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3. OPERATIONAL BUDGET REVIEWS FOR ADMINISTRATIVE SERVICES - EXAMEN DES BUDGETS DE FONCTIONNEMENT DES SERVICES ADMINISTRATIFS -
GESTION DES BIENS IMMOBILIERS |
Committee Recommendation AS AMENDED
That Council
approve the final 2008 Operational Budget of the Real Property Asset Management
Branch, as amended
by the following:
1. That
the 2008 Operating Budget of the Real Property Asset Management Branch be
reduced by $2.2M.
Recommandation MODIFIéE du comité
Que le Conseil approuve le budget
final de fonctionnement de 2008 de la Gestion des biens immobiliers, tel que
modifiée par ce qui suit :
1. que
le budget de fonctionnement de 2008 de la Gestion des biens immobiliers soit
reduit par 2,2 $M.
Documentation
1. City Council report dated 15 February 2008
(ACS2008-CMR-CSE-0017).
2. Extract of Minute, 22 February 2008.
Report to / Rapport au :
Long Range Financial Plan Sub-committee
Sous-comité du plan financier à long terme
and Council / et au Conseil
Submitted by/Soumis par : City Council / le
Conseil municipal
Contact
Person/Personne ressource : Diane Blais,
Committee Coordinator / Coordonnatrice du comité
City
Clerk’s Branch / Direction du greffe
(613)
580-2424 x, 28091
Diane.Blais@Ottawa.ca
That the Long Range Financial Plan Sub-Committee recommend Council approve the final 2008 Operational Budget of the Real Property Asset Management Branch, as presented in the attached updated 2008 operating budget pages.
Que le Sous-comité du plan financier à long
terme recommande au Conseil d’approuver le budget final de fonctionnement de
2008 de la Gestion des biens immobiliers, tel que présenté dans les pages mises à jour du budget de
fonctionnement de 2008 ci-jointes.
In December 2007, during its deliberations on the 2008 Budget, Ottawa City Council approved a motion calling on the Long Range Financial Plan (LRFP) to conduct operational budget reviews for administrative services.
At its 9 January 2008 meeting, Council considered and approved a subsequent motion, which amended the schedule for the LRFP’s review of the various branches.
In order to assist the LRFP in
its work, Financial Services staff has provided updated budget pages for the various branches being
reviewed. These pages have been revised
to reflect any changes approved by Council during its budget deliberations.
The budget pages for the Real Property Asset Management Branch are attached to this report and are numbered sequentially, however they also include the reference page to the 2008 Draft Budget document in case members of Council have made notes in their budget books and want to refer to them.
This item will be advertised in the local dailies as part of the Public Meeting Advertisement on Friday preceding the Long Range Financial Plan Sub-Committee Meeting.
Any changes approved by Council
will amend the City’s 2008 Operating Budget.
Document 1
- Updated
2008 Operating Budget Pages – Real Property Asset Management
Staff from the various branches to implement any changes approved by Council.
OPERATIONAL BUDGET REVIEWS FOR ADMINISTRATIVE
SERVICES - Real Property Asset
Management
EXAMEN DES BUDGETS DE FONCTIONNEMENT DES
SERVICES ADMINISTRATIFS - GESTION DES BIENS IMMOBILIERS
ACS2008-CMR-CSE-0017 CITY WIDE / À
L'ÉCHELLE DE LA VILLE
Mr. B.
Robinson, Director, Real Property Asset Management (RPAM), spoke to a
PowerPoint slide presentation, which served to provide the Committee with an
overview of his branch’s mandate, history, accomplishments, operating budget,
performance management and operational efficiencies. A copy of this presentation is held on file with the City Clerk.
Mr. Plamondon spoke to slides 5, 6 and 7 of his presentation, which outlined the review panel’s observations relative to the Real Property Asset Management Branch. A copy of this presentation is held on file.
At Mayor O’Brien’s request, Mr. Plamondon reviewed the rationale for using forecast numbers as the starting point in setting the budget for subsequent years, particularly as this would relate to the RPAM budget and the figures outlined at page 3 of his slide presentation.
Staff responded to a variety of questions from Committee members arising out of the presentation. The following summarizes the main points raised.
