By Michael Redding
Published in the October 2005 issue of Today’s Facility Manager
Before taking a car on a long trip, many motorists like to service their vehicles to make sure they’re fit for the journey. Of course, regular maintenance is key both to ensuring a reliable vehicle and minimizing long-term costs. But what is actually done depends on the driver’s plan for the vehicle. The basic principles of checkup and tune-up also apply to successful facilities management.
However, it is important to look at facilities management not merely as an engine that has to be kept running as smoothly as possible. Truly successful facilities managers should also see the bigger picture. They should be aware of continuously evolving strategic goals, financial situations, and specific business requirements of the corporation and business units being supported by facilities.
More often than not, facilities managers fall into the trap of reviewing performance from a vantage point that is too tactical. The goal is not necessarily to have top of the line technology or the best maintenance process. It is rather to create the facilities infrastructure and organization that provides the optimal combination of services, space, and infrastructure reliability, while finding the appropriate balance of both long- and short-term costs to best support the core business through the next planning cycles.
In order for the strategic decision making process to work, it is important to integrate facilities into the strategic planning process of the business. This presents a significant challenge, since it is often hard to convince senior management that facilities can meaningfully contribute to or enable core business strategy.
Often, facilities managers themselves are to blame for this misconception, primarily for two reasons. Previous fact collections about the business have been conducted in either an unfocused manner or with the emphasis on enabling facilities rather than enabling business success. So instead of approaching senior management and business unit leaders because “we need this information to do our own planning,” facilities managers should present senior management with this proposition: “let’s discuss how your business is using this space so we can help maximize productivity with new services, new space configurations, or more cost effective solutions. Let’s explore what facilities management can do to support the business goals of the company.”
This type of approach leads directly to a second point. Be careful to promise only what can be implemented. If facilities managers seek information, they should make certain it is actionable and then be prepared to act on it. If no visible changes are made or they were made but not communicated, future requests for information will be seen as a demand on time with no return on investment. To build credibility and awareness, effective follow through is crucial.
When it comes to collecting information, the answers depend on the questions being asked.
To align real estate and business planning, an awareness of cycles is critical. For example, with cyclical businesses, it is important to have a real estate portfolio that can quickly expand to deal with extra employees during high points and then rapidly shed space when the cycle dips. Providing the company with the ability to enter and exit space rapidly can translate into significant market and cost advantages for the business.
In the event of a major acquisition, facilities managers need to be prepared to think beyond just optimizing space and the respective real estate portfolios. They must also consolidate the different service level expectations, space standards, technologies, reporting requirements, and third party service providers of both organizations to ensure a successful integration.
Detailed knowledge of the business being supported will allow the facilities manager to get a better understanding of how maintenance of assets can create the greatest payback. In order to obtain capital for facilities upgrades or repairs, for example, it is important to communicate the immediate as well as the long-term financial impact of the request. Replacing a roof to avoid more expensive repairs down the road may make sense if the company’s short-term cash flow allows for it. If the organization finds itself in a negative business cycle, it may make more sense to defer this investment to preserve short-term liquidity—even if that means increasing the long-term spend. Providing the CFO with good financial as well as operational assessments of the alternatives enables informed business decisions.
One way to assess whether a facilities strategy is in alignment with the corporate strategy is to conduct a benchmarking exercise that allows the facilities manager to demonstrate current performance levels and identify the most relevant improvement opportunities. To be sure benchmarking will yield the desired results, be clear about what needs to be assessed and identify specific objectives of the benchmarking exercise. Is the organization looking for a broad overview of facilities performance or a detailed assessment of a specific facilities function (maintenance, moves, janitorial etc.)? The organization may even be more interested in exchanging best practices information.
Once these decisions are made, the equally important selection of a benchmarking peer group must be addressed. Should the comparison involve similar facilities (regardless of industry) or similar industries (regardless of facilities)?
A benchmarking peer group or consortium can be arranged once all these questions have been addressed. All parties involved need to be very clear about the measurements they want to use before embarking on this exercise. Careful alignment and validation of data collection activities is required to ensure a true “apples to apples” comparison is obtained.
It’s also essential that benchmarking exercises be conducted fairly quickly to be relevant, particularly in today’s ever changing business environment. At the same time, it is important to achieve a balance between speed and accuracy. Be sure to take the time to develop and ask the right questions to ensure the information is actually comparable. It may be easy to determine the cost per square foot for competitors’ facilities, but the numbers may be budget dollars in one case and actual expenditures in another.
Benchmarking provides up-front measures to assess the successes and deficiencies in an organization. When it comes to developing a response to these findings, it is important to be clear on what improvements will actually affect the bottom line. The benchmarking exercise may determine that installing a new computer system would increase productivity. But if the same subcontractors, the same number of staff, and the same overtime costs are retained, this increase in productivity will not translate into cost savings; nor will it truly benefit the business.
In the end, it’s most important for facilities managers to ensure that checkup and tune-up efforts actually contribute to operational efficiencies. If executed properly, proactive facilities management will exceed the mere provision of quality services and quick response times by identifying innovative and creative ways to reach the goals of the core business.
Redding is director of UMS Facilities Consulting, a subsidiary of EMCOR Group, Inc.