions for all types of FCO property in all parts of the globe:

       Our security requirements and the need to comply with appropriate health and safety standards drive us towards ownership in locations where
        the normal property market would not support such standards and we would have difficulty in transferring risk and enforcing standards with
        landlords.

       While leasing works well in much of the developed world, in less developed countries both control and flexibility can be best achieved through
        ownership. In some jurisdictions there are general restrictions on the foreign ownership of property or specific restrictions on foreign governments
        – these exist at both country and state level. For example, in Belarus, Cuba and China it is not possible to own freehold. In some countries (e.g.
        Nigeria) land law is immature or complex, and proving legal title is difficult.

       In many countries where we operate holding owned property can be more flexible because of problems in terminating and renewing leases. The
        right to renew is often not guaranteed under local law.

       In some locations (e.g. Canberra) most residential properties are not available to lease for more than three years as many are owned by overseas
        diplomats and civil servants.

The diversity of the FCO estate, and the presence of regional variations and other factors can be seen in the fact that around 70% of non-residential
property by area (embassies, consulates, offices) is currently owned, either freehold or on long leasehold arrangements. The proportion of owned
property is lower in the more mature markets of Europe and the Americas than in other regions: Around 35% of residential property by number of units is
currently owned. This is as low as 20% in Europe and as high as 57% in Africa.




                                                                                                                                                                       12
                                                                                                             Residential accommodation

2. Safe and secure                                                                                           The FCO provides residential
                                                                                                             accommodation, both leased and owned, for
The estate must provide a safe working and living environment for staff, their families and for visitors.    UK-based staff serving overseas that meets
                                                                                                             the following five criteria. Properties must -
We need to ensure that security of people, assets and information is maintained in the face of
growing and evolving security threats, and also that we meet our duty of care to those who use our                be safe - i.e. generally meet UK/FCO
buildings.                                                                                                      standards on health and safety. In some
                                                                                                                countries, mostly in the developed world,
The attack against our mission in Istanbul in November 2003 was the first major suicide bombing                 we will accept local standards where they
against an FCO post and illustrated the changing nature and extent of the terrorist threat. We                  provide adequate protection for staff and
carried out a fundamental review (Jack Review) in 2004 of our security practices and procedures,                families; in places where local standards
established consistent security standards and re-enforced our physical security worldwide in                    are inadequate we will seek to apply UK
response to the global threat. This resulted in a significant investment in security across our estate,         standards so far as is practicable;
including new guardhouses, vehicle blockers/barriers, access controls, perimeter defences and the                 be secure – i.e. provide adequate
purchase of more civilian armoured vehicles.                                                                    protection against threats of terrorism, local
                                                                                                                violence (e.g. the threat of armed robbery
We take the security of our staff most seriously and the FCO has a duty of care in law to take                  in some African countries, or civil unrest
reasonable steps to prevent reasonably foreseeable harm to others. This applies to all FCO                      whether directed at the UK or others) and
employees when at work and to all UK Based staff and their families posted abroad. Risk                         other threats. Conditions vary widely
management is the basis of our approach to security. No one size fits all: we assess the threats and            across the network and depend on the
vulnerabilities at each post and put in place reasonable measures to protect staff, families and other          „scale‟ of our presence.
assets.
                                                                                                                  be appropriate to the occupant‟s
                                                                                                                family‟s needs. This means that staff with
In practice, this means that we seek to ensure that all FCO buildings and missions overseas have                children at post can expect that officially
the appropriate level of physical and technical security protection and procedures in place according           provided accommodation will be able to
to the assessed level of risk. The revised security standards for new builds and acquisitions provide           accommodate them adequately;
a more robust framework for estates projects. We are also developing new, integrated security
systems (access control, CCTV, intruder detection systems) that deploy effective technology and                   represent value for money for the
address the physical and technical threats.                                                                     taxpayer. Rent ceilings and space
                                                                                                                guidelines are set down by London and
Overseas, we have an ongoing programme of physical security reviews at our Posts and residences.                managed locally by posts dependant on
                                                                                                                circumstances.
We completed over 140 overseas security reviews in 2009. Financial pressures required us to re-
prioritise outstanding security recommendations and look for “risk managed” value for money                       where appropriate, support our staff‟s
solutions where possible. In some places we also have to “accept” different levels of risk.                     performance of their duties overseas and
                                                                                                                the operational needs of the mission. This
We do not really want our missions to become global fortresses. Most posts need to welcome                      means that staff who have true
visitors and applicants for our services and to pursue Britain‟s foreign policy priorities overseas in the      representational responsibilities must have
majority of places. Security is nevertheless a significant driver on all estate issues and is factored          appropriate accommodation to entertain at
                                                                                                                home where this is usual practice.
                                                                                                                                                    13
into all projects. In high threat locations like Iraq and Afghanistan we provide enhanced security measures including the „hardening‟ of offices
and staff housing to protect our staff.

As we strategically rationalise our estate, and reduce the size of our presence, past security standards may come under pressure so we will
need to keep this security area under review.

Health and Safety and Building Compliance

The FCO is committed to providing a safe and healthy working environment for all its employees and visitors. Our aim is to have systems in
place, so far as reasonably practicable, which will ensure that all equipment, plant and premises are safe and free from hazards affecting staff
and visitors. Our commitment to health and safety is real and goes beyond simply complying with legislative requirements. We aim to embed a
positive and responsible approach to managing health and safety risks in all that we do.

