A newer
look at facilities and facility managers as corporate assets
 |
VDM Verlag, 2008
ISBN: 9783639002676 |
(as published in the Commercial Real Estate Network, sep09, vol17, issue3)
In today’s work environment, the competitiveness of an organization is
directly related with how effectively and efficiently that business manages its
resources. Corporate real estate assets are termed as the fifth resource, after
the traditional resources people, technology, information and capital. In
addition, for many organizations, facilities-related costs are second only to
the cost of labor.
Although these two characteristics should convince organizations that
judicious management of their real estate assets is a major factor,
expenditures on these buildings are generally regarded as a ‘sunk’ business
cost, which cannot be avoided. The prevailing view for most companies is that
the level of management associated with controlling facilities-related costs is
not sufficiently demanding or sophisticated enough to necessitate the skills of
a specialist or the attention of the business’s senior executives. Nevertheless,
companies that want to preserve their competitive edge in the market are
beginning to see the importance of treating their corporate real estate as an
asset and manage them accordingly at the C-Suite level.
They recognize that corporate real estate/facilities fulfill two
critical roles in supporting the work of the organization and the realization
of its competitive strategy. The first role is to physically support the
production process. Corporate real estate provides a central place for people
to gather and for work to be done. The second role is the symbolic
representation of the organization to the world. The physical setting of the
organization is seen by its employees, customers, and suppliers as the
embodiment of the company’s values and goals. A sound corporate real estate
strategy harnesses both the logistical and symbolic power of workplace and puts
it to work to complement the competitive strategy.
Failure to accomplish facilitating these business goals imposes heavy
burdens on the organization and its users. These burdens may include lost
productivity of people and activities housed in and served by the facility,
increased operating costs to overcome the mismatch of needs and facility
capability, or increased worker absenteeism and health care costs related to
on-the-job stress. Furthermore, the goals of users or owners may change,
leading to requirements different from those the facility was initially
intended to fulfill. Many of the technologies of modern facilities, as well as
the activities they shelter and support, have changed substantially in recent
decades and are continuing to change. These changes lead to rising expectations
about the services and amenities a facility should provide. Rising expectations
can effectively shorten the useful life of a facility and are the essential
characteristics of obsolescence. Accommodating rising expectations is often
costly, but failing to accommodate change can be even more costly.
Office buildings are typically designed to last for at least 50 – 60
years, and in their initial 15 – 20 years they are expected to serve to the
original function they are designed for. Yet, due to the rapid changes in
technological advances, office buildings that are 20, 10, even five years old
today can be subject to obsolescence. Even new buildings, under certain
circumstances, are being renovated to meet the needs of the market before they
become inadequate or ineffective due to obsolescence, or turn out to be
redundant due to a change in demand for their services. Thus, in today’s world,
it is reasonable to consider almost any property not categorized as part of the
market’s new-construction stock as an “older building” that is eligible for
renovation and/or adaptive reuse. Office buildings are one of the major assets
of companies enabling them to maintain their competitive advantage. Successful
and effective facility management of corporate assets means highly efficient
personnel, which translates into minimum cost and maximum profit. Preventing
office buildings from getting obsolete, adaptability to change and emerging
technologies protects organizations from foreseeable and excessive costs. All
of these facts demonstrate the indisputably important role that facilities play
in corporate success.
To minimize the impacts of obsolescence, the aging of a facility should
be regularly monitored against the possible changes related to the uses a
building or certain spaces within the building are expected to serve (i.e.,
functional); the cost of continuing to use an existing building, subsystem or
component in comparison with the expense of substituting some alternative (economic);
the efficiency and service offered by the existing installed technology
compared with new and improved alternatives (technological); or the broad
influence of changing social goals, political agendas, or changing lifestyles
(social, legal/political, market). Such changes are often embodied in the
adoption of new standards or codes, rising expectations of performance, major
technological change, major change in functional requirements, major
organizational change, shifts in property values, poor maintenance or abuse of
systems, or aesthetic shifts. These events and shifts spur obsolescence.
Many professionals seemingly use the term “obsolescence” whenever they
judge that substantial action is needed to return a facility to full service,
and they do not distinguish among the factors giving rise to this need. Yet,
new facility uses and their new demands; new materials, technology, and
procedures of construction and operation; new air pollutants; and new laws and
regulations exemplify changes that lead us to alter design methods and
expectations of acceptable service long before older facilities are abandoned.
Similarly, changes in organizations, variations in urban real estate markets,
and the opportunities presented by new equipment and materials often lead us to
renovate long before facilities and their parts are worn out.
Today’s phenomenon for such a change is
widely known as “Green Building”, and its leading advocate is USGBC’s
Leadership in Energy and Design (LEED) initiative. LEED-EB: OM, short for
Leadership in Energy and Design for Existing Buildings: Operations &
Maintenance, rating system provides the single greatest opportunity for
businesses to green their built environment. By implementing these green
building strategies to existing buildings, organizations are able to increase
their real estate value, while significantly cutting their operational costs.
