Downturn? Some Say Opportunity

We are all in the business of making lemonade these days. I am hearing more anecdotal evidence that the beginning of the end of our current economic mess is in sight, but I am not yet a believer. Several of my friends in the design and construction industry point to an uptick in proposals but none of them are yet signing much new business. They interpret the increased RFP activity level as a sign that good things are about to happen. Maybe. Or maybe it’s a sign of people wishing and hoping good things will happen. Who knows? Time will tell, and I hope it tells a happy story.

In the meantime, however, there is still much each of us can be doing, using the urgency created by our current state to make changes to our future state. As CRE’s and FM’s we are responsible for assets that comprise a large portion of the economy. We know for example that real estate is typically the second or third largest cost item, behind talent and sometimes technology, for most companies. It is not uncommon that RE represent 50% of a company’s balance sheet and the operation of those assets can account for 20% of a typical income statement. Big numbers you say? How about this one: Fortune 2000 companies are responsible for over 1 trillion square feet of space. In other words, we design, construct, manage and operate trillions of dollars worth of assets.

To state it another way, we make a very large contribution to the welfare of our respective organizations, and have a responsibility to steward the resources entrusted to us with great wisdom.

So how do we do that, especially in times like these? There are a host of ways, I suspect you will find one or more of these suggestions appropriate for your circumstance.

· Increase portfolio efficiency: In the eighties I spent several years building large corporate campuses and facilities for my employer. Then it all began to crash. We shifted from expansion to contraction and worked hard to redeploy real estate. We analyzed the entire portfolio and consolidated, focusing on strong business units. We got rid of space that was dragging down the balance sheet and were ruthless in doing it. Net result: Fewer sites and greater density, and significant cost reductions.

· Centralize control: When times are tough you need to make better decisions, make them faster, and strive to integrate them across the enterprise. It is certainly possible to do all of that in a decentralized organization, but you will fight fewer battles, make progress and reap benefits much faster by centralizing authority over strategies and implementation tactics.

· Don’t accommodate change, drive it: As noted in an earlier posting here, tough times can also represent opportunity. People are more likely to listen to ideas and more open to large scale change. As those responsible for a large asset base we have a responsibility to do much more than just manage the day-to-day details of operations. We are responsible for envisioning what’s better, what’s next, what’s needed that no one else is thinking or talking about. We are responsible for bringing it to the table, socializing the concepts and promoting positive change that contributes to the well being of our organization. Put your change agent hat on, roll up your sleeves and get to it!

European FM Standard – EN15221

When globalization developed momentum it quickly over ran most organization’s ability to track operational and portfolio data in a coherent manner. Recall also that the break up of the Soviet Union both added political instability and introduced new business energy into the Eastern European region. Stir that pot just a bit and you have one very interesting recipe. CRE/FM teams raced to support business expansions in an often times chaotic environment. Making it more difficult was the lack of comparative data. Forget about trying to normalize against Western measures, we often couldn’t normalize between two Eastern countries. Each, it seemed, had their own business calculus. They measured space differently and often something as simple as that had no standard within a country.

OK, so what you say? That was then, this is now. Why does that matter?

While multinationals have done a good job of integrating portfolios and operations across national boundaries in the region there has still been a lack of cohesiveness. Standards tended to be determined on a company basis, not on a national or regional basis.

That is changing with the emergence of EN15221, the European standard for FM. With first elements released several years ago it is already well rooted. New elements build on an impressive body of work and expand the reach of standardization. It includes specific standards for Terms and Definitions, FM Agreement, Quality, Classification, Process and Area and Space Measurement. This standard enables consistent, meaningful and actionable information and data tracking across thirty countries on the European continent.

As desirable as the outcome may be, it will not be easy. Thirty countries. Thirty different ways of doing things. All moving to one standard, all having to change long held definitions and methodologies. There’s that word again. Change. I expect there will be a fair amount of “dust in the air” as they say in the construction business, but it will be worth every bit of it when everyone speaks the same business language.