Fundamentals of Strategic Facilities Planning Part I – The ......Unum Group Disability, Life and Financial protection 3 million square feet, 10,000 employees, Planning and Design,

Fundamentals of Strategic Facilities PlanningPart I – The Portfolio

Paul LarkinsCFM MCR.w CCIM MBA AIA LEED AP

Director of Corporate Planning and ConstructionUnum Group

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Fundamentals of Strategic Facilities Planning, Tradeline April 2014

Agenda

Introductions

Understanding the Portfolio

Assessment of the Portfolio

Case Study

Translating the Process into the Business

Building a New Workplace Strategy Process

Case Study

Introductions

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Who am I . . .

Paul Larkins

Unum Group

Disability, Life and Financial protection

3 million square feet, 10,000 employees,

Planning and Design, Program Management, Transaction Management, Sustainability, Strategy

Headquartered in Chattanooga, Tennessee


Please tell us . . .

Your Name

Your Company

Your Role

Where you’re based

Your most pressing Facility Planning challenge

Your favorite smartphone app

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Learning Objectives

Understanding Phase

Portfolio Analysis

Cost and Forecasting

Assessment Phase

Reporting and Performance

Space Management

Case Study

Workplace Strategy proposal

Translation Phase

Understanding

4


Portfolio - Basics

Owned

Location, number and types of buildings

Size and age of each building

Cost/Spend of each building

Market comparable values

Replacement costs


Portfolio - Basics

Leased

Location, number of leases

Types of leases (NNN, Modified gross, Full service)

Outstanding lease commitments

Lease remaining durations

Options for each lease (Termination, ROFO, etc.)

NPV and cost of capital

5


Portfolio – Profile

Diversity

Office

Manufacturing

Educational

Retail

Warehouse

Research and Development

Other


Portfolio Snapshot - Example

0

10

20

30

40

50

HO1 HO2 HO3 HO4 FLD1 FLD2 FLD3

0

200,000

400,000

600,000

800,000

1,000,000

1,200,000


Number of Buildings

Total Area of Buildings

6


Portfolio - Discussion

How is this information managed?

IWMS directed – (Archibus, Tririga, Manhattan, FM:Systems, etc.)

3rd party service – Corporate services, Brokerage

Spreadsheet – internally

Don’t know


Portfolio – Management

How is the Portfolio managed?

Internally

Externally

Hybrid

7


Portfolio - Accounting

Components

Rent

Taxes

Utilities

Maintenance/Repairs

Consultants

Depreciation

Services

Security, Food, Waste, Operations, Moves, Grounds etc.


Portfolio Cost Snapshot - Example

0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

12,000,000

14,000,000

16,000,000


0

10

20

30

40

50

60

70

80

90


Cost per Building

Cost per RSF

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Portfolio Costs Dashboard - Example

ORent,

26,206,401

Taxes, 5,772,760

Utilities, 7,243,402

Maintenance, 6,605,622

Supplies, 1,588,911

Parking, 876,000

Consultants8,488,399

Revenue (120,000)

Depreciation, 17,001,111 Rent

Taxes

Utilities

Maintenance

Supplies

Parking

Consultants

Revenue

Depreciation


Portfolio – Cost Allocation

Types

Allocation Basis – Employee level or business unit level

Chargeback method – Per person, space or square foot

Chargeback diversity – By building, site, region or company

Chargeback Frequency – Yearly or monthly

9


Portfolio – Cost Discussion

Who owns the vacant space?

Real Estate or the Business


Portfolio - Condition

Inspections/Audits

Functional – visual assessment performed by in-house staff

Maintenance – Capital equipment assessment bi annually by external consultant.

Cleaning – Internal assessment, external validation

ADA/Architectural – Demonstrate diligence and priority

Commissioning – Project related and retro commissioning if modifications are made

Focus on single points of failure and “poor” grades on critical equipment

10



Facility Condition Index (FCI)



Life Cycle Asset Plan (LCAP)

Monetizing the FCI

Existing Assets

Long Range Capital Plan

Understanding deferred maintenance

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Project Component Accounting - Example

Based on component life and cost, project has blended life of 23.68 years.


Understanding – Questions

12

Assessment


Assessment - Measurements

Gross Square Feet

Number of occupiable workspaces (offices, workstations, etc.)

Rentable Square Feet

Gross square footage minus vertical penetrations (most common)

Useable Square Feet (leased)

Total amount of space that is demised and excludes common spaces

Assignable Square Feet (owned)

Useable square footage minus circulation (primary and secondary)

Common Load Factor

For owned buildings, add-on factor is used (rentable/useable)

For leases, common load factor is typically provided by landlord

13


Assessment - Inputs

Seats

Number of occupiable workspaces (offices, workstations, etc.)

