Why Project Management and Cost Management simply aren’t enough anymore for CRE Occupiers

Kostas Koultzis
When occupiers take or build new space today they need to have their eye on several areas that will have a major impact on the space they are taking.

These areas will be significant as to how their businesses and employees perform over the duration of the lease/ownership.

The major impact areas are:

  • Ways of working, for example: agile working, remote working, collaborative working, occupancy rate
  • The workplace of the future is being adapted and developed extremely fast. What’s right now maybe obsolete in 12 months. Future proof the workplace. A real estate portfolio that adapts quickly to change are valuable business enablers, allowing for growth without growth in footprint
  • Technology and technological advances
  • Resilience, ability to operate if primary power fails for example
  • Quality of FF&E against lifespan of the lease/building
  • Adaptability of the space. Drive your business culture - businesses are often embracing cultural change however workspace is the physical enabler of this
  • Technical issues, mechanical and electrical solutions
  • CapEx investment versus OpEx costs. Optimise property costs - there is an opportunity to rationalise corporate occupied space to reduce operational costs.  Increased earnings through lower operating costs through smart working, less space and fewer buildings.

So, what does this mean for traditional Project Management and what does an occupier need to be able to manage their exposure and ultimately risk?

When a space is identified via an agent the traditional approach is test fits on the space via a designer, followed by cost options driven by budget. The acceptable cost is reached and the deal is done. The occupier or landlord will then commission a Project Manager to either procure or manage (should the contractor be the one who estimated the test fit) a contractor. Whilst this will result in a successful project, and it will go some way to address the impact areas this will in no way drive the optimum solution anymore. What occupiers should really look for from their project management team should now include:

  • Project Management, design and conversation of workspace is not enough. Managing the change journey from inception through to occupation is important to ensure that the spaces are used to full potential post implementation. A process that provides the data necessary to affect the appropriate change is required, as well coordinating the business direction within the early test to fit.
  • Use of benchmarks to harness and interpret occupier’s data to their needs to create the right spaces, increasing sustainability, reducing energy consumption and waste.  Therefore, creating a lower carbon footprint/cost to operate. Working in a smart way for the occupier.
  • Leverage existing commercial fitout data from similar occupiers through commercial modelling at test to fit stage linked into the design enabling the potential occupier to have real time information to adapt requirements before main design stage.
  • Stress testing through the design process the adaptability of the layouts, for future adaptions and working with designers to design in flexibility in both structure and infrastructure
  • Resilience audits of the building and local infrastructure around critical elements such as power and IT connectivity. Specialist advice at design stage on how to protect the integrity of supply.
  • Strong advice and link on operational costs versus capital expenditure, life time cost planning
  • Strong planning around the FF&E based on lease terms, allying the durability and therefore cost of FF&E with lease terms or refresh terms
  • Strong and independent advice around the efficiency of the space versus other spaces. Ensuring that the easiest “fitout” isn’t the most expensive re Opex or highest in risk around resilience

Simply put for an occupier the delivery of the project is a given the rest however, requires something greater than a traditional Project Manager or cost consultant.

Originally authored by Kevin Chrisp.

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