Part 3: School property strategy and performance

Managing the school property portfolio.

In this Part, we discuss:

Summary of our findings

Given the significance of the school property portfolio, in terms of its value to the Crown and its importance to the day-to-day operations of schools, we expected the property function to be integral to the Ministry's operations. Instead, property is not well integrated with other parts of the Ministry. The importance of property investment and maintenance in creating an environment that supports modern teaching and learning practices and provides effective education to students could be better recognised.

We expected the Ministry's property strategy to align with the Ministry's other key accountability documents, with robust measures showing how investment and management of school property contributes to educational outcomes. Also, although Infrastructure Services has a strong risk focus, we expected property risks, given their size and nature, to be integrated into the Ministry's risk register. We found no evidence of either.

The Property Strategy

The Ministry manages a significant part of the Crown's estate and is responsible for more than 2100 state (non-integrated) school sites. Given this responsibility, it is critical that the Ministry has a school property strategy. In our 2006 report, we recommended that the Ministry produce a strategic plan for school property that was clearly linked to its wider education outcomes. We also recommended that the Ministry have common property management goals for school property throughout the different parts of the Ministry.

In July 2011, the Ministry published its Property Strategy. The Property Strategy set out three strategic goals that provided the vision and goals for Infrastructure Services:

  • School property is well managed through proactive management of the portfolio, focusing on value for money and establishing a property service model that recognises the property needs of individual schools.
  • School property is fit for purpose by ensuring that schools are in good condition and deliver internal environments that support educational achievement.
  • A high-performing portfolio of schools by ensuring that new schools and additional capacity is delivered in a timely and cost effective way. Also, by identifying ways to minimise extra property and optimise the number of schools needed to deliver educational services.

The Property Strategy was published when the Ministry was starting to build its capacity to be an asset manager. The Property Strategy is an important document for Infrastructure Services because it sets out what the Ministry was seeking to achieve for school property. The Property Strategy includes initiatives and performance measures set for the initial period of its introduction only. The vision and goals remain relevant (in particular the emphasis on linking school property management to value for money and educational achievement), but because many of the initiatives and measures did not extend beyond 2012, it is difficult to see how this Property Strategy can still inform the Ministry's direction.

During our review, the Ministry was preparing a replacement for the Property Strategy. The draft Infrastructure Services Strategy 2016-2025 reflects Infrastructure Services' increasing maturity as an asset manager and its wider responsibilities for school transport, Information Communication and Technology (ICT) infrastructure in schools, and school payroll. It now aims:

To advance educational achievement by managing school infrastructure as an inter-connected whole" with the focus on transitioning from school property funder to asset manager to generate safe, inspiring, ICT enabled state school spaces supporting improved education.

The draft Infrastructure Services Strategy sets out initiatives to address challenges in the management of school property. The initiatives include setting service-level expectations, meeting the demand challenges in Auckland, completing major programmes of repair work, and improving maintenance provision throughout the portfolio.

The draft Infrastructure Services Strategy also includes performance measures with an intermediate set of targets for 2019 and targets for 2025. It is encouraging to see this level of strategic planning. However, the Ministry is yet to put in place this new strategy and we do not know when it will be published.

Alignment with other planning documents

Four-year plan

The Ministry uses a range of accountability documents to set its direction and assess its performance. Along with its Statement of Intent, the Four-Year Plan 2016-2020 (the Four-Year Plan) sets out the Ministry's long-term vision, what it is trying to achieve in the medium term, and how it is going to do it. The Four-Year Plan summarises the Ministry's aims, including its aims for the school sector on its "Plan on a Page".7 The Ministry's long-term outcomes are:

  • The education system is relevant and reaches all children and students.
  • Every child and student achieves educational success.
  • New Zealanders have skills and knowledge for work and life.

The Four-Year Plan identifies indicators to measure the Ministry's success in raising educational achievement, including the three Better Public Service Results the Ministry is responsible for. The plan then focuses on the initiatives that are under way in the Ministry's work programme and throughout the school sector to achieve the targets set for these indicators. Although infrastructure, including school property, is considered in the delivery part of the Four-Year Plan, there is limited connection to the initiatives set out in the plan for achieving the Ministry's outcomes.

