MSD’s national office relocation

Note: the information below was released in July 2016.

We have taken an 18-year lease on 56 The Terrace with the option to extend it if required. We currently have over 2,200 national office staff working out of three buildings on the Bowen Campus behind Parliament.

In 2012, MSD was allocated 56 The Terrace by the Government Property Group (GPG) (formerly PMCoE) as part of the Wellington Accommodation Project – Tranche 1 which is reducing and future proofing the office space leased by five government agencies in Wellington.

The relocation of MSD and four other agencies will see the agencies collectively lease 30 per cent less office space. By relocating, the agencies achieve savings through leasing less space and avoiding the future costs associated with having to upgrade their existing or former buildings.

The project is forecasted to deliver over $333 million in savings over 20 years. 

Besides delivering substantial savings in lease costs, GPG has developed workplace guidelines to help government agencies implement better ways of working with its office space. A better designed, more flexible workplace creates efficiencies and supports staff wellbeing which can improve productivity.

Why we have to move

MSD first moved into Bowen Campus in 1973 and the three buildings are at the end of their commercial life. With the leases expiring, remaining at Bowen Campus was not an option as the owners need the buildings vacated to complete a major refurbishment.

The estimated cost of refurbishing and refitting Bowen Campus was approximately $44 million. This did not include the costs of relocating over 2,000 people during the work and moving them back in.

The move to 56 The Terrace is forecasted to come in under budget and the final costs will be confirmed when the project is completed later this year. The relocation is being funded within MSD’s baseline – no additional money has been required.

Government agencies receive funding each year to cover rent, building maintenance and other property costs. Instead of refurbishing Bowen Campus, MSD has earmarked those funds over several years to help pay for the relocation.

Throughout the project we have looked to get the best value for money.  This funding is separate from, and has not impacted funding for MSD’s core frontline services delivered through Work and Income (Studylink and Senior Services), Child, Youth and Family and for non-government organisations through Community Investment.

56 The Terrace

56 The Terrace will provide a functional and efficient work environment for over 1,900 staff.

The Ministry is leasing all 18 floors in the building plus a small amount of space on the ground floor – around 24,255sqm in total. We have over 40,000 visitors a year so host many meetings and conferences, and it is essential visitors can easily access us.

The building will have a mix of formal and informal meetings areas and shared spaces, allowing staff to use the whole building as their workspace, not just their desks.  This flexibility means we can more easily adjust to accommodate any changes in staff numbers. The use of acoustic booths in collaborative areas reduces the need for building and fitting out large numbers of meeting rooms so they are a very cost effective alternative.

To help staff move more smoothly between floors and access meetings rooms, the building will have an interconnecting staircase. Being based in the centre of the building, this encourages and makes it easier and quicker for staff to move around the building. It also eases pressure on the building lifts freeing them up for people who need to travel many floors.

MSD has been looking for new premises for over a decade and has been planning in advance for the shift. Furniture and other office equipment has been deliberately run down and not replaced over several years.  As we are changing the size and configuration of our work stations, we have had to buy mostly new furniture and did so through a government procurement panel which enabled a competitive price.

This furniture will have a 10 year warranty and is designed to last and cope with heavy usage. Existing furniture that will work in the new office will be reused and the remainder of the furniture will be redistributed to other MSD offices, recycled or donated to charitable organisations where practicable.

The relocation has been years in the planning. All financial decisions made were tested to ensure MSD was getting the best value for money.

Additional space

MSD’s move to 56 The Terrace was approved in late 2013. Since then new work streams, functions and a huge change programme mean our national office numbers have increased in the past three years.

National office staff numbers could rise further depending on our work programmes, and the Ministry regularly monitors staff numbers to ensure they can be efficiently managed.

Of the 2,200 staff at Bowen campus, around 1,900 will move into 56 The Terrace and the remaining staff will go to 89 The Terrace.  This is a short-term measure over two years and eventually all national office staff will be based in 56 The Terrace.

The fit out of the additional building will not require additional funding, with the costs being met from the budget for the National Office move.  Around $1.7 million is being spent on minor fit out works on six floors of the building which includes IT infrastructure. Even with the temporary use of the additional space, MSD is still leasing less space compared to Bowen Campus.

Key facts

• MSD is reducing the amount of office space it rents from 29,000sqm to 28,000sqm
• The move will come in under budget, on time and within government guidelines 
• MSD funded the move within its existing baselines and set aside money for it over several years
• This is part of a wider government property project which is forecasted to save over $333 million over 20 years.

Final project costs

The approved budget was $37.69 million, with the final project spend being $34.58 million resulting in an underspend of $3.1 million (8.4%). This total spend also included the $1.8 million to undertake the refurbishment works at 89 The Terrace.

The final project spend are as follows:

• Construction costs - $18,822,960
• Reception ceiling - $74,000
• Interconnecting staircase - $1,600,000
• Furniture costs - $7,180,000*
• Other sundry items (kitchen items, sanitary/hygiene items etc.) - $155,000
• AV costs - $719,000
• External consultant costs (Engineers, Architects, Quantity Surveyor, Project Manager etc) - $3,650,245
• Internal project costs - $1,640,909
• 89 The Terrace costs - $1,800,000

* This includes an amount of $405,000 computer equipment which is not typically referred to as furniture, however supported office set up.

Decision making documents

Below you will find documents relating to the decision making on MSD’s national office relocation.

Information withheld or deleted

Deletions have been made from the released documents under the following sections of the Official Information Act 1982:

• Section 9(2)(a) to protect the privacy of natural persons. We have removed the names of staff below tier three to protect their privacy.
• Section 9(2)(b)(ii) to protect the commercial interest of suppliers. Information that is commercially sensitive has been removed so as to not prejudice the commercial position of suppliers and contractors in line with the terms of the AoG Syndicated Panel Contract.
• Information which relates to other government departments has been removed as out of scope.

In preparing this information release, the Ministry of Social Development has considered the public interest considerations in section 9(1) of the Official Information Act.