Strategic Facilities Planning: How to Leverage Knowledge While Increasing Visibility in Your Organization

By Robert A. Klein, AIA
Principal, Horizon LLC, a business unit of HLW formerly known as HLW Strategies

As companies increasingly face the challenge of aligning their real estate and facility assets with their business goals, Strategic Facilities Planning (SFP) has grown as an area of expertise and discipline that provides increasingly sophisticated tools to support complex decisions. This article provides insight into Strategic Facilities Planning: what it is, what is the process, what are the major tools and what can it deliver? It provides a template for facility managers and real estate consultants to prepare an “RFP” for strategic real estate initiatives. In addition, it explains how SFP helps facility managers leverage their knowledge and increase their visibility within their organization.

The fundamentals of SFP

The one certainty in business today is change. Competition, mergers, acquisitions, and strategic alliances force organizations to continuously rethink the functions, hierarchies and identities of their business units. Work processes are revamped and technologies sweep through, leaving few business structures and practices intact. Inevitably, the approaches to finance, operations, technology, marketing, human resources and facilities are being dramatically recast. Change is evident in every aspect of the company. What corporation or institution isn’t trying to cut costs and increase revenue?

As companies strive to make smart, timely facility decisions to address growth and change and contain costs, they increasingly turn to strategic facilities planners to assist them in their efforts. The International Facility Management Association (IFMA), in its “Project Management Benchmarks Survey (2002)” offered the following definition of the “strategic facility plan”:

Copyright © 2002 Hillier International, Inc. The Hillier Group, Inc. All Rights Reserved

“A strategic facility plan 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”.

SFP recognizes architecture, real estate and business drivers play a prominent role in determining the optimal SFP solutions.

A strategic facilities plan is a tool to position the corporation or institution’s facilities portfolio to respond to future business requirements. It does so by answering such questions as:

• Where should people work in order to maximize the efficiency of space, increase its flexibility and minimize churn?
• How much space will be needed and when?
• What types of work environments are optimal for the organization?
• What should the facilities cost (alternately, what’s the budget)?
• What changes in the current facility portfolio would support future business goals?

SFP is not . . .

• Facilities planning which focuses on tactical day-to-day issues and not the more macro topics of SFP
• Facilities management which is about maintaining facilities and space while keeping operating costs in check.
• Programming where an architectural “design” program is completed at a level of detail that allows an architect or interior architect to design the building or space. This micro level programming is not required to make SFP decisions.
• Workplace design. While workplace types and standards are relevant and have an impact on the quality, quantity, and cost of space, workplace design is not synonymous with SFP.

SFP is a framework for understanding and integrating business drivers, organizational issues, industry benchmarks and alternative work environments into a road map for the future. At its best, SFP is a decision-support system that helps organizations make informed decisions about their facilities by identifying the potential impact the decisions have on business performance, and vice versa. It allows managers to optimize real estate expenditures, while at the same time it uses the process itself to enable change to occur within an organization.

SFP in service

A major multi-national pharmaceutical company with its headquarters dispersed in numerous buildings throughout a large metropolitan area in the U.S. has a total office space portfolio of approximately 2.5 million sq. ft. The SFP asks the following questions:

1. How can this company best use its real estate to optimize business processes, minimize cost and simultaneously develop a lease/own strategy that permits it to be “ahead of the curve” in estimating future real estate space requirements?
2. Will space requirements increase? If so, how much, when and where?
3. Are the current locations of functions optimal? If not, where should changes occur to reduce staff inconvenience and improve communication?

At the core of any pharmaceutical company is its pipeline of drugs: what is new, where it is in the development and launch cycle and when will patents expire? It was determined that a key driver predicting space needs over time would be reflected in the staffing needs centered around the marketing teams required for each product. By developing a staffing model for the research, development and marketing of different types of drugs, the project team, made up of SFP consultants and in-house strategic business planners, was able to develop a statistical model of how staffing would change, year by year, for a 10-year period. Two sizes of product development and marketing teams were modeled allowing an aggregate total of professional and support staff to be calculated. This model represented a rational link between pharmaceutical products and space demands. While no methodology is fool-proof, it helped the project map future space demands based on a series of assumptions that were not solely reliant on past experience, but rather was a blend of both historical data and future pipeline expectations.

How does SFP result in cost savings?

The implementation of facilities plans is often burdened by: 1) A slow response to change, resulting in a delayed “product-to-market” schedule, which ultimately affects shareholder value; 2) Multiple and redundant employee moves resulting in employee dissatisfaction and moving costs that could have been avoided; and 3) Running out of space even before the final move-ins occur, resulting in split groups and compromised business practices, all translating into loss of productivity.

