performance, benchmarking & monitoring in property · 2016. 12. 9. · introduction to altus...
Post on 20-Aug-2020
13 Views
Preview:
TRANSCRIPT
Performance, Benchmarking & Monitoring in Property 2016 RPIC Real Property National Workshop 16 November, 2016 Presented by Paul Hughes, Senior Director Altus Group Limited
2
Introduction to Altus Group
Altus Group Limited
Altus Infrastructure Research,
Valuation & Advisory
Realty Tax Consulting
ARGUS Software Geomatics
ALTUS OVERVIEW
2,500 staff globally
75 offices worldwide
Headquarters in Toronto
Revenue CIRCA $500m (2016)
300 Cost & Project Infrastructure Management staff globally – 150 in the Americas
Market Capitalization $1.05bn (Nov 2016)
3
Comprehensive Value to Clients
Construction Cost Guide
RealNet
InSite Voyanta
ARGUS AE
ARGUS Developer
AltusSphere Dashboard *
Due Diligence
Economic Consulting
Valuation & Advisory
Property Tax & Operational Efficiency
Feasibility/LEED Consulting
Development & Cost Management
Technical/Facilities Management
Life Cycle Optimization
Argus Express
Market Research
Risk Metrics *
Assessment
Best Insights
Executive Support
Cost/Revenue Analysis
Industry Trending
4
Paul Hughes – Senior Director Head of Infrastructure & Contract Solu3ons Group in PPP; currently working on $20bn of projects across Canada and the US in Transit, Highway, Accommoda3on (Hospital, Schools) and Power, Paul has over 30 years experience in the UK, Canada & US for contractors, developers, outsourcing businesses, and M+E Contractor. Chartered Surveyor and Chartered Arbitrator M.Sc., Project Management, University of Reading
5
Agenda
1. Corporate Real Estate Process & Performance Management.
2. Why Performance Manage?
3. PPP’s & Performance Management.
4. Payment Mechanism Explained.
5. Cost, Risk & Quality.
6. Other Areas & Incentivization.
7. The PMS Process & Technology.
8. Practical Commercial Consideration.
6
Public Sector Asset Management Report RICS
Push Toward:
§ More data intelligence.
§ Push to reduce floor space.
§ Sustainability.
§ Create visibility and improved decision making through analytics.
Corporate Real
Estate
Consolidated Data Analytics
Business Process
Automation
Human
Resources
IT
Energy &
Sustainability
Finance
Continued Facilities
7
1- Corporate Real Estate Process
8
2 - Why Performance Manage
“What gets measured gets done”
Performance Management helps;
1. Define issues that are crucial to organizational success.
2. Defines issues that are critical to delivery of functions & operations within organizations.
3. Kaizen – Continuous improvement.
4. Provides objective assessment as to performance.
5. Identifies areas of success & weaknesses.
9
The PMS Benefits
PMS
Continuous
Improvement Effective
Use of Resources
Organizational Goal Alignment
Organizational Standards
Across Portfolio
To Manage Performance &
Non Performance
Incentive
10
The Benefits of Performance Measurement
• Streamline processes. • Minimize waste. • Accelerate delivery of services. • Enhance quality of services. • Lower cost of compliance. • Optimize use of Resources
• Encourage process innovation. • Optimizes staff potential. • Promotes exchange and knowledge. • Accelerates spread of innovation. • Creates a framework for creativity. • Enables continuous improvement.
• Optimizes global supply chain. • Improves transparency. • Shared learning and techniques. • Standards.
Ø Productivity
Ø Innovation
Ø Globalization
11
What to measure (KPI’s)
§ Measure what improves organizational performance and that also can be also about staff moral or customer experience.
§ IT- Data network availability.
§ Elevator functioning.
§ Security and provision.
§ Delay / wait time at car parking / security.
§ Photocopier availability.
§ Washroom cleanliness.
§ Food / canteen options.
§ Customer feedback forms.
12
PPP’s Performance Management – PPP Contract Structure
Client
Lenders SPV Developer
Equity
DB Contractor
FM Provider
Lifecycle Capital
Replacement
Project Agreement Credit Agreement
DB Sub - Contract Facility Sub - Contract
13
Typical PPP Performance Measurements & Payment Regime
Features § 30 YR “Availability Based” Payment; “fixed” and paid monthly to repay capital and provide
services.