The Four-Year Plan considers school property as a part of the wider infrastructure supporting schools. As a result, school property receives limited discussion in the plan:

The infrastructure portfolio is a key enabler of the Ministry's strategic intentions: supporting 21st century learning practices through the provision of flexible learning environments, improving evidence-based investment decisions, increasing efficiencies, and supporting the system to reach students through the provision of transport services.
We used to see our property role as funding school property, but are now managing the property portfolio as an asset, with the long-term health of the portfolio in mind.8

The Four-Year Plan reflects the direction in which Infrastructure Services is taking school property. However, it is light on detail, given the expected level of investment in school property in the short to medium term.

Long-term property planning

In 2015, the Ministry prepared its long-term investment plan (the Long-Term Plan), following the Treasury's guidance. The Ministry's long-term view of investment planning will enable it to maximise the benefits of resources and respond to demands arising in the school sector. Although the document covers ICT-related matters, office accommodation, and other asset matters, the principal focus is the school property portfolio.

The Long-Term Plan provides information on the current state and scale of the school property portfolio, with a particular focus on the age and estimated condition of property. The Long-Term Plan uses the best available information provided by external property planners on the condition and fitness for purpose of the school property portfolio. However, given the scale of the portfolio and the limitations of the different information systems the Ministry uses, having accurate information is a significant challenge. The Long-Term Plan also includes an assessment of future growth and trends in student demographics and expected demand for schools. By bringing these factors together, the Long-Term Plan identifies where there is under-use and over-use of classrooms.

The Long-Term Plan sets out the forecast expenditure in the next 10 years that is needed to maintain, improve, and expand school property. The Ministry uses these capital expenditure plans to support its projections to the Treasury.

The Long-Term Plan also includes:

  • a broad assessment of opportunities in the school sector that would enable the Ministry to manage the portfolio in a more effective and efficient way;
  • key risks in the school sector and in managing the school property portfolio; and
  • the key assumptions, constraints, and dependencies in the school sector.

The Ministry's Long-Term Plan is new and will continue to mature. It represents a strong starting point for summarising the current and future state of planning for capital expenditure and broader investment in the school sector. The Treasury's Investor Confidence Rating highlighted that the separate parts of the Long-Term Plan needed to be more closely integrated. The Ministry intends to update the Long-Term Plan.

Annual business plans

All of the Ministry's operational groups, including Infrastructure Services, carry out detailed business planning. These plans become part of the Ministry's annual business plan, which it uses internally for operational purposes.

The most important part of business planning for Infrastructure Services is the capital works programme, in particular the timing of the projects and demands on capital funding. In recent years, there has been a significant increase in forecast capital expenditure as capital programmes have progressed through planning stages to capital works phases.

Infrastructure Services creates the capital works business plan from continuing projects and business cases that are under development. The demand for capital works throughout the regions is then balanced by capacity and capability considerations. Capital funding that is allocated directly to schools is relatively stable each year.

The Deputy Secretary for Infrastructure Services and other senior leaders need to sign off all business cases for growth in student numbers and other initiatives. All projects worth more than $3 million need to be supported by a robust business case and be approved by the Investment Board. The Investment Board includes the Deputy Secretary for the Sector Support Group, which ensures that the person responsible for network demand agrees the physical property solution is the right one. All projects with whole-of-life costs greater than $15 million need to be signed off by the Minister of Education.

The format of the Infrastructure Services business plan is consistent with other Ministry plans. Infrastructure Services seeks to align its planning with the Ministry's planning, although much of the Ministry's planning is from a sector policy perspective and Infrastructure Services' plan is focused on capital expenditure demands. All business cases for major projects include consideration of forecast demographic or school roll changes. Sector Support Group prepares this part of the business case and it is the main area where different parts of the Ministry must operate together effectively.

Does the property strategy align with other Ministry planning documents?

The Ministry's strategic planning continues to evolve. School property is not currently considered to be central to the Ministry's intended outcomes for educational achievement, as shown by its Four-Year Plan. However, we note that The Ministry of Education Statement of Intent 2014-2018 has creating flexible learning spaces as one of its six priorities. In our view, the Ministry's Property Strategy appears to have been written in isolation and ahead of the broader Ministry planning documents. It is difficult to see how the Property Strategy connects with what the Ministry as a whole is trying to achieve.

We expect the Property Strategy to give clearer consideration to the outcomes the Crown is seeking to achieve in education. Otherwise, it appears as though the Ministry's role in managing school property is isolated from its range of initiatives for achieving its outcomes.

Monitoring and reporting on property matters


The Ministry keeps a register of high-risk projects and monitors them at both a regional and a national level. It uses a series of different reports to assess project performance, including physical progress, financial matters, and stakeholder matters.

