Part 5: How well the Ministry of Education supports schools in property matters

Managing the school property portfolio.

5.1
In this Part, we discuss:

Summary of our findings

5.2
Schools told us that they generally understood their day-to-day roles and responsibilities for property. But the time schools gave to property matters varied greatly. Many schools rely heavily on their external property planners. Although these property planners are now Ministry-approved and have the necessary capability, there is a risk that school boards become disconnected from their property management responsibilities.

5.3
Although the Ministry's website provides support and a considerable amount of material, many schools do not find this easy to use and consider that they are not trained well enough to make decisions about property. This is another reason they rely heavily on external property planners. In our view, there needs to be improved role clarity and greater recognition that property matters are an important function for school boards and principals. The Ministry also needs to improve training and tools for school boards and principals to ensure that they have the capability to carry out these roles.

5.4
Although schools involved in the Ministry "focus-groups" considered that the Ministry communicates well, this is not the view of all schools. Ministry Advisors are the "face of the Ministry" to most schools but those we talked to did not feel that they saw their Ministry Advisor enough and that the person in that role changed too often. We suggest that the Ministry increase the capability and capacity of its regional property advisors.

Roles and responsibilities of school boards

5.5
The focus of the school sector is to keep school property in a good condition, invest in flexible learning spaces, and improve the educational experience of students.

5.6
Most schools and the Ministry are clear on their roles set out in the Occupancy Document. However, there are situations where schools are unclear on the role descriptions: particularly when schools do not have regular contact with their Ministry Advisor; and when principals are uncertain about their responsibilities for property management. Small schools often rely heavily on their contracted property planner and may not understand how the Ministry and schools should interact about property matters.

5.7
In our view, there needs to be clarity about their roles and greater recognition that property matters are an important function for school boards and principals. Those responsibilities cannot be entirely managed by the Ministry and external property planners and project managers.

Property planning

5.8
As previously discussed, assessing the condition of school property and prioritising project work is the first step of the School Property Plan and crucial to the integrity of further investment. Once completed by the property planner and agreed by the school, the Ministry's regional managers approve the School Property Plan. Schools update their plans every five years, so about 20% of schools should be having their School Property Plans approved each year. There are some exceptions, such as new schools and schools that are not required to prepare School Property Plans (these are mainly Christchurch schools and a limited number of schools receiving funding for major redevelopment projects).

5.9
Schools told us that they can experience significant delays in signing off their School Property Plans because of disagreements between the Ministry and the school. For example, some schools wanted to invest in projects they considered necessary for health and safety or essential renewal work but the Ministry wanted to prioritise other projects, such as flexible learning spaces. There can often be tension between the views of the school and Ministry because of their different roles and responsibilities for property.

5.10
In the year to 30 June 2016, the Ministry reported that it signed off 63% of School Property Plans against a target of 80%. The Ministry's explanation for not meeting this target was:

The signing of ten-year property plans is a shared responsibility between schools and the Ministry. We signed a total of 374 ten-year property plans, an improvement of 60 compared with 2014/15. We did not achieve the target, however, due to internal capacity constraints, external provider training requirements and implementation of the Ministry's new property management system. Less system and organisational change in the coming financial year should allow for a stronger focus on the signing of ten-year plans.11

Project management

5.11
Once the Ministry approves the School Property Plan, managing the approved projects effectively is critical to the school, because it is responsible for any significant overspending. To mitigate risks, schools usually hire project managers to manage their property projects. However, until the Ministry set up a panel in late 2015, there was no control over the quality of project managers. Schools do not have to use the project managers who are on the panel but they are encouraged to.

5.12
The extent of the project manager's role depends on the involvement of school principals and school boards in governing and managing projects. The success of projects can depend on a school's expertise and ability to manage contractors and its relationship with the Ministry. The Ministry is considering strengthening its risk assessment of schools capability to manage projects, but has not yet put in place these assessments. Schools can always get help from the Ministry but the Ministry Advisors are not necessarily actively involved during the planning and construction phase of projects.

5.13
When a project begins, the Ministry will set it up on its property management system and track the progress of the project. Regular reporting is available to Ministry staff at a national and regional level for all school–led projects. Regional staff monitor projects, focusing on the spending against set budgets and reporting from Ministry Advisors about the project's progress and technical compliance. After a recent internal review of school-led property projects, the Ministry will begin asking its Ministry Advisors to review costs incurred and approve final funding releases. However, we have not yet seen evidence of this being implemented beyond the region that established this level of monitoring.

Maintenance

5.14
As part of the School Property Plan, schools prepare a plan for their maintenance spending in the next 10 years and consider capital projects. The plan should include maintenance that a school might periodically need to carry out, such as painting the school. The plan should be informed by the information about the condition of the school property and take into account the assets that are due to receive investment in the agreed school-led property projects.

5.15
School auditors consider that school boards do not give as much attention to their maintenance plans as they do to capital projects. This can mean that schools are not adequately planning for their maintenance needs. Also, because maintenance funding is provided annually, there is a risk that schools might not have the funds to carry out significant maintenance required in the future.

