In this special edition of Ask the Expert, GRAHAM CONSTABLE, FM and the International Facility Management Association’s FM Journal seek sustainable solutions from six industry leaders.
The Question
Outback Software, a five-year-old technology company located in Sydney, Australia has outgrown its current space and decided to engage a developer to build and lease back a 23,225 square metre office building to suit Outback’s space needs into the near future. Outback will be the single tenant. It will be located in a corporate office park on the outskirts of Sydney. The architect has been hired and the design of the building has already proceeded to the design and development stage.
Just recently, Justin Blake was hired to be Outback’s first facility manager. In the first week of his new job, Justin reviews the plans and notices that sustainability has not been addressed in the design. Justin’s past experience is in managing a sustainably certified building and he and feels it is important to incorporate sustainability into the new Outback building to the extent that it would be equivalent to the Australian Green Building Association’s Green Star rating, although actual certification will not be sought. Justin estimates that this will add approximately $500,000 to the building’s budget. Justin has mentioned his intentions to senior management and received very little support.
Justin has hired you as a consultant to help him develop a business case to help sell his idea to management. What key recommendations would you make in order for Justin to prepare a sound, compelling and convincing case to gain funding approval from senior management for the sustainability initiative?
Answer from David Reynolds, CFM
Making the case
Justin has to demonstrate a suitable business case framed around ROI on an investment of $500,000 to be included in a capital plan. Direct returns include energy and water, as expected, and the attractiveness, market value and liquidity of the property as an asset in case changing business circumstances make rental/lease or sale helpful options.
Research those numbers, Justin! Indirect returns include the desirability of working in a Green Star certified building, the impressions of customers, community impressions and competitive effects. The Australian Green Building Association shows Green Star certification covering 37 percent of office space occupied by five percent of the national workforce daily. Justin, frame these into inducements to include Australian Green Building Association under the Outback brand, enhancing reputation to stakeholders. The time is right. Staff who are moving to the new building will be pleased to know of the green initiative.
Follow through
You’ve now persuaded your boss to take a risk and presented to the executive committee. They were impressed and asked for specifics prior to final approval. The CFO expects detail and cash flows – a budget – to make your plans specific for final approval. The COO wants to be sure that complications and delays are not a significant risk. It’s time to get assistance from Australian Green Building Association about certification goals in the time available to commission and to work with construction plans if any alternations are due before construction commences. Possibly, changes in plans now will reduce construction time and costs. Let’s find out. Time is short.
David Reynolds, CFM
FM – CONSULT – CREATE
David Reynolds focuses on FM strategic management, FM performance and risk mitigation. He is a founding partner in the Global Facility Management Alliance. David is President the IFMA Facility Management Consulting Council, FMCC and a member of the Facilithon core team.
Answer from Mike Liddle
Work in a software company is fast paced and senior management teams tend to think short-term instead of long-term because of the way the market works and the rate of change with technology. However, good FM and sustainability go hand-in-hand. So press on.
May I suggest that you never talk about ‘cost’, but start instead with the short, medium and long-term ‘benefits’. Talking cost to very busy senior management teams is usually the wrong approach and will immediately trigger negative thoughts before you get an opportunity to explain the reasoning and long-term issues.
As you have been hired well before the completion of construction you should working with the designers and developer, who is the ultimate owner, to introduce sustainability, as product selection and specification at this very early stage does not necessarily mean additional cost.
I do not see any reason why you cannot get the benefits you suggest at an initial cost of $500,000 when you are looking at relatively large building of 23,225 square metres rented over the long-term. Do remember that if you have a building designed and built with, say, a 25-year lease, the actual capital cost of construction can be as low as five percent, with the running and capital replacement costs taking up the other 95 percent over time. There are some very good examples of this style of lease in Australia and the UK.
I suggest that as well as working with the local consultant that you create a good relationship with the developer and try to get inside the head of your senior management team to see what makes them tick and concentrate and harmonise your activity with their goals and objectives.
Mike Liddle
Business and Facilities LLP
Mike runs Business and Facilities, an independent real estate and facility management consultancy operating in EMEA. His experience includes the control and coordination of multi-million pound projects involving all aspects of FM, real estate, design and construction.