Seat types

Number of each type of seats and capacities

Space categories

Number of each categories of space (people, support, meeting, etc)

Areas

Total areas by portfolio, buildings, spaces, seats

Costs

Total cost by portfolio and buildings


Assessment – Metrics

RSF/Occupant

Occupancy allocation of portfolio

Fairly volatile due to turnover

Total amount of rentable square feet

Divided by

Total Occupancy (Employee, contractors.)

Equals

RSF/Occupant

2,930,000 RSF

Divided by

7,850

Equals

373 RSF

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RSF/Seat

Capacity allocation of portfolio to gauge/compare for performance

More stable than RSF/occupant


Divided by

Total Seats (Offices, workstations, etc.)

Equals

RSF/Seat

2,930,000 RSF

Divided by

11,350

Equals

258 RSF



Cost/Occupant

Spend allocation of portfolio

Similar volatility as RSF/Occupant due to turnover

Total identified cost of real estate

Divided by


Equals

Cost/Occupant

$63,000,000

Divided by

7,850

Equals

$8,025 occupant

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Cost/RSF

Market comparison of portfolio

External comparison’s difficult due to variability of components

Total identified cost of real estate

Divided by


Equals

Cost/RSF

$63,000,000

Divided by

2,930,000

Equals

$21.50/RSF



I versus We ratio

Collaboration comparison of portfolio

New metric that focuses on the growing need for more team space


Divided by

Total number of meeting seats*

Equals

I versus We ratio

7,850

Divided by

3,800

Equals

1 : 2 ratio

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Vacancy rate

Can be expressed using space counts or square footage

Typically rate using space harder to determine given load factors and granularity of unassigned workspaces

Total unassigned seats

Divided by

Total number of seats

Equals

Vacancy rate

3,500

Divided by

11,350

Equals

30.8 %


Assessment - Metrics

Occupancy

Expressed as number the of employees, contractors and temp workers occupying space (seats) within the portfolio.

Typically a higher number than headcount

WAH program reduces occupancy number

Number is exclusive of occupant who perform services and aren’t required to need a seat.

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Efficiency (Circulation Factor)

Overused word and one metric that has limited application/interest

Target is to understand the percent of circulation with a portfolio

Total space attributable to functions

Divided by

Total rentable square feet

Equals

Efficiency factor

2,256,100 RSF

Divided by

2,930,000 RSF

Equals

77%



Utilization

Measurement of how much assigned seat are actually occupied

Valuable metric to have however the most difficult to obtain and revisit over time

Measurement can be obtained several possible ways:

Security badge data

User login activity

Workspace or seat sensors

Occupancy sensors

Physical inspections

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Assessment – Case StudySeat study



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Utilization

20



Utilization by space type



Utilization by day

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Assessment - Metric

Diversity Factors

People versus Support (expressed as space)

Business support versus Building support

Dedicated versus Shared meeting space

Training space versus meeting space

Employee amenities percentage


Assessment - Workforce

Employment Scenarios

Full-time, part-time, shift work, contingent status

Mobility arrangements

Work from Home – Full time, part-time

Demographics

Distance, Location, Age, Role

Turnover rate

Disruption and agility

Retention

Loyalty/Commitment/Length of Service

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Assessment - Workplace

Space categories

Classification of spaces

Office, Workstation, Assembly, Service, Support

Space standards

Breadth of standards, mostly tied to workspaces

A (20x20 O), B (12x15 O), C (10x12 O), D (8x12 W), E (6x8 W), F (6x6 W)

Space types

Descriptive classifications

Food, Mechanical, File, Corp conf, Dept conf, etc.


Assessment - Workplace

Space Functions *Focus, collaborative, social, discussion, etc.

Attribute that is evolving and will need to be included in tracking of space

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Assessment – Questions

Case Study

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Future State

6,000

7,000

8,000

9,000

10,000

11,000

12,000

13,000

Headcount Capacity 1% 2% 4% Linear (Headcount)

33% of workspaces are vacant

4% growth can be accommodated beyond 2020

$20.9 MM value of vacant space


Measuring to Manage

82% Occupancy Ratio


55% Utilization Ratio

0

100

200

300

400

500

600

700

800

DY1 DY2 DY3 DY4 DY5 DY6 DY7 DY8 DY9 DY10 DY11 DY12 DY13 DY14 DY15

Access Average Assigned Capacity

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Portfolio Overview

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

Capacity Add WAH Vacancy Utilization


Portfolio Metrics

342

472

284

267

256

170

432

846

0

100

200

300

400

500

600

700

800

900

LOC

1

LOC

2

LOC

3

LOC

4

LOC

5

LOC

6

LOC

7

LOC

8

Total size 2,930,994 RSF

Space/Occupant 369/RSF

CRE Cost $63,089,628 (2014)

