Real estate operation at the national police force

Report | 08-07-2015

Conclusions

The new forms of service being provided by the national police force make different demands on the organisation’s real estate. In combination with the target of saving €76.5 million a year as from 2025, they make a major real estate operation essential. Good real estate management is critical in such an operation. Cutting the cost of public real estate is a long-term process with risks and uncertainties that must be managed effectively as huge sums of money are involved.

In our opinion the following elements are relevant to good real estate management: a strategic real estate policy, a clear allocation of tasks and responsibilities, insight into the existing real estate portfolio, periodic assessment of proposed investments in new buildings, acquisitions and disposals in the light of the financial targets, and effective progress monitoring to mitigate risks so that the cost saving target is achieved on schedule.

We found that some of these elements – such as a real estate strategy with detailed social and financial targets – were in place at the national police force. The national police force has also clearly allocated the tasks and responsibilities for real estate and set standards for the number of square metres per workplace and the space required for flexi-workers. These elements together form a good basis to assess the current real estate portfolio in the light of future real estate requirements.

Our audit also found, however, that the following elements of real estate management were not in place at the end of 2014:

• insight into the actual and planned cost savings;
• a multiyear investment programme;
• necessary expertise for the disposal of real estate;
• information on the real estate portfolio and the operation’s progress.

We conclude from these findings that there are risks to achieving the cost saving target. Other ambitions regarding the services provided by the national police force may therefore also be at risk.

As the national police force is still a young organisation in many respects, we understand that the real estate portfolio must evolve gradually; not everything can be done at once. Nevertheless, the above elements should be put in place as quickly as possible. The financial consequences of the decisions currently being taken on the portfolio will be felt for many years.

Recommendations

We recommend that the Minister of Security and Justice (V&J) take stock of the current situation before pressing ahead with the national police force’s real estate operation. He should first sort out a number of matters to prevent irreversible decisions being taken that have unfavourable financial consequences. If budgetary constraints do not permit cost-saving investments, the minister could consider forming a special-purpose reserve.

To improve the management of the real estate operation and the cost saving target, we also made the following recommendations to the minister:

• ensure the financial targets are up to date and properly understood: make it clear what part of the cost saving target has been achieved by which concrete measures and how the remainder will be achieved;
• develop an integrated programme to carry out the real estate operation; it should include a multiyear investment programme, critical elements from the real estate plans, the main financial and planning risks, disposal plans, insight into the maintenance status, periodic reports that consider these elements in relation to each other, and an up-to-date understanding of the progress being made;
• use the multiyear investment programme to recalibrate the multiyear budget for the national police force;
• determine whether cooperation with the Central Government Real Estate Agency can help resolve short-term issues with professional capacity and develop the expertise necessary to make large-scale disposals;
• make all real estate costs transparent by coupling the real estate accounts to the financial accounts in order to create a full insight into the relevant costs of each building.

Response of the minister van V&J

The Minister of V&J thinks our description of the development of the national police force until the end of January 2015 largely agrees with his own observations and those of the supervisors. He sees our recommendations as support for the measures the force has already taken to resolve the problems we highlighted.

We are pleased the minister has undertaken to ‘enrich’ the real estate accounts with additional data and that he will study ways to cooperate with the Central Government Real Estate Agency. The minister indicated that he had taken stock of the situation and given priority in recent months to the further elaboration of the real estate plans. However, he did not explain what the financial consequences would be of changes in the real estate plans. There is therefore still a risk that irreversible decisions will be taken that have unfavourable financial consequences. We stress than an up-to-date understanding of the financial situation is necessary if the real estate operation is to get off to a good start.