Facility Management - India

FACILITY MANAGEMENT – INDIA 2009 - 2010

By Yogesh Kende 1

Meaning of Mall • A large, often enclosed shopping complex containing various stores, businesses, and restaurants usually accessible by common passage ways. • A street lined with shops and closed to vehicles. • A shady public walk or promenade. 2

South China Mall

Location: Dongguan, China Year Opened: 2005 Gross Leasable Area: 7.1 million square feet

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Golden Resources Shopping Mall

Beijing, China Year Opened: 2004 Gross Leasable Area: 6 million square 4

SM Mall of Asia

Location: Pasay City, Philippines Year Opened: 2006 Gross Leasable Area: 4.2 million square fee 5

West Edmonton Mall

Location: Edmonton, Alberta, Canada Year Opened: 1981 Gross Leasable Area: 3.8 million square

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King of Prussia Mall

Location: Philadelphia, Pennsylvania, USA Year Opened: 1962 Gross Leasable Area: 2.8 million square feet

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Berjaya Times Square Location: Kuala Lumpur, Malaysia Year Opened: 2005 Gross Leasable Area: 3.4 million

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Mall Management - A Growing Phenomenon in Indian Retail Industry

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Executive Summary • The Indian retail market is expected to continue its growth trajectory into 2010. • Mall management has been identified as a critical factor for the success of malls and the retail industry across the world. • Mall management broadly includes mall positioning, zoning, tenant mix, promotions / marketing and facility/finance management. • Currently, the Indian retail market lacks designated mall management firms. Large real estate developers and retail chains either have their own mall management arms operating as subsidiaries or have contractual agreements with international property consultants. 10

Cont… • Till recently, mall management was limited to facility management by a majority of developers in India, leading to gaps in mall management practices. • Given the high future supply of malls and increasing competitiveness within the Indian retail market 11

What is Mall Management? Globally, mall management broadly includes: 1.Positioning a mall (Location, Layout and design) 2.Zoning – formulating the right tenant mix and its placement in a mall 3.Promotions and marketing 4.Finance management 5.Facility management – Infrastructure, Traffic and Ambience management

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The Single Purpose of Retail Property Development = Value Creation!

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1) Positioning a Mall Positioning a mall refers to defining the category of services offered based on demographics, psychographics, income levels, competition in neighboring areas and extensive market research of the catchment. For example, if the market research indicates that the average number of households living in a particular area belongs to the upper middle class, An example of this practice can be seen in the upcoming malls Select City Walk in Saket DLF’s Emporio in Vasant Kunj. 14

Cont… • Positioning also refers to the location of the shopping mall. A good location defined in terms of factors like ease of access via roads, good visibility, etc. is considered as one of the prime prerequisites for a mall. Although other activities such as trade/tenant mix can be revisited or redefined, the location remains fixed, making it an imperative 15

Positioning Includes: a) Location b) Layout c) Design

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a) Location • The main objective of any industrial concern is to transform raw materials into end products by utilizing all the required resources and serving them to the customers effectively, efficiently, economically, and quickly. • This is possible when the plant is of the right size, right design, and at a place where all kinds of production economies are available. • Facility Location and Layout play a key role in enhancing the plant efficiency and production effectiveness. • The way in which inputs are obtained and outputs are distributed affects the location and layout decisions.

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Factors Influencing Location Decisions: Many factors - can be classified into three. a. Market Related Factors b. Tangible or Cost Factors c. Intangible or Qualitative Factors

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Location Evaluation Methods: • A number of diverse factors affect the location decisions • Developing a formal, generic location model is very difficult. • A complete study of all the sites available and identifying the optimal one is expensive and time consuming.

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People generally go for satisfying decisions instead of optimum decisions.

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Entrepreneurs may choose to exercise their choice • One choice is to have a single central plant that produces all the products of the company.