While the above case study is typical in the sense that the final recommendations were an outgrowth of business analysis, there is, however, no standard SFP scope of work. The scope is as variable as industries, company goals, institutional missions and facility assets; therefore, duration, required tools, deliverables and outcomes will vary. That said, there are industry accepted models and practices that can serve to aid those writing (and submitting responses to) an RFP.

How do SFPs happen? What do they accomplish?

The key to structuring an RFP is a clear understanding of how a Strategic Facilities Plan project is accomplished, i.e. the phases of work and the deliverables. It is also imperative that the SFP project be based on the concept, “Begin with the end in mind”. The project coordinator and champion should organize the RFP around the questions the plan needs to address and identify the deliverables that will enable managers to make the near and long-term facility decisions that support their business. In addition, project leaders need to determine how to weave timely and appropriate senior management review and approval into the process.

As explained in the chart below, there are five basic steps or phases in every SFP project:

The expertise and talent that make a successful strategic facilities planner is almost as variable as the process itself. Planners are experienced professionals often with backgrounds in architecture, real estate or business. They are good communicators and listeners, are able to see the big picture, can deal with complexity (and less than perfect information) and understand how facilities can enhance business goals. They may have a particular focus such as real estate finance or organizational development.

Projects of limited scope are often accomplished by a small team of generalists who are skilled in the SFP process and complete most of the tasks themselves. Complex projects require a team that may have a complement of specialties (change management, engineering, programming, etc). On large projects, the lead consultant will coordinate the response to the RFP, serve as the team leader and manage a number of sub-consultants.

Building on the above generic phases of work, how does the facilities or real estate manager structure the RFP to ensure that they get the deliverable they need? What can they prepare so that the services provided by the consultant answer the “right” questions?

What are the tools??

The tools that are used during the various steps in the process are as varied as the questions that are answered. They fall into three major categories:

1. Organizational Development Tools: Visioning sessions; interviews and questionnaires; focus groups; macro-level programming (square feet per person); change management; organizational analysis; and workplace mock-ups.
2. Analytic Tools: Business mapping; four square analyses; scenario modeling; financial analysis; utilization analysis (pre- and post-occupancy).
3. Industry Norms: Benchmarking; business profiles, industry standards; performance measures review.

One of the most effective tools is scenario modeling. Scenarios are tools for thinking ahead to anticipate the “changes” that will impact your organization. Scenarios can be considered instructive simulations of possible operating conditions. Scenarios also should allow you to build a more robust and resilient strategy, which, in turn, should create distinct competitive advantage.

For building scenarios, begin with a broad distinction between a business’s immediate environment—its microenvironment—and its wider macro environment that includes broad social, economic, technological, geophysical and political trends. Looking at the situation from both the micro and macro environments helps to ensure that you, as a planner, are not overlooking trends and changes that might escape the attention of those focused on the immediate events of day-to-day business.

Example: A major university was in the process of developing a Master Plan to chart its growth over the next 10 years. The initial focus was to study the physical opportunities and constraints on its existing campus and to test the available buildings and land to evaluate the optimal sequence of development to incorporate new programs and new attitudes in housing, studying and socializing. During the scenario-planning phase, it became clear that the most pressing environmental factor was the fact that the campus was located totally within a high-risk earthquake zone. Once this “macro-factor” was identified, a totally different development scenario emerged, creating a second campus outside the earthquake zone, to strategize what the university would do if an actual earthquake occurred. If the time was not dedicated to explore “macro-factors”, this issue may have gone unnoticed and the ultimate development plan would have been totally different.

Writing an RFP for SFP Services

There are many ways to organize an RFP for SFP services. A clear statement of purpose, goals and available information helps clarify the project goals in the minds of the project team members and ensure consistent and responsive proposals. The following outline, based on a sampling from similar projects, is one way to structure the material:

Project information (to be provided to those submitting proposals to do the work)

1. Project background and history;
2. Project scope:
   
   What questions need to be answered?
   Which are the facilities and business units to be included?
   How many interviews are anticipated?
   How many locations, and where, are to be included?
   
3. Timeframe for completion of project (key dates affecting implementation).
4. Fee guidelines: how the fee proposal should be structured—provide the template if a specific format is required or desired for comparative purposes.
5. Summary information, company data, previous studies, etc. that will be made available to the selected consultant:

   General

   	Strategy: corporate/institutional strategic plan, overall planning parameters (number of timeframes/years to be modeled), future headcount
   	Organization of the company or institution
   	Demographics (headcount/seat count)
   	Workplace strategies (design standards, alternative workplace options)
   	Amenities: food service, healthcare, fitness, childcare, conferencing, retail, banking, training, etc.
   	Space and location: overall size of portfolio and number of locations *even those not included in the immediate study.

