Special Report 43 - The Building Maintenance Service
Published on 13 December 2002
Summary of Findings
The Building Maintenance Service (BMS) carries out general maintenance work and specialised restoration and repair work on State property. The BMS is part of the Property Maintenance Service of the Office of Public Works (OPW) which also includes a national network of professional staff who oversee the condition of State property and who advise occupiers of State property on maintenance and refurbishment requirements.
A summary financial statement on the operation of the BMS in 2000, published in the OPW’s annual report for that year, indicated that the BMS had incurred a loss of €4.3 million on its activities in Dublin. An examination of the management and operation of the BMS in the period 1998-2001 was carried out to establish the reasons for the reported loss.
Results of Trading
My examination revealed that the accounts produced did not isolate the true results of the BMS’s business with government departments and offices. This was because it included notional income and related costs of work commissioned by the OPW itself. Since two thirds of all transactions were internally commissioned on a non-chargeable basis, the reported losses on these activities were notional.
The revised accounts drawn up by my staff revealed losses in all years between 1998 and 2001 on work performed for government departments. Some of these losses were due to chargeout rates not being maintained fully in line with the cost base. However, the bulk of the loss was due to errors in invoicing and a failure to collect debts. The cumulative losses for the four years were estimated at €3.5 million.
The lack of functionality in the computer billing and management information system (which cost €600,000 to develop), coupled with operational failures of the system by BMS staff, were the main reasons why work was not invoiced.
The fact that the BMS incurred a trading loss on its operations does not mean that taxpayers incurred a loss of that amount. All of the BMS’s charged clients are public sector bodies, so the trading losses represent, in the first instance, a failure to charge other central government agencies the full cost of work carried out.
Efficiency of the BMS
There has been a long-standing aim within both the OPW and the Department of Finance that the BMS should be operated on a commercial basis competing with private sector contractors. The examination found that
- Competitive forces were operating between the BMS and private sector providers only to a very limited extent in the period 1998-2001.
- In its relations with its clients, the BMS has not adopted standard commercial practices, such as competitive bidding for jobs, providing fixed price quotations for the cost of work and signing off on work done.
Around 63% of BMS expenditure relates to staff costs. There appears to be scope to improve efficiency levels through better management of staff downtime and reductions in the levels of sick leave. Furthermore, the BMS deploys skilled tradesmen for even minor maintenance jobs, unlike its private sector competitors who use multi-skilled ‘handymen’ for less complex tasks. There is scope for increasing efficiency in the BMS by developing multi-skilled general services operatives and reducing job demarcation.
Management of the Maintenance Function
An overall inspection/advisory role in relation to the maintenance of all government property was assigned by the Department of Finance to OPW in 1994, but the Property Maintenance Service only started to conduct the necessary surveys and draw up prioritised maintenance schedules in 2000.
A consultant’s review of the BMS in 1998 found that it did not have clear business objectives. Although the OPW’s statement of strategy for 1998 - 2000 identified a timetable for development of management systems for all its business units, these have not been developed in the Property Maintenance Service. As a result, the BMS is still operating without a clear business mandate.
Meaningful measures of performance should be drawn up for the Property Maintenance Service incorporating appropriate private sector benchmarks for the BMS in order to assess its efficiency and effectiveness.
The OPW has recently drawn up proposals for the future role and operation of the BMS. The main changes proposed are
- The BMS would cease to carry out work for its charged clients. Instead, the occupiers of State property would enter into ‘measured term contracts’ with private sector maintenance providers. Until these are in place, the BMS will continue to provide services to paying clients.
- Most BMS staff will be assigned to work on particular properties and will carry out minor works as required. No charges will be levied in respect of this work.
It is not possible to predict whether the proposed arrangements are likely to result in better value for money in the absence of any costed justification for the proposals. Of particular concern would be whether work on buildings exempted from charges would be sufficient to absorb the entire existing workforce and, if not, how surplus staff would be cost effectively deployed.
The future arrangement for the maintenance of government property is important not just to the OPW but to all departments and offices. There is by no means a consensus on the ideal delivery method. Recent reports reveal a division of opinion about the relative merits of devolution of responsibility for maintenance to departments, and of its centralization, which has been a recent trend in some larger Irish organisations and in other public administrations.
Consequently, indicative cost impacts should be determined by pilot testing the new arrangements in a small number of representative departments and evaluating the outcome before any definitive commitment is made.