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Central Plant Advantages: • Economies of Scale • Reduced unit cost by better utilization of equipment • Dispersion of fixed costs over more units

Disadvantages: • Highly Dispersed Suppliers • Highly Dispersed Customers • Transportation Costs • Strike • Disaster - Fire / Flood

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b) Layout: • Physical Disposition of a Facility and its Various Parts. Decisions also have a Long-term • Layout Consequence on Costs and Ability of the Firm to Serve the Market. Layout is a Physical Configuration of • A Departments, Workstations, and Equipment in the Conversion Process. • It is the Spatial Arrangement of Physical Resources used to Create the Product Objective: To provide a smooth workflow of material through the workplace.

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Criteria for a Good Layout: 1. Maximum Flexibility 2. Maximum Coordination 3. Maximum Visibility 4. Maximum Accessibility 5. Minimum Distance 6. Minimum Handling 7. Minimum Discomfort 8. Inherent Safety 9. Efficient Process Flow 10. Easy Identification

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Types of Layouts: Broadly, there are 3 Types of Layouts: 1.Process Oriented Layout 2.Product Oriented Layout 3.Fixed Position Layout

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Developing Layouts: 1. Mathematical Models – to Analyze and Conceptualize 2. Computer Models – to Arrive at a Quick Approximation 3. Physical Models – to Visualize

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Japanese Approaches to Layout: • Japanese Culture Encourages Teamwork. • When an equipment breaks down, they do not wait for management or maintenance people. • Main idea is work simplification and continuous improvement Japanese changed both the physical layout and managerial system. • They use U – shaped assembly lines

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c) Design: OBJECTIVES: • To get the inputs (material, supplies, etc) into through and out of each facility in the shortest time practicable, at acceptable cost. • Design deals with the design and arrangement of physical elements of an activity/s related to the manufacturing industry, whose drawing represents a plant layout. • Design analyzes, conceptualizes, designs and implements systems for the production of goods or services. • Design is represented as a floor plan, or an arrangement of physical facilities (equipment, land, buildings, utilities, etc.)

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Enterprise Design Process

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2) Zoning: • Formulating the Right Tenant Mix and Its Placement in a Mall. • Tenant mix refers to the combination of retail shops occupying space in a mall. A right tenant mix would form an assemblage that produces optimum sales, rents, service to the community and financial ability of the shopping mall venture. 30

Zoning refers to the division of mall – Forum Mall

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Forum Mall • The Forum Mall is designed in a ‘dog bone’ fashion, an anchor tenant at each end and vanilla retailers in the middle. • Landmark and Westside are the anchor tenants of this mall, and the food court is positioned on the top floor to attract consumers vertically up. • Forum Mall was built in 2003 and was the first mall in Bangalore City. Since then, six new malls have been constructed in the city and yet the Forum Mall • Continues to command the highest foot traffic, continuing to

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3) Promotions and Marketing: • Promotional activities and events in a mall form an integral part of mall management. • Activities like food festivals, handicraft exhibitions and celebrity visits increase foot traffic and in turn sales volumes. • Organizing cultural events has time and again proved vital in attracting consumers to a mall. • Such activities may also act as a differentiator for a mall. • Developers can work on drafting marketing • strategies • for individual malls to meet the needs of the local • consumer base and the challenges of local. 33

Promotion and Marketing at Ansal Plaza

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Cont… • Regular promotional activities at Ansal Plaza, including cultural events have ensured a steady foot traffic in the mall since its inception in 1999. • The mall also has an amphitheatre dedicated to these promotional activities. • This has been one of the driving factors behind the success of the mall, despite having a less optimal mall design and tenant mix compared with some recent 35

4) Finance Management: • Professional financial management of a mall as a business venture is a must. • Mall Management also covers financial management, which involves monitoring and controlling of various issues such as: • Cash receipts and collection of income including rentals, service charges, car park receipts, • Electricity and other utility income • Developing accounting systems to track the ageing of debts, payment delay patterns, bad debts.

