FACILITY MANAGEMENT OPERATIONAL EXCELLENCE · Operational Excellence for high functioning FM...

FACILITY MANAGEMENT OPERATIONAL EXCELLENCE

FORGING THE IRON TRIANGLE

EXECUTIVE SUMMARY

METHODOLOGY

THE FORGING OF THE IRON TRIANGLE

IRON TRIANGLE ARM 1

IRON TRIANGLE ARM 2

IRON TRIANGLE ARM 3

RECOMMENDATIONS

CONCLUSION

ACKNOWLEDGEMENTS

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November, 2014

CHRISTOPHER PERRIJEFF KLEINSCHMIDTPETER MIKOLLISA ROTHS

SECOND EDITION

EFFICIENT COST MANAGEMENT AND VALUE CREATION

HIGH OCCUPANT AND CLIENT SATISFACTION

PROACTIVE STEWARDING OF PROPERTY AND INFRASTRUCTURE

TABLE OF CONTENTS

FORGING THE IRON TRIANGLE

EXECUTIVE SUMMARY

The purpose of this report is to assist Corporate Real Estate executives with elevating the performance of Facility Management (FM) operations. Based on recent research conducted by CBRE Global Corporate Services, this study investigates leading FM best practices in CorporateRealEstate(CRE)organizationsthatbenefitfrom high levels of FM process maturity, occupant satis-faction and service provider alignment.

Our intent in distributing this information is to 1) help betterdefineOperationalExcellenceintermsthatcanbe adopted by the FM industry, 2) propose concepts that appear to propel FM organizations forward and 3) highlight tactics that result in operational gains. This paperistheresultofsignificantcooperationofCREexecutives at major corporations including Sprint, Royal Bank of Canada, Travelers, Regions Financial, ADP, Fidel-ity Investments, and Motorola Solutions, in addition to a partnership with CoreNet Global on an opinion survey conducted in August 2014.

This paper is divided into four primary sections. First, we discuss the methodology by which we collected and as-sessed our data; second, we discuss our analysis and ad-vance our theory of Operational Excellence that resulted; third,weexplainourprimaryfindings;andfinally,weprovide recommendations for FM organizations seek-ingtoimplementthestrategieswehaveidentified.

We worked closely with FM teams to identify their specificapproachestodriveOperationalEx-cellence. Upon identifying these approaches from onsite interviews, we validated certain assumptions through a wider popula-tion of FM leaders in North America by partnering with CoreNet Global on an opinion survey. We calibrated thesefindingstodeterminecurrentFM priorities, perceptions and attitudes in the marketplace. Certain initiatives appear to have a lasting impact on FM team performance and also create enter-prise value in reduc-ing risk, increasing

workplace satisfaction, and extending the useful life of properties or building infrastructure. We also noted that practices involving talent management, risk management and life cycle cost analysis are prevalent in today’s high performing FM teams. A few important themes emerged as we analyzed the data. We found that FM Operational Excellence requires simultaneously balancing three primary components.These components were represented in each FM team we studied and have proven essential to improving the performance of those organizations. They are as follows: • Efficient cost management and value creation:

accomplished through cost reductions, cost avoidance and risk management initiatives.

• Maintaining high occupant and client satisfaction: accomplished by managing occupancy, providing safe and functional work environments and providing ap-propriate property or campus amenities.

• Proactively stewarding property and infrastructure: accomplished through adopting disciplined approach-es to corrective maintenance, preventative maintenance and customer requests.

We hope this paper will inform readers on how to mature their own facility management organiza-

tions and how they might provide more effective leadership and FM service delivery models.


METHODOLOGY

By answering these questions, we hoped to isolate each firm’s“formulaforFMsuccess”anddevelopahypothesisofhowotherfirmscandefineandachieveFMOpera-tional Excellence. Based on the previously described criteria, seven companies were engaged to participate in thisstudy:ADP,apayrollservicesfirmbasedinRoseland,NJ;Sprint,atelecommunicationsfirmbasedinOverlandPark,KS;RoyalBankofCanada,afinancialservicescompany based in Toronto; Travelers, a property and ca-sualty insurance company based in Hartford, CT; Regions Financial, a retail and commercial bank based Birming-ham, AL; Fidelity Investments, a mutual fund company based in Boston; and Motorola Solutions a communica-tions equipment company based in Schaumburg, IL.

We determined that focusing on North American FM teams and best practices would enable a better compara-tive analysis as well as eliminate unique conditions re-lated to geography, cultural preferences or FM processes stillunderdevelopment.Organizationally,eachfirmhada combination of insourced and outsourced dedicated personnel. The average ratio was 1 insourced personnel to 6.5 outsourced personnel across the CRE organiza-tion. Portfolio square feet per FM staff (Management, FM and Techs) averaged 45,675 square feet per FM full time employee.

The genesis for this paper occurred at a client meeting in November 2013, when it was observed that the corporate realestateindustrylackedasingle,commondefinitionofOperational Excellence for high functioning FM organiza-tions. Opinions varied within the room of CRE leaders on what constituted Operational Excellence. Some thought uptime and cost management were core elements, others thought aesthetics and occupant satisfaction were the ultimate guideposts. We determined that solving for a commondefinitionwouldhavemerit,butidentifyinghowto best achieve progress in FM Operational Excellence would be even more valuable. This challenge led us to embark on this study.

WebeganourresearchbyidentifyingfirmsandCBREFM account teams known for high levels of client sat-isfaction and FM process maturity. We selected seven companies where our CBRE relationship spanned more thanfiveyearsandwhereacomprehensivelevelofFM outsourcing service existed.

