Tuesday, August 24, 2010

Alternative Workplace Success Strategies

FM’s and their cohorts are challenged these days to maximize space utilization and functionality while providing their organizations ways to increase headcount, productivity and revenue without adding real estate. Generational shifts in the workforce also contribute to the need to think about the workspace in new ways. These are just a few of the reasons for the current move to what is loosely termed “alternative workplace” solutions. Exactly what that term means varies widely from company to company. Despite the differences in definition, however, there are similarities in successful programs.

Know the Facts: Any time you start changing people’s environment you will meet doubt or outright resistance. That makes it important that you do not start in “unarmed and dangerous” mode. “Unarmed” in this instance means uninformed. Know your numbers and the facts behind them. Measure space allocation and utilization with fine detail. If your organization has a space entitlement policy then factor it into the process as well. First, make sure your numbers are absolutely correct, then know the numbers, then understand them and their implications. Spend time analyzing them to tease out understanding and insights to opportunity.

Build Executive Support: Before going public take your case to the C-Suite. Don’t expect this to be a quick sell, rather, consider it an exercise in patience and education. But when they say “go” be ready to mobilize and move quickly. Executives will want to review your data at a top level and the analysis that led to your conclusions. Once they trust that you’ve done your due diligence correctly you will have their attention. Now point out to them the value and opportunities underutilized assets represent. Expect a discussion about how the company can best take advantage of the opportunity to align real estate with new or emerging strategies. Your role at this point is to feed them information and help them understand the opportunities available, the risks of not proceeding with a project, and the conceptual costs of implementation. Your goal at this stage is to emerge from the C-Suite engagement with a clear mandate and a strong executive sponsor.

Build Influencer Support: Recruit influencers from across the organization to participate in the project. Meet with them individually to share and sell the project vision and charter, bring them together only when each has bought into the plan face to face with you. Use this group to accomplish the continued fact finding and analysis, and to conceptualize early solutions. As an intended side effect they will also advocate for the program among their peers, helping to speed adoption throughout the organization.

Engage Employees: Employees have a vital stake in the outcome and are vital to its acceptance and your success. Make sure you engage them to solicit information about their needs and desires, and to inform them about the project’s goals. Take advantage of this engagement process to sell the benefits of the project such as enhanced collaboration spaces and tools, technology improvements, environmental benefits, and employee amenities. When you use surveys make sure they are thoughtful and be certain to share the results of the surveys on a wide basis. This will support later concept and development work by allowing employees to connect the dots between what they said and what the project delivers. Take advantage of “town hall” and “brown bag” style meetings to share progress along the way and solicit feedback, and to share design responses to the feedback later on so they can see they are really contributing to the evolution of the project.

Discover, Prototype, Pilot: Conceptualize multiple solution options and analyze each. Do not be afraid to be a little edgy with some of your concepts. They may be largely discarded but some ideas will emerge that will eventually be included in the final plan. Use these concepts to socialize options and elicit further feedback. Create pilot projects that build alternative work areas or collaboration zones and let staff experience them on a day to day basis. This process also gives the implementation team a chance to recognize gaps in planning or resources and take action to solve those issues before the large scale project begins.

Build Your Future: When you have made the final decisions then communicate them well and often. Execute with planned precision and make the process as transparent as possible. Allow those not directly engaged to observe the transition as much as possible along the way. Celebrate gains such as new technology, environmental stewardship, improved amenities and a new and better quality workspace along each step. Make a big deal out of it, because it is!

In the end you likely will have improved space efficiency and utilization, shifted to more team like space for some functions, collaboration will increase across the board, and productivity and financials will improve as a result. You will also have demonstrated leadership and enhanced the credibility of FM throughout your company.

Not a bad thing, eh?

Sunday, August 15, 2010

Establishing a Project Management Office (PMO)

One of the initiatives I have on my plate is to establish a PMO within our facilities organization. Like many FM shops everyone on our team wears many hats. A few of us are even pretty good at project management. But ALL of us are at one point or another cast in the Project Manager (PM) role and while we are good at project implementations we need to get better.

At their heart PMO’s have relatively simple goals; establishing policy, setting and implementing project management standards, and measuring performance chief among them. Some might say “bringing order to chaos” would be a tidy summary. Possibly. I don’t think it applies in our case and I hope it doesn’t in yours. There is no arguing the fact, however, that PMO’s require adherence to set standards and that there is a definite process. While ad hoc project management may allow us to feel more “agile” and “nimble” it also contributes to a “tyranny of the urgent” culture. The positive tension in creating a PMO is to retain that agility while implementing a culture that brings standardization, transparency and accountability.

