Why You Should Have
A Strategic Facility Plan

By Jim Ford of The Fifth Resource, Inc.
2 March 1996

Directly or indirectly, all companies are in the real estate business. Figures published by Harvard Business Review indicate, in fact, that facilities represent 25% of a corporation's assets. Consequently, facilities, like any other company asset, should be managed to maximize the return on investment in support of the company's primary business mission.

While some estimates show that a quarter of all US corporations now manage their real estate investments for profit, many companies still do not recognize the relationship between their facilities and their financial performance. Even fewer have a comprehensive facilities management program that address both immediate and long-term needs.

That dilemma is overcome through the use of a Strategic Facility Plan (SFP), a flexible framework that outlines both facilities' needs, and alternatives to maximize productivity and profit. It gives management an overall picture so facility needs and alternatives can be seen objectively.

Flexibility is created in the SFP by two key factors:

• The SFP works in tandem with a business plan that is proactive in financial modeling and costing, and anticipates at least three scenarios: expansion, maintenance at the status quo, and downsizing.
• The framework of the SFP must be computerized by tailor-made databases that are reviewed and updated quarterly or semi-annually, depending on current market conditions.

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FOUR COMPONENTS

An SFP has four components that identify and analyze business needs relative to:

• Long-range facilities planning;
• Real asset management and policies (acquisition / disposal and location /consolidation);
• Space-management / best -use analysis (requirements and standards);
• Management of the design and construction procurement process.

For strategic facility planning to work, it is essential for top management to be part of the SFP team, because top management knows the long- and short-term goals of the business. Department managers, facility support staff, and production managers then provide the more specific information. In addition, consider if there is a long-range marketing plan that will affect the growth of the company.

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USING DATABASE SPREADSHEETS

The trend is to use database spreadsheets as they are needed in the planning process rather than using off-the-shelf packages. The information in the database should be reviewed at least yearly or as often as the business plan is updated; if it is a volatile situation, then probably quarterly.

Database management systems provide the strategic facility planner with a series of decision support tools designed to help him optimize the use of space within facilities. Four common modules are:

• Space Inventory is the key to creating a centralized database of space resources. This enables the strategic facility planner to generate area take-off, space allocation, and charge-back reports by building, floor, department, or space type (office, lab, storage, etc.) The module, when tied to graphic software, also lets the planner depict the space resources.
• Space Forecasting is a long-range planning tool which allows the planner to define current and future space needs of departments within the organization. Space requirements can be forecast by space standards, by person average, or by percentage growth rates. The module lets the planner perform unlimited "what if" space projection analyses and compare projected space requirements vs. actual historical trends.
• Space Planning assists the planner to merge space inventory data with forecasting data to help him identify optimum facilities planning strategies. Databases provide the tools which let planners present alternatives in report form and, with the appropriate software, in graphics.
• Space Layout allows the planner to test the viability of space planning options. One example is the AutoCAD floorplan system which gives the planner the ability to create stack diagrams, block plans, and schematic space layouts.

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MULTIPLE LOCATIONS

Having a SFP is especially useful to companies with multiple facilities in multiple locations, for in this setting many more opportunities for consolidation or shared use of support functions exists. For example, consider the benefits to be gained by consolidating five facilities into one. Obvious productivity-related benefits would include less travel time and elimination of redundant space. By combining five facilities, each with its own lobby, cafeteria and mailroom, 15% to 30% of the existing square footage for these uses could be saved. Another benefit is the improved interaction and communication between employees through more frequent and easier contact.

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EXISTING CAPACITIES VS. FUTURE NEEDS

The beauty of the SFP concept is that because it is a strategic plan, it does not presume there is any actual project, whether it is leasing space, building space, or disposing of space. It is not predicted on anything specific coming out of the process. Rather, it involves looking ahead to determine what may be needed, and then comparing those possible future needs to existing capacity.

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