We set out to answer certain core questions that emanat-edfromthatfirstclientconversationandwereimportantto better understanding how to advise FM teams seeking to improve their organizational capacities. These ques-tions included:

1. What does FM Operational Excellence look like at peer organizations?

2. What performance characteristics are most present in leading FM organizations?

3. Which FM metrics and programs are most useful in measuring successful outcomes?

4. Which occupancy solutions or program components are being offered to render high value to the enterprise or occupants?

Together, the seven participating compa-nies house over 290,000 occupants and roughly 1,940 FTEs who provide real estate and facility services.

Combined the collective portfolios repre-sent over 90 MSF of properties, with the vast majority of assets location in North America.

Collectively, the companies spend approximately $3.2 billion on opera-tional expenses each year (including rent, depreciation, staff, repair and maintenance, utilities, taxes and other). The average total occupancy expenditure is $36.45 per SF.

FORGING THE IRON TRIANGLEFACILITY MANAGEMENT OPERATIONAL EXCELLENCE

Our intent was to evaluate the similarities and differences in FM operations. We found many similarities in how teams were organized and budgets were constructed and tracked, but found differences in what was included in service provider KPIs as well as variances in which programs created value. Upon review, we developed a short list of interview questions regarding elements that lead to operational gains and higher levels of perfor-mance. (See appendix for a list of questions.)

The research team collected and assessed the answers from on-site interviews. We found consistent themes on customersatisfaction,portfoliocostefficiency,operationaluptime, FM process improvement, effective communica-tion and risk management. The teams interviewed clearly prioritized an FM capability focused on tactical execution of budgeting, issue resolution and property maintenance.

The seven companies also offered in-depth access to historical data on key performance criteria, budgets, cli-ent satisfaction data, and other program successes. Five outofthesevenfirmsidentifiedOperationalExcellencetobeatop-fivepriorityfortheCREorganization.Eachfirmhas a reputation for stable and progressive FM practices and many were recently included in a CBRE FM assess-ment program that conducts an in-depth assessment of functionalproficiency. Each FM team was required to submit comparable data for the research team to review and analyze prior to con-ducting site visits and interviews. Data submitted included CRE organization charts and priorities, property sched-ules, operational budgets, key performance indicators, recent cost-saving initiatives, occupant satisfaction data and work order history.

FIGURE 1: Select data contributed by seven participating organizations

CRE / Workplace Solution

227

1:8

25

202

46,429

28,634

Portfolio Consolidation

Client Relationship

Service Levels

Expense Reduction

Energy / Sustainability

CorporateReal Estate

460

1:6

177

283

142,857

48,478

Financial Perf/Transp


Role Clarity

Globalization

IT Insource

Corporate Real Estate

270

1:12

20

250

135,938

64,444

Expense Reduction

Partnership & Innovation

Operational Excellence

Workplace Experience


CorporateReal Estate

80

1:4

25

102

116,923

65,354

Expense Reduction

OperationalExcellence


SeamlessExecution

CRE&FOrganization

CRE&F FTE

Ratio

Insourced

Outsourced

Sq Ft / FM FTE

Sq Ft / CRE FTE

Top CRE Priorities

1

2

3

4

5

CorporateProperties

335

1:7

40

295

76,712

48,119

ExpenseControl

EfficientExcellence

M&AReadiness

Innovation

Leverage SP SMEs

RE Strategy & Ops

243

1:10

21

222

114,500

30,864

Portfolio Consolidation

Capital Utilization

Expense Reduction

HQ Redevelopment

Operation Excellence

REC

325

1:6

125

200

75,000

33,846

Critical SpaceMgt

AccountMgt

FinacialMgt

Operational Excellence

Quality Mgt

1 2 3 4 5 6 7Company

Source: CBRE GCS Research


We found varied opinions related to role of life cycle management and priorities around energy and sustain-ability. The quality and skill sets of FM leaders surfaced as a topic of focus and further inquiry. We observed that the FM teams with better occupant satisfaction, process maturity,andfiscalcontrolweregenerallymoreproac-tive and had strong leadership characteristics, such as: inclusiveplanningsessions,goalidentification,clearcommunicationbacktofieldteams,andadistinctcultureof training and accountability. Four months after our initial interviews, we surveyed the interviewees again. Key elements of FM Operational Excellence that surfaced are shown in the chart above.

Theseandotherfindingshelpedusdevelopanopinionsurvey of FM leaders in North America. In late July 2014, we partnered with CoreNet Global and conducted an open survey of practice leaders on similar themes. The resultsfromthissurveyareprofiledfurtherinthepaper.

FIGURE 2: Key elements of FM Operational Excellence

28%

20%

16%

14%

7%

6%

6% 2% 1%

Defining FM Operational Excellence

Customer Satisfaction

Proactive Stewardship

Service Delivery

Effective Operations

Continuous Improvement

Safety, Quality Work Environment

Measured Performance / Metrics

Risk Mitigation

Expanding the Relationship

Royal Bank Plaza, Toronto, Ontario



WespecificallyinquiredabouttheFMprogramcompo-nents that have been most impactful to driving operation-al success. Our respondents indicated that new informa-tion technologies (i.e., mobile), more effective call center solutions, and strategic sourcing had been most impactful to improving FM operations. We believe these represent commonly adopted best practices across FM teams, but not necessarily the only elements needed to achieve FM Operational Excellence. Other options in this list point to proven practices that can elevate FM team performance as organizations and processes mature. Such program components may incorporate: robust critical environment incident management, compliance, sustainability, and data driven technical maintenance that raises technician skill level and improves work order self-performance rates.

