Facility Management Personus Tower in the locality of Perth CBD - Term Paper Example

Fасility Маnаgеmеnt аssignmеnt 2 A Report Submitted By: NAME: INSTITUTION: COURSE: INSTRUCTOR: DATE: © 2014 EXECUTIVE SUMMARY This report is an application of the benchmarking process to assess the performance and efficiency of a building facility called ‘Personus Tower’ in the locality of Perth CBD. This report discusses the following questions:- How are the facilities and services of ‘Presonus Tower’ performing against its benchmark in terms of its operating income; statutory charges; operating expenses; and recoverable expenses? What are the major areas to focus on in improving its performance? In which ways do the management address (or what are the solutions to) the problems that have been identified? What is the implementation plan for the recommended solutions and who will execute it? The ‘Personus Tower’ data was compared with benchmark data in order to assess its performance. The results are presented in tables and charts. The facility was found to be underperforming because, although the building generates a relatively higher income than the benchmark, the operating costs are much higher and the space utilisation is not optimised. An action plan is drawn as a solution to improve the building’s performance in line with the benchmark. In this plan, the areas that require attention were identified. To execute the actual plan, a project team has been constituted composed of specialised and competent members. INTRODUCTION Benchmarking compares a specific existing set of data of a business’ output with a benchmark which is regarded as the industry’s best practice1. According to the views of2, benchmarking came forth as a powerful tool in the late seventies when Xerox gave credence to this method and compared its unit manufacturing cost of its copying machines with their major competitors so that they could strive to do better. This later, the application found its usefulness in facility management where it has been found to be cost-effective. The present report attempts to prove the significance of employing benchmarking in managing facilities, particularly by building managers. To achieve this, the report is presented in two parts. Part one assesses the performance of ‘Personus Tower’ against given benchmark data while part two makes recommendations to the board about what to do to improve the performance of the said facility. Finally, the report makes a conclusion on the findings. PART ONE 1. PERFORMANCE MEASUREMENTS 1.1 Introduction ‘Presonus Tower’ is a 20-storey office building over a ground (including plant) with a total leasable area of 23,000 m2 located in Perth’s Central Business District (CBD). The building facility is eight (8) years old now and is benchmarked to have a quality standard of Grade A, as indicated in the general data below. Table 1: Presonus Tower’s General information data General information Nett lettable area 23,000 m2 Standard of Building A Grade Age of Building 8 years Location Perth, CBD The Personus facility’s income and expenses are compared with similar office buildings in Perth CBD to measure its performance as to whether or not it can be perceived as a ‘best practice’ building within Perth CBD. This approach of comparison is termed “cost-comparison approach” 3which enables the facility’s management to establish the areas in which the building should be improved in order to match the competition. The data available in the annual benchmarks are designed to provide owners and managers with a reliable tool for evaluating the performance of their assets. According to the Australian Benchmarks handbook (2008), the data is organised in booklets in various ways to suit the differing needs of users and the levels of information required4. An extract from the handbook is shown in the Appendix of this report. 1.2 The source of benchmarking data To be more accurate and relevant, we have taken an average of the two highlighted data that are costs which come under the category of building size greater than 18,000 Square metres and of Grade ‘A’ quality standard since ‘Personus Tower’ falls under this category. 