Contract - Practice: Complexity in Design Simplicity

design - practice



Practice: Complexity in Design Simplicity

17 July, 2009

-By Julius Gombos, Executive Managing Director, Cushman & Wakefield Client Solutions


The commercial real estate (CRE) services industry recently has transformed itself, adapting to the competitive needs of corporate clients that are globalizing and consolidating while implementing dramatic cost containment measures. Gone are the days when service providers primarily manage the delivery of single service lines in set geographic locations.

Today, the outsourcing requirements of large corporations involve the delivery of holistic, integrated services platforms that depend largely on strategic alliances with highly specialized industry experts from various fields. Complex teams are developed by merging inside talent with outside contractors to meet client demands. Service offerings are seamlessly combined into joint ventures that have the ability to scale services rapidly wherever and whenever needed, across portfolios throughout the world.

The level of complexity involved in managing these partnerships is evident in the contracts for the design and construction of interior commercial space across multiple facilities. Corporate clients require consistency in the quality and uniformity of space standards. Rapid response times, aggressive completion schedules, and highly predictable pricing requirements are built into these requirements.

Cushman & Wakefield recently surveyed a number of large corporate clients that were asked to rate the overall performance of the real estate services industry. The overriding concern expressed in comments was that service providers lack consistency in product delivery from region to region. A classic example of this type of concern was presented a few years ago when a major bank issued an RFP for interior upgrades at 660 retail branch locations across Canada. The design and construction of each facility had to meet rigorous corporate specifications for common space standards and image. The completion deadline was eight months from start to finish.

Initially, the services firm selected to complete the work procured approximately 100 contractors. However, managing the number of vendors became problematic. Four months into the program the project was stalled, and virtually nothing had been delivered. The decision-making process was too burdensome and led to a domino effect of delays. A new project management firm was brought in, which immediately pared down the 100 individual vendors to a total of six.

Accountability was pushed down to a single point of contact from design, construction, furniture, signage, project management, and client. The architect, project manager, and a banker representing the client reviewed sketches together at each site, while the construction contractor gave pricing commitments. At the end of each session, final design drawings were completed with budgets attached. In the following four months, 100 branches were completed and delivered for occupancy by the client.

The lesson learned from this situation is that successful project management must be driven through a simplified process. No matter how complex today's client requirements get, fundamental and decades-old management techniques still apply. If a project management firm has a familiar framework of vendors, they can assume the management responsibility for the procurement of additional vendors, select materials, and train employees. External decision-makers are held accountable for a consistent quality product at a predictable price.

One of the greatest challenges in satisfying large occupier requirements is the need for multiple service offerings in areas where a firm may not already have resources. Building interiors is not a manufacturing process with an assembly line. Each space is different and every location involves a separate set of challenges and problems. This is where being able to draw on a seasoned design and construction firm that can mobilize is critical. If the firm is familiar with the standards, policies, and procedures of the client and lead contractor, it can hire and train local firms and be held accountable for the outcome.

To round out a firm's global service offerings, regional leaders from each of the company's disciplines should be assigned in different countries to drive the delivery of services and to do so from the standpoint of continuity. Utilizing internal policies and procedures that ensure consistency in construction, procurement, legal, and design services, these regional leaders are able to quickly mobilize partnerships and hire contractors that are in alignment with the company's core business platform.

Real estate services firms executing on large multi-service contracts excel for their clients when they adhere to the principle of single source accountability for design, construction, and project management. Through a simplified chain of command, corporate occupiers can more readily achieve their standards for consistency, product quality, predictable pricing, and speed to market.



Practice: Complexity in Design Simplicity

17 July, 2009


The commercial real estate (CRE) services industry recently has transformed itself, adapting to the competitive needs of corporate clients that are globalizing and consolidating while implementing dramatic cost containment measures. Gone are the days when service providers primarily manage the delivery of single service lines in set geographic locations.

Today, the outsourcing requirements of large corporations involve the delivery of holistic, integrated services platforms that depend largely on strategic alliances with highly specialized industry experts from various fields. Complex teams are developed by merging inside talent with outside contractors to meet client demands. Service offerings are seamlessly combined into joint ventures that have the ability to scale services rapidly wherever and whenever needed, across portfolios throughout the world.

The level of complexity involved in managing these partnerships is evident in the contracts for the design and construction of interior commercial space across multiple facilities. Corporate clients require consistency in the quality and uniformity of space standards. Rapid response times, aggressive completion schedules, and highly predictable pricing requirements are built into these requirements.

Cushman & Wakefield recently surveyed a number of large corporate clients that were asked to rate the overall performance of the real estate services industry. The overriding concern expressed in comments was that service providers lack consistency in product delivery from region to region. A classic example of this type of concern was presented a few years ago when a major bank issued an RFP for interior upgrades at 660 retail branch locations across Canada. The design and construction of each facility had to meet rigorous corporate specifications for common space standards and image. The completion deadline was eight months from start to finish.

Initially, the services firm selected to complete the work procured approximately 100 contractors. However, managing the number of vendors became problematic. Four months into the program the project was stalled, and virtually nothing had been delivered. The decision-making process was too burdensome and led to a domino effect of delays. A new project management firm was brought in, which immediately pared down the 100 individual vendors to a total of six.

Accountability was pushed down to a single point of contact from design, construction, furniture, signage, project management, and client. The architect, project manager, and a banker representing the client reviewed sketches together at each site, while the construction contractor gave pricing commitments. At the end of each session, final design drawings were completed with budgets attached. In the following four months, 100 branches were completed and delivered for occupancy by the client.

The lesson learned from this situation is that successful project management must be driven through a simplified process. No matter how complex today's client requirements get, fundamental and decades-old management techniques still apply. If a project management firm has a familiar framework of vendors, they can assume the management responsibility for the procurement of additional vendors, select materials, and train employees. External decision-makers are held accountable for a consistent quality product at a predictable price.

One of the greatest challenges in satisfying large occupier requirements is the need for multiple service offerings in areas where a firm may not already have resources. Building interiors is not a manufacturing process with an assembly line. Each space is different and every location involves a separate set of challenges and problems. This is where being able to draw on a seasoned design and construction firm that can mobilize is critical. If the firm is familiar with the standards, policies, and procedures of the client and lead contractor, it can hire and train local firms and be held accountable for the outcome.

To round out a firm's global service offerings, regional leaders from each of the company's disciplines should be assigned in different countries to drive the delivery of services and to do so from the standpoint of continuity. Utilizing internal policies and procedures that ensure consistency in construction, procurement, legal, and design services, these regional leaders are able to quickly mobilize partnerships and hire contractors that are in alignment with the company's core business platform.

Real estate services firms executing on large multi-service contracts excel for their clients when they adhere to the principle of single source accountability for design, construction, and project management. Through a simplified chain of command, corporate occupiers can more readily achieve their standards for consistency, product quality, predictable pricing, and speed to market.
 


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