Upon further studying the survey results and matching them with the onsite interviews and campus tours, we developed our core concepts and hosted a client forum to discuss them. Topics of particular interest included how leading FM teams actually measure performance and which type of metrics render the most value. The chart above shows some of the methods and feedback chan-nels FM leaders use most often. Traditionally FM leaders relyheavilyonthefinancialandworkordercompletionmetrics and often overlook other data points that signal underlying concerns regarding deferred maintenance on equipment, occupant perceptions on facility quality, staff service levels and technician productivity metrics.

FIGURE 4: Words most prevalent in definitions of Operational Excellence

0 20 40 60 80 100 120

Work order data

Recurring meetings

Site visits

Customer surveys

KPI metrics

Financial performance and budget variance

How does your FM organization evaluate performance?

1 = Most Important

2

3

4

5

6

7

8 = Least Important

FIGURE 3: “How does your FM organization evaluate performance?”

Source: CoreNet Global Survey, August 2014


THE FORGING OF THE IRON TRIANGLE OF FM OPERATIONAL EXCELLENCE

Proactively stewarding property and infrastructure: the long-term success of an FM or-

ganization depends largely on the organization’s abilities tokeeptheirmanagedfacilitiesupandrunningefficiently.Organizations that proactively approach corrective maintenance, preventative maintenance and customer requests will be able to avert downstream equipment fail-ures and equipment down time, thus extending the useful life of the asset.

Because all three components of Operational Excellence were clearly evident in the groups we studied, and be-cause it is clear that no single component can be favored at the exclusion of the others, we have termed this group the Iron Triangle of FM Operational Excellence. We describe the codependency and relative equal strength of each component in broader detail in the sections that follow.

The synthesizing of all of these inputs, themes and data points led us to conclude that FM Operational Excellence requires simultaneously balancing three primary compo-nents. These components were represented in each FM team we studied and have proven essential to improving performance. They include the following:

Efficient cost management and value creation: these objectives are supported by efforts within the

FM organization to manage operational expenses and capital budgets and create value through cost reductions, cost avoidance, and risk management initiatives. Strate-gicsourcing,energyefficiencyandvendormanagementprograms were most often cited as effective practices.

Maintaining high occupant and client sat-isfaction: FM organizations create success by

providing their client occupant groups with a workplace that enhances productivity. Effective FM organizations do this through managing occupancy, providing safe and functional work environments, and providing appropriate property or campus amenities such as retail, concessions, concierge services and conference support.


FM organizations with strong management teams are able to achieve Operational Excellence by measuring results and letting those results tell a story. Some of the categories of performance and trends our study group tracks on a year-over-year basis include:

• Level of value creation back to the enterprise

• Level of occupant and LOB leader satisfaction

• Useful life of facility infrastructure and plant equipment

The chart below shows the categories of FM KPIs in use by participating clients. The three categories with most KPIs align with the components of the Iron Triangle.

IMPORTANCE OF A BALANCED SET OF PRIORITIESThe balanced alignment of the three components enables FM organizations to pursue strategies that are known to improve operational performance. Those organizations that breed a culture of improving the occupant experi-enceandproactivelyfindwaystocreateenterprisevaluedevelop sets of priorities and invest in capabilities that average FM teams do not. Some of these priority sets include:

• Continual process improvement and innovation councils

• Recruiting, developing and retaining strong FM talent

• Leveraging service providers, emerging best practices, and technology platforms

• Ensuring that FM service levels are properly aligned with CRE priorities

FIGURE 5: Facility Management KPI categories used by participating firms

0

2

4

6

8

10

12

14

16

Best

Practi

ce

Custom

er Sa

tisfac

tion

Data In

tegrity

Finan

cial M

anag

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Energ

y Man

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Govern

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Resp

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Time

Ope

ratio

nal U

ptime

Talen

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agem

ent

Work O

rder

Mgt

# o

f KPI

s pe

r C

ateg

ory

FM KPI Categories

Travelers

Sprint

Regions

RBC

Motorola

Fidelity

ADP

Company 1

Company 2

Company 3

Company 4

Company 4

Company 6

Company 7



High-performing leaders measure performance of each of these functions on an on-going basis through the use of Monthly Business Reviews (MBRs) and other gover-nance functions. Organizational benchmarking and clear transparency of important metrics are woven into an organization’sDNA.EachFMteamwespokewithfirmlybelieved in an engaged governance structure to help manage FM performance. Not every category above is discussed at length every month, but FM leaders generally need an up-to-date view on how each area is working. Specificoperationalandfinancialobjectivesandcorre-sponding metrics can drive an organization’s year-over-year business planning. The use of MBRs and annual FM business plans can be effective tools to provide the leader with a clear picture of where the organization currently is and whether it is on the path to meet its strategic objec-tives.

Identifying and Developing TalentEffective FM leaders are responsible for identifying and developing high-performing associates that have strong technical and soft skills, energy, and the drive to succeed. Talent management is vital for the culture, consistency and growth of an FM organization. It is also necessary to foster associate career satisfaction which translates into a high-performing organization.

When successful leaders openly communicate with their top performers, have a vision for the FM organization, and develop talent, the FM organization becomes more engaged and productive over time. Talent management includes alignment of roles and responsibilities between CRE and service providers. According to one study par-ticipant,“clearjobdescriptions,employeerecognition,providing clear and frequent performance feedback are important factors in building culture in high-performing FMteams.”Whenroleclarityorculturesuffers,FMlead-erswillbehamperedwithmorereactive,“intheweeds”problems that lead to lower morale and talent turnover.