The Permanent Under-Secretary is ultimately responsible for health and safety on the FCO estate, supported by managers at all levels. Part of
our health and safety is delivered through building compliance (i.e. a chosen or imposed set of standards or requirements concerning the
design, maintenance and inspection of the building fabric, plant and equipment on our global estate). As with all of our strategic goals for the
estate, achieving building compliance across a worldwide estate is a challenge, especially in those countries with lower standard than in the
UK, and also because of funding constraints. Overseas our aim is to achieve similar UK standards of compliance where reasonably
practicable. Where higher standards exist overseas in law, these will apply. Addressing situations where UK standards are impractical
requires careful judgement calls/risk mitigation measures and a value for money assessment that can feed back to the „lease vs own‟ option
where that is available locally.

Through analysis of report data we can say that 61% of our posts have no urgent (red-rated) health and safety issues, although this varies
considerably by geographical region. We have put in place a rolling programme to tackle priority H+S work required in other posts. Overall, our
spending on property maintenance is 3% of asset value, although this varies according to region. We need to do better to meet our aspirations
under this part of the strategy, and despite funding constraints, the FCO Board made this a priority in early 2010.

We will deliver this strategic goal by:

     completing outstanding security work to continue to protect UK & overseas premises and staff adequately against reasonable,
      foreseeable security threats.
     ensuring that all business cases going to the FCO Estates Committee address H+S and security issues;
     a revised statement of health and safety policy and guidance and training for posts on implementation;
     dedicated funding to be held in London to address the most urgent health and safety issues globally on a planned solution basis;
     regular review of H+S, with the Permanent Under-Secretary chairing twice-yearly meetings;
     seeking to raise capital re-investment levels (on the existing estate) closer to a broad target of 5% of asset value.

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2. Value for money
                                                                                                        Investing in the estate
We want to lower the costs of the overseas estate, both in terms of running costs and capital
investment. We also want our spend to be better focussed as well.                                       We will continue to invest in our overseas
                                                                                                        estate building high quality cost-effective
The FCO estate is worth nearly £2 billion and in 2008-09 cost the FCO £269 million to provide, run      Embassies and High Commissions,
and maintain. We have an important strategic goal to reduce running costs and capital expenditure       representing and working for the UK
                                                                                                        worldwide. The extent to which we can do
and push up efficiency across the whole estate. The National Audit Office‟s February 2010 report
                                                                                                        this quickly will depend on funding decisions
noted that to manage the overseas estate to support ongoing business operations cost-effectively,       made centrally by HM Treasury.
the FCO needs to drive down estate costs to the lowest level commensurate with business needs,
whilst responding to a constantly changing world and balancing non-financial factors. The report        In 2008/9 we opened new buildings in
concludes that we have not consistently achieved value for money across the estate and                  Colombo, Harare, Ibiza, Manila, Mumbai,
recommends improvements in our management information on estates characteristics and on                 Podgorica and Portimão; a new information
capital projects. This strategy has been written in the light of the NAO recommendations and is an      and communication technology building on
important part of our ongoing work to meet them. But it is also important that, in running the FCO      our site at Hanslope Park, and a new
estate, HMG acknowledges how success is measured. Translating all financial matters into sterling       Legalisation Office in Milton Keynes. In
can mask FCO good asset management and only give a financial snapshot. The longer and more              2009/10 we completed work on the Baghdad
                                                                                                        compound, opened new Embassies in Madrid,
complex global situation has to be taken into account too.
                                                                                                        Warsaw and Algiers and refurbished space in
                                                                                                        our Whitehall and Milton Keynes buildings.
We are not at this stage setting formal tactical targets for cost reduction on a regional or global     We also recently completed a major
basis. Moving to tactical targets is premature whilst we build metrics, as identified by the NAO. But   rationalisation of our UKRep Brussels offices
we will deliver this strategic goal by:                                                                 (now incorporating our bilateral Embassy to
                                                                                                        Belgium), refurbished our offices in Ottawa
     ensuring that all business cases going to the FCO Estates Committee seek to minimise the          and fitted-out new offices in Boston.
      cost of our buildings without compromising our business needs;
     delivery of an energetic asset recycling programme (replacing properties which are old,           In order to ensure proper prioritisation of
                                                                                                        scarce public funds, better value for money
      surplus to requirements or which don‟t meet our business needs with new properties);
                                                                                                        and greater professionalism, we will recruit a
     better corporate governance including attention to quality and accuracy of management             Head of Capital Programme in 2010 to
      information;                                                                                      oversee our capital spend. We expect the
     more emphasis on commercial rather than in-house estates solutions;                               number of new builds to reduce as we
     a leaner supply chain for estate procurement;                                                     concentrate further on maintenance of our
     rigorous prioritisation of capital spending. In the medium term we expect a greater emphasis      existing estate. However, current capital
      on maintaining and making more efficient the estate we have rather than on major projects;        estate projects in progress or planning include
                                                                                                        completion of the residence refurbishment in
     further roll out of integrated/regional facilities management and related services;
                                                                                                        Moscow, and new embassies and residences
     adopting „total cost in use‟ assessments to maximise revenue and capital savings.                 in Damascus, Tbilisi and Abuja.


