Capital asset management for TEIs

Te whakahaere rawa o ngā Pūtahi Mātauranga Matua

Last updated 9 February 2023
Last updated 9 February 2023

This section sets out the Government’s, and our, expectations and requirements for how  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 $15 billion of assets with land and buildings accounting for nearly $14 billion (as of 31 December 2021). 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, 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

Every independent assessment will include an assessment report by an accredited consultant, which includes a performance improvement plan that TEIs are expected to implement. 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. 

Cabinet’s expectations for capital asset management

In 2010, Government set out its expectations for the approval of, and assurances relating to, major capital projects, and for the management of capital assets used in the delivery of government services by public service and non-public service departments, and Crown entities.

Cabinet Office Circular CO (10) 2 Capital Asset Management in Departments and Crown Entities: Expectations (PDF 219 KB)

These expectations allowed TEIs to set their own sensible and aspirational targets for capital asset management based on the scale of assets under the TEI’s management and their criticality to the delivery of essential services. The Treasury was tasked with monitoring and reporting of these expectations to Cabinet.

These expectations were updated in 2015 to give effect to Cabinet’s intention to ensure active stewardship of government resources, and strong alignment between individual investments and the government’s long-term priorities.

Cabinet Office Circular CO (15) 5 Investment Management and Asset Performance in the State Services (PDF 135 KB)

The policy focused on capital expenditure, asset disposals, lease arrangements, “as a service” investments and asset performance.

The Government further updated its expectations in 2019 to optimise value from new and existing investments and assets, for current and future generations of New Zealanders.

Cabinet Office Circular CO (19) 6 Investment Management and Asset Performance in the State Services (PDF 383 KB)

 

 

 

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 Intentions Plan submissions;
  • establishing the collection and monitoring of Asset Performance Indicators via the 10-year Capital Intentions Plan, and
  • adopting the Treasury’s Better Business Cases Framework for the TEI sector.

The Treasury has taken these initiatives into account and decided that TEIs  will be exempt from the requirement for an Investor Confidence Rating (ICR), specified in 2015 and re-confirmed in 2019 for Tier 1 and Tier 2 Investment-intensive agencies. The TEC on behalf of the TEI sector is classified as Tier 2.

However, the Treasury has identified six areas for improvement (set out in the table below), of which four have been implemented as of October 2022. The TEC will address the remaining improvements, including continually updating and improving those already implemented.

Areas for Improvement

Progress

Comments

Asset Management maturity assessment

Implemented

Independent and self-assessments being done biennially.

Long Term Investment plan (LTIP) reporting

Implemented

10-year Capital Investment Plans (CIP) being completed and reported annually, including disposal programmes.

Asset Performance measurement

Implemented

Reported in CIP annually.  Quality improvements being worked on.

Use of Better Business Case (BBC) framework

Implemented

BBC Single Stage template, developed for TEIs and rolled out to the sector for use.

Portfolio, Programme and Project (P3M3) maturity measurement

To be addressed

Used in the Treasury’s ICR calculation, which TEIs are exempted from.

Assessment of benefits delivery performance across the investment portfolio

To be addressed

Used in Treasury’s ICR calculation, which TEIs are exempted from.

If you have any questions on CAM, please send them to: camenquiries@tec.govt.nz.