LEADERSHIPIn order to forge the Iron Triangle, FM organizations require effective leadership. Historically, the FM industry hasnotinvestedsignificantresourcesinexecutivetrainingand leadership development. Our survey showed a direct correlation between the FM leader’s strengths and weak-nesses and those of his or her broader FM organization. The experience of our study group indicates that through organizational planning, discipline, goal setting and ef-fective communication, FM leaders can unite geographi-cally dispersed teams around a deeper sense of mission andpurpose.ProficientFMleadersnotonlyunderstandtheir team’s roles and contributions, but they also spend considerable time on three primary responsibilities:

1. Measuring and driving FM performance to new levels

2. Identifying and developing FM talent (internal and external)

3. Planning for the future needs of the organization

Measuring and Driving PerformanceOur research suggests that high-performing FM organi-zations have in place or are implementing many of the following FM attributes and work processes:

• True alignment of FM team goals and priorities for service providers

• Effective FM playbooks, Service Level Agreements, and protocols

• High levels of responsiveness in facility managers and technical workforce

• Systems to proactively identify process improvement opportunities

• Capability to develop a business case for change to senior management

• Financial controls that link forecasts to budgets to payables

• Training programs and investment in FM talent development


FIGURE 6: “Which would most help your FM team advance from reactive to more proactive operations?”

Strategies might include driving year-over-year occupancy reductions, increasing workplace utilization, improving access to building data, providing alternative workplace solutions, or developing proactive and predictive mainte-nance programs. The goals of each strategy need to be communicated early and reinforced frequently to focus and recalibrate the efforts throughout the FM organiza-tion. Consistent work processes, informed associates, and effective information technology can align efforts to achieve or exceed desired targets.

The CBRE Royal Bank of Canada team counters this by bringing all new FM hires to Toronto for an FM Onboard-ing Session, which includes orientation on key processes, team orientation, and lunch with key client contacts.

Planning for the FutureIn our CoreNet opinion survey, 72% of respondents stated that FM leadership should be spending more time on strategic planning for the future. The strength of this response shows a clear need for FM organizations to shift from reactive to proactive postures. Our research shows that FM organizations can be more proactive if they drive partnerships, build trust, and transparency with their key stakeholders, which include customers, associates and service providers. In order for facilityleaderstomanagetheirorganizations,theyfirstneed to understand how the corporate real estate and FM prioritiesfitintothebroadercorporateenterprisestrategy.One of our study participants cited the need to create tighter linkages from FM to CRE Client Relationship Man-agers as an alignment strategy, the purpose of which is to connect operational goals and enterprise objectives.

14.3%

19.5%

30.8%

36.8%

38.3%

38.3%

60.9%

60.9%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0%

Effectively right size occupancy expense and manage costs

Educate local FM staff on occupant expectations

Adapt staffing model to ensure proactive property inspections are completed on a recurring basis.

Regularly present program ideas that will transform FM delivery model.

Invest in new IT technologies to streamline FM workflow and budgeting

Continue to invest in team member growth and development

Continuously improve service delivery and execution of core responsibilities

Drive partnership, collaboration, trust, and transparency with stakeholders.

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Which of the following would most help your FM advance from reactive to more proactive operations? Please pick three.

Series1

Percentages exceed 100% because respondents chose up to three options.Source: CoreNet Global Survey, August 2014


schedules for capital deployment. Professional cost analytics are also aiding these efforts by bringing third-party data sources and algorithms to assist FM teams in determining what commercial standard or industry cost averages are to operate and replace equipment in spe-cificbuildingsofcertainageandcondition.

Another program component in use in operationally excellent organizations is working with real estate ser-vice providers to produce glide-path savings targets for year-over-year performance. Typically providers will agree to reduce a client’s operational expense run rate over a multi-year timeframe in exchange for incentive fees and fees at risk for complying with the success of the expense-reduction program. It is important for these programs to have a solid baseline of detailed operational expense informationfromthepreviousyearandforthedefinitionsof cost savings, cost avoidance and risk mitigation efforts tobedefinedpriortoengagement.

IRON TRIANGLE ARM 1EFFICIENT COST MANAGEMENT AND VALUE CREATION

One of the principal themes that resulted from our inquiry wastheimportanceofefficientlymanagingbudgets,operations and creating value. Most FM organizations are being asked to do more with less, and thus consis-tently need to deliver on target performance levels when it comestomanagingoperationalexpendituresandfindingwaystobemoreefficient.Costmanagement,costreduc-tion, cost avoidance and risk management initiatives are all facets of being operationally excellent and driving value creation.

In our study, 49% percent of survey respondents indicated thatbalancingbudget/fiscalprioritiesisakeyelementofFM Operational Excellence. Most FM organizations place ample if not a high portion of resources making sure operational and capital budgets are properly constructed, forecasted and managed throughout the year. In addi-tion,42%saidthatperformingeffectivelyandefficiencyare also attributes of Operational Excellence.

Of the FM organizations we studied, many have sophis-ticated programs that systemically create value through cost reduction initiatives. Strategic sourcing and supplier performance management programs are effective at le-veraging scale, standardizing service levels and reducing service providers down to those that are the most ag-gressive on price and are geographically aligned. Other tools, such as e-invoicing, place vendors and suppliers on more effective electronic platforms that will align contract labor rates and material pricing to purchase orders that mustbereflectedintheirinvoices,thusremovingariskofoverbilling or billing mistakes.

