Analysis

Public property

By Staff Writer

Posted on July 8, 2011

With news that Jordan is to revolutionise its use of public facilities, EC Harris partner Bernie Devine explains how its private sector advisory coalition will manage the country’s public sector assets Faced with the challenge of competing with its lucrative neighbours without the unlimited sovereign wealth funds, the Jordanian government has recruited British consultancies […]

With news that Jordan is to revolutionise its use of public facilities, EC Harris partner Bernie Devine explains how its private sector advisory coalition will manage the country’s public sector assets

Faced with the challenge of competing with its lucrative neighbours without the unlimited sovereign wealth funds, the Jordanian government has recruited British consultancies McBains Cooper and EC Harris to revolutionise how it manages its public buildings portfolio.

Working on behalf of the government’s privatisation commission, the coalition — along with consortium partners K&L Gates and the Jordanbased Darat Consulting — will deliver a public sector property review.

The aim of the exercise is to increase the efficient use of Jordan’s public buildings portfolio; driving greater return on the public funding invested in it. International built asset consultancy EC Harris, will act as programme managers and
technical advisors to the Directorate of Government Buildings.

“The Jordanian Government is one of the few governments in the region to recognise the need to improve how they manage real estate,” says EC Harris partner, Bernie Devine.

“The contract is to centralise the management of their properties portfolio. Establishing an efficient process is a critical component to maximising the return on investments. We’re at the start of the process and we are helping them to understand how to manage the portfolio better,” he adds.

Funded by the World Bank, the project will involve creating and implementing a “comprehensive property database and management strategy” to enable the property department to realise the full value of its assets; a property maintenance strategy; and procurement guidance.

The strategy will also identify potential maintenance projects to be financed through PPP; methods to ensure projects are attractive for investors; and an overall review of the department and its resourcing.

“Jordan is facing a number of issues, such as strategic land use decisions, aligning asset decisions with service delivery needs and how they manage the portfolio; looking at utilisation of space; setting design standards; getting assets
classified and getting a cost performance base in place,” Devine recalls.

“We will also help to implement new systems and processes, which will lead to improving the supply chain. It’s a positive outcome all round; rather than saying what is wrong with how they are currently working we will work on things with them help them improve these elements,“ he adds.

McBains Cooper director Anthony Coumdis calls the project a “crucial” piece of work which will: “Drive significant change and efficiencies in the way government-owned buildings are managed, operated and maintained”.

Behind the scenes

The tender process began in 2010, with EC Harris and McBains then working with the relevant authorities throughout Q1 2011 to negotiate on the specifics of what is needed and how to achieve it.

“They knew what they wanted but didn’t really have all the details,” says Devine. Naming one of two primary challenges as “focussing budgets”, the process will be implemented within months, providing other governments in the region with a best practice model.

Devine says the remit is to “set up all the major gate-way processes”, including contract works and procurement, yet he says the changes will take longer than the 12 months allocated to the project to filter through to all
government departments.

“There are a few governments in the region who recognised that they need to address similar issues and we are working with them also.

“The real challenge is that Jordan needs to be very focused on its budgets. We are working towards implementing the processes within months, which will get them down the road, but there’s a lot to do,” Devine comments. A major priority still on the ‘to-do’ list is addressing the lack of trade-based certification training; in short, the fact that no tradesman operating in the country is actually ‘certified’.

A problem at the best of times but, as Devine elaborates, a particular sticking point when there is a portfolio of thousands of buildings to manage.

“The government has been very receptive. One value they have realised is that this is a great way to drive training and employment into the national economy; it will help to manage buildings and also create economic growth
and jobs,” Devine says.

Likening the process to producing a road map, Devine maintains it is a collaborative effort, requiring huge amounts of work from all involved parties.

“This isn’t just ‘consult and go’, it is an institutional change; we don’t want to give them a fish dinner we want to teach them how to fish. It is working quite well,” he continues.

Working together

The concept of PPP was first introduced to the region almost two decades ago, for a power project in Oman.

Although establishing the contractual details can be time consuming, it has since been deployed aggressively, across a number of projects and is considered a vital method of funding for institutional, social and civil infrastructure projects.

As of September 2010, the value of PPP deals in development in the GCC alone stood at US $54.4bn; also at that time Egypt, Jordan and Syria were in the process of developing framework guidelines for partnerships. In addition Kuwait is developing a PPP strategy to be used on the construction of its $7bn metro system.

During his time as Prime Minister, Tony Blair employed the concept across a number of sectors in the UK, admitting the private sector was inherently more efficient than the public; and able to provide solutions, and money, where the public sector could not.

“Jordan doesn’t have as much money to support major investment like the GCC Oil States, and that will be the biggest challenge,” Devine observes.

“We will show them the best practice models but if you cannot afford it you cannot achieve it. One of the key things we are defining is a prioritisation model – if you have limited funds to spend, the best way to improve things is to encourage the private sector to invest,” he advises.

Saying the model will be provide a strong incentive for new players — both regional and international — to enter the Jordanian market, Devine says part of the work EC Harris and McBains will undertake includes pitching innovative
solutions to encourage such investment.

“The thing we are most excited about is that this is a great opportunity to improve asset performance for the country and demonstrate how, in this market, you can improve the quality of government services through very focussed asset management,” he says.