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Urgent need to reduce the maintenance backlog for defence properties, which has now grown to approx. NOK 4.5 billion

​The condition of the defence sector’s real estate and fixed assets has steadily deteriorated. By 2015, the cost of registered outstanding maintenance work had risen to almost NOK 4.5 billion. There is an urgent need for measures costing almost NOK 2 billion to tackle the maintenance backlog, which constitutes a 38 percent increase in two years. “The situation is worst for fortifications and defence installations,” said Auditor General Per-Kristian Foss.

Published 1/17/2017 12:00 PM

​Document 3:3 (2016–2017) The Office of the Auditor General’s investigation into the management of the defence sector's real estate, buildings and fixed assets was submitted to the Storting on 10 January.

The defence sector’s real estate, buildings and fixed assets are vital in enabling the Norwegian Armed Forces to fulfil its purpose, as well as of considerable financial and historical value. In 2015, the Norwegian Defence Estates Agency managed 12,407 buildings covering a total area of 4.1 million square metres. The total value of this portfolio has been estimated at NOK 39 billion. The Storting requires these assets to be managed efficiently and in a way that ensures their value is maintained.

“Our investigation shows that the condition of the portfolio deteriorated from 2009 to 2015. The maintenance backlog is growing and the maintenance situation is critical,” said Auditor General Per-Kristian Foss.

From 2013 to 2015, the maintenance backlog concerning the property portfolio requiring immediate action grew by 38 percent, from NOK 1.4 to 1.9 billion. Fortifications and defence installations are in the poorest condition, with a total maintenance requirement in 2015 of over NOK 900 million. The condition of residential properties has improved, but there is still an urgent need for maintenance costing almost NOK 700 million. The condition of properties of conservation value managed by the Norwegian Defence Estates Agency has deteriorated sharply, and for these properties there was a maintenance requirement of NOK 516 million in 2015.

Property management is organised so that the Ministry of Defence is the owner, the Norwegian Defence Estates Agency is the property manager and the Norwegian Armed Forces is the user and customer. The Storting has assumed that the rent will cover expenses for management, maintenance, operation, development and renewal of the property portfolio. The investigation shows that neither the rent nor the allocated funding has covered the cost of managing the properties in a way that will maintain their value.

“The ministry has stated that the rental scheme will be reviewed before the end of 2019. We believe that this review should be carried out sooner, as the scheme is not fulfilling the intentions of the Storting concerning property management which maintains the value of the properties,” said Foss.

The Office of the Auditor General stated that the Norwegian Defence Estates Agency’s management is inadequate as regards the implementation of maintenance. In many cases, the analyses of conditions do not provide an adequate basis for the planning of maintenance; much of the maintenance is not carried out as scheduled, and there is considerable variation in the monitoring and documentation of maintenance projects.

In addition, no guidance has been provided by the Ministry of Defence concerning the prioritisation of different types of real estate, buildings and fixed assets. “In consultation with the Norwegian Armed Forces, the ministry must give the Norwegian Defence Estates Agency clearer guidance as to which real estate, buildings and fixed assets should be given priority as regards maintenance,” said Auditor General Foss.

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