FM organizations also have shown a need to prioritize capital expenditures more effectively. Almost all of our interviewees suggested this was a priority in 2014. This requires a comprehensive and intimate knowledge of major and minor building equipment, the condition of the equipment, its remaining useful life and replacement costs. Each of these data points are aggregated over the portfolio to depict a comprehensive and year-by-year analysis of upcoming capital replacement and repair requirements.

Many FM organizations maintain certain aspects of this information for portions of their portfolio and then are challenged to create complete views with prioritized

Cost Management and Value Creation Programs• Procure to Pay E-Invoicing• Strategic Sourcing• Supplier Performance Management• Monthly Forecasting• Utility Bill Management• Capital Planning and Cost Analytics• Risk Management and Compliance• Glide Path Savings Targets

ADP’s Headquarters, Roseland, NJ


RegionsBankhasbeeneffectiveindrivingefficientbud-get management and creating value for its enterprise. Working with CBRE, Regions seeks to get more out of every dollar spent in the FM budget. They invest in new technologiesthatdriveefficienciesandproactivelyseekways to streamline spending. A recent change away from an older Maximo CMMS system to a new CBRE Service-Insight 7.0 work order and dispatch system enables more information to be in the hands of a technician, a process which enables them to do less paperwork and focus on more productive work efforts. Regions also has been able to drive down energy costs through a diligent pursuit of low-cost and no-cost energy demand strategies. Below is a chart of the reduction over time in kWh / SF consump-tion within their energy savings program.

FIGURE 7: Annualized electric consumption 2008-2013Annualized Electric Consumption 2008-2013

24.1 22.8 22.5

21.5 20.5 19.9 18.00

20.00

22.00

24.00

26.00

2008 2009 2010 2011 2012 2013

kWh

/ SF

kWh / SF

Regions Bank, Birmingham, AL, Operations Center



IRON TRIANGLE ARM 2HIGH OCCUPANT AND CLIENT SATISFACTION

Another associate-centric amenity includes Wellness Centers that enable associates to have access to health care professionals and preventative health screening op-portunities on site.

Within our survey, 46% of respondents believe focusing on the satisfaction and experience of the end user is an attribute most associated with FM Operational Excel-lence. High customer satisfaction can create loyalty with associates, and ultimately positively impact retention rates.

“In real estate, everything is personal.” Brad Reinhardt, Real Estate Manager, Sprint Real Estate

As the War for Talent continues to grow, and companies addressing an aging workforce seek to attract their next generation of associates, the workplace environment has become an increasingly important differentiator in recruit-ing and retaining the best talent.

“Thenurturingofnationaltalent,alongwiththecapac-ity to attract it globally, are the key differentiators of nationaleconomicperformance,”saidJohnYochelson,former president of the Washington, D.C. based Council on Competitiveness, an association of prominent chief executiveofficers.(‘Talentism’IstheNewCapitalism’WallStreet Journal July 17, 2014)

Indeed, many participating FM organizations are in-creasing their focus on workplace strategy and efforts to improve associate satisfaction, such as campus amenities, conference room reservation systems, health and wellness services, and walk-up IT services. They are doing so not only to pilot and implement, but also to measure the im-pact that these programs have on associate satisfaction.

At Fidelity Investments, client satisfaction levels are directly correlatedwith“keepingassociatescomfortableandwithgreatbuildingamenities,”accordingtoChuckFuller,VPof Facility Management. Fidelity, for example, places a high degree of focus on delivering high-quality occupant experiences in both their retail and campus environments, due to the highly skilled nature of its workforce. Campus amenities are deliberately designed to help associates be healthier, more productive and more collaborative. One such recent program supported by Facility Management is Go Work Centers for mobile workers. These touch down locations enable connectivity and collaboration for mobile associates.

FIGURE 8: Most common building amenities

Break rooms

Multi-purpose space

On-sitefitnessarea

Cafeteria / food services

Nursing / location room

Lounges

Source: IFMA Workplace Strategies Research Report

39%

50%

52%

54%

72%

93%

Lounges

Nursing/lactation room

Cafeteria/food services

On-site fitness area

Multi-purpose space

Break rooms

High Occupant and Client Satisfaction Programs• Customer Sat Surveys• Health, Safety Environment• Space Reservation Systems• Workplace and Occupancy Management• Employee Amenity Programs• Proactive Inspections• Web Portal & Mobile

Fidelity’s Westlake campus, Westlake, TX


WhileFMhasalwaysbeena“peoplebusiness,”FMteams are placing more and more focus on a concierge, white glove service culture, with an emphasis on customer centricity. As Sprint’s Facility Management leader Brad Reinhardtsummarizedthetrend:“wearehereforthecustomer.”

For Sprint, some of these customer-focused programs and associatedbenefitsinclude:

CAMPUS BICYCLE TRACKING • TrackstheSprintCampusbicyclefleet

• Assistsusersinfindingbicyclesoncampususingsolarpowered tracking technology

• Allows for instant access to the universal lock code and liability waiver signature using M2M QR code technol-ogy

MOBILE MEETING ROOM RESERVATIONS• Allows users to review room availability and schedule

by scanning a QR Code from a mobile device

• Allows users to view existing reservations and to search for alternative meeting locations

• Allows users to cancel bookings

FACILITY SERVICES ISSUE REQUEST• Allows users to create a facility request for their current

location by scanning a QR Code

• Enables instant access to ticketing

• Provides“OneClickTicket”withautopopulatedloca-tion

• Encourages quick resolution

When initiating any new programs aimed at improving Operational Excellence, FM teams must balance several factors, including return on investment, client service / satisfaction impact, and the overall impact on the work-place experience and productivity.