   
   Facilities-specific
   
   

   	Site & Building Data: condition of systems
   	Financial: occupancy costs
   	Real Estate Portfolio: own or lease?
   	Occupancy: who is located where?
   	Furniture and Equipment: age and type?
   	Project Management procedures: How are buildings maintained? By whom?

   
   
6. Project deliverables and target completion dates: specific expectations, e.g. PowerPoint presentations to senior management, newsletters and coordination with other contracted consultants;
7. Sub-consultant requirements: any specific consultants that you require by category, e.g. parking, food service or, or by name;
8. Contract terms e.g. minority participation, insurance requirements or waivers;
9. Company contact for questions: someone available and able to direct questions to the appropriate in-house staff;
10. RFP timeframes: pre-proposal meeting, facility tour(s) for consultants, due date for RFP, date of presentations (if applicable), target selection and anticipated kick-off dates.

Proposal Requirements (from the consultants submitting proposals to do the work)

Outline for the response

	Project understanding
	Project team
	Proposed work plan and schedule
	Fee proposal and items for reimbursement (under separate cover, as required)
	Firm capabilities: similar projects with client references for lead firm and any sub-consultants

Organizing the client team

In order to ensure a successful project, it is essential to have both a day-to-day project manager (PM) and a senior management “champion” who has access to the company’s leadership team. The PM should have the following capabilities:

• An understanding of the goals of the project, what needs to be accomplished and contractual requirements;
• Access to the champion during the proposal and project phases;
• Familiarity with the facility assets and understanding of planning issues, problem solving and the decision process;
• Good organizational and communication skills;
• Familiarity with the company/organization.

The “Request for Proposal” is a critical stage in the process. The selection team should conduct a pre-proposal meeting that is attended by both the PM and the project champion, to allow those submitting proposals to ask questions about both content and contractual issues. It affords a consistency in the flow of information and is an efficient way to quickly educate all those proposing on the work.

Once the contract is awarded, the “steering committee” for the project should be those who can be a voice for senior management in relation to the scope and direction of the project. This committee should include real estate, human resources, finance and IT staff that are sufficiently involved to be able to help navigate the decision-making process and available data. It should also involve the largest division so the project team has a quick voice on issues and concerns.

Directing the consultant team to the appropriate data, key individuals and leadership is important to keeping the project focused and on schedule. In certain instances, a steering committee already may exist that has been established to develop the “strategic business plan.” The committee members are ideal candidates to broaden their roles to include facility and site considerations.

Timeframe and schedule

More often than not, the need to prepare an SFP is driven by a specific, tactical decision that needs to be made, often sooner rather than later. The timing of that decision can be at odds with the timeframe to do a strategic facilities plan. Returning to the concept of “Begin with the end in mind”, it is not unusual, in practice, to have two tracks of work and two coordinated schedules for completion.

In an ideal situation, the strategic facilities plan will be completed first, and then the tactical decisions that are to be implemented will follow. It is worth remembering that the timeframe for completion of the work is an outgrowth of the scope and available data. Both project champion and project manager should consider the target dates in light of the company or institution’s capability to schedule meetings, collect and validate data review options and make decisions.

The timeframe to successfully complete a project is typically between four and 12 months. This range is a function of scope and complexity, size of the facilities and organization, the decision making process, the total number of staff to be interviewed and their availability. Clients often believe that the number of interviews can be limited to the leadership group, perhaps 8 to 12 people. Frequently this number is closer to 50 interviews because senior management, while able to discuss strategic business issues, cannot answer the department-specific questions related to current staffing, location or physical adjacencies. The process will require a manager involved with the day-to-day activities of a department who has an understanding of this information.

SFP is team-oriented. As such, it requires time for team members to learn to work together, gather, assimilate and process information. While the steps can be quite straightforward, there are many constituents who should participate in the interview and approval processes. Their involvement requires time to schedule and coordinate. The most successful SFP projects are those that have a seamless team structure where the internal staff is able to present information to its management. This requires regular project meetings to review information and findings at each phase of the work. The minimum timeframe should be four months. Recognizing that the duration for a complex project may be significantly longer, the allocation of time by phase for projects of shorter and longer durations is approximated below:

• Phase 1 — Launch 3 weeks (to 6 weeks)
• Phase 2 — Discovery 6 weeks (to 4 months)
• Phase 3 — Analysis/Synthesis 4 weeks (to 3 months)
• Phase 4 — Recommendation 3 weeks (to 2 months)
• Phase 5 — Implementation varies (to 6 weeks)

Typically, the duration of Phase 2—Discovery is the most unpredictable. It is not uncommon for the process to require 3 to 4 months, depending on the number of interviews and completeness of facility information. The team should be prepared to deal with some uncertainty.

Fee proposal

The purpose of the fee proposal is to:

• Establish overall cost of services
• Ensure (via comparison) that the consultants understand the scope and have budgeted appropriate resources to adequately complete the required tasks.