§ Certain Adjustment Factors to “Fixed” Payments.
§ Facility availability conditions and maintenance [PMS].
§ Certain indexed issues; insurance, Labor costs, lifecycle typically.
§ Energy risk.
§ Building handback conditions; commences YR 23 typically.
§ Obviously there needs to be a change mechanism.
§ Contract triggers. For Sub Par Performance and may be some upside for FM operator.
14
4 – Payment Mechanism & PMS Explained
1- Monthly Service Payment
MSP = (ASPn/12) - ∑D + GS – PS
2- Annual Service Payment
ASPn = (ASPXo x (1-PESC)) + (ASPXo x PESC x ESCn) + (LCPn x ESCn) +IA
3- Deductions
D= (ASPn/(Nyx6)) x AW x UW x DP
15
Availability
The concept that each functional unit/area. Has to meet Accessible Condition, Safety Condition
and meets Use Condition criteria & parameters. A failure to maintain leads to $ deductions and
failure points; see table of weightings. Example.
Functional
Unit Reference
Functional Area
Functional Unit Description
Area Weight (AW)
Unit Weight (UW)
Functional Unit
Category
02.001.01 Critical Care Unit Reception/Volunteer workstation 22.49% 0.39% Category 2
02.002.01 Critical Care Unit Visitor's lounge/Waiting Area 22.49% 1.17% Category 2
02.003.01 Critical Care Unit Washroom public, 2-pc. 22.49% 1.17% Category 2
02.004.01 Critical Care Unit Quite/Family room 22.49% 3.92% Category 1
02.005.01 Critical Care Unit Family Consultation room 22.49% 1.17% Category 2
Ø Building Functional Areas pre- scribed weightings allocated relative to importance. Ø Note the concept of “gearing”; sum of AW’s = 300% or other.
16
Service Failure – Responses & Rectification
Service Failures
A failure to provide the PCo services in accordance with performance measures in accordance with response and rectification times. Concept of minor, medium and major and [$10 to $100 fine] routine, urgent and emergency per event.
Response and Rectification Times
Category
Definition
Response Time All Areas
Rectification Time Availability Conditions
BREACHED Availability Conditions
NON BREACHED Category 1
Functional Units Category 2
Functional Units Category 1
Functional Units
Category 2 Functional Units
Emergency
Urgent
Routine
Any event that is, at discretion, a life safety issue or serious enough to cause significant operational disruption, economic or environmental damage, injury or death.
Means any Event that shall cause operational problems if not attended to quickly, or which may develop into an Emergency if not remedied or an AD Hoc Service Request which requires attendance quickly to avoid operational problems or an Emergency if not remedied.
Any Event that is not seen as immediately detrimental and not causing significant operational problems
15 minutes
The longer of 30 minutes or
prior to resumption of Core Hours
The longer of 2 hours or prior to the
resumption of Core Hours.
4 hours
4 hours
4 hours
4 hours
The longer of 4 Hours or prior to the resumption of
Core Hours
The longer of 24 hors or prior to
the resumption of Core Hours
The longer of 24 Hours or prior to the resumption of
Core Hours
For trending purposes
3 days
For trending purposes
The longer of 24 Hours or prior to the resumption of
Core Hours
The lesser of the time agreed to
with the User or 3 days
For tending purposes
7 days
7 days
For trending purposes
17
Quality Failures A fixed fee deduction. $50 to $500 for “minor” to “major” QF’s. these tend to be measured at defined intervals for qualitative issues e.g. A failure to produce the monthly performance report within a timeframe.
Ref Parameter Failure Type
Category Acknow./Re Sp.Time
Rect. Time
Recording Frequency
Application (Maximum Project Co exposure
GM12d % satisfaction score on the annual average of the Transaction Surveys no more than 5% lower than previous Baseline Transaction Survey score.
QF Major N/A N/A A One QF per Contract Year per service
Periodic Reporting
GM12e Project Co Shall Prepare a Performance Monitoring Report and deliver it to Osler within 5 Business Days after the end of each month.
