State Services Minister now says $110 mln a year office cost savings will take about six years longer to achieve than earlier promised

State Services Minister Jonathan Coleman's indicating that a projected $110 million annual savings on state sector office space is going to take around six years longer to achieve than he said it would less than a year ago.

In a press release issued on August 1 last year Coleman said: "We expect to reduce the government’s occupied footprint nationally by around 25 per cent in the next three to four years, producing annual savings of around $110 million says the Government's aiming to reduce state sector office space by about 25% in the next three to four years, producing annual savings of about $110 million."

However, this week Coleman's issued a new release headed up: "On track to achieve $110m annual savings in Government accommodation footprint."

In it the minister states: "The Government is making good progress on reducing its property footprint. We expect to reach annual savings of around $110 million by 2023."

That's about six years later than the Government was promising less than a year ago.

However, there's no reference to the earlier pledge in the latest release. Nor is there any explanation for why the timeframe for the target has slipped so significantly.

The minister's original savings pledge was made when he released a then new Government National Property Strategy and Principles document. 

At the same time he released the 2012 Report on the Crown Office Estate, prepared by the Government's Property Management Centre of Expertise, which was established in April 2011 as an offshoot of the Ministry of Social Development.

Neither of those documents made explicit reference to a targeted saving of $110 million a year - but the 2013 Report on the Crown Office Estate, released by the minister this week, does.

Much of the projected information is included in the chart seen below.

The chart indicates that in "three to four years" - the original Coleman timeframe - less than half of the originally projected $110 million annual savings will have been achieved. Based on the chart information the timing differences appear to amount to some tens of millions of dollars a year, before the target is met in 2023.

The report says the savings forecast is "based on a total footprint reduction of 18.75%" (the minister earlier talked about 25%),  with total benefits peaking at $109 million per year.

It says that incorporated into the forecast benefits modelling is the following:
• agency property plans
• agency business intentions
• accommodation project business cases
• market information, e.g. rental forecasts
• professional fees
• utilities, e.g. power
• maintenance and facilities management costs
• procurement economies
• relocation costs

The report says that in 2013 there was a reduction in total state office space of 14,782 sq m overall, mainly in Wellington.

It says that the average space utilised per person reduced from 20.5 to 19.2 sq m while the per workstation utilisation reduced from 17.9 to 16.5 sq m.

The average cost per person (landlord rents/operating expenses only) had a "small increase" of 3.5% from $259 per sq m to $268 per sq m (excluding facilities management costs).