Answer from Daniel Goldsmith and Patricia Hensley
Justin, as an experienced green building facility manager, can provide a strong case for the benefits associated with obtaining a recognised green certification. By seeking assistance from a consultant specialising in Leadership in Energy and Environmental Design (LEED) during the early stages for building design, the full potential benefits of a green building can be incorporated into the design. Facilitating the long-term economic, social and environmentally responsible use of resources while leveraging the secondary benefits. Justin’s engagement of a consultant team can assist him in preparing an automated dashboard reporting system that links efficiencies directly to value added to financial performance, employee satisfaction surveys and timely issue resolution. Secondary benefits include potential health care savings from workout facilities, healthy food options and work life balance. Even more intangible is the correlation with workforce recruitment and retention.
Please note the key recommendations below to provide Justin an outline for supporting his process to engage management:
- Analyse, monetise and correlate the benefits of the organisations with the green certification
- Link the benefits of the green certification to the corporate mission, goals and marketing strategies
- Determine the cost benefit analysis
- Access the payback period, and
- Outline the program tracking lesson’s learned associated with the green savings based on Justin’s previous work in a green building, including monetising the monitoring reporting from systems outputs to support the integration of smart system.
Daniel Goldsmith, DBA
Daniel M Goldsmith Consultancy LLC
Daniel Goldsmith is the principal of Daniel M. Goldsmith Consultancy LLC, a consultancy specialising in management and facility management.
Patricia Hensley
PHdash Inc.
Patricia Hensley, CPA MBA Veteran founded PHdash Inc. in 2008. As the principal, she has worked with Small Business Administration as a consultant on various financial projects and given presentations.
Answer from Martin Vaclavik
A business case that has a good chance of being accepted by senior management must be supported by real numbers and proven case studies. My first recommendation and collaborate effort with Justin would be to work on solid proofs of sustainable initiatives. Having established these, Justin and I would closely focus on how industry-leading competitors address sustainability in corporate policies regarding their buildings to provide a benchmark for Justin’s company.
Once we prepare a necessary background on applicable best practices in sustainability, we must demonstrate synergies among single measures. Many design solutions, if not all, should be compared to the triple bottom line. One of my favourite tools, which I would recommend to Justin, is a simple matrix where measures are assessed using an impact-based scale (positive/neutral/negative) to people, planet and profit. Cost estimates would be included as the total cost of ownership or using the return on investment predictions. Selecting the right measures is a critical exercise. Only identified synergies may assure good results and fulfil sustainable goals.
My last key recommendation to Justin would be stressing out added values by adopting sustainability for the new office building:
- A healthier indoor environment for occupants, resulting in higher productivity and lower absenteeism
- More effective energy and water management
- Responsible usage of materials and resources, and
- A positive attitude to climate change, which can likely be used for positive public relations.
Martin Vaclavik, LEED O+M AOP, WELL AP
Martin Vaclavik is a civil engineer currently working as an FM consultant. His specialisation is sustainability, which he also respects in his everyday life. Martin mainly focuses on effective building operations and maintenance and healthy workplaces.
Answer from Kimberly R Snow
In order for Justin to sell his ideas to management, it’s important for him to identify sustainability initiatives that will have a substantial return on investment (ROI). The long-term savings far outweigh the upfront costs to implement certain sustainability measures. For example, investing in smart glass windows as part of the initial build can reduce ongoing energy costs by 20 percent. Purchasing LED bulbs and adding daylight harvesting components to light fixtures will have a definite ROI and provide continued savings on utility costs.
In preparing the business case, I would also want to understand if there are any government incentives for sustainability programs and take advantage of those.
The last area I would highlight as part of the business plan is the positive impact investing in sustainability has on a company’s reputation. ‘Doing the right thing’ is a big part of our culture today and companies that can show how they are implementing and investing in sustainability practices attracts customers. Sustainability is important to people and we all want to work for a company that is actively involved in caring for the environment.
Kimberly R. Snow, FMP, CFM, ABCP
TJX Canada
Kimberly has over 10 years’ experience in the facilities management industry working with various companies managing renovation and expansion projects, space and move management, business continuity and general building operations.
Image: 123RF’s bas121 © 123RF.com