We can provide all the pronouncements we like and have the best of intentions, but the real success of a PMO depends upon other critical factors as well.

  • Is the initiative to establish the PMO communicated with the strong endorsement of senior management or is the team left to make it or break it on their own?
  • Are clear and measurable objectives established to define the expectations of the new PMO?
  • Are project managers selected on the basis of their aptitude and training, or simply because they are available or the projects are in their functional area?
  • Is appropriate time, training and software provided, or are members expected to do it out of their hip pocket?

Knowing the answers to those questions will give you a good indicator of the likely success of a PMO launch effort. Positive responses will define the lines of accountability, provide the resources needed and instill confidence.

Sunday, August 8, 2010

Lease Accounting Change Update

Corporate real estate professionals are anticipating coming changes to accounting rules with varying degrees of anticipation or dread, as the case may be. This rule change will likely cause all of us to go through a fair amount of technical work to adjust budget planning and compliance activities, but there will also be a significant change to the bottom line and for some that may be troublesome.

What is all this about, you ask? Essentially, this accounting rule change is part of the drive toward increased transparency, one of the outgrowths of various financial scandals over the last several years. The efforts to increase transparency began to pick up steam around the time of the Enron debacle and then kicked into high gear when the government began funding corporate bailouts. Put simply, the changes will capitalize most leases and require that expenses be front loaded as incurred instead of being accounted for on a straight line basis over the life of the lease. The result is likely to be higher balance sheets, increased initial occupancy expenses, higher cash flow and more complex reporting requirements.

  • The rule changes are still very much a work in progress. You can access summaries of the process here
  • See the Lease Accounting Blog for a simplified overview of FASB and IASB discussions and decisions.
  • Jones Lang LaSalle’s Mindy Berman has authored a perspective on the impacts changes will have on corporate finance, available here.

The schedule for these changes is not finalized yet but it is assumed they will become operational in 2012, possibly 2013. The remainder of 2010 and 2011 will see continued work between FASB and IASB. Keep a watch on the developing requirements stay informed, and do what you can now to prepare in advance.

Monday, August 2, 2010

Buying Strategies for Construction and FM Services

You would think that I should look forward to summer, after all it’s the vacation season and the beaches are in their prime. For many, however, this time of year is defined by budget meetings and projects that are racing to the finish line, just before the end of the Fiscal Year. And so it is these days. I’ve been carrying beach gear in my car for three months and have used it all of three times. Something is wrong with this picture!

Aside from racing to complete projects, I have been struggling with the issue of process requirements for contracting construction and services. Most organizations have strict policies in place for the purpose of protecting investment integrity and assuring maximum value, and I’ve got no problem with either. But there is a disconnect between the requirement to deliver projects rapidly (do it right now) and the requirement to comply with a strict contracting protocol (follow the rules exactly). Again, I am not against either, they just don’t always coexist very well. Having to gain pre-RFP approvals to authorize a project, then subsequently bid to multiple contractors/vendors, and then deliver the project in a severely constrained timeline can be a challenge. It is even worse when the projects or purchases are of relatively small value or when there are multiple instances in process at the same time. Welcome to my world.

But there are ways out of this dilemma. For starters, blanket purchase orders with pre-approved contractors and vendors will shortcut the delivery process. Done correctly these “investment quality contract vehicles” are even appropriate for large projects or tasks. Pre-qualifying contractors and locking in unit costs for various project elements or services enables a much faster response time. In this scenario, contractors have already run the gauntlet of approval requirements (contract agreement, labor rates, unit costs, MBE/WBE/VBE and SBA status, etc.), allowing them to respond quickly when tasked to price a project. Then it is simply a matter of selecting and executing. Some organizations are using this strategy to speed execution of large projects within very large programs where speed of execution is critical. It provides all the due diligence required, properly informs the selection process, and supports quality management.

There is a buying phenomena occurring now also. Given the economic times and difficulty accessing capital we assume that projects are being put on the back burner waiting for better times. Mostly true, but not always.

The normal model is to delay capital investment until the last responsible moment. But, just as real estate managers are renegotiating leases for longer terms (accepting more future risk) in exchange for lease rate or other concessions, some well-heeled organizations are buying construction now on future need projects to take advantage of today’s lower construction costs. This strategy is not for everyone but it is intriguing for those who have high certainty of the need. Private non-residential construction is now 35% below its late 2008 peak and still trending down. Those with the right project portfolio and the required capacity see opportunity and are acting on it.