A framework for the strategic management of facilities, balancing physical and financial considerations with service, customer, utilisation and environmental requirements

Private as well as public sector organisations now recognise the contribution that corporate real estate (CRE) makes to business outcomes. As a result, appraisal of facility performance has of late concentrated heavily on strategic evaluation, that is, the alignment of the real estate function with the organisation’s overall strategic aims. A reductionist view of the building in primarily financial terms is not useful in this context. Rather, the facility must be understood as the intersection of the physical building and the processes that take place within it. CRE professionals must succeed in the delicate balancing act of keeping costs under control, providing spaces that are in a satisfactory condition, meeting regulations, and allowing workers to perform their jobs efficiently and effectively. Simply choosing the most easily assembled indicators of asset performance, such as cost/m2 or occupancy rate, does not lead to optimum results. Key performance indicators (KPIs) must be chosen to represent the required function of the real estate as well as its cost and utilisation perspectives. Building on this, the paper presents a strategic facilities management tool that was developed as a major initiative with nine local government partners in Victoria, Australia. The tool incorporates qualitative and quantitative performance indicators and balances the demands of service delivery with those of maintenance, preservation of asset value and financial performance. Web access allows for multiple stakeholder input, while a central database facilitates benchmarking. Implementation of the tool has shown that the success of strategic asset management depends on a number of issues external to the management software. Support for and promotion of strategic asset management by senior management, getting stakeholder buy-in, successful communication between stakeholder groups and the availability of sufficient resources for implementation were found to be key issues.