                                                                                                                                              15
4.      Modern
                                                                                                           Heritage Assets
 It is a principle of good asset management that our public buildings overseas should be suited to
modern working practices – for example, accessible to as wide a cross-section of the public as
                                                                                                           The FCO is fortunate in owning a number of
possible, and suited to the latest IT, as well as reflecting the best of contemporary British
                                                                                                           properties overseas which embody the British
construction and design expertise. It does not mean that we will neglect our responsibilities to           government‟s longstanding historical links with
maintain heritage assets (see box). We have a proud historical legacy, and will retain our most iconic     key foreign countries and governments. Many
buildings. But we want the rest of our estate to make a modern statement, not grand or prestige.           of these, such as the British Embassies in
                                                                                                           Paris and Rome, are of international
In many cases, e.g. high cost city centres, we will want to look closely at occupying parts of buildings   significance. The FCO will continue to
as one tenant among others.                                                                                manage these historic properties carefully,
                                                                                                           with due regard to our national and
We need to take into account that the estate is a key tool for the UK to achieve impact and influence      international heritage responsibilities, at the
internationally. It needs to represents Britain‟s values as a modern, democratic and innovative            same time as changing them where we need
                                                                                                           to so that they remain working buildings and
country, with a deep sense of our history but a modern outward-facing approach.
                                                                                                           represent value for money for the taxpayer.
                                                                                                           38 head of mission residences and offices
We will achieve this strategic goal by:                                                                    around the network are „designated‟ by the
                                                                                                           FCO as being of special historical, cultural or
      ensuring that all business cases going to the FCO Estates Committee promote modern                  political significance. Maintenance of our
       buildings and ways of working.                                                                      heritage assets in active use is a key
                                                                                                           responsibility for the FCO and we will take
      A review of our „designated properties‟ (i.e. heritage) policy to establish whether current         advice from FCO Services, English Heritage
                                                                                                           and specialised consultants and contractors
       arrangements still meet our needs.
                                                                                                           on specific issues. We will also keep
                                                                                                           Parliament closely informed over any major
      Continued delivery of refurbishments and on occasion major new builds from the capital              planned changes.
       programme.




                                                                                                                                                 16
5.      Functional – and in the right locations
The estate must be functional, or fit for purpose. This is linked to all the strategic goals but at the very basic level it means that our buildings
whatever the nature of our tenure (owned, leased, gifted and so on), need to be appropriate for the range of tasks carried out in them. Crucially
for the FCO and our partners, it also means that our estate must be in the right locations worldwide.

Our overseas estate comprises our bilateral embassies and High Commissions, missions to international organisations like the UN and its
subsidiary bodies and subordinate posts (often delivering consular, visa or trade and investment services). In the UK the estate consists of our
owned and rented properties in London and North Buckinghamshire, the two most important of which are the FCO Main Building in King
Charles Street and our site at Hanslope Park, near Milton Keynes. We also have owned and rented residential accommodation overseas to
house FCO and other staff working abroad. A summary of our property holdings, both owned and leased, is in an annex.

The estate, both in the UK and overseas, has developed over time. Overseas the estate primarily reflects the network of diplomatic
relationships which the UK has built and continues to build, and our rich heritage from the past. The estate continues to evolve in response to
the changing strategic priorities of the UK and to changes in working practices, IT and HR management. At the same time, management of
heritage buildings must not be overlooked.

Specific characteristics and asset management challenges of the overseas estate by geographical region2 are described in the tables below.

                   Europe            Middle East        Russia,           Americas           South Asia and     Africa             Asia-Pacific
                                     and North          Caucasus and                         Afghanistan
                                     Africa             Central Asia
Value of owned     £569m             £240m              £5m               £264m              £134m              £137m              £231m
assets (2009)
Rent and rates     £15m              £2.6m              £3.3m             £7.7m              £1.35m             £1m                £7m
             3
costs (2009)
% of FCO staff     21                13                 4                 14                 14                 20                 14
by region (UK-
based and
locally engaged)


2
  Generally the FCO does not own office buildings in the UK‟s 14 Overseas Territories, as they are usually provided and maintained by the host government.
We do, however, own some of the residential estate.
3
  Budgets held by posts excluded

                                                                                                                                                        17
Europe
     There is a 50-50 split between owned and leased offices.
     Europe represents our highest value owned asset base by region.
     Half of the FCO‟s „designated‟ residences are in Europe.
     Most buildings in Europe are in an acceptable condition, and standards of local maintenance are generally good (less so in Eastern
      Europe). Plans are in place to address any shortcomings.
     Apart from newer properties (e.g. in the Balkans) most head of mission residences in Europe are owned and some designated
      residences are adjacent to or on the same compound as offices (e.g. Oslo, Helsinki, Ankara).
     Facilities management (FM) in 14 north-west European posts will be rolled out further from 2010.
     We need to address the issue of over-scale properties: many premises are too big for our needs following zero-based review of our
      Europe network in 2006-7. Down-sizing has, however, still to deliver value for money and sometimes carrying extra space is the best
      value for money option.
     We propose to shift to more leased properties. Exiting also provides a solution to the need to maintain owned buildings, and is one way
      of eradicating compliance backlogs.
     We need to have more flexible and generally smaller space guidelines for residential properties to ensure efficiency, within local market
      capacities.

