Specificity of University Asset Management – Polish Experience

Specificity of UniversityAsset Management – PolishExperience Małgorzata Rymarzak, Dariusz Trojanowski mrymarzak@wzr.ug.edu.pl

The aim of the research • Describe the determinants of asset management of universities and their main problems in this respect. • Presentation of possible solutions of increasing the effectiveness of asset management of Polish higher-education institutions.

Definition of asset management The land and buildings assets base of an organization should be optimally structured in the best corporate interest of the organization concerned. “It seeks to align the asset base with the organization’s corporate goals and objectives. It requires business skills as well as property skills although only an overall knowledge of property matters is required. However, property input within the overall process is imperative”. Jones, K., & White, A. D. (2008), RICS Public Sector Asset Management Guidelines: A guide to best practice, London, RICS.

Determinants of university asset management

Macroenvironment Effects of globalisation • internationalisation of university activities (research and flows of students and academic staff). • universities are exposed to a growing international competition, and they have to meet its requirements if they want to develop. • necessity of keeping up with infrastructure and equipment used by foreign universities, and adjusting their infrastructure to students’ demands, who can choose from offers of schools in many countries. • necessity of adjusting its own infrastructure to the needs of foreign-language students (e.g. removing language barriers).

The EU programmes (including the Infrastructure and Environment Operational Programme) • Owing to Priority 13 of the Programme and EU subsidies granted in 2007-2013 (EUR 588,235,294), a huge investment boom started in Poland. • Within the Programme, research and teaching infrastructure of universities and research units was modernised and expanded. New laboratories and state-of-the-art lecture halls were built, and environment-friendly technologies were developed. • Therefore, it was necessary to make decisions based on long-term goals rather than current needs. The development of infrastructure hardly resulted in a direct growth of income, but definitely raised operating costs.

Macroenvironment Legal regulations of higher education • The Higher Education Act regulates university administrators’ rights and obligations in asset management. • The regulation of the Council of Ministers on detailed rules regarding financial management of state-run universities regulated and defined the rules for tangible asset management. • Financing of investment projects and buying tangible assets coming from the resources of the government budget, local governments or the EU are subject to the provisions of the regulation of the Council of Ministers on detailed ways and modes of investment financing from the government resources.

Macroenvironment Legal regulations of higher education • There are differences in the application of legal regulations on the functioning of state-run and private universities. • State-run universities are bound to apply regulations on public finances and procurements. For example, it is necessary to apply to the Minister of Treasury for his/her approval of selling a real estate when its market value is higher than PLN equivalent of EUR 50,000. The decision is issued to the buyer selected under tendering procedures. • Private universities operate on the basis of solutions developed autonomously, and as far as material resources are concerned, their administrators can make their own decisions, without unnecessary procedures and rules.

Macroenvironment Number of students • The demand for immovable property, will vary depending on the number of students (both full- and part-time) of various fields of studies. • The size of student population is determined by a variety of factors, which include: demographic changes, changes in legal regulations, a situation on the labour market, State support in access to higher education and internationalisation of universities. • According to the Central Statistical Office demographic forecast, the population of Poland will be steadily decreasing until 2035.

Macroenvironment Promoting information technologies • As the technologies spread across universities, the approach to research work and to teaching changes. • Thanks to the access to ITC in general, and the Internet in particular, eLearning is becoming increasingly popular, resulting in the creation of student-oriented virtual campuses. • All these solutions reduce the demand for teaching or administrative space, while the requirements grow of IT furnishing of universities and their virtual (web) "assets."

Microenvironment competition, educational offer and conditions • At the beginning of the 2011/2012 academic year, there were 460 universities in Poland, of which 132 were state-run and 328 were private. • Of the 1.76 million university students in the academic year 2011/2012, more than 70 per cent (1.25 million) studied at state-run universities. • The major form of studies in state-run universities was full-time courses, with 70.4% students studying in this way, as opposed to private universities, where 82.9% of students studied part time. • In 2011/2012, students doing economics and administration were the most numerous (21.9%), followed by educational and social sciences (11.2% each).

Microenvironment competition, educational offer and conditions • The variety of courses offered by state-run universities is much greater than in private ones. • State-run universities are generally large and provide university education in a broad range of disciplines. • Private universities are usually small, their location is often in towns, where they are the only provider of university education, at a cost much lower than in major university centres. • This makes their space requirement very different, too. Sciences and technological studies, unlike the humanities, require spacious, highly specialist laboratory premises that are used from Monday to Friday. • A significant proportion of private universities, offering courses in law, economics and the humanities, chiefly uses typical classrooms or lecture halls during the weekends.

Internal conditions university’s internal regulations • University self-government and autonomy are governed by legal regulation and procedures. • The powers of the central authorities of a university are limited, because under university education legislation, departments and faculties enjoy a high degree of autonomy and self-government, frequently enhanced by university statutes. • As a result, real assets are not used effectively if we look at it from all-university perspective. There are significant variations in weekend occupancy of buildings managed by individual faculties, depending on the number of students enrolled for both full-time and part-time courses.

Internal conditions assets • There has been improvement in the past two decades in the housing conditions of state-run universities. Many buildings previously used by institutions of the communist state have been transferred to universities, and partly to new construction, in the latest years co-funded by the EU. • Universities havetaken over some architecturally prestigious buildings. • Private universitiesoften acquired post-industrial or post-military buildings. • Even prior to 1989, decision was made about creating university campuses. It was often done by squeezing new structures into the existing space, with little respect or none to the spatial and functional concept of the campus as a whole. • As a result, sizeable spaces between buildings or between a building and the boundary of the lot are not properly developed.