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5) Facility Management: • Facility management refers to the integration of people, place, process and technology in a building 5 Vanilla retailers refer to single-brand shops. • It also means optimal utilization of resources to meet organizational needs. • It broadly includes Infrastructure, Ambience and Traffic management. 37

a) Infrastructure Management: • Infrastructure management refers to the management of facilities provided to the tenants within the mall. • This includes provision of adequate power supply, safety issues in case of emergency and miscellaneous issues related to signage, water supply, sanitation, etc. 38

Make sure that every bit of the mall has enough infrastructure

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Cont… • Infrastructure management refers to the management of facilities provided to the tenants within the mall. • This includes provision of adequate power supply, safety issues in case of emergency and miscellaneous issues related to signage, water supply, sanitation, etc. Infrastructure management also includes risk management issues such as essential safety measure asset liability and 40

Cont… INFRASTRUCUTRE REQUIRED:

OCCUPANT MANAGEMENT:

• Uninterrupted Power Supply with 100% power backup • HVAC with adequate redundancy • Fire Fighting & Detection System • Dedicated Security System • ETP Plant • Proper Sewage System • Water Softening & Purification System • P. A. System with Channeled Music • Emergency Lighting in all areas • Toilets - separate for customers & staff • Building & Floor Directories • Signages directing customers towards elevators, toilets, fire exits, etc.

• Help desk • Periodic feedback • Coordinate construction of shops • Billing • Collections • Attending to grievances & complaints • Ensure observance of rules & regulations of the mall

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B) Traffic Management: • Traffic management includes managing foot traffic into the mall and parking facilities. • Foot traffic management involves crowd management inside the operational area of a mall. • The flow of people is related to the design of the mall and the spatial 42

A shopping mall underground parking

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C) Ambience Management: • The overall shopping experience provided for consumers becomes an important factor for the success of any mall. • Ambience management includes management of parks, fountains and overall look of the mall. In favorable, lush green landscaping with seating facilities and the presence of food and beverage inside or outside the mall can increase foot.

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Facility Management In The Indian Context

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Understand FM ……. Facilities Management’s Effectiveness is Measured Through

Value For Money WORKING

Occupant Perceptions

Organization Needs

Infrastructure Microenviron C

ENVIRONMENT

‘FM ‘FM Is Is About About Managing Managing People People and and Places Places to to Achieve Achieve Best Best Value Value for for Money Money by by Balancing Balancing Between Between User User Needs Needs and and Business Business Needs Needs to to Achieve Achieve Optimum Optimum Organizational Organizational

… helping Clients attract and retain good employees by providing an excellent working environment

Productivity

Cost

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Sector Overview in India: New Delhi & NCR ( 20%)

Mumb ai (10%) Pune (10%) Bangalore (35%)

Hyderabad (5%) Chennai (10%)

Others (10%) Others include Chandigarh, BBSR, Indore, Jaipur, Vizag, TVM, Calcutta etc

Total FM Market : Rs.1225 Crores

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Future Growth Prospects: FY 2007-2008

FY 2008-2009

FY 2009-2010

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•

Foreign systems in Indian Context- do they work??Issues FM companies are brought in at a late stage of the

project. Cost of fixing an error rises dramatically, with highest cost during the operations phase. • Large organization should focus on Strategic Asset Management-Property performance, planning tools, delivery methods etc. • Capacity to pay to service providers is limited. Only rich projects make use of technology /hi-tech equipments. • Environment, health and safety issues given less importance.

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Facility Management Indian Context • • • • • • •

Growing Market, limited trained manpower hence prone to poaching. No training institute with a focus to FM. Acute manpower shortage foreseen in future. Vendors as business partners. Most facilities are over manned. Performance based Management fee with a fair fixed fee. Develop applicability of FM to all types of infrastructure like township, factory, hospitals, airports, STPI parks, Govt. establishments etc.