Speaking to the frustrations experienced in some areas when community groups wanted to make relatively minor improvements in community facilities, Mr. Robinson acknowledged that there were problems in the branch’s operation. He discussed the state of some of the facilities inherited upon amalgamation and the importance of ensuring work was done according to regulations. Having said that, he suggested every situation was different and where there were real problems, the branch’s management team needed to know about it.
Responding to
a follow-up question, Mr. Kirkpatrick acknowledged that in general, the City
may be too risk averse. He noted that,
pursuant to a previous direction, staff would be coming forward with a risk
management strategy. However, he
referenced Mr. Robinson’s explanation about ensuring work on City
facilities was done according to regulations and submitted that in this area,
the City had to be careful to ensure it was compliant with all regulations.
In response to various questions with respect to RPAM support for capital projects, staff advised that a 5% project management fee was charged back to departments in relation to RPAM support for design and construction supervision of capital projects. A detailed discussion ensued in which staff explained the background and rationale for this policy, as well as the costs and timelines generally associated with such projects and the ability to recover costs when project timelines were not respected. It was noted that the 5% fee was lower than what it would typically cost to receive these same services from an external source. Furthermore, staff submitted that if a private citizen or community group were to build the same facility to the same standards and with the same liability insurance, the costs would likely be comparable.
Speaking to the increase needed for corporate accommodations, identified at page 33 of the agenda package (page 686 of the Draft Budget), Mr. Robinson indicated the facilities at City Hall and Constellation had been compressed as much as they could be and that additional space was required, therefore the City was leasing office space at Barrister House, on Elgin Street. He explained the industry standard was approximately 200 square feet per person and that the City’s facilities were currently at approximately 170 square feet per person. He noted various options were being explored to reduce pressures on corporate accommodations, such as teleworking or having people work from home.
Responding to questions with respect to new FTE requirements associated with new or expanding facilities, staff explained RPAM staff’s roles in these facilities and the fact that, depending on the client in the various facilities, RPAM had to abide by the collective agreements of the respective unions – either CUPE or ATU, depending on the facility, which had an impact on staffing levels and shift scheduling.
In response to a question with respect to the level of cross-training done in his branch, Mr. Robinson indicated his branch had approximately 700 operational staff and a budget of about $80,000 for training, which came to about $153 per person per year. He advised that his management team had been creative in finding ways to meet their staff’s training needs, however he reiterated that their formal training budget was approximately $153 per person.
Speaking to the issue of using over-time versus additional staff, Mr. Robinson indicated management was fairly forensic in its assessments. He explained the analysis undertaken whenever a new facility was brought on stream and the deployment model used to ensure maximum efficiency – geographic rather than functional. He noted the union had been a key player in the branch’s success by recognizing and participating willingly in this service delivery strategy.
With respect
to the process of consolidating facilities, the notion that this should offset
FTE growth in RPAM and questions as to what was driving FTE growth in his
branch, Mr. Robinson referenced the key message in slide 14 of his
presentation, he pointed to the new facilities having come into the inventory
and he noted that since 2001, the branch was up by the equivalent of 1
FTE. He indicated this had been
accomplished by looking at external service deployment strategies. He suggested that if there was a cap placed
on them, this would have the effect of driving up his overtime costs or forcing
him to use external services, which were not always cost effective. He noted his branch had been through
numerous reviews and he pointed to their success in doing assessments and in
blending internal and external service delivery strategies.
Responding to a follow-up question with respect to facilities consolidation, Mr. Robinson confirmed there was a corporate initiative, as part of the efficiency program. However, he submitted the challenge RPAM had related to the corporate will to close facilities.
Speaking to a report recently circulated to members of Council with respect to vacancies in the various branches and, in particular the number of vacancies report in RPAM (30.5), Mr. Robinson indicated their actual vacancies was 12 and that the aforementioned document reflected the churn rate common to their business. He maintained there were 12 positions identified in the report for 2008 budget requirement and that this was the actual number of vacancies in the branch.
