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Funding a co-location

Co-locations are an example of a pooled funding model, with one exception – the lead agency takes on the legal and commercial risk on behalf of all participating agencies.

How co-location funding works

Pooled funding is where a group of agencies pool funds to share the cost of an initiative.

Cross-agency funding framework – The Treasury

All parties:

  • must have funds available to meet the required capital expenditure (CAPEX) and expected operating expenditure (OPEX) costs before entering a formal agreement
  • pay an equitable share of establishment costs and operating costs, based on their area allocation.

Financial considerations for lead agencies

Lead agencies need to consider whether the funding and cost models adopted constitute a finance lease or an operating lease.

Co-location capital expenditure costs

Capital expenditure costs (CAPEX) apply when a new fit-out is required for the building.

​​Co-location operating expenditure costs

Operating expenditure costs (OPEX) are recovered from participating agencies based on their agreed co-location area allocation.

Co-locations and insurance

The lead agency will take out public liability insurance on behalf of all the participating agencies. Agencies may need additional insurance to cover specific equipment or business risks.

Spending rules for Crown entities

Crown entities don’t require an appropriation to spend, so they’re not bound by the same approval and reporting requirements as public service departments.

Case study: The CIGA programme co-location model

The Christchurch Integrated Government Accommodation (CIGA) co-location model has been applied across all buildings in Christchurch accommodating multiple government agencies.

What's next

Delivering a co-location project

A co-location fit-out project is different from an ordinary fit-out project, and requires different considerations for deliverables, procurement, culture, health and safety, and security.

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