Middle East and North Africa
     Security is a particularly strong driver of estates change, with significant capital investment in the region: since 1999 we have built new
      or reprovided offices in Algiers, Basra, Beirut, Casablanca, Doha, Rabat, Sana‟a, Tangier and Tunis.
     Managing and providing the estate in conflict zones and locations with a high security threat is a considerable challenge (Erbil).
     Key estates sites (e.g. Abu Dhabi, Dubai and Muscat) have been gifted to us by governments in the region, in most cases without
      formal transfer of title. Some of this property is estimated to have a significant market value but uncertainties over title mean that we are
      unlikely to be able to dispose of it on the open market.
     Despite this, there is scope for rationalisation of the estate in the longer term, optimising the value of our gifted estate to secure new
      purpose-built office and residential accommodation at minimal cost to the taxpayer.
     We will aim to put in place new or upgraded embassy premises in Tel Aviv, Damascus and Tripoli.

Russia, Caucasus and Central Asia
     The owned value of estate is much less than in other regions.
     The British Embassy Moscow (completed 2001) is our main owned asset. We have a bilateral arrangement with the Russian
      government which gives us a 99 year lease on the site.
                                                                                                                                                 18
     We have a new embassy under construction in Tbilisi.
     It is difficult to maintain, refurbish and dispose of properties in an environment of difficult and sometimes uncompromising bureaucracy.
     We face problems with state agencies that do not fulfil their landlord‟s responsibilities for some office properties.


Americas
     Renting property in some cities, such as New York is high in cost.
     We have promoted effective networking and consolidation of estates services between posts, e.g. in the Andean region and Central
      America.
     We are undertaking re-design and open-planning of offices where possible to enable us to give back under-utilised space (e.g. Atlanta)
      and reduce rent payments.
     We lease our owned office space to partners across government (e.g. Washington).
     We are undertaking upgrades to infrastructure in Washington and Kingston.

South Asia and Afghanistan
     Security threats to our buildings and staff are high throughout the region.
     Our embassy in Kabul is one of our largest missions overseas in terms of staff numbers.
     A new estates solution is needed in Kabul to provide safe accommodation for FCO/HMG staff. In Afghanistan meeting the
      accommodation needs of the international military and provincial reconstruction teams in hostile environments is a particular challenge.
     Planning is under way for secure housing in Islamabad.
     The region offers some major opportunities for co-location with our partners across government, e.g. between FCO and DFID in Dhaka
      and New Delhi.

Africa
     Africa has more small posts than any other region.
     Poor local infrastructure, low standards of maintenance/build and difficult climatic conditions mean our maintenance spend in Africa is
      proportionately higher than in other regions.
     An in-house FCO maintenance capability is therefore likely to be needed for the foreseeable future.
     There is though a need for estates modernisation throughout the region.
     A new High Commission in Abuja and rationalisation of the Lagos estate are being planned.
     We are cooperating with DFID on a new post in Juba, Southern Sudan.
                                                                                                                                                19
      We need to ensure proper development of key strategic „hub‟ missions, in Nigeria, Sudan, South Africa and Kenya.
      Co-location, especially with DFID is a key aim in Africa (e.g. Accra, Ghana, Maputo).

Asia-Pacific
      This region has very diverse locations and a highly dispersed estate.
      The value of our owned asset base is high: £1,400m (open market value) or £231m (fair value) but concentrated in a few locations.
      A new embassy is needed in Jakarta.
      As in other regions we have surplus space (Vientiane, Wellington) because of network shifts.

We will achieve this strategic goal by:

     ensuring that all business cases going to the FCO Estates Committee on new builds and refurbishments address functionality and
      location, rigorous space analysis and maximum flexibility;
     improving dialogue between FCO Geographical directorates and ESD to ensure that the location of our properties reflect business
      needs;
     development of regional asset management plans to support this strategy.




                                                                                                                                           20
„Designated‟ residences and offices by geographical region

Europe       Asia Pacific   Americas       Africa        Middle East and   Russia, Caucasus   South Asia and
                                                         North Africa      and Central Asia   Afghanistan

Ankara       Bangkok        Boston         Addis Ababa   Cairo             Moscow             New Delhi
Athens       Beijing        Buenos Aires   Cape Town     Tehran
Berlin       Canberra       Montevideo     Nairobi       Tunis
Brussels     Seoul          Ottawa         Pretoria
Budapest     Singapore      Washington
Dublin       Tokyo
Geneva       Wellington
The Hague
Helsinki
Istanbul
Luxembourg
Oslo
Paris
Prague (*)
Rome (*)
Sofia
Vienna




   (*) designated offices




                                                                                                               21
6.      Smaller
This means that the estate must operate from a smaller „footprint‟ wherever feasible, while we retain a global presence. This is closely linked to
our objective to achieve a value for money estate, and is thus particularly relevant where we have property in high-cost locations. It is unlikely
to be a driver in itself if it does not deliver on cost reduction and efficiency. The issue of un-used space on the estate was highlighted by the
National Audit Office as an issue we must address: we want less floorspace worldwide, removing the surplus space we have in many posts.