Capacity 11,770 seats (office/workstations)

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Portfolio Metrics

15.8

7

12.9

7

17.9

3

53.5

8

30.1

5

55.6

5

39.2

24.9

8

0

10

20

30

40

50

60

LOC

1

LOC

2

LOC

3

LOC

4

LOC

5

LOC

6

LOC

7

LOC

8

3,99

8

3,75

8

4,57

5

13,9

69

6,26

5

13,5

85

10,7

49

11,3

03

02,0004,0006,0008,000

10,00012,00014,00016,000

LOC

1

LOC

2

LOC

3

LOC

4

LOC

5

LOC

6

LOC

7

LOC

8

Cost/Seat $5,360/seat

Cost/Space $21.43/rsf


Concept

Business

Alternative work settings

Innovative Collaboration

Real Estate

Master Planning

Enhanced Amenities Subleasing

Employees

Flex work Working

Alternatively HUB Centers

63% of occupants in office daily

33% of real estate vacant and unused

12% of employees working@home

PartnersHR GIG

Communications Procurement

Finance Risk Mgmt

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Goal

Enhance employee engagement

Cultivate employee innovation and collaboration

Create flexible environments for better productivity

Align resources efficiently and reduce annual expenses

Establish partnership team to drive evolutionary change


Observations

Employee Innovate

Engagement Compliance

Work from Home (“flexible work”) has much broader application

•HR has classified 750 employees as WAH (home more than 50%)

•Corporate Real estate has 1,050 employees as WAH

•Survey performed on Service organization reveals 24% work flexibly

•Challenge:

•Command and Control structure of existing organization could limit

new program’s success.

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Observations

Work functions are often misaligned with space allocation

• Alternative environments and solutions being requested

• Conference rooms and technology are not distributed nor sized for

actual applications

• Employees who are at their desk the most often are in the smallest

workstations

• Challenge:

• Balancing company culture against alternative environments and

approaches

Business Flexible

Collaboration Evolution


Observations

People are not at their desks as much as we think

• Preliminary security badge data suggests only 63% of employees are in

the office daily

• 33% of office space is vacant and unused

• Departments spend $2.5 MM on moves annually and often only moving

20 feet.

• Challenge:

• Entitlement needs to be put in broader context and realign the entire

environment with leadership demonstration and support.

Real Estate Alignment Enhance Reduce

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Next Steps

Employee/Mobility

•Broader, branded, enrollment program and formalized tracking,

policies and compliance

•Expand and integrate program into HR workforce strategy

•Create flexible co-working centers (HUB) to strengthen engagement

and productivity

•Progressively managed, staffed by CRE, centralized and flexibility

focused


Next Steps

Business Environment

•Customer experience labs piloted, cascade to other campuses

•LIVE:lab created to demonstrate tools and alternative environments

•Dedicated business resource to lead change management and process

innovation

•Piloting of selected groups - Visioning, deployment and assessment

•Deployment will be paced against market interest and momentum of

real estate monetization

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Next Steps

Real Estate

•Aggressively address existing dark space for alternative use or

subleasing

•Master plan of campus locations for long range

consolidation/conversion

•Continued reassessment of strategy and efficiencies of

requirements in field locations


Looking Ahead

Communication plan

–Focus all efforts on employee engagement, business process

improvement and space optimization. This should not be a cost

reduction initiative.

–Launch each program independently but with common theme

–Use social media for engagement using interactive sites such as

SocialCast, Chatter, Yammer, etc.

–Promote opportunities to experience LIVE:lab and business centers

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Looking Ahead

Milestones

–Customer Experience Lab – Phase One – 1st quarter 2014

–Pilot group(s) identification and visioning sessions – 2nd quarter 2014

–LIVE:lab launched – 3rd Quarter 2014

–Co-working HUB centers – 4th quarter 2014 (4 sites)


Looking Ahead

Investment

–Program development for LIVE:Lab

–Pilot groups – Assessed independently and funded upon recommendation

–Field work executed around lease expirations

–Broad estimate to deploy new business work settings for potentially 1,000

employees

–Multi-tenant conversion of selected buildings excluding fitness or amenity

modifications.

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High Level Timeline


Tactical plan

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What is a HUB


A social internal co-working center. Workplace strategy incubator.

Hub offers enrolled participants (employees) a unique ecosystem of

resources, inspiration, and collaboration opportunities to grow the

positive impact of work.

Enrollment and access in this employee centric community of work

settings offers interaction of diverse departments will inspire, connect,

and enable them to develop their best work, connections to the

organization, and enhance engagement and provide support when

required.


