Annual Report 2004-2005

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Your location: Performance > Outcome 4 > Output 4.1 > Reporting against effectiveness indicators

OUTPUT 4.1: Property management

Reporting against effectiveness indicators

On this page: Overview :: Provision of accommodation overseas :: Physical management of assets :: Financial management of assets


Through effective management of the overseas owned property estate, the department met the Government's property needs in accordance with the Australian Government Property Principles—the standard that ensures maintenance of the value of the Government's property assets.

The department's Overseas Property Office (OPO), which is responsible for the management of all aspects of the Australian Government's overseas owned property estate, continued to apply rigorous commercial practice to management of the estate.

The department met indicative targets under output 4.1 relating to the maintenance of the overseas property portfolio. We paid a dividend to the Government, made a return on investment and maintained a management expense ratio consistent with property industry guidelines.

The department maintained regular close consultation with the Department of Finance and Administration and government agencies represented at our overseas posts to ensure effective inter-agency communication on relevant property management issues.

The international security environment continued to place significant additional pressures on the management of the overseas property estate, necessitating the relocation of a number of our overseas properties to meet new security requirements (see output 1.2 for more information).

Provision of accommodation overseas

Through a combination of owned property and property leased from private landlords, the Government fully met the wide range of office and staff accommodation requirements of agencies representing the Australian Government's interests overseas.

In 2004–05, the department managed owned properties in 57 locations, commercially valued at $1.3 billion at 30 June 2005.

The leased overseas estate comprises property leased by the department and other agencies from private landlords. The leased estate is funded from departmental appropriations (see Section 3: Corporate management and accountability on page 251 for information about the department's leased estate).

New chancery for the Australian embassy in Baghdad

The Overseas Property Office (OPO) completed construction of our new chancery in Baghdad in June 2005. The building, located in the International Zone, is leased from the Iraqi Government. It was extensively reconstructed and modified to provide a secure working and living environment for embassy staff.

The fast-track delivery of this project called for detailed planning and management in a uniquely difficult environment. There was close collaboration between relevant work areas of the department and consultation with the post throughout the project's design and delivery stages.

OPO managed the project through an on-site Australian project manager employing Iraqi contractors and a local work force. Difficult logistical problems caused in part by the security situation were overcome to ensure the regular supply of labour and the shipping and delivery of materials, including from Australia.

From the beginning of construction, continuous reviews of security requirements led to substantial additional works to ensure the chancery's effective future operation, as well as staff and visitor safety. A detachment of the Australian Defence Force provided security at the site, and will continue to provide security for the new chancery and embassy staff.

Physical management of assets

The department maintained a program of continuous assessment of all overseas property, involving annual inspections by qualified facilities managers and consultation with post management and agencies.

We assess properties using a model we developed for measuring and monitoring their physical condition. The model is based on property industry standards, including: expenditure on repairs and maintenance as a percentage of asset value; compliance with safety and storage codes; structural soundness; strategic importance of the individual properties; age of the properties with allowance for mid-life upgrades and refurbishments; and functionality and amenity of the properties.

The model is used to develop an age and condition profile of the estate, which provides a basis for determining priorities for upgrading, acquiring or disposal. It also guides the forward refurbishment program approved annually by the department's Senior Executive. The model identified a continuing significant trend of modernisation and renewal in the age profile, reflecting current and recently completed major construction works and relocations, as well as property divestments determined on the basis of market assessments.

Financial management of assets

The department operates a Special Account to manage the overseas owned estate. The account, which is separate from the department's Budget appropriations, was established in May 2002 by the Minister for Finance and Administration. Revenue into the account is derived from commercially based rents paid by agencies that occupy Government owned property overseas.

For detailed reporting on financial management of the overseas owned estate, see quality and quantity information for output 4.1, which reports on the rate of return on investment achieved from the operation of the estate in 2004–05, the annual dividend paid to the Government and the management expense ratio, which measures management costs.

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Department of Foreign Affairs and Trade Annual Report 2004–2005
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