We will deliver this strategic goal by:

      ensuring that all business cases going to the FCO Estates Committee seek to minimise the footprint of our buildings, while meeting our
       operational needs, including flexibility;
      ensuring Asset Management Plans (AMPs) identify value for money opportunities to downsize/move;
      through AMPs review the estate footprint in locations to identify downsizing opportunities that can be self funded from sales or rent
       savings.
      reviewing space usage in office buildings across the estate drawing on improved data from our property database, Pyramid (see below);
      ensuring regional back office functions are located in „value for money‟ locations;
      allocating space to reduce the overall footprint (more open-plan where feasible, right-sized cellular offices, flexible meeting spaces,
       greater shared use of representational “grand spaces”);
      reviewing space standards for all parts of the estate including residential properties, in a way which takes account of local
       circumstances and how best to deliver space on a value for money basis.

While smaller may be better, and in the long term offer improved value for money, much of our space utilisation challenges are contained in
small and widely dispersed locations. The existence of spare space is also an integral part of our commitment to flexibility. Seeking to exit
“small pockets” of under-used space usually offers poor value for money in the short to medium term. Each case will be considered on its own
merits as we seek to avoid high “change costs” to deliver headline space reduction and utilisation measures.




                                                                                                                                               22
7. Sustainable
  Sustainability is central to our global estates operations. Within the FCO, ESD has lead responsibility for the „Greening the FCO‟ change
  programme. The purpose of this is:

      to ensure that all aspects of FCO operations at home and overseas are managed sustainably, and that environmental considerations
        are at the heart of the way the FCO is run;
      to reduce the FCO's global carbon footprint and make our performance against central HMG sustainability targets the best in
        Whitehall.

  The demands of sustainability have a significant impact on the estate, and changes need to be done in a way that does not compromise our
  other strategic aims or the FCO‟s wider operations.

  The Greening the FCO programme provides visible evidence of our commitment to tackle our own environmental impacts and adapt to the
  broader effects of climate change, in line with our wider climate change obligations encapsulated, our obligations under the 2008 Climate
  Change Act, HM Government‟s Sustainable Operations on the Government Estate (SOGE) targets and our commitment to producing a
  Sustainable Development Action Plan. But it comes at a cost.

  In the UK, the FCO's focus is on delivering its Carbon Budgets and meeting challenging Whitehall-wide targets. The SOGE targets for CO2
  emissions from offices, water consumption, waste and recycling impact most on estate decisions. The targets are being revised to
  increase their scope and aims from 2011/12 onwards. The FCO's participation in the Carbon Reduction Commitment Energy Efficiency
  Scheme, established with Carbon Budgets by the 2008 Climate Change Act, also acts as a driver for reducing CO2 emissions from the UK
  estate. In addition, the FCO manages environmental impacts on its UK estate through an Environmental Management System externally
  accredited to ISO 14001.

  Although climate change legislation does not yet explicitly apply overseas (where we operate in a multitude of different foreign jurisdictions
  and climates/cultures) we aim to deliver overseas the measures agreed in the 2008 Act wherever possible. We recognise that achieving a
  sustainable overseas estate is an integral part of delivering our wider climate change agenda. It is likely that the overseas estate will be
  incorporated into the revised SOGE targets from 2011/12, although initially government departments will set their own targets. Over time we
  will aim to align better the targets for the UK and overseas estate. Environmental Management System principles have been rolled out to
  key posts – the challenge is to ensure that sustainability is mainstreamed into all decisions that affect how the estate is run.

  The 2008 Act also sets out a framework for dealing with Adaptation to Climate Change, with government departments expected to
  demonstrate leadership by setting an example in identifying and planning for future climate risks. The FCO faces particular challenges in
  this, insofar as our estate, scattered as it is around the globe, faces highly uncertain climate change impact from place to place (see box).


                                                                                                                                              23
Good management information on sustainability issues remains crucial. A major technical and resource challenge has been measuring the
FCO‟s global carbon emissions, for which a customised on-line calculator has been devised. We believe we are the first foreign service to
obtain a comprehensive carbon footprint for its overseas estate. Our current emerging estimates indicate that the measured carbon
footprint of our overseas estate is 163,890 tonnes of CO2, and that of the UK estate is 69,198 tonnes. We will continue to refine our figures
to get a more accurate measure. This will enable us to draw up carbon reduction plans for individual posts with large carbon footprints.
We will also include carbon reduction in regional geographical property asset management plans as they are drawn up.

 We will however need to recognise that some posts will be limited in what they can achieve due to
their business needs, security issues or the local operating environment. Other factors, such as
lease arrangements and the extent to which retrofit work can take place, are also relevant.              Climate Change: Adaptation Plan


A strong sustainable performance can therefore be measured by a range of criteria that include           The FCO published its first-ever Climate Change
                                                                                                         Adaptation Plan in March 2010, setting out how it
incorporating the most appropriate technology into the design of our buildings, reducing the carbon      intends to work to identify and manage the key
emissions arising from our offices, increasing sustainable procurement and achieving efficiency          risks resulting from the global impacts of climate
savings. We want a measurable increase in sustainability of buildings on the UK and overseas             change. The Plan flagged that protecting and
estate.                                                                                                  adapting our estate, both as the global public face
                                                                                                         of the FCO and the delivery platform for HMG‟s
                                                                                                         objectives overseas, would be a key part of this.
We will deliver this strategic goal by:

    ensuring that all business cases going to the FCO Estates Committee include a sustainability
     assessment;
    concentration of effort and resource on the posts with the largest carbon footprints;
    demonstrating visible leadership on reducing carbon;
    mainstreaming sustainability into all policy and operational decisions;
    ensuring all new contracts meet BREEAM Excellent or Very Good standards so far as is practicable globally;
    including Climate Change resilience as an explicit factor in decision making for new affordable capital investments;
    getting posts to highlight, within the operational risk management system, major vulnerabilities to extreme weather impacts;
    publishing climate impact summaries internally to raise staff awareness.