Sprint Headquarters, Overland Park, KS


Certain elements are base requirements in delivering a successful FM program, including:

• Strategic Sourcing

• Energy and Sustainability

• Critical Environments

• Health Safety and Environmental

Another component within our Iron Triangle is the proac-tive stewardship of property and infrastructure. Proactive stewarding may involve programs that structure advanced planning and preparation for business continuity events as well as programs like critical incident management, facility condition indexing, preventive and predictive maintenance, operational risk management, and several others. With respect to advanced planning for critical environments, ADP Corporate Real Estate recently added a new Incident Escalation email alert capability that has dramatically improved communications during Disaster Recovery and Business Continuity events. In this program, Senior Management personnel, Line of Business leaders, CRE and FM professionals all get appropriate levels of disclosureandimpactinformationinatimelyandefficientmanner, which helps facilitate better decision making dur-ing critical situations.

While the maintenance of buildings and sites are the very essence of the FM function, it is the proactive part of this process that differentiates high-performing FM organiza-tions. The teams that regularly implement new FM pro-grams and solicit fresh ideas from associates and service providers get more results.

IRON TRIANGLE ARM 3PROACTIVE STEWARDING OF PROPERTY AND INFRASTRUCTURE

Property and Infastructure Programs• Facility Condition Indexing• Engineering and Technical Services• Energy Supply Procurement• Energy Demand Management• Critical Incident Management• Preventative and Predictive Maintenance• Asset Preservation - Project Management• Operational Risk Management• MROFulfillmentandLogistics

1.50%

7.50%

8.30%

11.30%

16.50%

18.00%

19.50%

23.30%

25.60%

25.60%

27.10%

36.80%

39.10%

39.80%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Other (please specify)

Health Safety and Environmental

Call Center

Critical environments

Facility condition index

Occupant and employee services (reception and concierge, mailroom, AV,

Lifecycle Asset Management

IT tools & systems

Energy and sustainability

Engineering and technical services

Capital Planning

Strategic sourcing

Preventative Maintenance

Talent management

Which FM program components have been most impactful in creating FM operational success? FIGURE 9: Which FM program components have been most impactful in creating FM operational success? –

Survey Results

Percentages exceed 100% because respondents chose up to three options.



While these programs can certainly be impactful to operations, they can also be challenging to implement. Twenty-two percent of respondents said facility condition index was a challenge toward achieving FM Operational Excellence, and 30% lifecycle asset management fell into that category.

Answer Options Response Count Talent management 43.8% IT 41.5% Lifecycle Asset Management 30.0% Facility condition index 22.3% Capital Planning 22.3% Strategic sourcing 21.5% Preventative Maintenance 18.5% Engineering and technical services 15.4% Energy and sustainability 14.6% Critical environments 11.5% Occupant and employee services (reception and concierge, mailroom, AV, etc) 10.8% Health Safety and Environmental 9.2% Call Center 5.4% Other (please specify) 5.4%

We believe these challenges result from many companies taking a reactive approach to maintenance due to budget constraints, resource limitations, etc. For many FM teams, life cycle management may look like this:

• No documented process or historical recording of asset evaluation

• Budget development based on broken equipment

• Littleriskorcriticalityjustificationwithinbudgetalloca-tions

• Little insight to expected future replacement costs

However, the FM teams we interviewed indicated that as theylooktomaturetheirFMprogramsinthenextfiveyears, they will place more focus on enhancing other areas, including life cycle and facility condition indexing and risk management and compliance.

EFFECTIVE CONTRACTS INCENTIVIZE HIGHER FM PERFORMANCEIt cannot be overstated that appropriate Line of Business Service Level Agreements (SLAs) and service provider Master Service Agreements (MSAs) are essential to evolv-ing to a higher level of FM performance. Strategic FM performance requires effective contract structures that enabletransparency,flexibility,clearoutcomesandstate-mentsofwork(SOWs)thatreflecttheoperationalneedsof a diverse property portfolio and occupants. Often internal corporate SLAs need to vary widely depending on whether the FM team is supporting a mission critical location, a customer-facing environment, a customer contact center or distribution center. The highest perform-ingFMteamshavefirst-andsecond-tierserviceproviderrelationships that adapt to the needs of the business and focus the team on the right priorities at the right time. This most likely means adapting KPIs and fees at risk over the course of a multi-year service contract.

LIFE CYCLE AND FACILITY CONDITION INDEX Preventative Maintenance, Life Cycle Asset Management and Capital Planning are among the programs survey respondents selected as most impactful in creating FM operational success.

Travelers, Hartford, CT, Historic Campus Rennovation

FIGURE 10: Which FM Program Components are most challenging to implement?



RISK MANAGEMENT AND COMPLIANCEWhile cost reduction and cost avoidance are still high priorities to the FM teams we interviewed, quality assur-ance and compliance are becoming increasingly impor-tant. In fact, as the chart above shows, Quality Assurance Management (29%) and Regulatory Compliance (24%) aretwotechnicalskillsthatwereidentifiedinthesurveyasmostneededinthenextfiveyears.

Not unique to facility management, the importance of regulatorycomplianceinthefinancialservicesindustryis increasing as these companies respond to height-ened federal regulations and compliance requirements. For example, in late 2013, JPMorgan Chase and Co. announced it would invest an additional $4 billion and 5,000extraemployeestofixriskandcomplianceissuesafter a slew of investigations by regulatory authorities. The FM teams we surveyed are increasingly implementing Risk Management and Compliance programs of various extents. Some of these programs include: lean sigma pro-cess methodology and training (Royal Bank of Canada), compliance of third-party vendors (Regions), and a Risk Operational Review Committee (Sprint).

