The A-Z of facilities and property management

436 Pages·2006·2.272 MB·English

by  David M Martin

IFC
Second Edition
The A-Z of facilities and
property management
David Martin
Published by Thorogood 2006,
updated and reprinted 2008 and 2010
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The author
David M Martin FCIS FCIPD FIoD
The author David M Martin has been Assistant Secretary of two public
companies, Scaffolding Great Britain and Gaskell & Chambers, where he was
directly involved in property and contractual matters as well as personnel and
corporate administration. He was subsequently appointed Secretary and then
Director and Secretary of one of the top 250 listed PLCs where he remained
for nearly ten years.
David was responsible for a range of disciplines – including property and
insurance as well as statutory and legal requirements and corporate/internal
communications. The property portfolio comprised over 400 units including
retail, manufacturing, warehousing and domestic premises.
Following a takeover, he founded his own business consultancy – Budden -
brook – in 1985. Buddenbrook carries out various projects for a range of
clients, large and small, including conducting property negotiations, acquisitions
and disposals, rent reviews and renewals etc.
David is also an employer’s representative for the panel of members for the
Employment Tribunals and a member of one of the Registrar of Companies
committees. He speaks at around 90 seminars each year and is author of
around 50 business books. A sixth edition of his title The Company Director’s
Desktop Guide and a third edition of his The A-Z of Employment Practice are

now available from Thorogood.
iii

Foreword
It’s for you!
“I’m not into property – I just want to make widgets.” This is entirely under-
standable, but whether your organization is making widgets, selling insurance
or leasing aircraft – or, indeed making and/or selling anything else, then, like
it or not, you arein property. Property is often the most valuable of an orga-
nization’s fixed assets; for example, trading in UK property portfolios reached
a record £9 billion in 2005. Here, however, we are concerned not so much with
property as an investment (other than as a one-off) but with its use and admin-
istration for the purpose of an organization’s own business.
Some entities employ managers to specialize in property administration; in
most, however, either the duties relating to such assets are allocated to a
manager already fully committed to his or her ‘real job’ – or they are not
properly administered at all. Such a ‘property admin. vacuum’ is not restricted
to smaller organizations. In an investigation of a hundred of the largest 1000
UK compan ies, property surveyors DTZ Debenham Thorpe discovered that:
• only 20% of those surveyed had a comprehensive database concerning
the properties they occupied, and
• 10% had such incomplete databases that not even addresses and
details of tenure were recorded centrally!
The survey also disclosed that 66% of organizations were investigating how

to minimize their occupation costs – though how this could be achieved
without an accurate database is difficult to reconcile!
v
A property strategy
It may help planning and administration in this area if occupiers develop and
adopt a property strategy. For example:
Whilst it is accepted that the [organization] needs to occupy property(ies) primarily
to facilitate its aims, it is recognized that property occupation/ownership
a) generates opportunities to trade in such assets and such opportunities
will be explored and exploited
b) imposes responsibilities, obligations and liabilities, the full extent and
effect of which will be established and considered as part of the regular
planning process of the business
c) requires regular investment not only to comply with legal obligations,
but also to maximize its value and protect the investment.
Some organizations may wish to adopt a strategy which commits them to
trade actively in the property(ies) they use as well as in their core business,
although the dilution of management attention as well as the potential
dislocation caused by repeated moves must be carefully considered.
‘Occupational value’ myopia
The DTZ report also stated that ‘…proactive management of occupational real
estate will make a significant contribution to a company’s performance’.
Surely at a time when all organizations are looking at improving performance
by realizing assets and cutting costs this strategy should include ‘occupying
(their) buildings more efficiently’. This point was emphasized by the Royal
Institution of Chartered Surveyors (RICS) which stated that British industry is
‘…throwing away £18 billion every year’ through inefficient control and use
of its property assets. The RICS calculated that proper budgetary and cost
control, space planning, disposing of surplus space, etc., could ‘boost profits
by 13%’.

Far too often organizations enter into the long-term commitment of property
occupation without fully appreciating the obligations they have taken on,
whilst the routine administration of the facility may be handled by a variety of
different people perhaps leaving gaps and paying insufficient attention to
gaining ‘best value for money’. The DTZ survey suggested that only around
50% – 70% of occupiers monitor their property costs, whilst only 25% – 40%
review existing and potential property values. Property can be improved,
altered, have its use changed, be used as loan security and sold – all strategies
which can work to the financial and efficient benefit of the business.
vi THE A-Z OF FACILITIES AND PROPERTY MANAGEMENT
FOREWORD
Duties
The obligations of those responsible by appointment (or default) for the
administration of their organization’s property assets are three fold:
1) Facilities administration, which the British Institute of Facilities Manage-
ment defines as:
• the integration of multi-disciplinary activities within the built
environment and the management of their impact on people and
the workplace
• (combining) resources and activities (which) are vital to the success
of any organization, by contributing to the delivery of strategic
and operational objectives
• providing a safe and efficient working environment which is
essential to business performance whatever its size and scope
• the provision, maintenance and development of myriad facility
services which range from developing a strategy, managing
space and putting in a communications infrastructure to building
maintenance, administration and contract management.
2) Budgetary and expenditure control. In many organizations there is an
apparent ‘cost blindness’ to property expenditure, so much so that
facility costs are regarded as fixed and immutable as taxation. Indeed
in some instances costs are passed for payment with hardly any
examination as to correct calculation and/ or appropriateness. This is
doubly curious since presumably costs related to other purchases are
surely not passed for payment without investigation. Of course property
costs could be among the most expensive in the budget.
3) Property administration, which could include:
• long-term planning of requirements
• compiling and administration of records
• interfacing with regulatory bodies involved in building, fitting

out and occupying properties, and those having access to them
• interfacing with landlords and/or agents
• administration of cleaning, security, reception, housekeeping and
safety, waste disposal, gardening etc. services
• ensuring compliance with covenants under leases
• interfacing with, providing information to, and making claims on
insurers
vii
• interfacing with utility and other bought in service providers
• preparing and updating contingency and/or disaster recovery
plans
• interfacing with neighbours and trespassers
• assisting with planning and implementation of relocation
• overseeing the renegotiation of leases, agreeing rent reviews and
renewals
and so on – and on – and on!
With this range of obligations it is obvious that in any organization with more
than a few properties (particularly if leased) this should not be a job to be
added to the duties to be undertaken by someone who already has enough to
do. It poses specific problems and challenges which, if not dealt with properly,
could involve (and often does) considerable cost, waste and inconvenience.
The challenges of the 21st century
Both the working environment and the location of such work are subject to
considerable change and, assuming these changes continue in their current
direction, present new problems for the property administrator. For example,
around 3 million people in the UK work at home and this number has been
projected to grow to around 9 million by 2010. (Although the recession has
substantially increased the numbers unemployed, a considerable number of
those thrown out of work have started their own businesses working from
home so these projections could still be met.) If correct, this would mean
roughly a third of the UK workforce could be working at home within the next
decade, which, apart from the beneficial effect it would have on public
transport and road congestion, could mean a substantial reduction in demand
for commercial property. After all, if an organization can operate effectively
with only two-thirds of its workforce commuting to, and working in, its
traditional workplace, at the very least the size of those workplaces should be
re-assessed. Organizations should ensure NOW that they do not commit on a
long-term basis to space which could become a costly surplus in the future.
viii THE A-Z OF FACILITIES AND PROPERTY MANAGEMENT