1.3 Derived benchmarking data and its assessment The benchmarking data tabulated in Table 2 below is extracted from the Property Council of Australia, Perth Office Buildings Benchmarks, 2008’. Table 2: Benchmarking data >18,000 Sq. M Average Grade A Operating Income Rental Income 330.35 339.14 347.92 Car parking income 40.69 41.24 41.79 Naming/signage income 8.23 9.10 9.97 Total 379.27 389.48 399.68 Statutory charges Municipal rates 25.28 26.26 27.23 Water and sewerage rates 6.81 6.78 6.75 Land tax 13.96 14.15 14.33 Other Statutory charges 2.19 2.21 2.23 Total 48.24 49.39 50.54 Operating Expenses Insurance premiums 5.53 5.58 5.62 Air conditioning / Ventilation 6.67 6.86 7.05 Common area cleaning 13.19 13.98 14.77 Building supervision 8.38 8.67 8.96 Car parking 2.55 2.68 2.81 Electricity 11.38 11.37 11.35 Fire Protection / Public Address 1.35 1.45 1.54 Gas and Oil 1.25 1.45 1.65 Lifts and Escalators 6.93 7.11 7.28 Pest Control 0.15 0.17 0.18 Repairs and Maintenance 9.27 9.71 10.14 Emergency generators 0.77 0.81 0.85 Energy Management / building automation systems 2.84 2.99 3.13 Security / access control 11.57 11.82 12.06 Gardening / Landscaping 1.28 1.37 1.45 Administration management fee 15.97 16.82 17.67 Miscellaneous 6.23 6.61 6.98 Total 105.31 109.40 113.49 Recoverable Expenses Tenancy area cleaning 15.07 15.49 15.90 Total 15.07 15.49 15.90 Table 3 below shows the benchmarking data for Personus Tower (column 3) and for a Grade A (>18,000 m2) building facility respectively (column 2), which are compared in columns four and five for the purposes of this assessment. This table is the source of computed data that is used in the column and bar charts that form graphical representation for comparison purposes in this report. Table 3: Building performance assessment   Benchmarking data (Grade A) ($/Sq. M) Presonus’ data ($/Sq. M) Difference ($/Sq. M) (% ) difference Operating Income 347.92 540 192.08 55.21% Car parking income 41.79 37.8 -3.99 -9.55% Naming/signage income 9.97 2.5 -7.47 -74.92% Total 399.68 580.3 180.62 45.19% Statutory charges 27.22 30.5 3.28 12.05% Water and sewerage rates 6.75 6.8 0.05 0.74% Land tax 14.33 12.18 -2.15 -15.00% Other Statutory charges 2.23 2.62 0.39 17.49% Total 50.53 52.1 1.57 3.11% Operating Expenses Insurance premiums 5.62 4.1 -1.52 -27.05% Air conditioning / Ventilation 7.05 9.62 2.57 36.45% Common area cleaning 14.77 16.5 1.73 11.71% Building supervision 8.96 10.8 1.84 20.54% Car parking 2.81 4.5 1.69 60.14% Electricity 11.35 9.7 -1.65 -14.54% Fire Protection / Public Address 1.54 2.5 0.96 62.34% Gas and Oil 1.65 2.55 0.9 54.55% Lifts and Escalators 7.28 9.72 2.44 33.52% Pest Control 0.18 0.15 -0.03 -16.67% Repairs and Maintenance 10.14 7.42 -2.72 -26.82% Emergency generators 0.85 1.82 0.97 114.12% Energy Management / building automation systems 3.13 1.53 -1.6 -51.12% Security / access control 12.06 17.52 5.46 45.27% Gardening / Landscaping 1.45 0.9 -0.55 -37.93% Administration management fee 17.67 15.07 -2.6 -14.71% Miscellaneous 6.98 3.8 -3.18 -45.56% Total 113.49 118.2 4.71 4.15% Recoverable Expenses Tenancy area cleaning 15.9 22.82 6.92 43.52% Total 15.9 22.82 6.92 43.52% In this table, the Personus Tower building’s data is compared with the benchmarking data for evaluation. This comparison is represented in the following charts: Chart 1: Comparison of Operating Incomes Chart 2: Comparison of Statutory Charges Chart 3: Comparison of Operating Expenses Chart 4: Comparison of Recoverable Expenses 2. PERFORMANCE ANALYSIS 2.1 Operating Incomes/Expenses analysis It is easily detected from Chart 1 that Personus Tower has a very dependable operating income which is way above that for Grade ‘A’ quality buildings. However, the naming and signage income needs to be topped up. Nevertheless, the statutory charges are eating a sizable income for the Tower, which needs to be cut down to conform to Grade ‘A’ buildings in the area (see Chart 2). For instance, the total operating income for the building of $580.3 per Sq/M is way above $399.68 per Sq/M for Grade ‘A’ quality buildings, a status quo which must be maintained or improved, although ‘naming/signage income should be monitored keenly. Seemingly, the overall Statutory Charges of Presonus Tower are 3.11 % higher than the benchmark data where the municipal rates are the main culprit. Municipal rates are fees charged by the City of Perth for the basic provision of services such as “waste management, supplying electricity and gas, road maintenance, street lighting, property taxes” etc. High rates call for a consultation with the local council to look into this issue and find solutions that are cost effective on the tower’s operations; it requires an agreement that could benefit both the Presonus Tower management and Perth City Council. The Personus Tower’s total operating expenses is $4.71 (4.15%) is more than the benchmark whereas can recover $6.92 (43.52%) in terms of tenancy area cleaning. Table 3 read together with Chart 3 indicate very clearly that the building spends much more than the recommended benchmark values in the following categories of operating expenses: “security/access control; emergency generators; lifts/escalators; gas and oil; fire protection/public address; car parking; building supervision; common