Companies that place a priority on new technologies (such as facility and site inspection/assessment tools) and proper planning of resource requirements are well-posi-tioned to implement a proactive maintenance approach. Organizations that implement these tools often see the followingbenefits:

• Fully documented process and historical capture of as-set evaluations

• Technologyenabledefficienciesandaccuracyforlifecycle management process

• Budget development based on maximizing the asset ROI through the full life cycle

• Fully developed risk and criticality rankings for buildings and/or equipment

• Fully transparent insight into expected costs

1.50%

15.80%

18.80%

24.10%

24.80%

24.80%

28.60%

30.10%

35.30%

41.40%

54.90%

0% 10% 20% 30% 40% 50% 60%


IT Management

Data Center Operations and Maintenance

Emergency Preparedness and Response Management

Regulatory Compliance

Purchasing and Contract Administration

Quality Assurance Management

Project Management

Budget Management

Building Operations and Maintenance

Energy Management and Sustainability

Which of the following technical skills will be most needed in the next five years? Please pick three.

Percentages exceed 100% because respondents chose up to three options.

FIGURE 11: Which of the following technical skills will be most needed in the next five years?

1.50%

15.80%

18.80%

24.10%

24.80%

24.80%

28.60%

30.10%

35.30%

41.40%

54.90%

0% 10% 20% 30% 40% 50% 60%


IT Management

Data Center Operations and Maintenance

Emergency Preparedness and Response Management

Regulatory Compliance

Purchasing and Contract Administration

Quality Assurance Management

Project Management

Budget Management

Building Operations and Maintenance

Energy Management and Sustainability

Which of the following technical skills will be most needed in the next five years? Please pick three.



CASE STUDY: SPRINTSprint employs a number of programs at its headquarters in Overland Park, Kansas that contribute to FM Opera-tional Excellence. The SRE mission statement sets out a clear vision for the entire CRE organization and its suppli-ers:“CreatestrategicvalueforSprintbyprovidinginno-vative real estate services and superior customer service throughpartnershipswithindustryleadingproviders.”

Leaders within their FM organization spent about 75% of their time focusing on proactive activities such as plan-ning, developing new initiatives, meeting with the lines of business, testing new technological innovations, bench-marking performance and communicating expectations tothefield.Bycontrast,41%ofoursurveyrespondentsindicated that their organizations function on a 50-50 split between proactive and reactive performance. Sprint’s SRE relies heavily on an array of performance indicators that are updated regularly and reported and distributed to the entire team as a normal course of business.

SRE FM leaders have deliberately created a culture of collaboration and appreciation of holistic CRE functions. They place great emphasis on customer centricity and position themselves as available to assist the lines of busi-ness in accomplishing their key objectives.

FM training calls are conducted every two weeks to reinforce key programs and operational priorities. They measure employee workload, emerging customer needs, metrics for programs in place. They also host FM func-tion and SRE cross-functional forums on a regular basis to update the teams on their performance and clarify expectations.

The SRE web portal is an entry point to delivering superior customer service. One quick stop on the internet offers occupants the ability to reserve conference rooms, enter work orders, receive status updates, access occupant records, coordinate move request, learn about Sprint’s sustainability efforts and download an app which en-ables more occupant conveniences like campus maps and reservation tools. SRE and CBRE have prioritized the occupant experience and strive to improve it and deliver innovation in a disciplined and cost effective manner. They have successfully created a vision and culture for the FM team on what is expected related to continual process improvement and improving the physical space and work experience for occupants of Sprint’s facilities.

“In FM organizations, the word ‘no’ should never appear before the word ‘risk.’ There is always some risk; you have to quantify the situational risk relative to other types of risk.”Brian Jordan, Director, Sprint Real Estate

At Fidelity Investments, there is wide participation in a Corporate ISO1401 initiative that focuses on vendor management. Fidelity also recently hired a new Senior Di-rector of Quality Assurance within its corporate real estate organizationtoevaluateandfinancialrisk,OperationalExcellence and global standards.

Service providers are dedicating more resources and programming to quality assurance and compliance. Programs implemented include: technology and screen-ing programs to ensure compliance with federally and locallymandatedlaws;CertificateofInsurance(COI)compliance management for vendors; and information and network security compliance, which has taken on renewed focus in the wake of the Target and Home Depot customer information breaches.



RECOMMENDATIONS

This self-assessment should include at a minimum:

• Understand and document the resources that are being allocated to the three components of the Iron Triangle:

• �Efficient�cost�management�and�value�creation

• Maintaining�high�occupant�and�client�satisfaction

• Proactively�stewarding�property�and��infrastructure

• Is there a strategy in place to advance or institutionalize each of these components? Are the strategies effective and being measured? Are resources equitably appor-tioned to each to sustain them as true priorities?

• Simplify and dashboard the most important metrics and processes used to prioritize each area. Many organizations spend too much time generating re-ports and gathering information and still lack business intelligence. Are you tracking and measuring process adoption effectively? Do more effective processes exist or can existing processes be adopted more consis-tently? If so, how might your organization identify and make teams more accountable to adhering to the right processes?

• Assess where and how the senior FM leaders spend their time. Do FM Directors and Regional Facility Managers spend enough time planning for the future? Do they interact enough with Transaction and Project Management leaders? Do they engage their teams in the planning process and communicate agreed upon plans regularly? If not, how might these leaders delegate other tactical responsibilities to free up time to plan strategically for the coming years?

