FHWA Office of Real Estate Services Research Results:
2006 Strategic Vision for the Public Sector Real Estate Profession
August, 2006
II. Vision Statements (cont'd)
E. Policy and Politics
Policy and politics refers to external forces impacting our public agency customers and the internal trends of these customers related to the management and operation of their agencies.
1. Summary of Key Policy and Politics Trends
The study team identified a number of policy and political trends. These trends included:
A focus on managing government like a business, with increased emphasis on performance measurement and accountability.
Increased policy maker reluctance to utilize eminent domain for redevelopment projects as a result of fallout from adverse public reaction to the Supreme Court's decision in Kelo v. City of New London 125 S. Ct. 2655 (2005) which allowed the use of eminent domain to transfer land from one private owner to another to further economic development.
Both of these trends are described in further detail below.
Focus on managing government like a business, with increased emphasis on performance measurement and accountability
Government agencies are consistently focused on managing themselves more like businesses with an emphasis on transparency and accountability through setting and meeting performance objectives. This trend was confirmed by a survey of the strategic plans of a number of Federal, State, and Local agencies that are significant customers of the public sector real estate community.
"The President's Management Agenda," for example, outlines a number of objectives including:18
Manage human capital strategically.
Compete a portion of inherently non-governmental work.
Bring government closer to citizens through responsive technology.
Improve financial performance.
Ensure that the budget is integrated with performance expectations for improved accountability.
These principles can be found in agency mission statements and strategic plans as well. The Department of Housing and Urban Development's annual performance plan, for example, is closely aligned with "The President's Management Agenda." It specifically includes a goal to continue to make measurable improvement in a number of areas including:19
Improving the physical conditions of HUD's assisted properties.
Improving the performance of HUD program intermediaries.
Improving key areas of risk management strategies and program controls.
Advancing the strategic management of human capital.
Improving financial performance.
Integrating budget and performance.
Advancing electronic government
Improving competitive sourcing; and
Strengthening community performance reporting.
The mission of the U.S. Army Corp of Engineers, for example, calls for USACE to:20
Provide sustainable development and integrated management of the Nation's water resources in collaboration with others.
Repair past environmental degradation and prevent future environmental losses.
Ensure that projects perform to meet authorized purposes and evolving conditions.
Reduce vulnerabilities and losses to the nation and the Army from natural and man-made disasters, including terrorism.
Be a world-class public engineering organization.
This same emphasis on performance and accountability can also be found at the state level. The Virginia Department of Transportation (VDOT), for example, has implemented a series of performance measures for its project delivery process and tracks the agency's performance against these metrics on a web site accessible on to the public. The Washington State Department of Transportation (WSDOT) has instituted a detailed performance measurement process that is tightly linked to WSDOT's business objectives. Results are reported quarterly to policy makers and the public through a detailed briefing book known as "The Gray Notebook."
Increased policy maker reluctance to utilize eminent domain for redevelopment projects as a result of fallout from Kelo case
As a result of significant public opposition to the ruling in the Kelo decision in 2005, policy makers have become more reluctant, at least for now, to utilize eminent domain for redevelopment. In fact, Federal legislation has been proposed to bar the use of Federal funds for takings for private development, and 20 plus States are looking at legislation and possible constitutional amendments to restrict use of eminent domain authority for economic development.
This reluctance is further complicated by confusion, on the part of some policy makers and the public on the protections afforded under the Uniform Act. There is also a great deal of confusion on the distinction between the taking of private property for clear public benefit such as the building of a new highway or the expansion of an airport runway and the taking of property to benefit private development. An example of the latter would be a city using its powers of eminent domain to condemn an area of low income housing and then selling this land to a developer to build a shopping mall and higher end condominiums to help improve the city's overall tax base.
With the increase of public private partnerships, the leasing of public assets to private entities, and other creative financing arrangements, this distinction may become even less clear going forward, further creating the potential for public confusion and anxiety for policy makers. In addition, there is the potential for increased pressure on policy makers due to the need to establish guidance and direction on evolving issues such as creation of new artificial lands, the development of underground communities and the impact of reverse condemnation in situations where land may be abandoned.