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TOWNSHIP - FM COMPONENTS • MUNCIPAL SERVICES • ZONAL SEVICES

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MUNICIPAL SEVICES • • • • • • • • • • • • •

Landscaping / Turf Management Lake Maintenance Maintenance of Utilities Street lighting / signage Street repair Street cleaning Potholes Sidewalk repairs Traffic Management and Parking Mgt Refuse collections Sanitary enforcements Illegal dumping Dead animal pickups

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ZONAL SERVICES • • • • •

Grass Mowing Housekeeping Pest and Rodent Control Security Electrical and Mechanical Services

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STRATEGIC MANAGEMENT STRUCTURE Delivery Systems

Maintenance Mgt

• Performance Plan • Preventive maintenance • Develop process improvement • Condition monitoring plan • Corrective maintenance • Restructuring delivery relationships

Service Quality Measures

Call Center/Help Desk

• Forward complaints/reports/orders to • Management Systems appropriate person • Health and Safety • Monitor performance • Staff Professional development • Maintain database of all calls 54

Activity Grass & weed Mowing Trash Collection

AGENCY

TOP PERFORMANCE

SY

ZONE PERFORMANCE

`

OBSERVATION

Rodent Abatement Abandoned Vehicles Sanitation Enforcement Parking Enforcement Street/ Sidewalk Repair Street Cleaning Landscaping Dead Animal Pick Up

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Strategic ModernAsset Techniques & Facilities Audit S.no

Servi ce

Item

1.

Prope rty Ma nagem ent

Co mputer Aid ed Facitlities Ma nagem ent

2.

Financial Ma nagem ent

3.

Utilities Ma nagem ent

Financial So ftware integrated with CAFM Building Autom ation Syst em

4.

Trash Collection & recycling Collection

Large Super cans (96 gallons)

Functions

Benefits

Remarks Call Cent er can be established

7 Levels of Hierarchy

Provides Centralised expertise for a ll matter Single Seat Interface

I ntero perability Viz HVAC, Lighting, Building Access, Security, Fire Fighting, W ork Ma nagem ent

Energy Ma nagem ent Efficiency of system, Cost Red uctio n, Better inform ation M anage ment, Cost Red uctio n, Better Co ntrol Actions Colle ction on a Systematic meth od Recycling pe riodic basis. All of Tra sh collection colle ctiontrash is bagg ed newspaper, and p ut in a super corruga ted can. cupboa rds, foo d & Bags out side the bevera ges, cans, can a re allowed glass b ottle, only for grass meta ls, p la stic etc. clipper & leaves. 56

S.no

Service

5.

Item

Functions

Benefits

Street Cleaning Mechanical Street Cleaning

Cleaning Street for mud and litter

Regularise cleaning on a periodic basis

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Open Area Cleaning

Sweeping & cleaning of large open areas

Efficient and modern methods of cleaning

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Security

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Turf Management

Pressure Cleaner, Floor Scrubbers, Driers Electronic & access control system, Digital video Technology Mowing Equipment; Blade Type, Reel Type, Flail & Rotary type

Commonly used for mowing large open areas

High Productivity & Quality performance.

Sprayers

Chemical Sprayers and Spreader

Environmental Concern, Advanced Technology, Computerised Sprayers.

Seeders

Remarks

A centralised security system

Large coverage area. home

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FOR A SUCCESSFUL MALL …… A Carefully Conceived Design and A Good Management Team, managing the functioning of the Mall. Modern, Convenient, Technologically Well-Equipped, Well - Maintained / Managed and Promoted – Today’s Malls….. Efficient Management requires: Integration of the Owner and The Mall Management Team

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Mall management : planning and strategy PROPER PLANNING INCLUDES : • VISITORS MANAGEMENT • OCCUPANTS MANAGEMENT • SOUND INFRASTRUCTURE • CREATION OF AN AMBIENCE

