Opd 2004

OPD Conference 2004 How to Challenge the International Space Budget

Group Real Estate and Facilities Management 04 March 2004

Group Real Estate and Facilities Management

Introduction: The Portfolio Profile • 

ABN AMRO is one of the worlds largest financial institutions with:   3 million square metres of space (office and retail)   More than 60 countries   1.3 billion Euro per annum property cost base   3,000 properties   110,000 FTE

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ABN AMRO’s activities are organised by Strategic Business Unit (SBU), around three core client segments:   Wholesale Clients   Consumer and Commercial Clients   Private Clients & Asset Management

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ABN AMRO’s 2003 end of year Results   record profit for 2003 of 3.16 billion profit   net profit increase of 31.1%   ABN AMRO ranks 11th in Europe and 23rd in the world (based on Tier 1 capital)

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Group Real Estate and Facilities Management

Understanding the Business Goal “reduce the property cost base significantly” “move from decentralised to coordinated portfolio management with local implementation”

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With the ambition to be in the top 5 of it peer group, one of the areas of focus was efficiency and real estate cost savings

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The SBU structure enabled a decentralised model to be pursued and it was recognised that co-ordinating synergies could realise reductions in the cost base

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Global business managers required more transparency of their global business occupancy due to the geographical complexity

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Co-ordinating key property decision making would enable full and objective alignment of business unit strategies and avoid local decision making in isolation of global plans

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Target significantly reduce in the property cost base

“from delegation to coordination”

“Delegation”

“Oversight”

“Co-ordination”

“Control”

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Group Real Estate and Facilities Management

The Issues: Packaging the Problem “understanding the issues” “where should the focus be?” “where is the value add”

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Decentralised portfolio with geographical complexity

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Need for greater transparency

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No clear definitions, standards or space measurement

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Opportunity to establish performance measures and targets

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Space efficiency impact

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Need for clear process of delivery

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Co-ordination and Governance

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Group Real Estate and Facilities Management

The Issues: Establishing Functional Expertise for Wholesale Division “creation of: Group Real Estate and Facilities Management” “global reach with local feel”

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ABN AMRO creates a team of “Functional Experts” to work with regional and local knowledge centres in property, delivering: “Real Estate Strategy, Workplace Strategy, Project Management, Facilities Management and Business Evaluation”

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Providing international best practice and a high value add governance process

Group Real Estate and Facilities Management (GREFM)

Real Estate Strategy

Workplace Strategy

Project Management

Facilities Management

Business Evaluation

Interface with Business at local and regional level

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Group Real Estate and Facilities Management

Initial Findings, “the 20% impact” “the initiatives focus is to leverage high value add elements of property services”

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A broad study of the Property Portfolio and its cost base established 8 key high impact value add categories   Space Planning Efficiency   Asset Restructuring   Surplus Space

* “20% reduction from 26sqm to 21sqm delivers significant saving opportunity”

  Project Management and Capital Expenditure   Facilities Management   Front and Back Office   Key Lease Event Planning

“local area space measurement was not a common international standard”

  Scorecard (create property scorecard and savings tracking tool) • 

Top 12 buildings make up 30% of the office cost base

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Workstation densities range from *8sqm to 32 sqm, with an average of 26 sqm

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Improving the space planning efficiencies of the office portfolio by 20% delivers a significant saving opportunity

* Note: these measurements are taken from local measurement and not a common international standard 6

Group Real Estate and Facilities Management

Space Planning Efficiency Strategy “why would one business occupancy vary so much ?”

“to challenge you must first understand”

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Focus on the top 25 buildings with geographical spread

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Standard measurement of buildings carried out centrally to ensure accurate space data

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Local interpretation of space categories differ around the globe - standard definitions had to be established

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Key Performance Indicators developed to enable value add comparison of data

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Benchmark both internally and externally for peer group best practice

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Set a space occupancy target that challenges the property teams and business

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Identify opportunities

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Align with business strategy

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Align with Key Lease Event planning

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Group Real Estate and Facilities Management

Top 25 Buildings: Square Metres in Excess of Target • 

Global target of 12 square metres Net Internal Area (International Standard) per workstation with a 2 +/- square metre tolerance depending upon local legislation, cultural expectation, size of building and functional business requirements

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Range of excess of -4 to 13 square metres (165,000 sqm in excess of target)

sqm

“12 square metres per workstation target”

N.America

Europe

S.America

Asia Pacific 8

Group Real Estate and Facilities Management

Top 25 Buildings: Cellular Offices and Workstations • 

Workstation footprints are globally in line, (with a few exceptions in historical locations) - average of 4 square metres

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Cellular space varies more due to cultural differences and building specification

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The majority of users sitting at workstations don’t need to be affected

sqm

“workstation standards are found not to be the key driver of space efficiency”

N.America

Europe

S.America

Asia Pacific 9

Group Real Estate and Facilities Management

Top 25 Buildings: Dedicated versus Non Dedicated Space “50/50 target”

Detailed analysis was carried out on the Non-Dedicated space to establish the impact on the occupancy efficiency and a target of 50/50 ratio was set

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It was evident that management and control of support areas would play a major part in reducing the excess space in particular locations - not the users desk space

sqm

“focus on nondedicated space efficiency to deliver savings”

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N.America

Europe

S.America

Asia Pacific 10

Group Real Estate and Facilities Management

Top 25 Buildings: Opportunity and Priorities • 

With additional dimensions - volume of space (size of the bubble) and cost per square metre (on the X axis) the chart below identifies the priority locations

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Those locations that exceed the targets will be converted over time as opportunities arise (relocations, restacks and business strategy change)

sqm

“reduce the delivery task to priority locations”

Target Zone €’s

Note: differences in cultures and business lines e.g. Private Clients, Investment Banking and Asset Management would require additional space needs 11

Group Real Estate and Facilities Management

User Impact “making the space more efficient enables a give back of functionality to the user”

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80% to 90% of the user base would not have their workstation standard modified

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cellular office allocation and size would impact the middle tier of management

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redistribution of non-dedicated support space would provide a “give back” to all of the users through:   more efficient secondary circulation and effective layouts   align space requirements with all businesses in a location, greater sharing of resources   creating formal and informal meeting spaces in the workplace encouraging collaboration

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Project in the Head Quarters building in Amsterdam demonstrates this re-alignment of space:   20% improvement in space utilisation to 15.2 sqm per head with additional functional space of: – 

24 meeting / conference / project rooms

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17 group storage rooms (assisting with the clear desk policy)

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6 team “think tank” spaces encouraging collaboration

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12 lounge / quiet areas for concentrated working

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Group Real Estate and Facilities Management

Recommendation “measure against targets during the project life cycle” “inform business leaders of noncompliance and impact”

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During the standard project life cycle space measurement and analysis should be carried out to ensure that both business and design changes are tracked and monitored - informing business leaders of non-compliance and financial impact

Existing Project Cycle

Space Analysis

Concept

Proposed Project Cycle

Concept Space Analysis

Design

Design Space Analysis

Implementation

Implementation Space Analysis

Delivery

Delivery Space Analysis 13

Group Real Estate and Facilities Management

Conclusions “transparency provides informed decisions”

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Understand your portfolio and create a demand challenge environment

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Identify the specific areas of improvement through accurate measurement standards

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Establish challenging targets that allow priorities to be set

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Analyse space at key stages of a project life cycle and understand the impact

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With these tools in place we deliver:

“full transparency to global business heads, leading to informed businesses, making informed decisions”

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