2. Impact Analysis on Public Sector Real Estate: 0 to 10 Years
Projected Impacts
These policy and political trends are anticipated to have several impacts on the public sector real estate function. These impacts include:
Establishment of more transparent processes to improve the overall accountability of public sector real estate. This should include establishing performance measures for planning, managing and evaluating all aspects of its performance.
Developing and implementing processes for establishing accurate estimates for the real estate and utility components of projects to ensure accurate information for customer decision-making about projects. The accuracy of these estimates should then be one measure of the performance of the public sector real estate function.
A need to educate team members and customers on the processes protections and benefits of the Uniform Act and sell decision makers on the overall value proposition of public sector real estate.
Recommended Actions
These policy and political impacts will drive a number of recommended actions. These actions will include:
Develop model performance measures to evaluate the effectiveness of the public sector real estate function.
Develop and deploy improved cost estimating methodologies for real estate and utility relocation.
Be involved in the project development process to allow for impact on existing real estate to be avoided or minimized.
Develop and market an education program for policy makers on the role and value proposition of public sector real estate.
Exhibit II-9 summarizes the impacts of policy and political trends on public sector real estate for Years 0-10.
Exhibit II-9: Anticipated Impact of Policy and Political Trends: Years 0 - 10
| Trend/Direction | Impact on PSR | Required Actions |
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3. Impact Analysis on Public Sector Real Estate: Years 11 to 30
Projected Impacts
The additional impacts of policy and political trends in Years 11 to 30 include the following:
Clear accountability and performance measures will become integral to how public sector real estate staff works everyday.
There will be a need to establish processes for handling new and evolving issues that can only be imagined today through learning and applying historical precedents and leveraging past experience.
Recommended Actions
The following actions, which further extend and institutionalize action steps initiated in the first ten years, are recommended in Years 11 to 30 to address policy and political impacts:
Institutionalizing performance measurement processes.
Evolving and extending education programs for decision makers based on changing conditions.
Establishing research programs and structured decision processes to handle evolving issues by learning from historical cases and applying these precedents to future decision-making.
Exhibit II-10 summarizes the impacts of policy and political trends on public sector real estate for Years 11-20.
Exhibit II-10: Anticipated Impact of Policy and Political Trends: Years 11 - 20
| Trend/Direction | Impact on PSR |
Required Actions |
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F. Project Development Process
This subsection describes those trends directly related to the project development process including project financing and mechanisms for service delivery.
1. Summary of Key Project Development Trends
A number of trends are expected to help to evolve and transform the project development process over the next thirty years. These trends include:
Potential for the Federal government to have a reduced or reconfigured role in financing infrastructure projects.
A substantial increase in the use of innovative financing techniques.
Public sector real estate work increasingly performed as part of an integrated, multi-disciplinary team effort.
Greater decision-making authority and accountability for Local Public Agencies.
Each of these trends is described briefly below
Potential for Federal government to have a reduced or reconfigured role in financing infrastructure projects.
There is a potential for changes in the Federal role in financing the development of infrastructure projects most notably highways, transit facilities and airports, with some consideration being given to the potential for some devolution of the current Federal system.
SAFETEA-LU established two study commissions to address different aspects of this issue. These are:
The National Commission on the Future of the Interstate Highway System,which is directed to develop a conceptual plan with alternative approaches for the future of the interstate system for 15-, 30-, and 50-year horizons.
National Surface Transportation Policy and Revenue Study Commission, which was directed to provide a conceptual plan — with alternative approaches — to ensure that the U.S. surface transportation system will continue to meet current and future needs, including specific recommendations regarding design and operational standards, Federal policies, and legislative changes.
Substantial increase in the use of innovative financing techniques.
More projects will clearly be built using a variety of funding sources other than straight government funding. For transportation projects, there will be a transition away from reliance on gasoline taxation to user fees, general taxes, specialized taxes, and other specialized revenue sources. Other financing techniques could include land swaps, joint ventures, and a number of different types of public private partnerships.