In response to questions with respect to slide 31 of his presentation, Mr. Robinson confirmed that RPAM had a ratio of 70/30 with respect to preventative versus corrective maintenance, which was consistent with industry standards. He acknowledged that greater investments in that regard would lead to better service continuity and less equipment failure. In closing, he noted that upon amalgamation, the ratio was the reserve. Therefore, this was a good news story because the branch had completely turned it around since 2001.
Responding to a series of questions with respect to the cost of utilities and investments in energy efficiency, Mr. Robinson indicated the branch had previously been afforded a dedicated funded program to help achieve energy efficiencies but that program died in 2008. Because he no longer had this tool, he submitted there was a risk that he would not be able to deliver 20% in terms of energy savings. Furthermore, he maintained he could not control the weather so a particularly cold winter or a particularly hot summer would impact usage. He then discussed changes in the industry in terms of unit rate costs and deregulation, which would further impact his ability to control costs associated with utilities. To put these factors in context, he advised that a one cent increase would have a $3M impact. He went on to say that, having assessed it, staff had pushed the reset button and reduced by 2008 budget increase request by $1M.
Speaking to
the rest of the 2007 surplus, Mr. Robinson indicated 0.75% of the surplus was
generated by odds and sods. As an
example, he referenced a delay in acquiring new vehicles, which led to a
$263,000 surplus. He submitted that,
had the vehicles arrived in a timely fashion, he would not have had that
savings. He acknowledged that the
branch had a surplus in 2007, however he expressed the following concerns: that reducing the budget would have the
effect of punishing his staff, who had worked long and hard and been creative
to find ways to meet their objectives; and that the reduction would not be
sustainable because of problems in facilities, which needed funding in order to
be resolved. He asked that Committee
afford him the opportunity to use some of the surplus to re-align in order to
deal with the business needs.
Mr. Robinson responded to follow-up question with respect to the timing of the order for the aforementioned vehicles and issues that affected their timely delivery.
In response to follow-up questions with respect to costs associated with heating and cooling, Mr. Robinson indicated staff monitored weather patterns and tried, as much as possible, to tweak temperature settings in order to achieve savings. However, he maintained there was a limit as to how far they could push the threshold. He believed they had been able to achieve savings in this area in 2007 because it was a relatively warm winter and cool summer, which may not be the case in 2008. He noted that in the first quarter of 2008, they had already surpassed their targets over 2007 because of the colder weather patterns this year in relation to last January and February.
A brief discussion ensued with respect to making greater investments in energy efficiency. Mr. Finnamore advised that in general, investments of this nature had a 20% annual return, for a 5-year payback. He indicated that, of the $3M worth of energy efficiencies, Mr. Robinson had applied $1M to the risk management side and reduced his requested increase for 2008 associated with energy increases. This left $2M of risk management funds. He suggested it might be appropriate for Council to take a portion of that and invest it in the energy management program, which would provide a 20% to 25% return. He wanted to address this because, during the process where staff put together the corporate SI initiatives, energy management was one of the things extracted from it, with the assumption being that it would fall into the category of technological efficiency savings. He noted it would compete with other IT and control-type initiatives in the $5M fund Council set aside and therefore it may or may not get funded, depending on the other opportunities in that category.
Responding to follow-up questions, Mr. Finnamore explained that the RPAM budget had a $2M surplus in energy, which Mr. Robinson wanted to maintain for potential 2008 issues, such as user rate changes.
Mayor O’Brien felt it was very clear that, since amalgamation, the senior management team had done a fairly substantial job of reducing the number of facilities, consolidating space, and reducing the square foot usage per person. He suggested staff had also done an extremely competent job in terms of investing in increasing energy efficiency. However, he noted the requested increase in this branch’s budget and submitted that even if Council took out $2.2M of the 2007 surplus, it would still leave a 6% increase over the previous year’s budget. He re-iterated that staff had done an outstanding job, but he maintained that Council was struggling with some money issues.
The item was
then approved as amended.
That the Long
Range Financial Plan Sub-Committee recommend Council approve the final 2008
Operational Budget of the Real Property Asset Management Branch, as amended
by the following:
1. That the 2008
Operating Budget of the Real Property Asset Management Branch be reduced by
$2.2M.
CARRIED
as amended