Capital asset management for TEIs

Te whakahaere rawa o ngā Pūtahi Mātauranga Matua

Last updated 11 November 2016
Last updated 11/11/2016

This section sets out the Government’s, and our, expectations and requirements for how tertiary education institutions (TEIs) manage capital assets. It provides TEIs with tools, templates and advice to help them better manage their capital assets, the supporting systems and processes.

Why is the Government interested in the asset management of TEIs?

The tertiary education sector collectively manages around $9.5 billion of land and buildings. This makes it one of the largest social asset portfolios across the most capital intensive government agencies.

The Government has an interest in these assets being effectively managed. This includes:

  • owning the right assets
  • managing the assets
  • funding the assets
  • managing risks to the Crown balance sheet.

These are all critical ingredients to the ongoing provision of high-quality and cost-effective public services.

What is capital asset management?

Capital asset management (CAM) involves meeting required levels of customer service while ensuring individual investments and long-term priorities are aligned in the most cost-effective way. It requires the active stewardship of resources for present and future customers.

What must TEIs do?

TEIs with capital Crown assets must currently:

  • submit annually (in May), along with their audited information, their 10-year Capital Intentions Plan. This is underpinned by their Investment Plan . These two plans give the TEC a long-term view of the capital and near-capital investments of TEIs and an indication of effective planning and decision-making. Having a view of this investment pipeline also lets us understand capital sustainability in the sector
  • assess annually their capital asset management capability against agreed asset management standards and processes. This assessment alternates between an independent assessment performed by an accredited consultant and a self-assessment every alternate year.

Assessing the asset management capability of tertiary education institutions

We review these assessments to ensure that asset management standards are being maintained and/or improved. The assessments also let us know the level of maturity of each TEI’s asset management capability. Each assessment report includes a performance improvement plan that TEIs are expected to implement.

New 2015 requirements for capital asset management

In 2015, the Government updated its expectations for managing investments and both physical and intangible assets for:

  • all departments as defined by the Public Finance Act 1989
  • Crown entities
  • companies listed under schedule 4A of the Public Finance Act.

Cabinet Office Circular CO(15) 5 Investment Management and Asset Performance in the State Services

The 2015 Circular supersedes the Cabinet Office Circular CO(10)2 released in 2010 which sets out Cabinet’s expectations for approval of, and assurances relating to: 

  • major capital projects and
  • plant, property and software resources used to deliver services by public, and non-public service departments and Crown entities, especially Crown agents.

Under these expectations, TEIs were allowed to set their own sensible and aspirational targets for capital asset management. These targets were to be based on the scale of assets under the TEI’s management and how critical those assets were to the delivery of essential services.

The following aspects are continued from the 2010 Cabinet Office Circular, although they may not all apply to TEIs:

  • decision threshold levels
  • monitoring high risk projects
  • Public Private Partnership (PPP) consultation with the Treasury
  • investments in scope
  • Gateway assurance
  • asset management practice and performance
  • assurance
  • Better Business Cases
  • Government project portfolio reporting – 10-year intentions.

Our initiatives and next steps to meet the Treasury’s requirements

Since 2010, we have introduced various elements of good capital asset management for TEIs including:

  • independent and self-assessment of CAM capabilities
  • ensuring good, forward capital planning through the 10-year Capital Intention Plan submissions
  • establishing the collection and monitoring of Asset Performance Indicators via the 10-year Capital Intention Plan.

The Treasury has taken these initiatives into account and decided that TEIs will not be subjected to some of the onerous requirements of the 2015 Circular, specifically the requirement for an Investor Confidence Rating.

However, the Treasury has identified a number of areas for improvement and agreed to allow us to set our own timetable to achieve these improvements.

We are working closely with the TEI Sector Reference Group on capital asset management to decide how to meet the Treasury’s expectations.

Meanwhile, if you have any questions send them to: camenquiries@tec.govt.nz.