Facilities management: holistic view of asset performance
21 October 2016
Rachel Dick sets out a framework that can help facilities managers get an holistic view of how assets are performing
Real estate (RE) and facilities management (FM) professionals will be faced with a whole host of operational decisions every day, but more and more strategic choices that drive the business's overall objectives require data to support decision making.
Specifically, the key decisions in FM and RE are as follows.
- How does the asset base support the business's objectives?
- What is the return on investment (RoI) from the asset base?
- How big does the asset base need to be to support business functions?
- What are the big risks for the asset base and how likely are they to happen?
- When do the cost, performance and risks of the asset outweigh its value?
- What investments need to be made to mitigate risks?
- When are acquisition and disposal decisions required?
- Where should new assets be based?
There are some key metrics (as outlined in Table 1) that can prove useful in decision-making, regarding the need to maintain, acquire or dispose of space and help transform work cultures. Both RE and FM professionals have a significant impact on the overall success of the organisation – particularly now as the connection between wellness and productivity has begun to be recognised widely by employers and the costs related to poor mental health are rising. The workplace and the associated strategy can potentially have a positive effect on the workforce's quality of life.
Table 1: Managing and applying data in properties
Metric 1: Space utilisation
The underutilisation of space represents an avoidable cost for businesses.
Regulation 10 of the Workplace (Health Safety and Welfare) Regulations 1992 states that, with regard to room dimensions and space requirements: "every room where persons work shall have sufficient floor area, height and unoccupied space for purposes of health, safety and welfare". The associated Approved Code of Practice and Guidance goes on to state that: "the total volume of the room, when empty, divided by the number of people normally working in it, should be at least 11 cubic metres. The Health and Safety Executive says: "in making this calculation, a room or part of a room which is more than 3.0m high should be counted as 3.0m high". This requirement does not easily translate into a m2/workstation metric.
The Government Property Unit (GPU), however, has an overall goal of achieving 8m2/full-time employee (FTE) as part of its office rationalisation programme, which will establish 20 multiregional and multi-use hubs that will have a positive impact on 270,000 central government staff in The State of the Estate in 2014–15 . The GPU achieved the 10m2/FTE in 2015 and has established 8m2 as its challenge for 2016 and onwards.
The GPU is also changing its business processes to enable and encourage more flexible approaches to working. It recognises the positive influence on employees' mental health of not having to follow a traditional 9-to-5, office-based work pattern that typifies white collar work of the last century.
Metric 2: Cost of occupancy
Often, the location and quality of a property is an investment in brand that is intrinsically linked to the return. However, using RoI alone as a measure, then poor-quality, cheap and uncomfortable space can prove just as productive if the team has a positive working culture. The cost of occupancy must be understood in the context of how well the space is used and the RoI it represents for metric 4, rather than considering it as an isolated operational cost.
Control of occupancy costs does not simply involve a blanket reduction of operational services, but means tailoring them to ensure that each building or asset has sufficient provision, according to the frequency and intensity of use as well as the associated statutory compliance requirements.
Metric 3: Safe, comfortable and compliant
The building should be both physically safe and secure, with clear circulation space and secure entrances, as well as complying with relevant regulations. The level of statutory compliance achieved at any one time will directly relate to the maintenance strategy and the level of occupancy costs identified in metric 2. Low levels of statutory compliance start to represent high levels of backlog maintenance activities – that is, those activities that when not undertaken represent an operational risk.
Effectively maintained buildings tend to perform well in terms of energy use, while high levels of backlog maintenance typically indicate poor energy performance, irrespective of the age of the property.
The level of cleanliness will directly affect the satisfaction of staff, clients and visitors. It could also have an impact on staff turnover, absenteeism and productivity.
A poorly maintained, shabby-looking building that is energy-inefficient has the potential to be a barrier to business development because it could be seen as evidence of a lack of corporate social responsibility, ultimately leading to a loss of reputation.
Metric 4: Space productivity
Determining what an organisation deems productive depends on the nature of the business and its required outputs. A crude but universally comparable metric is gross profit: the productive output is measured as £/m2 or £/workstation, and then divided by the cost of occupancy to ascertain the RoI. To increase the RoI, either output needs to increase or occupancy costs need to be lower. The automation of processes and outsourcing often represent an opportunity to achieve these, but focusing on people, processes, systems and data can yield longer-term results.
Metric 5: Location productivity
In 2001, the World Health Organisation said the impact of mental health problems in the workplace has serious consequences, not only for individuals but also for the productivity of the enterprise. In the UK that year, 80 million days were lost due to mental health issues, costing employers £1–2bn. In 2012, the Parliamentary Office of Science and Technology stated that poor mental health in the workplace costs the UK an estimated £26bn a year, with:
- absenteeism costing £8.4bn
- presenteeism costing £15.1bn
- staff turnover costing £2.5bn.
The Oxford English Dictionary defines "presenteeism" as "the practice of being present at work for longer than required, especially as a manifestation of insecurity about one's job". In 2013, The Economist stated that working longer hours drains productivity rather than increasing it, and countries with longer average working hours are much less productive than those that work fewer, while in 2015, the Guardian reported the results of a University College London study finding that a 55-hour week increased the risk of strokes by 33% and coronary heart disease by 13%, compared to those who worked between 35 and 40 hours per week.
Strokes and heart disease are preventable when they are associated with lifestyle choices. This represents an opportunity for RE and FM professionals to have a positive influence on staff at the level of building and location through the provision of amenities such as proximity to fitness facilities, access to green space, bike racks, lockers and changing rooms, fridges and food preparation areas, choices regarding interior design and, where appropriate, availability of more healthful food options.
Metric 6: Start of the day wellbeing
Measuring commuting times and the speed of journeys is important because if a location is difficult to access it will be stressful for staff and reduce their productivity at the start of the day. Opportunities to work differently or relocate the workplace nearer to the staff base are potential solutions. If a building location does not depend on specific geographical features – unlike, for instance, in the oil and gas, utilities and water sectors – then assets that are difficult to access could represent a barrier to attracting new talent and existing and potential customers.
Metric 7: Lease life
The overall business strategy should be informed by an awareness of the point at which assets will reach the end of their legal service life or the date when contracts need to be renewed, as these timings determine when investments and decisions are required.
This also represents an opportunity for change and transformation, especially in working practices that are associated with particular locations – such as late starts or early finishes because of the difficulty in reaching a location – or particular buildings – such as poor energy performance as a result of occupiers' behaviours.
Achieving the right size for your workplace involves assessing flexible working solutions appropriately for risk and making the right equipment available. Another essential, albeit intangible, element is the trust bestowed by the organisation's leaders on those who choose to work away from the primary location. Senior members of the organisation must lead from the front to demonstrate that trust to the staff.
The management consultant Peter Drucker once famously said culture will eat strategy for breakfast, so your workplace strategy must be informed by the cultural norms of an organisation. However, when those norms have a direct impact on the premises' RoI, there is a compelling argument to transform workplace strategy.
Dr Rachel Dick FRICS is Senior Consultant, Data Services at RICS
Related competencies include:
This feature was taken from the RICS Property journal (September/October 2016)