5.16
Other maintenance risks to schools are:

  • The condition of the school's assets has reached the point where the annual maintenance funding is no longer enough and other renewal funding might not be available, depending on where the school is in the five-year planning cycle.
  • There are other financial demands on a school and it decides to use the funds elsewhere to ensure that it meets its educational achievement objectives.
  • The school's maintenance funding is not enough to cover the extent of maintenance needed because either it has extra classrooms or it has existing property issues, and the school might need to use a high proportion of its Five-Year Agreement funding allocation on health and safety work. This means that funding is not available to modernise or even renew property.
Recommendation 6
We recommend that the Ministry of Education, with the school sector, more clearly define the roles and responsibilities of the Ministry, principals, and boards of trustees for managing school property and recognise that these may differ between schools.

Property tools and training available to school boards

Training

5.17
The Ministry provides training in property-related matters for school board members and principals. However, the general view throughout the school sector is that the training is not adequate, considering the significant investment decisions that school board members and principals need to make and put in place. The capability of principals and school board members is critical.

5.18
Without enough training, opportunities can be missed or funding used in a way that does not reflect the best value for money or long-term solution to an issue. Stakeholder groups consider new principals should get substantially more training in property matters. If the Ministry continues to rely on schools to manage property projects, we support more training for principals and school boards. People we interviewed told us that informal peer support from more experienced principals to new principals without property management experience is critical to the success of school property projects.

5.19
Discussions with stakeholder groups reveal that property matters can take a lot of the school board's time. Where the Ministry is considering issues that are affecting the school network strategically, such as high student numbers and deciding whether to provide extra classrooms or a new school, school boards and principals will become heavily involved.

Guidance and other tools

5.20
The Ministry provides a broad range of tools and material that is available to schools through its website. Support is also available from regional staff should schools need help. Schools find these tools and material up-to-date, relevant, and practical. However, principals and school board members told us that it is hard to identify the right template or document to use for a particular circumstance.

5.21
The Ministry wants to make sure that it provides new tools and guidance in a timely way, and this forms part of regular communications with the school sector. The Ministry often uses regional forums to provide schools with updates on recent changes adopted by Infrastructure Services and the property tools and material available.

5.22
The Ministry's procurement tools and standard documentation are available to school project managers, who have an important role in property management. Our discussions with some of the project managers show that they know how to access the information and that they use the material provided by the Ministry.

Recommendation 7
We recommend that the Ministry of Education enhance the relevant training, tools, and support provided to schools to allow them to carry out their property management responsibilities.

How schools are using asset information

5.23
In our discussions with schools, it became clear that schools without principals or school board members with significant property experience have limited visibility or use of the Ministry's asset information. Most schools are not interested in the specific databases of information, mainly because of their reliance on external property planners and project managers. Although the Ministry keeps information about the condition of school property at a building level, schools mainly react to what they see on the ground, because day-to-day the school usually knows about the most immediate property issues.

5.24
Historically, PMIS was available to schools. It would show the capital projects for each school whether ongoing or completed, at a school or national level. However, the Ministry has not updated the property information in PMIS since 30 June 2016. The Ministry is planning to make this information available to schools from Helios.

5.25
Schools rely on external property planners to access necessary skills. However, if school staff or school board members lack experience in property matters, they may not be able to engage with the property planner in an effective way. Schools are vulnerable if they are not adequately engaged in property matters because it provides an environment where the school board may not receive the best advice for investing its allocated funding wisely. The Ministry has mitigated this in part by requiring schools to use an approved property planner, although this is not a requirement for project managers.

Interactions between the Ministry of Education and schools

5.26
Stakeholder management is an important part of the Ministry's approach to improving its performance as a school portfolio asset manager. Different stakeholders have different perspectives on the Ministry's success in managing the school property portfolio.

5.27
The principals' representatives generally believe the Ministry is unresponsive and not collaborative enough when providing the sector with solutions. However, these views are not held as strongly by school boards' representatives or by individual schools. An important part of the gap between what the school expects and what the Ministry can provide continues to be communication and the historical challenges represented by matters such as weathertightness problems and the general age profile of school property.

5.28
The Ministry Advisors are effectively the customer face of the Ministry for schools. It is critical that Ministry Advisors identify schools that need support or interventions by the Ministry in a timely way. Each Ministry Advisor looks after 35-55 schools. The large number of schools each Ministry Advisor has to look after means they are not able to make on-site visits as regularly as we would expect for such a large and complex portfolio. Some people we spoke to felt that they did not see their Ministry Advisors regularly enough and that Ministry Advisors change too often.

5.29
When experienced advisors leave the Ministry, another experienced advisor is given their complex schools. This shows a risk-based approach to allocating advisors to schools. However, it creates more changes in the portfolios of Ministry Advisors. One of the findings of the assessment of the Ministry as part of the Treasury's Investor Confidence Rating was that more resources should be provided to support Ministry Advisors.

