On behalf of Lidingö Stad, Sigholm is developing a simplified model for internal rent setting for the municipality's properties that are leased internally to other administrations. The templates in the current cost-based model have over the years become administratively cumbersome to calculate and therefore the municipality strives for a simplified, sustainable and future-proof model version.
The assignment involves supporting change and development work in the financial management area at the Property Management's finance unit. This is done by, among other things, developing a simplified model, carrying out new standard calculations, mapping and documenting routines, processes and instructions for the work with internal rents, developing training materials and reviewing automation opportunities linked to system support.
Internal rent had long been a tool for distributing costs related to the city's properties between the municipality's departments, but over the years, the model became difficult to manage. It relied on standardised rates and manual calculations that lost precision. The system support was inadequate, ownership became unclear – and it became increasingly difficult to follow up and make wise decisions regarding the municipality's properties. Something needed to change.
The History Behind the Model
There was a legacy to consider. Nearly ten years ago, a Sigholm consultant, who was then working for another employer, developed the municipality's internal rent model. It was followed up a few years later by the same consultant, and the evaluation identified several areas needing change. But the organisation changed, and the model fell into obscurity. When Lidingö City now wanted to create a more easily understood, pedagogical and person-independent model, it was natural to turn to the same expertise to further develop the model.
The assignment was to simplify, clarify and future-proof – but without losing the functions that make internal rent an effective management tool.
Internal Rent as a Management Tool
Internal rent is a tool to clarify what properties actually cost. But above all, it is a way to create incentives – for economic responsibility, efficient use of properties and long-term planning. Properties are given a price, just like personnel and materials. This makes it possible to prioritise – and to influence.
The model should also be used to support sustainable development within the municipality by influencing how departments relate to their premises. Some of the important issues the model should help to manage:
- How can departments be encouraged to vacate properties that are no longer central to their mission?
- How can investments be directed towards the right adaptations – that is, adjustments that actually benefit the department's goals?
- How can engagement in energy conservation be increased?
To answer these questions, the model needs to be not only technically correct – it must be understandable, clear and well-established within the organisation.
Simplification Without Losing Core Principles
Lidingö City chose to continue with a cost-based model, but with simplified standard rates and a more predictable structure. The rent setting per property type continues to be based on historical costs and industry benchmarks, and the costs are divided into three main categories: operations, maintenance and capital costs. Some elements are shared across all property types, others are more specific.
Sigholm's role was to support the Property Management Department's finance unit by developing the standard rates, updating guidelines, documenting procedures, creating training materials and establishing the model across all committees and departments that are tenants. An effort was also made to map opportunities for increased automation, but as the model's sources are currently spread across several systems, some manual work will still be required going forward.
A Model That Must Continue to Evolve
For the model to work over time requires more than just figures. It requires that guidelines are followed, that input data is quality assured, that the distribution of responsibilities is clear and that system support facilitates the work. The model must live within the organisation – with structures for change, follow-up and learning.
And with that in place, the model can do more than distribute costs. It can support better decisions, clearer priorities and contribute to a long-term sustainable use of the municipality's properties – resources that ultimately exist for the benefit of residents.
