SJSC “State Real Estate” (SRE) continues working on change management and overcoming strategic challenges. So far, we have remedied or are in the process of remedying a part of the problems identified by the State Audit Office (SAO) from 2018 to 2021, says Renārs Griškevičs, Chairman of the Board at SRE.
SAO audited the SRE in the period from 1 January 2018 to 31 December 2021. The capital company initiated significant changes in line with its “Medium-Term Strategy 2018-2022” (the Strategy). A number of improvements, such as restructuring operational processes, which allowed a shift from function-based to customer-oriented service, and improvements in both the accounting process and the methodology for calculating rent and investments, were introduced as early as the time of the audit. It has also started reorganising our IT and data infrastructure which is expected to significantly improve data quality and is preparing to migrate the State Real Estate Information System to a new platform.
“We appreciate the real estate improvement opportunities highlighted in the SAO audit based on the 2018-2021 data. We are working together with all the stakeholders to review the processes still under development and the opportunities for additional improvement in line with the SAO's guidance. However, I would like to point out that some of the weaknesses identified were undergoing change at the time of the report and are no longer present,” says R. Griškevičs.
Introducing the Strategy has significantly optimised SRE's operations. The company has made significant investments to improve its working environment and develop a common understanding of its internal regulations, for example by specifying the procedure for cost-sharing and information selection criteria. Significant improvements were also made to the methodology for calculating rent, including the separate accounting of costs for unforeseen management works. SRE's goal is to accurately aggregate costs, which would allow for a recalculation of the rate based on actual costs. It also developed a method for calculating management measure plans and introduced changes to the procedure for planning management measures. At the same time, the Company developed a new and improved procedure for calculating the necessary investment for repairs, which contributes to greater accuracy for the methodology used to draw up an investment plan for a specific property. Previous lease agreements will be updated with this new calculation method, thereby reducing the risks associated with reserves. Innovative and sustainable real estate management is a development priority of SRE, which is included in the overall strategic objective. Buildings and structures of strategic importance for national security are essential for institutions and for the development of State and local government administrative territories.