                                                                                                                                                 24
8. A platform for the whole of the Government‟s overseas operations
The global estate is not only for the FCO‟s use. Up to 91 different organisations use the overseas estate for their international operations,
including the British Council, the Department for International Development (DFID); the Ministry of Defence (MOD), the UK Borders Agency
(UKBA) and UK Trade and Investment (UKTI). A number of our partners operate from their own buildings in various countries - but we want
our buildings to offer an attractive platform for the staff and operations of other UK government departments working overseas.

There are strong reasons why we (FCO and HMG) want to co-locate as many government operations overseas as we can, particularly to do
with reducing costs, shared security protection, achieving „one team‟ devoted to HM Government‟s objectives in a particular country or region.
There are usually real benefits to be derived from better cross-government working. However, there are significant barriers to co-location,
including differing business models of various government departments which operate overseas, changes in our and our partners‟ networks,
different security requirements, and legal or diplomatic constraints (e.g. preventing leasing of space to commercial users). Further barriers are
that the FCO is only funded for our own estates needs and the procedures for charging other government departments for running costs and
capital contributions are unclear, cumbersome and over- complicated.

We will deliver this strategic goal by:

     ensuring that all business cases going to the FCO Estates Committee seek to optimise the
      attractiveness of our buildings to Whitehall Partners;                                              Co-location
     working with the rest of government, including HM Treasury to remove barriers to co-
      location where these exist, including anomalies in the current system for internal charging         We aim to co-locate HM Government
      for space in our overseas missions;                                                                 operations overseas on the FCO platform
     Taking forward with HM Treasury feasibility work to determine the most appropriate                  wherever possible. There are many examples
      operating structure to deliver value for money across the government footprint overseas;            where shared premises overseas can work
                                                                                                          well, such as New Delhi, Sana‟a and Brussels.
     Developing and deepening shared co-location strategies with our key Whitehall partners;             In some locations differing operating models,
     Clarifying with our partners and with HM Treasury the appropriateness of current capital            un-transparent and inadequate cross charging
      funding requirements for major projects and refurbishments;                                         regimes between government departments
     More structured coordination between the FCO and other government departments at all                mean that co-location is more difficult to
      levels including at the Estates Committee;                                                          achieve. The FCO will continue to work with
     Leading and responding on the HMG Smarter Government Paper.                                         all government departments operating
     Working with other departments to ensure the FCO also shares their space (where                     overseas to develop a clear framework for
                                                                                                          cooperation, to deliver value for money across
      separately provided) where this is practicable.
                                                                                                          government.




                                                                                                                                                 25
How estates decisions will be made: governance, accountability and responsibilities
We want an estate which is well-managed: run as efficiently and effectively as possible. This covers issues such as good corporate governance
whether exercised in the UK by the FCO or locally by Heads of Mission and their staff, and value for money. We want to increase the level of
professional/commercial skills we have devoted to the estate, and move away from decisions made in „silos‟ across the organisation.

The FCO board has overall corporate responsibility and accountability for the overseas estate and for investment decisions above £20 million
referred to it by the Estates Committee (see below). The Board has agreed four basic principles for running the estate in future:

             simplicity: clear and simple decision-making processes against agreed plans;
             speed: taking and implementing estate decisions against priorities and legal obligations;
             subsidiarity: the centre will take the decisions and set the standards which only it can, with all others to be devolved to a network
              of regional estates managers and/or Heads of Mission;
             synchronicity (or „end to end accountability‟): in other words, the person who makes the individual decision also owns the money
              necessary to implement it.

The Board has also agreed on the following roles and responsibilities:

   A new Estates Committee, reporting to the FCO Board, will:

              oversee the delivery of the FCO Estates Strategy and own/oversee global budgets and estate priorities through a lean supply chain;
              prioritise, scrutinise and authorise all investment decisions above £2 million (referring those above £20 million to the board)
              monitor the progress of the estates investment programme against budget and timeline;
              ensure other FCO and Whitehall partner projects and programmes which will have a bearing on the FCO‟s estate at home or
               overseas are properly factored into estates decisions, and that we provide an overseas estate which works for both the FCO and
               our Whitehall partners;
              ensure that the FCO estate complies with FCO/HMG targets and obligations on sustainability and accessibility;
              undertake post-project appraisal on major projects.

   Estates and Security Directorate, reporting to the Estates Committee, will have responsibility for:

             Our global estates strategy: what kind of buildings we want, where.



