Program 3.2: Overseas property

Program 3.2 Objective
  • To ensure a secure Australian government presence overseas through the effective management of the Commonwealth's overseas owned estate and of the contracts for the leased estate.
Program 3.2 Deliverables
  • Efficient and effective management and delivery of a substantial construction and refurbishment program in the overseas property estate, including:
    • construction of a new chancery, residential accommodation and a head of mission residence in Jakarta; construction of a new chancery and head of mission residence in Bangkok; and a services upgrade of the chancery in Paris.
  • Efficient and effective management of the overseas property estate, including contracts for the leased estate, to meet the government's requirements and maintain conditions and service capabilities.
  • Effective management of outsourced property contract arrangements.
Program 3.2 Key performance indicators
  • Completion of construction and refurbishment projects within an agreed timeframe and budget.
  • Effective and accountable management of the property services contract and construction project contracts.
  • Achieve a portfolio condition and utility rating of good or better.
  • The majority of tenants rate the performance of the service provider and the Overseas Property Office as good or better.
  • Asset management plans are in place for all owned properties in the estate.
  • Achieve a management expense ratio appropriate to the unique nature of the Commonwealth's overseas owned estate.

Program 3.2: Overseas property

Overview

The department, through the Overseas Property Office and Services (OPO), ensured the provision and maintenance of safe and secure office and staff residential accommodation for government agency tenants overseas.

The department oversaw both medium and large-scale construction projects in the overseas estate, in particular the development of major new chancery complexes in Jakarta and Bangkok.

Maintenance and refurbishment programs sustained the value and functional effectiveness of the overseas owned estate. As at 30 June 2013, the overseas owned estate was valued at $1.8 billion.

Regular contact was maintained with all posts by OPO's estate managers and property specialists, and through the contracted property services provider, DTZ (formerly known as UGL Services Pty Ltd). Based on the regular annual property inspections by the DTZ facilities managers, comprehensive asset management plans were developed for all properties in the overseas owned estate.

OPO enhanced strategic asset and portfolio planning, and continued its dedicated program of global property compliance. Remediation and mitigation measures were implemented when areas of non-compliance were identified.

The revised governance and financial arrangements for the overseas owned estate, which were recommended by a joint review of OPO by the department and the Department of Finance and Deregulation and approved by the government in May 2011, were fully implemented.

Construction program

In 2012–13, OPO undertook a substantial construction and refurbishment program in the overseas property estate.

In the owned property estate, construction commenced in December 2012 on the major new chancery and diplomatic residence complex in Jakarta. The complex will be the largest diplomatic construction project ever undertaken by the Australian Government and entails the construction of a chancery, head of mission residence and accommodation for 32 diplomatic personnel and their families, recreational facilities and a medical clinic. Office space of 20 000 square metres will accommodate staff of 16 Australian government agencies, comprising 165 Australia-based staff and 374 locally engaged staff. Increases in representation since initial planning will be absorbed into the existing space and budgetary parameters. The head works contract for the project was awarded to the Australian construction company Leighton Contractors in partnership with the Indonesian construction company Total Bangun Persada. The project is scheduled for completion in the second half of 2015.

OPO Project Director Jakarta, Adrian Bowen (right), discussing work on the Jakarta chancery on site with the Leighton Total Joint Operation team, (left to right): Project Manager, Greg Jackson; Director, Lio Sudarto; and Deputy Project Manager, Rudy Wibowo, June 2013. [Australian Embassy Jakarta]

OPO Project Director Jakarta, Adrian Bowen (right), discussing work on the Jakarta chancery on site with the Leighton Total Joint Operation team, (left to right): Project Manager, Greg Jackson; Director, Lio Sudarto; and Deputy Project Manager, Rudy Wibowo, June 2013. [Australian Embassy Jakarta]

 

In Bangkok, we took possession of the site for construction of a new chancery and head of mission residence which will provide office accommodation for 53 Australia-based staff and 157 locally engaged staff. The Bangkok project is scheduled for completion in 2016.

Construction of a new secure chancery in Nairobi was approved by the government in the 2013–14 Budget and this project will be carried forward in the coming year.

Refurbishment of essential building services and associated works were undertaken at the chancery in Paris. Refurbishment of the head of mission residence in Paris is on track to be completed on schedule in July 2013. Construction also commenced on a new, owned head of mission residence in Colombo.

In the leased estate, the chancery in Brussels was relocated, construction continued on the new chancery in Addis Ababa, and planning proceeded on accommodation for the new consulate-general in Chengdu

Management of the overseas property estate

We continued to improve strategic asset and portfolio planning through the Portfolio Strategic Plan, which forecasts major new capital works and refurbishments to the overseas owned estate.

Substantial progress was made in mapping OPO's business practices to deliver greater visibility and understanding of the dependencies that link project design, planning and delivery. To inform investment decisions and performance monitoring, we developed rigorous asset management plans for all owned properties. To help inform other areas of the department and attached agencies of upcoming priorities, work is underway on a planning tool which will chart leasing and potential capital works projects within the leased estate.

The department's property services provider DTZ delivered property management and financial services on leased chanceries and head of mission residences, including annual inspections, technical assessments and advice on compliance and building safety. In addition, DTZ managed procurement and contractor services for maintenance of the estate, and provided management and revenue collection, payment processing and IT and reporting support services. DTZ's work was carried out in accordance with Commonwealth procurement requirements.

Satisfaction with DTZ's and OPO's performance is measured by annual post surveys. The surveys conducted in 2012–13 showed posts rated OPO's performance as good or better (86 per cent) and DTZ's at 75 per cent.

All owned properties were assessed as good or very good through a conditions rating index. This index considers the physical condition of all assets and maintenance and refurbishment programs delivered.

We have completed comprehensive audits of 55 posts to confirm compliance with Australian work, health and safety practices. Additional ad hoc audits and hazard identification work was also undertaken and remediation plans were developed and implemented. A program of audits of the remaining 35 posts is underway.

In managing the Commonwealth's overseas property estate, the department achieved a management expense ratio (MER) of 1.314, which is appropriate to the unique nature of the estate. (MER refers to management expenses expressed as a proportion of the portfolio value.)

Outlook

A significant part of OPO's work in 2013–14 will be the construction of the new chancery complex in Jakarta, commencement of construction of the new chancery and head of mission residence in Bangkok and detailed planning for the new chancery in Nairobi.

We will manage a substantial program of construction, refurbishment and maintenance works to sustain and improve the value of the overseas owned property estate, particularly in Dili, Hanoi, Paris, Washington and Port Moresby.

We will continue the program of compliance audits and hazard identification, risk mitigation and remediation in the overseas estate to ensure the safety and welfare of staff, their families, contractors and visitors.