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FM Faculty Briefing No.7

11 January 2008

Seeing Purple
The RICS Red Book, widely regarded as the pre-eminent guide to property valuation is published in its 6th edition this month, to be followed shortly by a companion book for FMs – the Purple Book. Michael Cant describes this important RICS initiative

Few can have missed the media hysteria over a possible recession. Newspaper reports talk of ‘crash’, ‘slide’ and downturn’. Whether recession transpires or not, the role of property tends to dominate headlines when such debates take place. Usually it starts with the decline in house prices, which then leads to a general discussion on employment and debt levels, the value of office properties, and ends in what appears to be a healthy enthusiasm for predicting an imminent recession.

The role of property runs like a thread through the whole economic and social system. The London ‘crane count’ representsone of the more interesting measures of strength in the economy. As does the number of vacant offices in the City and Canary Wharf, these visual clues are used to measure business temperatures! But with the explosion in global economies, typically illustrated by Dubai, Korea, Hong Kong, Sydney and many others, commercial property assets – and their value – are now becoming part of an integrated system of measuring economic health worldwide. Investors require a level of confidence in their professional advisors when making decisions about property, as they should do when getting advice on what operational FM will cost having occupied the acquired premises.

Sixth edition
Fortunately the means to assess the value of property is seen to be in good hands via the Royal Institution of Chartered Surveyors Valuation Standards - known as ‘The Red Book’ - recently released under its sixth edition. It has long been accepted as the pre-eminent guide to property valuation – and much more. Not only does it ensure a consistent use of valuation bases and assumptions for property, it contains official practice statements and guidance notes on valuation. First published in 1974, the Red Book has now gone beyond being a best practice guide; it is an industry landmark, and embraces the RICS’ role as the leader in setting and maintaining standards for the sector. From professional ethics to conflicts of interest, it provides essential rules for the rest of the world to follow.

The Red Book is renowned worldwide, and continues to grow, supporting professionals in all aspects of valuation, and providing all those involved in property transactions and management practice clarity as to their responsibilities. Already available in English, German, Dutch and Chinese, it is to shortly be published in French, Russian, Spanish, Italian and Arabic. When the sixth edition published 1st January 2008, will represent another milestone for the property professional – wherever they operate.

Purple Book
FM has been a silent partner in the business sector and as a guide to economic health (or otherwise). For better or worse, we tend to gain attention when things go wrong.

A positive framework for best practice, backed by an professional Institution, is felt to be one way to readdress some of the concerns over the FM sector and those that operate within it. The RICS FM Faculty is therefore embarking on the development of the equivalent to the Red Book for the FM practitioner. The ‘Purple Book’ will contain many of the professional conduct and guidelines of ethical practice we expect of the property sector, but there will be much that is needed to address the specific needs of our growing sector.

The RICS FM strives to guide best practice across its market – locally and internationally – and the Purple Book seeks to mirror the communication of regulatory procedures, statements and guidance notes, as well as encouraging a voluntary code of conduct for those who do not fall or operate under RICS codes.

The Purple Book will set the global standard for FM professionals Professionalising FM RICS has a long standing and flourishing relationship with FM. Few activities that FM engages with do not have a property asset of some kind as its base foundation (arguably mobile working and space stations may be a little different). The RICS Chartered FM qualification will only be available to full members, but the Purple Book will, when published, be available to all practitioners who seek to meet the standards expected of a professional.

The RICS is in an ideal position to produce a framework for FM governance. This framework is critical as FM expands, ensuring that the sector meets, and maintains, credibility while retaining confidence within the wider market. Whilst for those not falling under the RICS codes, it can only be followed by voluntarily, it is hoped that there will be an increasing level of mutual agreement by contracting parties to use it. The use of dispute resolution procedures and governance best practice will, when set out in the Purple Book, provide a sound base for our sector to move forward – whether in periods of recession or economic growth.

● Michael Cant is Vice Chair RICS FM Faculty Director Larch Consulting

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