5.30
Many schools feel that communication from the Ministry on school-specific property matters is poor, and there is often uncertainty about the timeline and decision-making on projects. Although an appointed property planner or project manager will have a critical role, the Ministry needs to continue to establish relationships with principals and school boards. We would expect the Ministry Advisor to be the school's trusted advisor.

5.31
The Ministry's national team has regular phone interviews with all principals. We understand that although these conversations have allowed principals to communicate some issues of significance warranting attention to the Ministry, they have not identified a large backlog of concerns or incomplete work.

5.32
Infrastructure Services has set up focus groups for schools to discuss new initiatives in the sector and provide feedback to the Ministry. Schools have commented that this is an area other parts of the Ministry could learn from. However, schools that do not participate in these focus groups lack an understanding of the Ministry's direction and aims for school property.

5.33
Although the Ministry has done much work centrally to improve capability, standardisation, and support for the sector, schools that have limited interaction with the Ministry are not gaining the benefit of this work.

Recommendation 8
We recommend that the Ministry of Education increase the capability and capacity of its school property advisors so that frontline services to schools can be improved.

Co-ordination of investment decisions

5.34
Regional staff and capital works programme teams work together when schools need national intervention. Capital works teams take the lead in contract management and project monitoring. However, regional staff, mainly the Ministry Advisor, will eventually have to take over continuing operations once projects are complete. It is critical from a regional perspective that schools are satisfied with the outcome of the national intervention, or at least understand the nature of the property solution the Ministry has provided.

5.35
We noted from our interviews that schools have not noticed significant duplication of effort between different Ministry teams. However, schools do have concerns about the timeliness of projects, the number of parties involved, some Ministry appointments, and number of staff changes without enough communication. We were told these concerns were more the exception than the rule.

5.36
Some schools included in our sample had significant concerns about the timeliness of the Ministry's response to weathertightness issues and increases in student numbers. Concerns continue about how long projects take. Schools gave us some examples of where the Ministry first prioritises projects and then delays them significantly without adequately explaining why.

Opportunities for the Ministry of Education

Facilities management contract

5.37
Individual schools arrange and pay for their own maintenance work. This can create inefficiencies or exposure to contractors who may take advantage of schools not having robust procurement practices. Schools can also fail to maximise their value for money where few contractors are available.

5.38
The Ministry has piloted a facilities management contract in the last two years. Although we have not received a final benefits analysis of this work, we understand from the Ministry and from schools that it was well received and the services were of a high quality. Also, the facilities management contract reduced the principal's work load and significantly reduced the risk that schools were not receiving value for money for the work completed.

5.39
We understand the main challenge for schools arising from this facilities management contract is that the annual cost of the contract greatly exceeded their annual maintenance funding. Therefore, unless further savings were available, such a contract would be financially challenging to put in place. The other challenge is that the condition of all schools is not consistent. Therefore, it would only be possible to set up a service-level expectation once schools had resolved any issues of deferred maintenance, unless these issues were specifically excluded from contractual arrangements.

5.40
We understand the Ministry is still considering whether it is practical to roll out the facilities management contract pilot throughout a broader range of schools. This was a recommendation of the Treasury's Investor Confidence Rating assessment. Although we see that there could be a significant increase in the annual cost of maintenance funding, the benefits to the school property portfolio and in schools' capacity to provide education could provide a significant return on investment. Ensuring that schools are maintained at a consistent standard should reduce the need for extra capital funding, including significant interventions needed when deferred maintenance is allowed to build up, reducing total costs over the life of the assets.

5.41
In some areas of the country, a lack of contractor capability and resources available to schools presents a challenge. Without facilities management contracts or other solution, there is no way of reducing the risk for schools in rural or sparsely populated areas.

Procurement opportunities

5.42
Given the scale of expenditure in new builds, major redevelopments, and responding to the increase in student numbers, procurement represents a risk. However, it is also an opportunity for the Ministry to get value for money. The Infrastructure Services procurement team supports all national programme work and has set up a centre of excellence to support capital works teams throughout the country. The Ministry is one of the highest users of the Crown's online tender system and the sector has a strong understanding of the Ministry's property-focused procurement mechanisms.

5.43
The Ministry has increasingly focused on procurement in the last three years. The Ministry has recently set up panels for different types of services and used competitive bids to create increased participation in the sector. These panels have only recently been established, so we cannot yet determine their effectiveness. However, by concentrating the sector participants into pre-qualified areas of expertise, this should increase the capabilities of all providers who work in the sector. Also this should give better value for money and reduce the amount of time before a project starts.

Other opportunities

5.44
Other opportunities for the Ministry include bringing together schools' Five-Year Agreement funding to maximise group buying power and, in limited circumstances, reviews of education provision in specific geographic areas. However, these reviews normally occur only when there is a major event, such as natural disaster or fire. Current governance structures can result in situations where, if one school does not want to "opt in", it can result in district-based initiatives failing. The Ministry believes that more collaboration between schools in Communities of Learning will assist with this.

11: Ministry of Education, Annual Report 2016, page 74.