By Tom Brewer
Conceptually, a facilities portfolio is like a stock portfolio. Either are comprised of different assets with their own strengths and strategic uses. But facilities and stock portfolios differ when we think about performance. A stock portfolio’s performance is straightforward — financial investments should yield financial returns. Defining and measuring facilities performance is trickier given that the goals of a facilities portfolio are often more complex than ROI.
Here are five ways organizations define facilities performance and strategies for measuring facilities performance:
1. Space Utilization
Optimizing space is a quandary that vexes leaders across industries and is especially pertinent in the realm of education. Public schools, under pressure to provide modern and equitable learning experiences, must evaluate space use to ensure it aligns with their mission. They seek opportunities to enhance teaching and learning spaces — whether that’s incorporating or updating technology, improving the student-teacher ratio or providing more services.
Financial and facility leaders on higher ed campuses must collaborate to ensure they are using spaces optimally throughout the week. Comparing space utilization in any facilities portfolio requires accurate spatial data collected and organized consistently from building to building and from room to room. Leaders should also consider collecting occupancy data to find out who uses the most space. Finally, there are insights into how many seats are occupied in a given space at a given time.
Both school districts and higher ed campuses must think of capacity planning. They cannot assume that the student population will be static. Yet considerations about the student population go beyond mere numbers, as the cultural, demographic and socioeconomic mix in schools is evolving. Campuses must adapt their physical spaces to accommodate a new customer profile. This might look like extended meal service in a grade school cafeteria or more on-site daycare on a college campus. To make informed decisions about their facilities, education leaders must consider not only how many people are coming to campus but also who those people are.
2. Revenue Generation And Realization
In almost every scenario, organizational leaders manage their facilities portfolios to maximize revenues. This is obvious in commercial settings like strip malls and other mixed-use spaces. But decision makers across industries must keep an eye on the bottom line.
Consider a hospital. Before changing its facilities to accommodate a new piece of equipment, leaders must evaluate if the change will yield a return on their initial investment, how great that return will be and how fast they will realize it. Healthcare facilities are far from alone in thinking about the relationship between their buildings and the bottom line. Colleges and universities must consider whether they are offering the optimal classroom and campus spaces to remain financially viable in an increasingly competitive and volatile market.
Of course, any organization will complete a revenue projection process to help them make any significant decisions. Once a facility has been altered to optimize revenue generation and/or realization, leaders must check their work by measuring total revenue, revenue growth and revenue velocity. They might also consider ways to lower their operational costs by measuring maintenance costs per gross square foot or as a percentage of asset value, and maintenance coverage per gross square foot.
3. Energy Efficiency
Given internal and external pressure to reduce carbon footprint, organizations are looking seriously at energy efficiency. They’re comparing Facility Condition Index (FCI) and Energy Use Index (EUI) and finding that when both are high, there is an opportunity to improve energy efficiency with capital investment.
Energy sources are of interest as well. Solar power and other alternative energies are becoming more commonplace. Leaders are also considering the context of their energy use, namely how a space is being used and the degree to which heating and cooling said space is necessary.
4. Sustainability Standards
Many organizations are working toward sustainability initiatives like LEED certifications and STARS rankings. These achievements are not only environmentally friendly but as consumers continue to emphasize responsible business practices, meeting independent sustainability standards can offer a competitive edge. Tracking toward those goals means conducting a thorough assessment of a facilities portfolio to establish a baseline, and then measuring progress as spaces are changed and operations are altered. It may also be useful for organizations to benchmark their ENERGY STAR ratings against their peers to ensure they are meeting or exceeding industry standards.
5. Community Benefits
Public sector organizations may want to define facilities performance in terms of how their investments impact the citizenry. Expanding or improving services on the state or local level should have ripple effects in the community. Analysis of resident health, wealth, safety and other quality-of-life measures may quantify those effects.
To that end, environmental, social and governance (ESG) projects tend to ensure equitable access to critical facilities and services. Therefore, it’s often easier for public agencies to secure funding for these initiatives because they have a direct benefit to the community. Such projects raise an area’s standard of living which could attract greater investment from the private sector and serve as a feather in the cap for elected officials. No matter the underlying motivations of the stakeholders involved, leaders in the public sphere may measure facilities performance in terms of community impact.
Data Collection: The Key To Measuring Facilities Performance
No matter how an organization defines facilities performance, leaders must collect and analyze data to establish a common understanding of current performance and chart the impact of their efforts. The level of detail necessary for measuring facilities performance will vary from asset to asset across the portfolio. That’s why Gordian offers four facility condition assessment options — so our clients can tailor their assessment needs to their definition(s) of performance and their organizational goals. Additionally, we have the expertise to conduct energy assessments, help leaders benchmark against their past performance, and build custom reports and dashboards to chart and communicate progress. With this data in hand, organizations have robust tools for measuring facilities performance, however they define it.
Tom Brewer is a Content Marketing Manager at Gordian, a leader in facility and construction cost data, software, and services for all phases of the building lifecycle.