Many organizations are taking a short-term view of their facilities (corporate real estate) at their own peril. Not just because it will cost them more over the property life-cycle, and result in less desirable facilities, but because it might put them out of business.
First some working definitions.
- By facilities, I mean the buildings and grounds, leased or owned, and other related fixed assets used to support the business.
- By business, I mean the operations of the organization, whether a for-profit commercial corporation or not. Fundamental changes underway in healthcare, education, and even government are already starting to exert similar pressures on organization in those industries.
What is a Strategic Facilities Plan?
IFMA has a whitepaper that is the best reference I have found on this topic: “Strategic Facility Planning“. (This paper is also written about on FMLink by Mark Sekula, an authority on the subject.) In this paper, IFMA offers this definition:
A strategic facility plan (SFP) is defined as a two-to-five year facilities plan encompassing an entire portfolio of owned and/or leased space that sets strategic facility goals based on the organization’s strategic (business) objectives. The strategic facilities goals, in turn, determine short-term tactical plans, including prioritization of, and funding for, annual facility related projects.
While the IFMA definition is useful, there is nothing sacred about a 2-5 year time frame, and they use the terms “strategic” and “facilities” as part of the definition, so I suggest the following working definition:
A strategic facility plan describes the general [real estate] property assets your organization requires to effectively accomplish its key objectives, when and where these assets are needed, and the value they provide to the organization.
How does Strategic Facilities Planning Help You?
While I do advocate having a Strategic Facility Plan, the real value is not the plan but the planning. This is the effort made to think about the context of your facilities and how they help your organization advance your goals.
- Facilities are expensive. They are the largest capital expense for many organizations, and typically second only to staff in total cost of operations.
- They are multi-faceted physical assets, providing a work environment, requiring proper operation, and providing a physical representation of the organization in the community.
- Facilities have long cycle times. Their life-spans is many years, and it takes months to make major changes or even large transactions.
In contrast, the world today has increasingly short cycle times with rapid changes: technology shifts, product launches, and even government transitions can happen in just weeks. Cost pressure is intense with global competition all through the supply chain. Constituents are informed and often mobilize campaigns with single-purpose agendas (global warming, social equity, financial return on investment).
Strategic Facility Planning is determining how you want your facilities to support and reflect your organization in the face of the certain change and competing objectives. Then resources can be targeted and activities aligned for the greatest benefit or impact. The plan itself is just the documentation of this thinking. But it is not a “one and done” effort – there is a need to continually revisit and course correct.
Organizations that don’t get this right, end up wasting money by renovating a building they no longer need, deferring maintenance that results in an unplanned outage, and carrying under-utilized properties and poorly performing space, resulting in an expensive asset base that is a drag on the business. Even if it is not obvious, the effects are still there.
Organizations with a strategic facility plan (whatever they call it) end up with assets that:
- Reflect their core philosophy to their staff, customers, and the community,
- Provide the type of workplaces that allow them to recruit the talent they want,
- Support productive operations that efficiently deliver their products and services,
- Enjoy lower risk of disrupted operations, and
- Realize lower total costs associated with their facilities.
These all provide a real competitive advantage!