                                                                                                                                                  26
                                                                       Facilities Management (FM) in the overseas network
          Strategic resource allocation: how to allocate money
           (capital, programme, admin) and people to different         Provision of FM services in our Posts has traditionally been delivered
           parts of the network to implement that strategy.            through a mixture of in-house resources and limited supplier support. The
          Major projects, working through a project manager,          FCO staff involved are committed, experienced and professional. However
           who in turn will work closely with the Head of Mission      outsourcing to dedicated FM service providers offers a number of benefits,
           and Regional Directorate.                                   including:
          Standard setting and guidance for health and safety
           and buildings standards compliance.                                consistent services across the globe;
                                                                              access to industry best practice and innovation;
          Centrally ESD will see and can challenge and provide a
                                                                              the opportunity to dedicate more FCO staff resources to front line
           compliant supply chain whilst posts can call off                    activity.
           action. This is also essential to deliver value for money          a professional service delivery approach.
           and procurement compliance along with NAO
           recommendations on metrics.                                 What have we done so far?

    Heads of Mission at individual posts, reporting to Regional        FM has been outsourced in the UK and some individual overseas posts
    Directors, will have responsibility for:                           (including Hong Kong and Paris) for several years. In September 2008 the
                                                                       first regional FM contract was signed, for the UK and 14 North West
          implementing maintenance and health and safety work,        European Posts. Roll out was completed in July 2009 and the target figure
           with guidance from ESD and regional estates                 for savings from outsourcing is £7m over the seven-year contract; £1m of
                                                                       this has been delivered in 2009/10.
           representatives.
          proposing innovative estates solutions.                     In May 2009 the FCO Board considered the business case for further
          participating in the project boards for major projects.     outsourcing and decided that FM should be outsourced where it makes
                                                                       practical and financial sense to do so. A Market Capability Review identified
This framework will guide our future approach to estates               the following countries/regions where outsourcing is likely to be viable: Asia
management. However, we will keep this under review and                Pacific, Wider Europe, India and South Africa.
examine the scope for further improvement. The 2010 National
Audit Office report said that our internal processes for managing      What happens next?
and funding for managing the global estate are complex and lack
coherence – we lack one single point of authority over all estates-    The market review indicated that the Asia Pacific region (including India)
                                                                       offered the greatest potential benefits from outsourcing, so that is our next
related spending decisions (e.g. spending on maintenance and
                                                                       priority. We are also looking at the options for further outsourcing of FM in
rents are currently split between ESD and geographical                 wider Europe – including whether to extend the existing UK & NW Europe
directorates/posts). We recognise, as did the NAO, that there is a     contract or start a new procurement process. In other areas, e.g. North
great deal of innovation and good practice in our overseas             America, brigading of FM services will be pursued.
network, as well as enthusiasm for proper planning to deal with
the challenges and problems posts face on a daily basis.               Responsibility for managing the contracts once outsourced is with the FCO‟s
                                                                       FM Client Unit, headed by an externally recruited Director and team, the
                                                                       majority with appropriate FM knowledge, qualifications and experience.

                                                                                                                                                       27
Management Information and guidance for posts
The 2010 NAO report also notes that we need to improve the management information (MI) we collect on the performance of the overseas
estate, in order to manage our estates portfolio strategically. To this end we will:

          enforce a more consistent use of our property IT system (Pyramid) across our network of posts. We currently estimate some 70% of
           posts are using Pyramid: we want to achieve 90% by 2011/12 and 100% by 2012/13.

          Use Pyramid to expand data collected on estates performance, such as cost and space per person, in accordance with Office of
           Government Commerce (OGC) guidance;

          Investigate the best way to link up our property information system with existing FCO financial systems.

          Review the standing estates guidance for posts, concentrating on their role in the system of estates governance, including specific
           advice on procedure for managing surplus space whether leased or owned;

          Through Asset Management Plans ensure that all investment is assessed through a business case that includes cost in use criteria.


We will deliver this part of the strategy by:

          ensuring that we run our estate in accordance with the principles set out above;

          holding individuals accountable for their part in the good management of the estate;

          improving our estates MI as set out above;

          reviewing the FCO‟s estates funding, resource and decision-making structures;

          reviewing specific guidance on the roles of Heads of Mission on estates issues.



CONCLUSION

An organisation‟s buildings say a lot about the organisation: its aims, its priorities, how it manages its resources and the importance it attaches
to its customers and its own staff. The FCO‟s purpose is to work for Britain. We aim, through this strategy, to make sure our buildings work
better for Britain too.
                                                                                                                                                 28
Key priority actions to deliver the strategy
Detailed implementation plans for this strategy are being drawn up. Listed below are some of the key priority actions we plan to take in the
short term to deliver it.

     Strategic goal                       Action                                                                 Timing

 1. Flexible                       Identify and communicate to posts incentives and parameters for        March-August 2010
                                   them to reconfigure their estate.

                                   Pilot one regional asset management plan (AMP) in Asia-Pacific         First AMP in place by September 2010
                                   with a view to introduction of asset management plans in other
                                   regions later. Phasing out of most post-specific estates strategies.

 2. Safe and secure                Security:

                                   Completion of outstanding security recommendations on overseas         Review of progress in November 2010
                                   estate.                                                                Medium/High priority recommendations
                                                                                                          implemented by end March 2011.
                                   Compliance:

                                   Revised statement of H&S policy to posts.                              March 2010

                                   Address with FCO Services and geographical directorates most           Under way. Review of progress in
                                   urgent compliance/H&S issues on the estate.                            November 2010

                                   Compile one central FCO standard covering construction, usage          October 2010
                                   and maintenance for offices.