area cleaning; and air condition/ventilation” by a whooping total of $ 18.56 per sq. metre. These overheads are considerably very high so that the management needs to reduce them. There may be factors that cause this effect. For instance, lack of considering ‘green building practices’ in the design and construction of Presonus Tower could result to high overheads. Thus, the building does not conform to good practices of ‘energy-efficiency’ which is widely adapted within the building industry. Hence, Personus’ operating costs from energy, water and gas consumption are very high compared to benchmark figures. In addition, higher costs of lifts and escalators suggest that their system are not effectively sustainable or are not properly controlled5. 2.2 Space utilisation analysis It is important to look at the building’s efficiency in terms of spatial utilisation and/or management. In any office building, space utilization tends to directly affect the employees’ productivity and functionality. Table 4 below shows the spatial information for this building. Table 4: Presonus Tower's spatial information Spatial Information Average floor area per Full Time Employee 20 m2 Building Efficiency Rate 65% Net Personal Work Area 44% Circulation Area 25% Support Area 31% Since Personus Tower is an office building, space should be utilised as a combination of open space work stations and enclosed offices because there should be a large number of clerical/administration; middle management; and senior management groups who require enclosed offices6. An average space allocation per full-time employee (FTE) of 20 m2 in Personus Tower does not depict good space utilisation since 18 m2 is considered to be the standard space utilisation as per benchmark. In fact, modern office buildings are designed at around 14-16 m2 per person as observed by7. Building efficiency rate (BER) is the percentage proportion of a building’s rentable area over gross floor area. BER excludes the circulation space and all spaces occupied by equipment, elevators, etc. A BER of 70% and above is regarded as a sound efficiency rate so that the Personus Tower’s 65% BER is poor. Space allocation for support areas is normally based on operational needs within the building. Support area include spaces required by meetings, conferences, in-house libraries and registries, waiting rooms, areas for special equipment such as photocopying machines, etc; storage areas; amenities areas like toilets, cafeterias, kitchens and kitchenettes; etc 8. A space allocation of 31% for support areas is fine since such spaces are accommodated in various multi-purpose rooms which avoid duplicating and underutilising space. It has been noted that the Tower’s roof top space is not utilised well in as far as it is neglected. Proper use of this space can bring in additional income. In general, Personus Tower’s performance is below average in terms of space utilisation compared to similar buildings in Perth CBD so that some innovative methods are proposed to increase efficiency in space utilisation. PART TWO 3. RECOMMENDATIONS MADE TO THE BOARD OF MANAGEMENT 3.1 Issues identified from the assessment After assessing the Personus Tower’s performance based on the standard benchmarks, the following issues are identified as deserving urgent attention: High operating/maintenance costs for lifts and escalators High Air-conditioning costs High consumption of energy and gas High municipal rates High costs for security/access control Inefficient use of space High recoverable expenses 3.2 Proposed action plan to improve performance High Operating/Maintenance Costs for Lifts and Escalators Optimum use of these systems should be adopted by making use of sustainable and more efficient lifts. The high costs associated with lifts arise due to the selection of tractions lifts for the Tower. However, a more detailed study is required that should analyse the peak usage of the six elevators and to identify the elevators that operate when not needed. Obviously, elevators are needed more at peak timings when employees come to work such as 8:00A.M to 10:00A.M and when they leave at around 5:00P.M to 7:00P.M9. High Energy and Gas Consumption According to10, it is important to “assess the impact of the building on the environment; re-design and renovate the lighting and HVAC systems to conform to sustainable practices with an ultimate target of GreenStar certification. In view of this, the operating expenses of air conditioning, gas and oil, and electricity point to the fact that there is little consideration of sustainable and green building practices and systems in the building. Therefore, renewal of the Towers’ existing lighting, HVAC and all systems