lecture 3 - the crem organisation

7/30/2019 Lecture 3 - The CREM Organisation

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Corporate Real Estate Management

Lecture 3 Understanding CREMcharacteristics

Abdul Jalil Omar


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Review

CRE(M) - an organisational function

How it is integrated into the organisationis a decision about the design of theorganisation

Business mantra for design of

organisations Core business keep close

Support service push away (buy-in)


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CRE(M)s responsibilities

Provide shelter (physical space orenvelope)

Optimising workplace (productionplatform)

Rewarding shareholders (financialreturn)

Managing CRE function (form,environment, growth and advancement)

After: Valenziano & Kious(2005)


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The CRE(M) functions structure

Options

Business units run their own CRE function

Organisational internal property unit

Cost centre - Property costs charged to a CRE unit Profit centre A CRE unit charges business units for

their property costs. Aims to maximise propertyprofits

External property unit

Subsidiary property company

Publicly traded subsidiary company

Property trust (LPT/REIT)


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CRE and firm infrastructure -The IRIS or CIR platform

CRE

HR

IT

Finance

Corporate Infrastructure

Resources (CIR)

Integration of strategicorganisational resources

Source: Materna, R. & Parker, J. (1998) Corporate infrastructure resource management: an emerging source

of competitive advantage, IDRC, Atlanta

Integrated Resource

Infrastructure Solutions (IRIS)


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IRIS or CIR

IRIS orCIR is orientated towards executingthe organisations business plan through

A set of corporate functions and processesrecognised as strategically important

New way to create & sustaining corporatecapabilities for executing those plans

Increasing use to increase firmscompetitiveness


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Alignment of organisational andCRE strategies

Organisation

Businessunit 1

BusinessUnit 2

IRIS/CIR

Management Management

Operations Operations

HR

CRE

IT

Finance

BusinessUnit 1 as

silo

Horizontal strategy

Horizontal strategy

Businessinfrastructure

Horizontal strategy

Make self-servingspace decisions

BusinessUnit 1 as

silo


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Balanced scorecard alignment

Internal processes

Financial

Learning and knowledge Customers perspective

Source: Kaplan &Norton (2006)


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CRE(M)s balancing act

Businessunits

Corporateoutcomes

Customised Standardised

CRE(M)unit

Corporatemanagement

Serviceproviders


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CRE(M) functions organisationalstyle

Centralised Decentralised

Business

unit 1

Business

unit 2

CRE

unit

Organisation

CRE unit

Region 1

Nth

America

CRE unit

Region 2

Europe

CRE unit

Region 3

Asia/

Pacific

Organisation

Direct or centre-ledmodel


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Some other variants

CRE unit

Region 1

Nth

America

CRE unit

Region 2

Europe

CRE unit

Region 3

Asia/

Pacific

Organisation

CRE unit

In-direct, or Advisory model(CRE resources controlled)

CRE

Region 1

Nth

America

CRE

Region 2

Europe

CRE

Region 3

Asia/

Pacific

Organisation

CRE unit

Influence model(CRE resources not controlled)


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CREM units (Australian companies)

Separate business

unit33%

Part of finance unit

13%

Part of shared

service unit27%

Separate CRE

company20%

Other

7%

Source: PCA/KPMG(2005), Graph 2


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CRE(M) Sub-functions

Valenziano & Kious(2005)

Planning

Transactions

Facility management

Design andconstruction

Varcoe (2000)

Facility management

Design and occupancy

planning Project management

Property management

Transactions Strategic management Portfolio management

Asset management


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Varcoe (2000)


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CRE(M): designing the organisation

In-house management unit

(internal service provider)

Out-taskedmanagement activities

(external service provider) Outsourced management activities

(external service provider)

Strategic alliances management activities

(internal/external service provider) Joint venture management activities

(internal/external service provider)


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Structuring drivers

What is CREs fit in the organisation?

What services are to be provided to

the organisation? How best to deliver those services?

Who are CRE(M)s customers (forrelating too)?


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CRE(M): designing the organisation

What do I make? in-house

What do I buy? outsource


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Designing the CRE functionsorganisation

4 organisational structures

Functional

Geographic Market/customer

Process

Source: Valenziano & Kious(2005)


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Functional CRE organisationalstructure

CRE Lead

Planning TransactionsFacility

Management

CRE

Infrastructure

IT

HR

Finance,Legal, etc

Design &Construction

After: Valenziano & Kious(2005) Fig. 9


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Geographic CRE organisationalstructure

CRE Lead

Planning Transactions FM

CRE

Infrastructure

IT

HR

Finance,Legal, etc

D & C

Region A Region B



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Customer relationship CREorganisational structure

CRE Lead

Planning Transactions FM

CRE

Infrastructure

IT

HR

Finance,Legal, etc

D & C

RelationshipBusiness Unit A

RelationshipBusiness Unit B Portfolio

ExpertiseContent

ExpertiseWorkplace

ProcessProgram



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Process CRE organisationalstructure

CRE Lead

Entitlement &

DevelopmentProcess

Workplace

DeliveryProcess

Customer

Relationship& Planning

CRE

Infrastructure

IT

HR

Finance,Legal, etc

WorkplaceDeliveryTeams

CustomerTeams

NewDevelopment

teams



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Case example Sun Microsystems- 1987

Source: OMara (1999)Figure 4.3


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Case example Sun Microsystems 1988-91



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Case example BBC

Original CRE(M) organisation design

CRE Lead

Environment Design Development Finance Strategy Operations



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Case example BBC

Redesigned CRE(M) organisation

CRE Lead

WorkplacePartnering

Direction Infrastructure

CustomerIntimacy &

RelationshipManagement

Planning &Advice

Workplace,Environmental,

& PortfolioStrategy

Innovation

EnablingSystems &

FinancialReporting

Compliance &Reporting

DeliveryManagement

Projects(workplace solutions)

& Facilities(workplace services)

KPIs. Vendor &PerformanceManagement



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Required skill sets

Outsourceskills

Insourceskills

Business

Technical

Strategic

Managerial

Operational

Financial & planning

Relationships

Contract management/administration

Operating the artefact


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Strategic skillsets

StrategyCommunication

Relationship skills

Customer focus

TeamworkBusiness acumenFinancial acumen

Intellectual curiosity

TechnicalProcessReal estate acumen

Project managementNegotiation

Trust

After:McCarty, etal. (2006) Fig 8

Traditional

Morestrategic


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CRE(M) skills

Communication

Strategic thinking

Consulting skills (consultation? Or being a Consultant?)

Financial & analytic skills

Underlying orientation to externalenvironment

Customers

Customers business, financial & competitiveenvironments

Outward trends and forces

Source: McCarty, et al.(2006)


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Summary

CREM organisation varies amongorganizations.

Higher involvement requires multipleskill sets

lecture 3 - the crem organisation

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