lecture 3 - the crem organisation
TRANSCRIPT
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Corporate Real Estate Management
Lecture 3 Understanding CREMcharacteristics
Abdul Jalil Omar
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Review
CRE(M) - an organisational function
How it is integrated into the organisationis a decision about the design of theorganisation
Business mantra for design of
organisations Core business keep close
Support service push away (buy-in)
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CRE(M)s responsibilities
Provide shelter (physical space orenvelope)
Optimising workplace (productionplatform)
Rewarding shareholders (financialreturn)
Managing CRE function (form,environment, growth and advancement)
After: Valenziano & Kious(2005)
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The CRE(M) functions structure
Options
Business units run their own CRE function
Organisational internal property unit
Cost centre - Property costs charged to a CRE unit Profit centre A CRE unit charges business units for
their property costs. Aims to maximise propertyprofits
External property unit
Subsidiary property company
Publicly traded subsidiary company
Property trust (LPT/REIT)
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CRE and firm infrastructure -The IRIS or CIR platform
CRE
HR
IT
Finance
Corporate Infrastructure
Resources (CIR)
Integration of strategicorganisational resources
Source: Materna, R. & Parker, J. (1998) Corporate infrastructure resource management: an emerging source
of competitive advantage, IDRC, Atlanta
Integrated Resource
Infrastructure Solutions (IRIS)
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IRIS or CIR
IRIS orCIR is orientated towards executingthe organisations business plan through
A set of corporate functions and processesrecognised as strategically important
New way to create & sustaining corporatecapabilities for executing those plans
Increasing use to increase firmscompetitiveness
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Alignment of organisational andCRE strategies
Organisation
Businessunit 1
BusinessUnit 2
IRIS/CIR
Management Management
Operations Operations
HR
CRE
IT
Finance
BusinessUnit 1 as
silo
Horizontal strategy
Horizontal strategy
Businessinfrastructure
Horizontal strategy
Make self-servingspace decisions
BusinessUnit 1 as
silo
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Balanced scorecard alignment
Internal processes
Financial
Learning and knowledge Customers perspective
Source: Kaplan &Norton (2006)
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CRE(M)s balancing act
Businessunits
Corporateoutcomes
Customised Standardised
CRE(M)unit
Corporatemanagement
Serviceproviders
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CRE(M) functions organisationalstyle
Centralised Decentralised
Business
unit 1
Business
unit 2
CRE
unit
Organisation
CRE unit
Region 1
Nth
America
CRE unit
Region 2
Europe
CRE unit
Region 3
Asia/
Pacific
Organisation
Direct or centre-ledmodel
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Some other variants
CRE unit
Region 1
Nth
America
CRE unit
Region 2
Europe
CRE unit
Region 3
Asia/
Pacific
Organisation
CRE unit
In-direct, or Advisory model(CRE resources controlled)
CRE
Region 1
Nth
America
CRE
Region 2
Europe
CRE
Region 3
Asia/
Pacific
Organisation
CRE unit
Influence model(CRE resources not controlled)
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CREM units (Australian companies)
Separate business
unit33%
Part of finance unit
13%
Part of shared
service unit27%
Separate CRE
company20%
Other
7%
Source: PCA/KPMG(2005), Graph 2
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CRE(M) Sub-functions
Valenziano & Kious(2005)
Planning
Transactions
Facility management
Design andconstruction
Varcoe (2000)
Facility management
Design and occupancy
planning Project management
Property management
Transactions Strategic management Portfolio management
Asset management
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Varcoe (2000)
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CRE(M): designing the organisation
In-house management unit
(internal service provider)
Out-taskedmanagement activities
(external service provider) Outsourced management activities
(external service provider)
Strategic alliances management activities
(internal/external service provider) Joint venture management activities
(internal/external service provider)
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Structuring drivers
What is CREs fit in the organisation?
What services are to be provided to
the organisation? How best to deliver those services?
Who are CRE(M)s customers (forrelating too)?
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CRE(M): designing the organisation
What do I make? in-house
What do I buy? outsource
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Designing the CRE functionsorganisation
4 organisational structures
Functional
Geographic Market/customer
Process
Source: Valenziano & Kious(2005)
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Functional CRE organisationalstructure
CRE Lead
Planning TransactionsFacility
Management
CRE
Infrastructure
IT
HR
Finance,Legal, etc
Design &Construction
After: Valenziano & Kious(2005) Fig. 9
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Geographic CRE organisationalstructure
CRE Lead
Planning Transactions FM
CRE
Infrastructure
IT
HR
Finance,Legal, etc
D & C
Region A Region B
After: Valenziano & Kious(2005) Fig. 10
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Customer relationship CREorganisational structure
CRE Lead
Planning Transactions FM
CRE
Infrastructure
IT
HR
Finance,Legal, etc
D & C
RelationshipBusiness Unit A
RelationshipBusiness Unit B Portfolio
ExpertiseContent
ExpertiseWorkplace
ProcessProgram
After: Valenziano & Kious(2005) Fig. 11
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Process CRE organisationalstructure
CRE Lead
Entitlement &
DevelopmentProcess
Workplace
DeliveryProcess
Customer
Relationship& Planning
CRE
Infrastructure
IT
HR
Finance,Legal, etc
WorkplaceDeliveryTeams
CustomerTeams
NewDevelopment
teams
After: Valenziano & Kious(2005) Fig. 12
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Case example Sun Microsystems- 1987
Source: OMara (1999)Figure 4.3
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Case example Sun Microsystems 1988-91
Source: OMara (1999)Figure 4.3
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Case example Sun Microsystems 1991-5
Source: OMara (1999)Figure 7.2
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Case example Sun Microsystems 1996-9
Source: OMara (1999)Figure 7.3
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Case example BBC
Original CRE(M) organisation design
CRE Lead
Environment Design Development Finance Strategy Operations
After: Valenziano & Kious(2005) Fig. 13
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Case example BBC
Redesigned CRE(M) organisation
CRE Lead
WorkplacePartnering
Direction Infrastructure
CustomerIntimacy &
RelationshipManagement
Planning &Advice
Workplace,Environmental,
& PortfolioStrategy
Innovation
EnablingSystems &
FinancialReporting
Compliance &Reporting
DeliveryManagement
Projects(workplace solutions)
& Facilities(workplace services)
KPIs. Vendor &PerformanceManagement
After: Valenziano & Kious(2005) Fig. 13
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Required skill sets
Outsourceskills
Insourceskills
Business
Technical
Strategic
Managerial
Operational
Financial & planning
Relationships
Contract management/administration
Operating the artefact
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Strategic skillsets
StrategyCommunication
Relationship skills
Customer focus
TeamworkBusiness acumenFinancial acumen
Intellectual curiosity
TechnicalProcessReal estate acumen
Project managementNegotiation
Trust
After:McCarty, etal. (2006) Fig 8
Traditional
Morestrategic
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CRE(M) skills
Communication
Strategic thinking
Consulting skills (consultation? Or being a Consultant?)
Financial & analytic skills
Underlying orientation to externalenvironment
Customers
Customers business, financial & competitiveenvironments
Outward trends and forces
Source: McCarty, et al.(2006)
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Summary
CREM organisation varies amongorganizations.
Higher involvement requires multipleskill sets