Linking FM with Business Strategy

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Linking FM with Business Strategy
Christopher Hodges, P.E., CFM, LEED AP, IFMA
Fellow Principal Facility Engineering Associates
Teena Shouse, CFM Senior Facility Management
Consultant Facility Engineering Associates
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Agenda

• The VALUE of FM

• The FUTURE of Facility Management

• STRATEGY and Facility Management

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Agenda

• The VALUE of FM

From to people
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The Value of FM

• You are being pressured by the demand to deliver
  better results greater value, but at lower
  costs
• You have much more influence over a facilitys
  environment than those who designed/built them

The FM in Todays World
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The Value of FM
The FM as the Link between Design and Operations
As Defined by Time . . .
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The Value of FM
Corporate Headquarters Model

• 8 stories, 640,000 square feet
• Design Construction Costs (CRV)
  82,368,000
• Capital Renewal 2 of CRV
• OM Budget 5.69/sf
• Inflation 3

RS Means 2006 Square Foot Costs APPA
Benchmarks IFMA Benchmarks 25 Headquarters
Average
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Total Cost of Ownership
The Value of FM
In Terms of Total Dollars . . .
DC 82M CR 279M OM
411M Total 772M
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Total Cost of Ownership
The Value of FM
Savings in OM and Capital Renewal . . .
Savings
DC 82M Total NPV CR
279M ? 14M ? 3.2M OM 411M ? 41M
? 9.4M Total 772M ? 55M ? 12.6M
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The Value of FM
In Terms of Total Dollars (Millions) . . .
With modest operational and capital cost savings
Building
55
Savings
772
Building Cost
0
2,000
4,000
6,000
8,000
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The Value of FM

• Typical design and construction costs account
  for only about 2 of an organizations total
  cost to exist.

Life-Cycle Costs of a Facility
(Cotts, D.G., The Facility Management Handbook,
Second Edition, 1999)
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The Value of FM
In Terms of Total Dollars (Millions) . . .
What about this?
695
People Savings
6,950
People Cost
Building
We know this is possible
55
Savings
772
Building Cost
0
2,000
4,000
6,000
8,000
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Agenda

• The FUTURE of Facility Management

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The Future of Facility Management
Linking FM to Strategy Emergency
Preparedness Change Management Sustainability Emer
ging Technology Globalization Broadening
Workforce Aging Buildings
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Corporate Social Responsibility
The Future of Facility Management
Corporate Social Responsibility (CSR) is a
concept whereby organizations consider the
interests of society by taking responsibility for
the impact of their activities on customers,
employees, shareholders, communities and the
environment in all aspects of their operations.
This obligation is seen to extend beyond the
statutory obligation to comply with legislation
and sees organizations voluntarily taking further
steps to improve the quality of life for
employees and their families as well as for the
local community and society at large.
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Corporate Social Responsibility
The Future of Facility Management
The roll of the FM is changing . . .
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Agenda

• STRATEGY and Facility Management

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Strategy and Facility Management

• 5 Steps to Link FM to Strategy
• Organization strategy understanding
• 2. Department support of the strategy
• 3. Evaluate services alignment
• 4. Cascade individual objectives
• 5. Champion the process

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Strategy and Facility Management
Provide a sufficient and measurable return on
investment. Help differentiate the organization
to recruit and retain the best people. Have a
clear vision and understanding of long-term
corporate business strategy rather than a
short-term focus on tactics.
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Importance of linking facilitieswith core
business strategy
Strategy and Facility Management

• It is sometimes difficult to prove and
  communicate the value of facilities (constantly
  changing).
• Speaking the language of the C-Suite (CEO, COO,
  CFO, etc.).
• A shift in the belief that facilities are an
  effective component of business strategy and more
  than just the cost of doing business is required.
• Understand the complexities associated with
  strategic facilities planning/budgeting

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How do you begin to create that link?
Strategy and Facility Management
Identify your goals . . .
Where? What? How?
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Strategy and Facility Management
Partnering with the C-Suite
Why? More effective budgeting Wise real estate
decisions Helps to justify and secure
resources Builds a proactive and connected FM
Department Better optimization of the facility
for the core business success
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Strategy and Facility Management
Partnering with the C-Suite
How? Understand where the organization is
going Learn how FM can better support the
organization Stay ahead of the curve Learn the
organizations initiatives and how FM can become
engaged
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Activity
Strategy and Facility Management

• Take a few moments to collect your thoughts and
  then in the next few minutes, explain to the CEO
  (sitting next to you) the value your FM
  Department brings to the organization.
• What does the FM Department do?
• Why you do it?
• How can you support
• the organizations mission?

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Building a Strategy
Strategy and Facility Management
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Strategy and Facility Management
WB
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Balanced Scorecard
Strategy and Facility Management
A system that . . .

• Provides an insight into operations

• Balances the historical data with future
  performance

• Assists us in implementing strategy

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Strategy and Facility Management
How do we get from here to there?
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Strategy and Facility Management
FACILITY MANAGEMENT PLAN DEVELOPMENT - Steps we
will take in a continuing process -
Fall 2008
Fall 2011
Fall 2008 to Opening
6- 9 months prior to Opening
January 2009 though 2010
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Strategy and Facility Management
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Strategy and Facility Management
FACILITY MANAGEMENT PHILOSOPHY - Linking Facility
Management to Vision and Mission -
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Strategy and Facility Management
KEY DELIVERABLES - Items to be Finalized Before
Opening -

• Operations and Maintenance Plan and Procedures
• Maintenance Repair Program for Curtain Wall,
  Skin and Roof
• Building Maintenance Processes and Procedures
• Food Service Processes and Procedures
• Security Processes and Procedures
• Garage and Green Space Coordination Plan
• Landscaping Processes and Procedures
• Janitorial Processes and Procedures
• Asset Management Plan and Development
• Furniture selection and
• Commissioning

• Organizational Design Validation
• Outsourced Contracting Alternative
  Recommendations
• Staffing and Training Plan

• Update and Validate the Facility Operations
  Budget
• Finalize all operating budget figures including
  Labor, OM costs, Capital Reserve, and Utilities

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Now Its Your Turn!
Strategy and Facility Management

• Ask for a meeting with each group of influence or
  customers
• Prepare for the meeting
• Create and present your strategic plan balanced
  scorecard based on your findings
• Ask for resources to help achieve objectives
• Publicize your achievements
• Use your strategic plan as a guidepost when
  looking at the other trends

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Questions?
Thanks!

• Christopher Hodges, P.E., CFM, LEED AP, IFMA
  Fellow
• hodges_at_feapc.com
• Teena Shouse, CFM
• teena.shouse_at_feapc.com

www.feapc.com