Topic: Facility Planning
Author: Paul Hay – Managing Partner, PAUL HAY Capital Projects
In 1993, I had been offered a position in one of the Caribbean’s largest architectural firms; but two things bothered me. First, they had made their first offer prior my becoming a project coordinator in the Jamaican Government service; and this was rescinded shortly after, because the construction industry had contracted. Secondly, I intuitively knew that the number facilities being constructed at the time by financial institutions, was not sustainable. Unknowingly, my environmental scanning had rightly detected a threat to the construction industry, and my prospective job. Referring to the period, Economist Wilberne Persaud described businesses as being “driven more by ego than economics”. What would later transpire is an example of what can happen when image precedes good business sense.
Despite the perceived risk, I accepted the offer. The largest project in the office was a building for a large financial institution, perhaps the firm’s largest client. I was informed that the building was never designed for the current site, but the client had changed the site prior to completion of the drawings. Then, a director met a town planning official at a cricket match, and was assured that approval could be given for two additional floors. So, the director, without analysis, gave instructions for the architects to add them. The design was revised and building constructed. Shortly after completion, the building and the institution’s financial assets were sold to other financial institutions.
This case study of a big business, serves to illustrate the risk of making real estate decisions without reference to your strategic objectives, because facility planning is an important business decision that needs to precede image. According to the International Facility Management Institute:
A strategic facility plan is 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.
Every decision made in business planning has a direct impact on an organization’s real estate assets and needs. Strategic facility planning involves four steps: understanding the values and goals of an organization; analyzing its long-term objectives; planning short-term measures to achieve them; and finally, implementing them. Long-term needs should be reviewed annually, or earlier if necessary. Our financial institution got caught up in what Persaud called an ‘edifice complex’. So when the real estate market collapsed, so did they.
Let us look at a good example of strategic planning. This example is a 500-seat church not far from the building previously referred to. In 1999, I was engaged as project manager for the construction of a multi-purpose building to be attached to the church. Subsequently, I was asked to head their building committee. We understood that there were three major problems linked to the church’s rapidly expanding congregation: the need for more space for Sunday services, Sunday school, and parking. An alternate site was sought. Owners of the adjacent property were not interested in selling, but a government office beside them were.
The church called all committees to participate in a SWOT analysis. Subsequently, we prepared seven long-term objectives summarized by the acronym “PERFECT”: the “F” standing for the facility objectives. Next, each committee planned how to meet the objectives. The building committee proposed that the existing property be used for the Sunday school and youth ministry; the government office converted for Sunday services; and, the owners of the lot between re-approached for sale of the property to be used for additional parking. The government office was purchased and converting to a 2,000-seat auditorium. The original church used as proposed, and owners of the adjoining lot finally agreed to sell their property; but, it will be converted to training facilities: which, by that time, had outgrown the multi-purpose building. All this took 14 years and is ongoing.
Let us end by considering what happened to the architectural firm. When businesses fail, especially large businesses, their stakeholders are negatively impacted. The architectural firm had to downsize, making most of its staff redundant. Strategic facility planning was needed to determine how their facility could achieve a commensurate reduction in overheads, such as electricity to power lighting and air-conditioning. As for me, that which I feared had come upon me. I was made redundant. However, the multi-purpose building was one of my first projects as a new business; and, the path was charted for provision of strategic facility planning services.