Internal conditions running costs • At Polish universities, there is no comprehensive information on every asset and its technical, economic, financial, legal, functional and strategic data. • There is often no financial, economic or strategic information about a given asset, while data on its value, as well as the revenues and the costs generated, are ether scattered or difficult to find (accounting entries are made not for an asset, but for the faculty). • The relevance of an asset for the basic operations of the university, or its alternative costs are not analysed by the universities, or the analyses lack in regularity and thoroughness.

AM at the University of Gdańsk – CASE STUDY • University of Gdańsk is located in northern part of Poland. It was established on 20 March 1970, following the merger of the College of Economics in Sopot and the College of Educational Sciences in Gdańsk. • Currently, University of Gdańsk is the largest university in the region of Pomerania, with nearly 33,000 students, doctoral students and post-graduates in its eleven faculties, along with a staff of 1,800. • They use more than 40 buildings with a teaching, research or administrative function, (excluding 10 students' hostels, 7 specialised libraries) with a total space of 140,606.99m2.

AM at the University of Gdańsk – CASE STUDY • Current development strategy of the University focuses on the development of three university campuses: in Oliwa (University of Gdańsk Baltic Campus), in Sopot and in Gdynia. • The other estates (not situated within the three campuses) willbe successively left and sold.

AM at the University of Gdańsk – CASE STUDY • Asset management at the University of Gdansk is the responsibility of the chief administrative officer and the chief engineer. • The chiefadministrative organises and supervises the work of six divisions: • Administration and Transport, • Students' Welfare – Students' Hostels Unit, • University Conference Centre of Leźno, • University Archives, • University Wardens, • Staff Welfare. • The chiefenginnerhas overall responsibility for the Real Estate Unit and the Maintenance and Repair Team.

AM at the University of Gdańsk – CASE STUDY Administration and Transport Division: • manages accounts for the operational costs of the buildings in its care, keeps records of heat and electricity costs, monitors the use of all utilities. • drafts and manages short-term lease contracts as well contracts for other services, in accordance with the UG Pricing Policies. • verifies, on their form and merits, documents concerning the cost of operating the buildings as well as current administrative costs of the University, which are subsequently allocated to University organisational entities and buildings.

AM at the University of Gdańsk – CASE STUDY The Real Estate Unit: • defines goals concerning the development of buildings and keeping them in non-deteriorated condition, and ways of achieving these goals. • prepares documents for the Ministry of Treasury regarding the disposal of items of PP&E as defined in accounting regulations . • cooperates with competent local authorities, courts and other authorised entities/experts as regards necessary documents defining formal and legal status of properties. • keeps records of real estates being the UG resources and explores for buildings to be bought for the University needs. • develops opinions (based on the monitoring, research and analysis of the real estate market) in order to determine appropriate rental prices, and accomplishes other assumptions for the UG Pricing Policy. • prepares draft contracts of sale and rental of commercial buildings, and reports on real estates.

AM at the University of Gdańsk – CASE STUDY On the UG real estates information is scattered throughout different units. Thus, rental/lease contracts, for example, as well as other documents are stored by: • Real Estate Unit: documents on land and separate buildings excluded from teaching functions, vendible real estates and those intended for swapping; • Administration and Transport Division: documents on teaching facilities: • Students’ Welfare Division: documents on hostels; • Staff Welfare Division: documents on junior staff hostels; • University Conference Centre of Leźno (management office): documents on the Centre; • Physical Education and Sports Department: documents on sports facilities.

AM at the University of Gdańsk – CASE STUDY The University properties are not divided into: • mandatory (the property used to perform the basic functions of universities), • instrumental (of spatial development nature – a reserve for specific future goals), • surplus or revenue-generating (the property that is in neither of the categories above and can generate one-off profit from its sale or regular profit in rent) properties.

RECOMMENDATIONS - SOLUTIONS • University real estate resources should be designed and maintained with regard to teaching and research activities planned for at least five years ahead. • The demand for space should be in line with the development plans of the University, and include an estimated number of full- and part-time students, staff, and types of future research technologies in subsequent years. • Planning should be performed on the University rather than department scale. • The purpose of asset management should be to optimise the structure of asset base in relation to strategic goals of the organisation.

It is necessary to gather comprehensive information on each asset: its technical specification, and economic, financial, legal, functional and strategic data. • The existing assets should be evaluated (benchmarks defined) with regard to the achievement of the University’s strategic goals, and, if need be, various ways to increase assets (purchase) should be considered.

The assessment of suitability of assets should be carried out according to the principle that: if a real estate market value is: • higher than its value in use, the university should consider changing the function of the building or its sale in order to get additional income; • equal to its value in use, the university should consider keeping these assets, but make them more cost-effective (reduce maintenance costs, increase revenues from real estates, renovate), or, if possible or lawful, selling them; • lower than its value in use, the university should consider its upgrading or moving to a more suitable building and selling it.

The process of optimisation of university asset structure

Specificity of UniversityAsset Management – PolishExperience Małgorzata Rymarzak, Dariusz Trojanowski mrymarzak@wzr.ug.edu.pl

Specificity of University Asset Management – Polish Experience