Archive for February, 2012
|The Evolving Project Manager’s Role in the Real Estate Transaction
Thursday, February 23rd, 2012
By Phillip Infelise, Chairman
As our world turns more toward an integrated real estate and project execution process, the role of Project Manager in strategic and workplace planning and the real estate transaction process grows exponentially. Today, we will examine the specific role of the Project Manager in the real estate transaction process.
In the past—and to this day in some organizations—many assumed the Project Manager’s work began once a real estate transaction was finalized and the client was ready to move into the design/construction phase. This is not so today, at least not in an integrated real estate organization like ours. To be optimally effective in an integrated process, the PM begins work at the outset of the transaction process alongside our real estate advisors so that planning, cost and schedule impacts, and building evaluation criteria are known, studied, and leveraged up front. The earlier the PM is involved in the process, the more value they bring to it; the earlier they start work, the most savings or effective deployment of capital are captured.
A quick summary of the PM activities during the transaction process include, but are not limited to, the following:
-Develop or participate in the development of the Preliminary Programming document defining SF and space characteristics
-Discuss workplace innovations, trends, option with the client before they begin kicking tires in the market place
-Develop a Site Selection Matrix to objectively and subjectively evaluate various site or building options
-Create a Design Narrative that describes the potential space that can be shared to provide direction to prospective architects, as well as the landlord’s space planners
-Set early budget and schedule goals and develop conceptual budget and concept schedules against each best and final site or property
-Develop comparative budgets for build-to-suit, tenant in-fill, or adaptive reuse of existing tenant spaces
-Conduct walk-through(s) of any proposed sites/properties, check zoning as needed
-Evaluate current build-out state and establish a value for it if any can be reused for the client build-out or the core/shell specification exceed a typical building
-Evaluate the proposed Tenant Work Letter, determine value thereof and detail shortfall or overages against the proposed client build-out
-Compare landlord core/shell build-out and Work Letter and determine an overall value against other proposed properties
-Review the proposed design/construction methodology described in the lease document to determine if it meets the client’s best interest
-Review and comment on necessary changes to initial Test-Fits to better accommodate client requirements
-If and as required, conduct a selection process for architects, interior architects, and/or engineers to refine or further develop test-fits that may have been designed by landlord team
Now it is time to start what everyone else believes to be the typical Design and Construction process management where many other Project Managers begin their work.
It quickly becomes obvious that there is a ton of work to be done by the Project Manager, working hand-in-hand with the real estate advisor, if the client is to be provided the best of both worlds. When the team integrates these efforts it assures that the best site is selected, a favorable lease document is developed, the client understands all of the cost and schedule impacts prior to lease execution, and the entire team (both internal and external) is better prepared to commence the design and construction effort leading to a new, optimally design workplace.
The future may totally blend the real estate and project execution process into one seamless activity (and we hope that it does), in which case it may be hard to tell the transaction folks from the project folks. In an integrated approach world, it’s a team thing.
Tags: corporate real estate, PM, process management, project manager, tenant
Posted in Project Management | Comments Off
What size is the right size?
Wednesday, February 15th, 2012
By Rob Wheeler, Vice President
When considering warehousing, what size is the right size?
One of the questions I’m continually asked by customers and colleagues alike is: what are the trends in warehousing as it relates to network design? That is, are things trending toward fewer larger warehouses in a distribution network or toward having small regional warehouses? My answer to this question is….it depends.
To understand how networks are designed you need to understand the business of the company that’s designing it. The major expense of any supply chain network is always transportation, but next in line is inventory. So, how expensive each piece of inventory is will drive how the network is designed. The general rule is, the more warehouses you have the more inventory you will carry.
Here are a couple of examples to illustrate this fact.
Example 1 - A maintenance, repair, and operating distributor carries thousands of different products, mostly of low value. Their go-to-market strategy is that they will have the product you need in stock, and it will be delivered next day. Because it is a very inventory-intensive business model, spreading that inventory out over a broadly arrayed distribution network makes sense. Their model is to get the product from vendors and warehouses close to the customer so that they can deliver it next day with minimal cost. In fact, the company’s distribution network was designed by a parcel delivery service to cover the maximum amount of the population via overnight ground service.
Example 2 – A medical device company has very high-value products. Each piece of product can be worth thousands of dollars. Their key driver is to reduce inventory as much as possible while maintaining service. Because of the value of the product, reducing to a single centrally located warehouse makes sense. The reduction in inventory will offset the expense of shipping the product via overnight air. In this customer’s case, they located almost all of their product across the runway from an air parcel carrier’s main sort hub. This allowed them to eliminate as much inventory as possible by allowing them to extend the shipping window during the day as much as possible.
Both examples above have caveats attached. In Example 1 the company has a master distribution center that carries slow moving or high value goods, helping them eliminate this inventory from the regional warehouses. In Example 2 the company utilizes third party warehouses on both the east and west coast to hold limited inventory in case of emergency.
The bottom line is that there is a right solution for every company. But that solution depends on a number of factors. The Industrial Services team at Cresa can help you work through the different scenarios to find the right solution for your business.
Tags: corporate real estate, industrial, warehouse
Posted in Supply Chain | Comments Off