SAFTEA-LU, for example, includes numerous bonding and tolling provisions that allow private entities to finance, build, own, and operate transportation facilities. It also includes provisions to establish pilot projects for tolling existing interstate highways to help with on-going enhancement of these facilities.
Public sector real estate work increasingly performed as part of an integrated, multi-disciplinary team effort.
Public sector real estate work will be performed more often as one part of an integrated, multi-disciplinary team effort as part of design/build initiatives or turnkey engineering services and construction management contracts.
SAFETEA-LU includes the Highways for Life program that seeks to enhance the ability of the private sector to save time and costs by delivering projects in innovative ways. This is just one example of the large number of innovative project delivery techniques that while still the exception today, will likely become standard operating procedure over the next thirty years.
Fewer projects will be built using the traditional design, bid, build approach. Likewise, real estate work may not be performed by the public agency itself or by consultants working for the real estate function. Instead, more real estate work will be performed by a consultant organization as a member of a large design/build project team who has responsibility for project implementation. Alternatively, the real estate function may be performed by a consultant acting as a sub-consultant to an engineering firm or construction management company driving the design process in the role of general contractor for the public sector agency.
In both of these delivery approaches, the role of the public agency real estate function will be more focused on project and contract management and quality assurance of the consultant's work versus actual service delivery, especially in regards to the acquisition and relocation assistance phases of the project. The current presumption is that the role of condemnation would still remain vested in the public sector agency but this may shift over time with the private sector partner playing a larger role as the agent for the public sector organization.
Over the course of the planning cycle, it is also likely that these teams will become more global in nature, with firms representing many countries teaming together to pool their specialized expertise developed around the world to provide the experience necessary to execute the larger, more innovative or more risky projects.
Greater decision-making authority and accountability for Local Public Agencies
More control of project programming decisions and the subsequent responsibility for managing these projects is currently being given to Local Public Agencies. Stakeholder team members reported that a number of states are giving Local Public Agencies more control of project decision-making, with California and Tennessee where there is a gubernatorial initiative underway to allow communities to take ownership of the execution of a number of transportation projects cited as two examples. In addition, the private sector members of the stakeholder team reported a considerable increase in the number of smaller communities who are clients for projects that would have been previously been managed by state agencies. This trend is expected to increase in the future, with Local Public Agencies having considerably more control of project decision-making.
2. Impact Analysis on Public Sector Real estate: 0 to 10 Years
Projected Impacts
These project delivery trends are expected to have several important impacts on the public sector real estate function. These impacts include:
A significant amount of public sector real estate work in the past was performed by an organization's real estate unit or by consultants directly responsible to the real estate unit. Going forward, a significant amount of public sector real estate work will be performed by real estate services firms, who will be one of several partners on a large, diversified team. In addition, the prime contractor or consortium leader may have limited experience with public sector real estate and will need to be educated on the value proposition of public sector real estate and the roles the real estate function should appropriately play on the team.
Increased local responsibility for projects presents several challenges for public sector real estate. With Local Public Agencies having responsibility for executing a larger number of projects, there is a need to educate these agencies on the Uniform Act in general and the constitutional protections it provides for citizens. Likewise, for private sector real estate services organizations, marketing to these agencies becomes more difficult, since firms now have to reach potentially hundreds of Local Public Agencies as opposed to a smaller number of State-level agencies.
The role of the staff working in the public agency real estate function will continue to become much less hands-on service delivery, shifting instead to contract, project management, and quality assurance of consultant work.
Recommended Actions
These impacts will drive a number of required actions on the part of the public sector real estate community. These actions will include:
Development of an education program on the Uniform Act and the value proposition for public sector real estate for use with new customers, including Local Public Agencies with limited public sector real estate experience and the managers of design/build teams, engineering and construction management firms, and other consortiums leading project efforts.
Enhanced training programs for project management skills for most public sector real estate staff.