We have described the components of our Iron Triangle theory of FM Operational Excellence and the importance of placing equal emphasis in each area. But as theories go, a common question may surface: can we really keep our team focused on all three areas simultaneously? It would seem pursuing two could come at the expense of thethird.Pursuingefficiencyandoccupantexperiencemight lead to less focus on stewarding the assets. Or pro-actively investing in infrastructure and maintaining high levels of occupant satisfaction will probably force you to exceed budget constraints.

We do not believe this to be true. By instilling disciplined leadership, developing thoughtful FM strategies, pursuing performance and talent management as primary man-agement practices, most FM organizations can achieve a level of harmony across all three components.

“In order to be effective, partnerships need to exist - especially with the provider - none of this works if effective partnership is not in play.” Chuck Fuller, Vice President of Real Estate Services Fidelity

So how should FM teams best apply this theory? Un-derstanding that FM organizations operate in unique circumstances, we recommend that FM leadership teams undertake a self-assessment of their organizations to identify how their organizations align with the Iron Tri-angle paradigm.



CONCLUSION

Another point made clear was that there is no one facet of the FM service delivery that will result in Operational Excellence. Rather, we found that the essence of FM op-erational excellence is in achieving a balance of the three primary components—each of which requires measure-ment and tracking as well as ample time and resources devoted to it.

“Trust is the oil in the FM Operational Excellence engine”

Joe Holcombe, Sr. Vice President Regions Bank

To be operationally excellent, FM organizations must: i)managecostsefficientlyandcreatevalue,ii)maintainhigh levels of client and occupant satisfaction, and iii) proactively steward all property and infrastructure in their portfolio through a lens of proactive leadership and effec-tive communication.

Themostdefinitiveresultfromourresearchcameonthe question of whether an FM organization’s strengths embody those of the leader of the organization. Close to85%ofrespondentsconfirmedthiscorrelation.ThisspeakstotheinfluenceFMleadershaveinshapingtheirorganizations and also the extent to which people as-sociate the performance of an FM organization with the performance of its leader.

When respondents indicate that FM leaders should be spending more of their time planning for the future (72%) and communicating strategy (61%) they are in effect identifying areas where the overall organization could improve. In order to steer their organizations to be more proactive and focused on strategy, it is critical that FM leadersfindwaystodelegatehighlyreactive,trouble-shooting and other tactical activities and focus more time on future planning as well as other critical activities like performance management and talent management. This might require empowering direct reports to have more frequent engagement with key client contacts or other functional leaders within the CRE organization or lines of business. It also might require more coaching and men-toring in how to handle crisis situations or communicating effectively.

0.0%

20.0%

40.0%

60.0%

80.0%

Yes No

85%

15.0%

Does your FM organization’s strengths embody those of your FM Leader?

FIGURE 12: Does your FM organization’s strengths embody those of your FM Leader?



ACKNOWLEDGEMENTS

EXECUTIVE SPONSORSAlex J. DarraghExecutive Manager DirectorGlobal Facilities Management312 338 [email protected]

Karen EllzeyExecutive Managing Director Global Consulting617 869 6154 [email protected]

PROJECT TEAMChristopher PerriTeam LeaderSr. Managing Director 704 331 1294 [email protected]

Jeff KleinschmidtFacilities Director704 996 [email protected]

Lisa RothsDirector, Client Solutions312 297 7650 [email protected]

Peter MikolDirector of Knowledge Management202 585 [email protected]

Michael MoyerSr. Graphic Designer202 585 [email protected]

GCSwww.cbre.com/gcs

We extend a sincere thank you to our FM clients whose thirst for continuous improvement gave us the motivation to pursue this research. In particular, we recognize the seven participating companies and their FM staffs who were generous with their time, energy and encourage-ment through many hours of interviews, data requests and project updates:

ADP Roseland, NJ Steve PiccirilloSteve Bonsal

FIDELITY INVESTMENTS Boston, MA Jeff Cook Chuck Fuller

MOTOROLA SOLUTIONS Schaumburg, IL Buddy KnipferTricia Lombardo

REGIONS BANK Birmingham, AL Joe Holcombe

ROYAL BANK OF CANADA Toronto, ON George Della Rocca Zhen Lee

SPRINT Overland Park, KS Brian JordanBrad Reinhardt

TRAVELERSHartford CTTom LuczchacGreg Sharpe


APPENDIXSELECT INTERVIEW QUESTIONS ASKED OF PARTICIPATING COMPANIES

FM OPERATIONAL EXCELLENCE DEFINITION

• How much are you reactively dealing with facility-related challenges?

• HowdoyoudefineoperationalexcellenceorFMsuccess?

• Which feedback channels do you most heavily rely on to gauge performance?

PERFORMANCE CHARACTERISTICS

• HowwouldyoudefinethecultureandprioritiesofyourFMteam?

• How do you capture and implement FM process improvements?

• Whatskillsdoyouseeasmostcriticalinthenextfiveyears?

FM METRICS/PROGRAMS

• Which FM metrics do you most rely on to drive team performance?

• Which FM related programs have been most productive in delivering FM successes?

• What changes have you made that didn’t render success? (Learning from failure)

RISK & INNOVATION

• Are new FM solutions or services being offered to your occupants?

• What value are these new FM solutions creating for occupants or CRE management?

• How do you support or correct global/regional differentiation?

• How are you managing risk and how is your approach to managing risk changing?

GLOBAL CORPORATE SERVICESwww.cbre.com/gcs

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