QF Major N/A N/A M One QF per Contract Month
Rectification
GM12f Emergency requests for Services are rectified in the Rectification Time for any Services
SF Major N/A Per Table 1 Section
2
PE One SF per non-compliance
Manual, Policy, Procedure & Plan
GM13 Each manual, policy, procedure or plan required in these Output Specifications is delivered initially and then on an annual basis in accordance with the sooner of March 1st or the date agreed to in writing by Osler.
QF Major N/A N/A A One QF per manual, Policy, procedure or plan tat is submitted late
18
Elevator Failures
A sub set of the availability concept structured around the elevator availability.
Note – Flow down of risk to elevator contractors is a challenge
Number of Elevators Unavailable
(at any one time) DP (EAF)
1 25%
2 50%
3 100%
4 100%
* Note the concept is that all rooms not served on a floor, sum of AW x DP = Deduction Percentage
19
Failure Points
See table below
Category FPs Application
Minor Quality Failure 2
Per Quality Failure Medium Quality Failure 6
Major Quality Failure 20
Minor Service Failure 2 Per service Failure and if applicable, per Functional Unit affected by the Service Failure Medium Service Failure 6
Major Service Failure 20
Availability Failure (for the avoidance of doubt, this applies whether or not HHS continues to make use of the relevant Functional Part)
20
Per Functional Unit affected by the Availability Failure
This provides a “tool” to address a repeating or systematic failure on part of service provider with an escalation process in the project management;
• Remedial rights monitoring, self performance
• FM provider replacement
• PCo termination
*See Lender rights and step in-remedy
20
Other Contract Mechanisms
Excusing Causes - exempt deductions and failure points, there are 11 issues typically &
compensation payable e.g.
• Variation Implementation. • Negligent act by client.
• Obstruction by client. • Performing schedule maintenance.
Relief Events - Typically matters for which there is insurance, which is prescribed by the project
for matters such as; Relief from failure points & termination.
• Fire, explosion, lightning, storm, etc. • Failure by a utility. • Blockade or embargo.
• Unofficial or official strike. * Note – Physical damage to trigger insurance.
21
Other Contract Mechanisms
Force Majeure - Gives relief from failure points and there is compensation payable e.g.
• War, civil war, armed conflict etc.
• Criminal or biological contamination. • Discovery of fossils , archeological finds. • Pressure waves by devices [travelling at supersonic speeds].
22
5 – Cost, Risk & Quality
§ Bidders cost is related to quality requirements (Response / Rectification / Measures) and perceived risk transfer.
§ 60-70% of operator price is people, therefore higher demands, response/Rectification = more resource + more $.
§ Higher level of deductions = higher risk = more risk $
§ See excusing causes and compensation regime.
Cost
Quality Risk
23
6 - Other Areas for Possible Incentivization
§ Energy – volume risk tariff risk; protocol required for user / tenant Management.
§ Insurance – Big part of risk management, see business interruption. Benchmarking of cost.
§ CO2 Emissions – See move toward Carbon pricing.
§ Contract Duration – 5/10 years? Evergreen. Price review? Benchmarking and market
testing.
§ What other policy matters require incentivization; LEED? Sustainability / Recycling etc.;
Public transit.
24
7 - The Performance Management Process
Event Occurs
[Session]
User Call
Helpdesk Reply &
Info Assessed
Helpdesk Task
Allocation
FM Response
FM Rectification
Monthly Reports
Failure Deduction
Points
Agree Monthly Reports
Monthly Payment & PMS
Adjustment
Call Priority?
Emergency Urgent Routine
Call Response Response
Time Rectification
Time
Failure to
Report
Made a Month in Advance
25
8 - Practical Commercial Issues
Things I’ve learnt;
§ Education of staff – consensus building.
§ IT Infrastructure –Understand process & Technology.
§ Invest time early in relationships.
§ People Manage Contracts.
§ Flexibility & working together – long term.
§ Contracts are never perfect & complexity adds cost.
§ People change brings risk.
§ Building function & organizations change – so must the approach.
§ Measure the right things.
26
To Summarize
q Real benefits to organizational goals can be shaped by performance
measurement of the “right” performance measures.
q It can lead to more efficient and targeted use of resources.
q Performance Measurement allows you to objectively measure across an
organization a buildings performance, a contractors performance or other.
q Too much complexity is costly & counterproductive.
q “What gets measured gets done”.
top related