Therefore, the ideal fee proposal will be structured around each phase of work, indicating the number of estimated hours, by firm and by discipline, and applying hourly rates to establish the cost per phase.

If the scope and timeframe are clearly defined and available data has been collected for the consultants’ review, then it is possible to request a “fixed” fee. In order for the “fixed” fee to be achievable, the scope must be developed to a point that the bidders are able to minimize contingencies (unknowns).

If the scope is not developed to this level, a fixed fee for Phase 1 is more appropriate. It can be agreed that subsequent phases will be based on a time card with a “not to exceed” fee or fixed fee once the scope is defined. The major benefit of a fixed fee is that it allows the consultant flexibility to move hours and staff around to suit the reality of the project, accepting the degree of risk inherent in that fee structure.

It also permits the client to budget a specific number. If an RFP is well prepared and explicit in scope, a “fixed fee” should be requested. Agreement in advance on standard billing rates helps facilitate adjustments in fee associated with changes in scope.

The value of providing consultants with a template for the fee is that it enables the client to easily analyze and compare RFPs. The ultimate goal is to select a consulting firm that understands the scope and is requesting a fair compensation for that scope. A fee that is well below the median numbers often suggests a lack of understanding about what is required and ultimately can mean an incomplete or low quality final product.

Perhaps the most daunting aspect of strategic facilities planning is selecting a consulting firm to support those efforts. The consultant’s response to the RFP is the first deliverable in the process. It reflects attention to detail, level of interest and the ability to communicate information and ideas. It should reflect an understanding of the client’s situation, provide a clear approach to the work and describe the team’s capability to do the work requested.

The second “deliverable” is the presentation by those “short-listed”, if a two-phase selection process is used. While the response to the RFP is a written form of communication, the presentation is in verbal and graphic form. Similar to the SFP process, there are two major tracks of criteria: qualitative and quantitative.

Evaluating proposals

Decision-making is not a scientific process in the sense that the considerations are all straightforward. The selection committee ideally made up of the project manager, project champion, and steering committee, must balance experience, team personality and fee considerations in deciding which team to select. A matrix can be used to evaluate both written proposals and presentations and enables the selection team to award points in weighted categories such as:

1. Team: Do they appear capable of working well together? Are the project manager and principal-in-charge articulate and clear in their roles? Do they demonstrate the required skills? Are they people you can work with and in whom you can be confident will interact well with senior management?
2. Experience: Does the firm have a clear approach to the project? While it is not always possible to have a precise work plan, i.e. detailed list of tasks to be performed, it is important to have a project approach which supports the company’s issue and project goals. Every organization believes its issues are unique and unusual, yet experience shows that there are many similarities within the discipline of SFP. It is important to be confident that there is a well thought out process and appropriate tools in the hands of capable professionals that are integrated with the goals of the project. A consultant with good listening skills can be as valuable to the process and outcome as one with previous work with similar companies.
3. Fee: The general guideline is that the consultants have sufficient fee to do the work correctly and in a manner consistent with the required deliverables. Hiring a company that has not budgeted sufficient hours to do the work will inevitably result in conflicts. The reason to focus on both rates and hours is that it allows the reviewers to see the anticipated effort and skill level of the staff who will do the work. SFP is largely accomplished by senior professionals with support of intermediate staff, often in the data gathering and production stages. The hourly rates and fee proposal will reflect that.

Conclusions

Finding the “right” answers requires asking the “right” questions. While this sounds simple, it often is not. The process of seeking the right questions can be as important and challenging as answering them once they are understood. The involvement of a senior manager who is convinced of the importance of facilities in the overall business strategy and who is willing to champion the project and provide access to upper management will be important in crafting the questions.

The SFP process and team need to acknowledge that the environment is dynamic. External and internal conditions are changing and decisions need to be made while the project moves forward. The goal is to manage the change, not let it manage the team.

Successful planning requires good teamwork and a level of responsibility often not entrusted to facility managers and planners. The goal is to align the process, team and management more closely with strategic planning than facility planning to provide the most valuable result for the business.

While the RFP is a tool to communicate information to prospective consultants and ensure consistency in responses, it is also a tool to encourage those preparing the RFP to do as much pre-project work as possible and to “begin with the end in mind!”

Robert Klein is a licensed architect in both the United States and United Kingdom and is a Principal with Horizon LLC, a business unit of HLW formerly known as HLW Strategies, based in New York City. His experience over the past 30 years spans both corporate and institutional clients with a focus on pre-design services. He holds both bachelor’s and master’s degrees in architecture from the University of Michigan and a post-graduate diploma in Health Facilities Planning and Design from the University of North London, England. He has taught a course for the Harvard GSD's Executive Education winter 2004 program and will do so again in summer 2005. www.horizonllc.com