CoCo


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Gangplank



Parisoma


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Case Study – Questions

Translation

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Translation – Plan meets Vision

Alignment to Business Objectives

Teach stakeholders something they don’t know – Find a new angle your customer will care about and shock them with the implications

Never, ever talk about cost or space density – Presentations must focus on things that the business actually cares about, productivity, profit, collaboration

Start with the problem, and not the solution – Stakeholders have no interest to buy into real estate proposals unless they align with something they need or want

Get stakeholder involved in creating the solution – Best way to build buy-in for a plan is to make the stakeholder feel they have ownership and involvement in its creation.


Translation – Alignment

Speaking the Language of Business

Work output

Strategy

Product

Service

Work Mode

Collaborative

Concentrative

Work location/mobility

Office – Desk, conference, lab

Offsite – Home, customer, travel

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Collaboration

Individual v. collaborative

Spontaneous v. scheduled

Virtual v. face to face

Anchor tools

Things

People

Connectivity

Privacy

Acoustic

Visual




Work activities

Analyze

Transact/Admin

Develop/Create

Present/Sell

Respond/Help

Visual

38


Program Management

Strategic Project Management

Challenges

Coordinating the work – Multiple vendors and variety of means and methods

Sensitivity to staff, managers and business unit leaders, very personal

Plan for more meetings, updates and open communication

Leadership changes – understand potential changes in vision and direction

External events – M&A, organizational change and staffing levels

Monitoring and Controlling

Monitor cost, schedule, quality and scope

Pay attention to dependencies

Discussion shortfalls and gaps with responsible people

Make necessary adjustments


Program Management

Strategic Project Management

Balancing needs and requirements

Business continuity

Introducing sustainability

Capital investment and accounting

Supply chain and procurement

39


Translation – Plan Structure

Governance

Who is involved?

Core team – CRE, HR and IT (plus external providers)

Extended team – Finance, Compliance, Legal, Risk, Communications, Sustainability

Sponsorship

Leadership or Executive Sponsor – Ability to drive vision, demonstrate support and integrate message


Translation – Plan Structure

Implementation – It’s a journey, not a destination

Review the mission regularly

Identify metrics and success criteria

Develop the project plan – Phases, Resources, Deliverables

Update team structure – Leadership, Resources, Service providers

Start-up

• Initial implementation

• Small scale

• Monitor results closely

• Identify lessons learned

Scale up

• Broad implementation

• Apply lessons learned

• Measure effectiveness

Integration

• Becomes the way we work

• Monitor changing business drivers and culture

• Focus on continuous improvement

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Influencing – Best practices

Network

Relationships are the foundation of influence

Find connections inside and outside your company

Invest time and build relationships – Light many fires

Get to know others outside your department

Help Others

“Run towards trouble”

Find ways to help others solve their problems

Volunteer to pitch-in



Build Coalitions

People are more likely to support strategies when they see support by others

Find those with common interest

Broaden the issue to include more people who can work together

Be explicit about the coalition goals

Cultivate loose associations so members can contribute towards short term goals

Earn Trust

Establish your credibility and reliability

Provide quality and value

41



Persuade and Negotiate constructively

Listen to understand the other person’s needs concerns

Ask for input on your project

Present your position in context of the organization’s needs

Be transparent about your motives

Build consensus around points of agreement and common interest


Change management

Create a change management process

Plan: Prepare to be deliberate rather reactionary

Act: Use a range of tools to appeal to both sides of our brain

Create Understanding – Articulate the vision, business case for change

Build Support – Help people commit to new direction with chances to question, digest an adopt the cange.

Sustain Energy – Celebrate success; share best practices; capitalize on opportunities to highlight the performance and behaviors that are valued.

Test: Seek feedback early and often and adjust to lessons learned

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Educating Users

Create a change management process

Plan: Prepare to be deliberate rather reactionary

Act: Use a range of tools to appeal to both sides of our brain

Create Understanding – Articulate the vision, business case for change

Build Support – Help people commit to new direction with chances to question, digest an adopt the cange.

Sustain Energy – Celebrate success; share best practices; capitalize on opportunities to highlight the performance and behaviors that are valued.

Test: Seek feedback early and often and adjust to lessons learned


Translation– Questions

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APPENDIX

Date:

Session:

Presenters:

Metrics

Tools

Resources

Innovative Ideas

Proofs

Date:

Session:

Presenters:

Metrics

Tools

Resources

Innovative Ideas

Proofs

Date:

Session:

Presenters:

Metrics

Tools

Resources

Innovative Ideas

Proofs

Documents

Fundamentals of Strategic Facilities Planning Part I – The ......Unum Group Disability, Life and Financial protection 3 million square feet, 10,000 employees, Planning and Design,