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Scope of Services Utilities Management • Fire Detection and fire fighting system • HVAC • Lifts & Elevator • Water and Fire Pumps • Closed Circuit Television System • Access Control System • Vertical Elevation Systems • Water & Fire Fighting Pumps • Backup Power Supply

Service Management • • • • • • • • •

Security Electrical & Mechanical DG & HVAC Operations House Keeping Sanitary & Plumbing Pest Control Landscaping Office Support Staff Water Effluent Treatment Plant Maintenance • Parking Area Management

Management Functions • • • • • •

Quality Control Health and Fire Safety Preventive Management Energy Management Help Desk Vendor Management & Procurements • Tender Processing • Inventory Control • Budgeting

Minor Repairs • • • • • • • •

Equipments Civil works Carpentry Masonry work Furniture Painting Trouble shooting Project Work

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MALL MANAGEMENT : Typical Organization Structure

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MALL MANAGEMENT : TYPICAL MALL OPERATION SCHEDULE Descriptionof Mall Timings

Timings 9AM- 9PM

OPERATIONSCHEDULE Duration 12Hrs.

CleaningTime

6AM- 9AM

3Hrs.

Diesel Delivery

7AM- 9AM

2Hrs.

Escalator / Lift Repairs

GarbageDisposal

EmergencyLighting

Electrical Breakdown

11PM- 7AM

8Hrs.

7AM- 8AM

1Hr.

-

24Hrs.

Remarks

-

24Hrs.

Major cleaningcarriedout beforeopening of Mall for customers, inpresenceof securitystaff.

Escalators generallyrequire5-6hrs time for maintenancework, inthepresenceof securitystaff. Tobecarriedout inthepresenceof securitystaff.

RequiredbyInverters and/or emergency lights inall commonareas andshops. Typical minor electrical faults inshops require10mins to40mins torepair. Recommendation- Haveamplenumber of electricians at all times.

Air Conditioning MaintenanceWorks

7AM- 10AM

2-3Hrs.

Normal maintenanceof AHU's etc. installedinshops andcommonareas. Cleaningof filters etc. of AHU's, inthe presenceof securitystaff for common areas andinthepresenceof shop owners for theshop.

PlumbingWork

11PM- 7AM

8Hrs.

All plumbingworktobedoneat night in thepresenceof thesecuritystaff.

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INORBIT MALL Mumbai is an example of a successful mall led by good facility management

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Inorbit Mall in Mumbai By K Raheja Corp is a good example of facility management in a mall. It has two anchor stores placed at the two corners of the mall. There are three entry points, one each from the two anchor stores and another entry directly to the mall atrium. With three entry points, traffic management within the mall is better organized. 64

Cont… • The mall also provides ample parking space and superior infrastructure management. The Inorbit Mall commands higher rental values of INR 175 per sq ft per month compared with other malls in the north-western suburbs of Mumbai with average rental values of INR 135 per sq ft per month in 4Q06, indicating it’s success story. The low vacancy rates at Inorbit Mall.

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Indian Scenario for Mall Management • large Indian conglomerates such as Reliance Industries and Aditya Birla Group are commencing their foray into retailing across India. • Currently, there are very few designated mall management companies in India. • However, big retail chains such as Future Group and some large developers have set up their own mall management divisions that operate as their subsidiary companies. • Some developers such as DLF have also recently entered into contractual arrangements with retailers.

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Future trends… • The building industry is recognizing the benefits of an integrated Facility Management Services and the trends are: – the increased availability of industry specific software packages that can provide for a wide range of FM requirements; – data on assets such as buildings and equipment is being viewed as corporate information that is best managed by the FM department – increasing interest in web based access to the FM services for improved access to information by the FM staff and others in the organization; – more emphasis on business process re-engineering and staff training in order to maximize the use and benefits of the system; – future interfaces with building automation systems in order to achieve further operating efficiencies.

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In India, retail is an emerging market having immense potential in terms of opportunities.

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