Enhanced training programs on contract management for employees of public sector agency real estate units.
Strengthening of the non-technical soft skills of the public sector real estate work force to help individuals work more successfully in a team-based, collaborative environment. These skill sets should include:
Communication.
Facilitation.
Negotiation.
Collaboration.
Team Building.
Exhibit II-11 summarizes the impacts of project development trends on public sector real estate for Years 0-10.
Exhibit II-11: Anticipated Impact of Project Development Trends: Years 0 - 10
| Trend/Direction | Impact on PSR | Required Actions |
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3. Impact Analysis on Public Sector Real Estate: Years 11 to 30
Projected Impacts
The impact of changes in project development processes for Years 11 to 30 represents a continuation and strengthening of the impacts predicted for the first ten years. In Years 11 to 30, it is anticipated that:
Performing public sector real estate activities as part of a larger, multi-disciplinary team will become the norm for most projects of any size or complexity, with many of these teams being global in make-up and composition.
In performing their work, it will be quite standard for public sector real estate staff to have to work with different customers (for example the managers of engineering firms and design/build consortiums).
Local ownership of projects will also continue to become very prevalent, again increasing the number of potential customers who have to be educated on the value proposition of public sector real estate.
Recommended Actions
The required actions in Years 11 to 30 primarily involve a continuation and institutionalization of the actions started in Years 0 to 10. In addition, the following actions will be critical:
Continuing to emphasize the team building skills to prepare public sector real estate staff to work effectively on global teams.
Developing partnerships where appropriate to bring in specialized resources with specific expertise from other countries to work on multi-national teams.
Exhibit II-12 on the page below summarizes the impacts of project development trends on public sector real estate for Years 11-20.
Exhibit II-12: Anticipated Impact of Project Development Trends: Years 11 - 20
| Trend/Direction | Impact on PSR |
Required Actions |
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G. Human Capital
Human Capital refers to the organizations and employees responsible for delivering or managing the delivery of public sector real estate work. This includes both public agencies and private sector firms performing public sector real estate work on behalf of the public agency owners.
1. Summary of Key Human Capital Trends
A number of anticipated trends involving the public sector real estate work force include:
Aging of the work force. Over the next five to ten years especially, a large number of very experienced resources will be retiring and leaving the profession.
Difficulty for some agencies to replace staff. Some agencies are not being allowed to replace vacant positions or encountering difficulty in recruiting qualified candidates to take positions they are allowed to fill.
Increased outsourcing of work. Ultimately, most if not all hands-on delivery work will be done by private sector firms, with public agency staff performing policy setting and contract management roles. This work will often be performed as part of large multi-disciplinary teams, including multi-national teams.
Like the work force in general, the public sector real estate work force of the future will be transient. While staff today, especially those working for public agencies, may have worked their entire career for one organization, workers tomorrow are more likely to shift between one private sector provider or another or exit the profession altogether based on increased compensation or better promotional opportunities. This trend will be accelerated by changes in the Federal and some State pension systems which make these pension plans similar to Section 401K pension plans in the private sector; allowing public employees to more easily transfer the government's share of the person's pension contributions if the person leaves government service.
Public sector real estate has difficulty being recognized by its peers as a profession. This complicates the public sector real estate professional's ability to be viewed as an equal player at the table with other disciplines. Unlike the engineers or architects with whom they often work, for example, public sector real estate professionals, other than appraisers, do not have a widely recognized or defining credential or certification.
This lack of a recognition as a profession on the same level as its peers is one of several factors that make it difficult for real estate to be viewed as an equal player at the table in some our agencies. Another reason is confusion on the part of many policy makers, as well as the managers of engineering and construction management firms, on the value proposition of public sector real estate.
2. Impact Analysis on Public Sector Real Estate: 0 to 10 Years
Projected Impacts
These organizational and human capital trends will have several impacts on the public sector real estate function. These impacts include:
The loss of experienced resources will drive the need to find ways to leverage the existing knowledge and experienced of workers. This could include the creation of multi-agency pools of specialized resources that are available as SWAT teams to address complex issues or creation of a cross agency/cross functional government real estate center that has expertise on the Uniform Act and other public sector real estate issues.
