Karen Skillings has a few ideas for saving costs and design impacts, to ensure your project reflects current market circumstances and isn’t operating outside or differently to the rest of the business.
Published in Facility Management Magazine.
Leadership often ask the Project Team to produce savings once the project is underway. Value engineering, finding savings, making changes are part of a Facility Managers responsibility to ensure that the project reflects the current market circumstances and isn’t operating outside or differently to the rest of the business.
Value engineering is a systematic method to improve the "value" of goods or products and services. Value can be controlled by either improving the function or reducing the cost. Project teams are often asked to continue to improve on spend by reducing costs where they can. Often the design starts out with everything incorporated from the ‘Must Haves’ of Leadership and employees but many unknown things can occur and cause a blow out in a project budget and that immediately puts pressure on the project and project team to find savings.
This article will explore some of the obvious and not so obvious ways you can reduce costs in your project, but keep in mind, the larger the savings, the larger the costs associated with changing, planning and managing the change associated with the value engineering exercise. Make sure that the savings and the costs to achieve these savings don’t cancel each other out.
EXPLORE AN IMPACT ASSESSMENT, FOR DROPPING A FLOOR
If you have signed a Heads of Agreement (HOA) and paid your deposit, but having yet signed the lease, you may consider dropping a floor. Even if you have signed the HoA and paid a deposit, it is not legally binding, and you can change your mind on a floor.
You will need to know what the date on the HOA is for when you have to make a decision. Work out the date you want to draft the notice by and when you are to serve it to the Landlord.
This is an acceptable practice, and not necessarily messy, with the tenant well within their right to do this, but there is always risk in a real estate deal, and consider the worst case scenario that the owner may not be happy and the deal may fall over.
If the deal doesn’t fall over, but the owner has instructed lawyers to draft up the lease, and costs have been incurred, means you will be expected to pay costs.
MOVE TO A DIFFERENT WORKING MODEL
If you are seeking to reduce floorspace cost – as do many owners of office space do an example of moving to a flexible working model will save real estate and fit out costs. The floorspace $ savings could be in the order of ~15% per person when compare to a 1 desk-per-person kind of model.
Monetising the ~15% saving depends whether a floor or half floor can be freed up for subleased. Practically, the savings are more likely to manifest as freed-up space for alternative use, than as cash savings
RUN A DESIGN CHANGE REGISTER
When discussing saving costs, of course design changes are an obvious one where you can tackle savings. It is not a good idea to pick a feature and discuss it in isolation to the rest of the design. When discussing taking away an element of the design that may have a larger cost implication, consider whether the function of the business is supported still. When having a session about tackling savings, in the first instance, work out whether you can accommodate taking the design feature or element away, and what you are giving up. The design team and project team will work together from the beginning of the project in relation to establishment and input into a Design Change Register which captures the organisations agreed design changes associated with per phase value engineering process. This is a standard process, so if it is not happening get started doing this now.
CHEAPER FIT OUT
Be cognisant of procuring high quality replicas rather than originals. Ask your contractors to evaluate and report on alternatives or substitutions and requested this information in a timely manner. Provide feedback from the Procurement team on the acceptability for use of the product in line with your organisations brand and ask for as much information as possible on the manufacturers, suppliers and fabricators to ensure that there isn’t a misfit with your Sustainability Policy.
HAVE A BUDGET AND STICK TO IT
The biggest area of cost you can easily influence when seeking savings are Workstations & Furniture. A small saving on a large volume item can have a significant impact on the overall project cost and careful selections can make or break your budget. Consider locking in these items early in the process to reduce the risk to the project budget.
VALUE ENGINEERING SESSIONS
What can be value engineered with making the design worse, the fit out harder, or more expensive? Get the Project team and the Design team together and pick out the big-ticket items in the process for discussion in the sessions. Make sure that everyone is open to exploring efficiencies as well as cost savings. So that the sessions start on a positive note, frame that ‘cost savings’ aren’t the only focus and that you do want to be clever with how budget and space are used.
WHAT ARE THE ‘PRIORITY SPACES’ YOU CAN TAKE OUT?
Play with all the spaces and comb through the space budget and menu of settings. Can you tweak the menu of settings and space use strategy without taking away the functionality of the space to meet the business requirements? Think through the scale of risk and impacts in changing a design in order to meet the budget requirements, particularly after the vision has already been ‘’sold’’ to your staff. Consider any re-documentation costs and potential time delays to your project.
CAN YOU DENSIFY YOUR WORK POINTS TO SAVE SPACE?
For some teams it makes sense to continue with allocated work points (e.g. lawyers, tax, some accountants). But for other teams, and where your occupation reporting indicates that you only use 60% of desks on any given day, you may look to densify your workprints. This is in line with industry averages for our current workplace and workforce. Perhaps if your original design was proposing to provide up to 80% of work points for people and the remaining 20% of space to be used to provide the alternate work settings, perhaps stretch the thinking a bit further. Now that organisations have moved to a larger number of their workforce working from home, can you densify the space further?
MORATORIUM ON DESIGN / SCOPE CHANGES
Sometimes, for a range of reasons, it may be necessary or desirable to change some parts of the design of your project. Regardless of the stage your project is at when this happens your project needs to be firm on a no change policy without approval by the executive. By managing the process that approvals for proposed changes need to go through you are more likely to manage cost implications of any potential changes. Having an approval process, that is not changeable for anyone in the Project or Design Team provides you with the right baseline, so you can make the best decisions for your project, avoiding cost blowouts and timely delays.
REDUCE STORAGE
Reduce the amount of storage being provided on floor. Joinery is costly and often misused over time. What teams often say they need to meet functional requirements can be influenced with the right amount of effort. Reducing paper in the business and the resultant storage that will store it is a piece of work that your Storage Consultant or Change Manager can get onto immediately and where great results and savings can be made. Consider that many fit outs will purchase up to 60 units @ $600 per piece per floor. There are significant savings to be achieved there alone. To help the change program in selling this to employees go the angle of sustainability which people understand.
DEFERRING ROLLOUTS
Perhaps some of the things you have in your budget are also in another budget. An example of where savings could be explored is the deferment of any soft phone requirements.
ARE THE SAVINGS THIS FINANCIAL YEAR OR NEXT?
Whatever the answer, maximise the opportunity that exists in your project, or the market, now. Look at real estate optimisation as favourably as production optimisation. Whatever the value engineering results in your project, whether they be more efficient space layouts, space optimisation through storage solutions, or contraction in your real estate, seek advice of your project team, design team, quantity surveyor, and the procurement and finance team.
