The Leader Magazine

MAR 2018

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t H e le A de R MARCH 2018 33 C orporate real estate and facilities management (CREFM) organizations commonly employ a balance of insourcing and strategic outsourcing solutions. This is driven by the need to minimize costs while avoiding negative impacts on the employee experience or the quality of services provided. There is no "one size fits all" solution. With the broader business strategy driving the outsourcing decision, the CREFM organization can become a major contributor to the corporation's success. While the broader business strategy should be the primary driver in outsourcing decision- making, there are certain functions and/or service lines that organizations commonly retain internally and others that are commonly outsourced. For the purposes of this discussion, we will break down these service lines into three major buckets: 1. Portfolio management • Portfolio strategy: These services are commonly driven and delivered internally by senior leadership with direct connections to the business units. External support is typically derived on a consulting basis, as needed, by their provider or via an external consultant. • Transaction management: About 80 percent of organizations are outsourcing transaction management services using a commission-based fee structure. • Lease administration: About 60 percent of organizations outsource some or all lease administration using a unit cost/activity-basis pricing structure. • Occupancy planning/space management: Space management is a critical component of effective portfolio management; about 50 percent of organizations are currently outsourc- ing this work. 2. Project services • Project management: About 50 percent of organizations have fully outsourced their PMO and project-execution services, largely depending on the volume of activity. In organiza- tions with consistent project volumes, it is most common to see pricing as a direct cost pass-through of staff, while organizations with variable project volumes are most com- monly pricing project work using a $/SF or %/project cost basis. • Moves, adds and changes (MAC) management: Outsourcing of MAC management largely depends on volume, and the focus is on minimizing churn through better technology (less equipment and furniture to move). • A/V management: Most organizations don't have the volumes to require a dedicated A/V team; this work is almost always outsourced to an A/V specialist. 3. Facilities management About 50 percent of organizations are outsourc- ing FM services in an integrated way, while the other half are still managing the services in a hybrid model of internal staff and local subcontractors. Figure 1 shows the various options for managing FM services, from internal management to a fully integrated facilities management model. o utsourcing strategies are 'generational' Our firm has found that outsourcing strategies tend to be incremental, or "generational," referring to a typical outsourcing contract term of three to five years. First-generation outsourcing is often viewed as an experiment. The client outsources a small selection of services and relies minimally on service-provider expertise. To move ahead, trust needs to be established. Second-generation outsourcing typically occurs when the first generation, or trial period, is successful. There is increased trust, further refinement of the model, and better leveraging of by Ingrid M. Fenn Figure 1

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