There is a need to capture the intellectual capital of retiring workers. This can be done through the development of templates, guidance materials and job aids, and by leveraging technology to establish web-based collaboration environments and project repositories to capture and to more effectively share information within and between project teams.
To replace retiring staff, there need to be aggressive programs in place to recruit the best and brightest people to the profession and effectively train them. Whereas this staff may have previously worked for a public agency, most new hires to the profession will be by private sector real estate service companies.
There is a need to define public sector real estate as a unique profession on an equal footing with its peer professions such as architecture and engineering.
There is a need to establish a credential or certification process for public sector real estate staff that is recognized within the profession first, and then by peers, as indicative of a high level of quality and professionalism.
Public sector real estate staff will need strong project management skills, and public agency staff will need excellent contract management skills.
Required Actions
The impacts of the organizational and human capital trends will drive a number of required actions on the part of the public sector real estate community. These actions will include:
Greater multi-agency collaboration and cooperation to leverage experience. This could include implementation of SWAT teams and other multi-agency pools of experienced resources to allow these resources to be shared across projects in different program areas.
Implementation of web-based project development manuals, templates and collaboration tools.
Implementation of project repositories to capture and allow easier access to history.
Project management and contract management training.
Design and implementation of a marketing program targeted to increase interest in public sector real estate as a profession of choice.
Strengthening of existing certification programs or implementation of a new public sector real estate certification program.
Positioning of the value proposition of public sector real estate through a marketing and education program targeting key decision makers in public sector agencies and private sector customers such as engineering firms.
Developing training for line managers in other disciplines such as designers and environmental specialists on potential real estate, and utility challenges on projects and on the value proposition public sector can bring through early engagement to help address these challenges.
Exhibit II-13 summarizes the impacts of human capital trends on public sector real estate for Years 0-10.
Exhibit II-13: Anticipated Impact of d Human Capital Trends: Years 0 - 10
| Trend/Direction | Impact on PSR | Required Actions |
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3. Impact Analysis on Public Sector Real Estate: Years 11 to 30
Projected Impacts
Additional impacts of organizational and human capital trends in Years 11 to 30 include:
The impact on public sector real estate for Years 11 to 30 is expected to involve a continuation and strengthening of the impacts predicted for the first ten years. In addition to those impacts identified above, some additional impacts of organizational and human capital trends in Years 11 to 30 above include:
The need for standardized processes and extensive uses of technology such as project repositories and collaboration environments to prevent loss of intellectual capital as a result of transient workers who may change private sector firms or exit the profession.
The need for structured continuing education programs in place to provide training to staff on new rules, approaches, tools and methods, and other changes impacting the profession.
The need for continued execution of recruitment programs to attract highly qualified candidates to the profession.
The need to institutionalize the new certification program as a standard for all staff entering the profession.
Required Actions
The required actions in Years 11 to 30 involve a continuation and institutionalization of the actions begun in Years 0 to 10. In addition, the following actions will be critical:
Expansion of the multi-agency SWAT teams to multi-national SWAT teams, designed to draw upon the relevant of resources globally.
Greater multi-agency and multi-national collaboration to leverage experience.
Continued institutionalization of knowledge sharing and collaboration processes.
Development of a continuing education program to allow public sector real estate professionals to keep up-to-date on issues, opportunities, and challenges in the industry.
Exhibit II-14 summarizes the impacts of human capital trends on public sector real estate for Years 11-20.
Exhibit II-14: Anticipated Impact of Human Capital Trends: Years 11 - 20
| Trend/Direction | Impact on PSR | Required Actions |
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18 "The President's Management Agenda", Office of Management and Budget.
19 Department of Housing and Urban Development Fiscal Year 2006 Annual Performance Plan.
20 Department of the Army Corp of Engineers, Civil Works Strategic Plan, 2004-2009.