that consume excess amount of energy and water should be undertaken. Personus Tower needs to go ‘green’ by including such systems as solar/photo-voltaic panels, energy efficient lightings and incorporation of day-lighting, rain water and grey water systems and application of similar sustainable methods11. High Municipal Rates The Management of the building needs to consult the council of City of Perth to re-evaluate the property. This is because the paid taxes are higher than it should be, so that the management needs to re-negotiate the rates and services’ prices a fresh. And most importantly, solicit for any subsidies, tax cuts or any such support available when the building adapts ‘green building practices’12. Inefficient Use of Space One innovative method to address this problem is to embrace telecommuting technology. This is an arrangement where employees in an organisation work for one or more days a week at a location away from their office space. Telecommuters can work at home, at a special location/centre meant for regular reporting or at a mobile office. This technology can improve productivity, save office space and benefit both the employers and staff with greater flexibility. Furthermore, telecommuting has the following benefits: it increases employees’ satisfaction; improves their morale and productivity; cuts overhead costs by saving on space; and reduces carbon footprint and energy usage13. 4. IMPLEMENTATION PLAN To implement the proposed action plan, the facility’s Management team of Personus is constituted with additional members collaborated from elsewhere to tackle the issues in hand broadly and more appropriately and efficiently. The solutions recommended in action plan are interrelated so that the project team should understand each other’s roles, responsibilities and duties in order for the team to work in an integrated manner. An environmental safety officer (ESO) and a sustainability coordinator (SC) will be especially incorporated in the team since the building will ultimately become completely energy efficient14. This is more so since it is envisaged that the building will achieve ‘green building’ certification. A director for space planning has been recruited by the recommendation of design technician, who will take care of spatial planning and make sure that spatial utilisation is optimised. Three more personnel will assist the planner namely: Operations General officer (OGO) who has prior experience and background in managing security matters is mandated to take care of the facility’s security/access control15; a Change Management Coordinator (CMC) to head the implementation team and finally a Surveyor. 5. CONCLUSION The benchmarking data used in this report is sourced from Property Council of Australia Benchmarks 2008 that conducts surveys on operating costs for Perth Office buildings. The most relevant and appropriate for a building such as Personus Tower was extracted in regard to the building size and quality grade16. The Personus Tower data was compared with benchmark data in order to assess its performance. The results are illustrated using tables and charts which facilitate clear understanding of the current state of the building in a quick and easy manner. The building was found to be underperforming and below average standard in comparison to other similar facilities in Perth. Although the building generates a relatively higher income than the benchmark, the operating costs are much higher and the space utilisation is not optimised. This suggests that the building is not efficient and/or sustainable at all. An action plan is drawn as a solution to improve the building’s performance in line with the benchmark. In this plan, the areas that require attention were identified. To execute the actual plan, a project team has been constituted composed of specialised and competent members. BIBLIOGRAPHY Becerik-Gerber, B., F. Jazizadeh, N. Li, and G. Calis. “Application areas and data requirements for BIM-enabled facilities management,” Journal of Construction Engineering and Management, vol. 138, no. 3, pp. 431–442, 2012. Cotts, D. G., K. O. Roper and R. P. Payant. The Facility Management Handbook, Amacom Books, 2010. Devetakovic, M. R. and Radojevic M. “Facility Management: a paradigm for expanding the scope of architectural practice,” International Journal of Architectural Research, vol. 1, no. 3, pp. 127–139, 2007. Partida, Becky. Benchmark your manufacturing performance, APQC. 2013. Zimmerman, Greg. Using Internal and External Benchmarking to Evaluate Performance, Facilities Management. 2006. APPENDIX 1: BENCHMARK DATA Figure 1: Extract from ‘Property Council of Australia, Perth Office Buildings, Benchmarks 2008’ Read More