                                                                                                                                               29
3. Low cost/good value for   Delivery of £25m asset recycling target for current FY.               March 2011
   money
                             Review of quality and type of Management Information on the           Review completed by June 2010
                             estate (Pyramid) with a view to establishing an improved metrics
                             capability in ESD.

                             Letter to posts on Pyramid setting out their obligations and giving   April 2010
                             information on training.

                             Review of post take-up/use of Pyramid with a view to achieving        Review in January 2011. Aim is 90% of
                             improved coverage (except smallest posts) & data quality.             posts using Pyramid by 2011/12 and
                                                                                                   100% thereafter

                             Discussions with Finance Directorate to ensure clearer idea of        Agreed direction of travel in place by
                             successor to Pyramid and future integration with other FCO            January 2011
                             financial and MI systems.

4. Modern                    Review of designated residence/office policy on the basis of an       October 2010
                             asset management plan for designated properties.

5. Functional                Formal review of location of properties and current estates           Ongoing
                             issues/problems at least twice a year with geographical
                             directorates.

6. Smaller                   Report on space usage in offices on the estate based on Pyramid       March 2011
                             data.

                             Desktop review of space standards in residential and office           March 2011
                             accommodation in a way which takes account of local
                             circumstances and staff needs.

7. Sustainable               ESD to set initial sustainability targets for clusters of posts for   April 2010
                             2010/11, with concentration on posts with the largest carbon
                             footprints.

                             Implementation of environmental efficiency plans for top 11 posts.    March 2011


                                                                                                                                        30
                              Implementation of 10:10 initiative.                                  December 2010

   8. Platform for whole of   Clarification with our partners and HM Treasury the                  March 2011
      government‟s overseas   appropriateness of capital funding requirements for major projects
      operations              and refurbishments.



Other priority actions

                              Guidance to Heads of Mission on their role on estates matters        August 2010

                              Recruitment of new Head of Asset Management                          October 2010

                              Recruitment of new Head of Capital Programme Delivery                October 2010

                              Clearer separation of duties on asset management and projects in     March 2011
                              ESD including review of arrangements for delivery of projects
                              below £2m

                              Ensure FCO CSR planning takes into account estates issues            April 2010




                                                                                                                   31
Facts and figures
The global estate

                        Number          % of                      Number of properties                     Estate value
                            of       FCO staff    Offices     Residential     Residences       TOTAL          (£m)
     Region
                        locations     working                 properties
                                      overseas
     Africa                 39           20           55          511               33            599          137
     Americas               57           14           76          483               52            611          264
     Asia Pacific           35           14           51          489               28            568          231
     Europe                 87           21          121          822               59           1002          569
     Middle East            31           13           51          606               27            684          240
     and North
     Africa
     Russia and the         12            4          13           140               11            164           5
     Caucuses
     South Asia             18           14          31           393               10            434          134
     and
     Afghanistan
     TOTAL                 279          100          398          3,444            220           4,062        1,580

Notes: Staff figures based on 13,012 FCO staff working overseas. Residential properties include those occupied by FCO staff and others working overseas. This does not include the 109
compounds and 706 other properties (such as guard houses and stores) used by the FCO. The estate value reflects the open market value at the end of March 2009 for FCO owned properties.
Source: NAO analysis of FCO management information from March 2009.




                                                                                                                                                                                       32
Global estate expenditure and proceeds from estate asset sales

            Element                                 2004-05          2005-06      2006-07       2007-     2008-
                                                     (£m)             (£m)         (£m)        08 (£m)   09 (£m)
            Revenue expenditure
            Rents and rates                            72              77               66        71        74
            Maintenance and refurbishment              44              49               52        51        61
            Utilities                                  13              14               15        14        14
            Berlin Embassy (Private Finance            6               3                 4        5         5
            Initiative)
            Sub-total revenue expenditure              135             143              137       141      154

            Major capital projects                     64              78               66        82       115
            expenditure

            Total estate expenditure                   199             221              203       223      269
            Proceeds from asset sales                   11              11               60       15        58

Note: Figures restated to 2008-09 values.
Source: FCO Departmental Reports (2004-05, 2005-06, 2006-07) and FCO information.


Estate capital funding allocations and expenditure on capital projects since 2004-05
  Value (£ m)   160
                                                                                                          Final budget allocation
                140
                                                                                                          Actual capital project spend
                120
                100
                80
                60
                40
                20
                 0
                         2004-05          2005-06           2006-07           2007-08         2008-09      2009-10
                                                                 Financial year




Notes: Aside from 2009-10, figures are restated at 2008-09 prices.
Source: NAO analysis of FCO data



                                                                                                                                         33
Unused space identified by posts

                         Desk Spaces
               Visa Reception Booths
       UK-based staff Accommodation
                 Visa Reception Area
                    Office properties
                    Official residence
           Local staff accommodation
                               Other
         Type of space
                                         0   5   10        15       20        25      30        35       40       45
                                                                     % of Posts



     Source: NAO survey of 188 posts.
     Note: Overall 96 posts reported some vacant space, some in more areas than one. Gifted properties have been removed from this analysis as these cannot be easily disposed or
     reconfigured.


                                                   Numbers of non-FCO staff in our buildings worldwide 2008-09




                 Headcounts based on numbers of staff co-located (including separate buildings on compound) – source: activity recording data.
                                                                                                                                                                                    34

				
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