The Deputy Secretary for Infrastructure Services is given broad reporting details on high-risk projects. The Infrastructure Services Risk and Assurance Committee also gets regular updates on major projects and those that meet certain risk factors, including over-spending, time delays, contractor risk, design issues, and stakeholder interests. However, these risks are not included on the Ministry-wide risk register.

The risk to the Ministry largely sits with the small- to medium-sized projects that can have an effect locally but do not necessarily warrant national attention until problems arise. Also, we consider that both operational and strategic property risks, such as the increase in demand for schools in main centres, should have greater visibility at a Ministry level, given the value of the school property portfolio and the part it plays in schools' day-to-day operations.

Performance reporting

The performance measures about school property in the Ministry's current accountability documents mainly focus at an output level. The Ministry's measures are changing to focus more on the Ministry's capability as an asset manager. This is consistent with the strategic direction the Ministry is taking.

The school property-related performance measures in the Ministry's 2016 annual report are:

  • The Ministry is seen as a high-quality property manager and advisor to the Government, as measured by the Asset Management Maturity Index.
  • The School Property Capital Plan is delivered with a variance of less than 20%.
  • Eighty percent of scheduled 10-Year Property Plans are signed by the end of the financial year.
  • Major redevelopment and modernisation projects are delivered on, or ahead of, scheduled completion dates.
  • Post-occupancy evaluations of school buildings show the Ministry has achieved its standards and specifications.

The last two measures show how the Ministry is carrying out its role as the manager of major projects. The 2016 annual report classified five projects as "major" and reported that three evaluations were carried out. This represents a small portion of the more than 6000 Ministry-led national programmes and school-led projects that could be under way in a year.

In 2015, the Ministry went through an exercise to update its performance measures for 2017 by holding workshops with a wide group of Infrastructure Services stakeholders. The measures were included in the Ministry's 2016/17 Estimates and Output Plan. They are:

  • The Ministry is seen as a high-quality property manager for the Government as measured by the Asset Management Maturity Index for the school property portfolio.
  • Seventy five percent of state schools with a utilisation ratio between 75% and 105%, based on the number of actual school classrooms against those allowed for the number of students, as an indicator of the effective use of the school property portfolio.
  • Eighty percent of state schools with a property condition of "fair" or better, indicating the condition of the school property portfolio.
  • Number of schools receiving furniture and equipment grants for expansion projects.
  • Number of schools receiving furniture and equipment grants for maintenance projects through their Five-Year Agreements.

These measures reflect continued progress towards reporting on the condition of school property and the effectiveness of the Ministry's management of the school property portfolio. However, these measures do not cover the breadth of quality, quantity, and timeliness that is the expectation of good performance reporting. Also, the challenge for the Ministry is linking those measures to wider Ministry objectives.

Planning for property by schools

Each school must prepare a school charter that sets out its aims and goals for the next three to five years. Educational growth and success, and community priorities, will normally be the focus of these documents. Property is considered as an important enabler to this success. The School Property Plan should be consistent with the school's charter. Our discussions with schools and review of a small sample of charters shows that most schools do cover property objectives in their charters, which follow through to their property plans.

However, schools' awareness of the Ministry's property strategy is variable. Some schools interviewed are not aware of its existence. The goal of the Ministry's Property Strategy is to provide property that is fit for purpose and deliver learning environments that support educational achievement. The Ministry has effectively pushed this focus down to schools through the Ministry's priorities in the school property planning process, but there is currently no way for the Ministry to measure how its investment is supporting its educational goals.

Our interviews with schools show that school boards consider property matters each month. However, the school boards' attention on property matters can vary. This can depend on where the school is in its property planning cycle and whether the Ministry is doing work as part of a national programme. The extent of planning and reporting on property matters varies significantly between schools. It depends on the immediacy of property matters and the degree of interest the principal and school board have in them. Schools often rely on their external property planner and project manager. We talk more about the roles and responsibilities of school boards in Part 5.

Recommendation 1
We recommend that the Ministry of Education fully integrate school property matters with the rest of its functions to recognise the contribution of school property to its educational outcomes. Priority should be given to:
  • aligning its property strategy with other key accountability documents;
  • ensuring that all of its functions support the implementation of the property strategy;
  • having measures showing how investment in, and management of, school property contributes to its educational outcomes; and
  • including property risks in the Ministry-wide risk management framework.

7: Ministry of Education, Four Year Plan 2016-2020, page 8.

8: Ministry of Education, Four-Year Plan 2016-2020, page 30.