Speeding up responses: building flexibility into Siemen’s global real estate portfolio
In times of global economic and political uncertainty, having an agile and fast real estate strategy is particularly important for multinational businesses. Real Estate Head of Building Solutions Stefan Kögl explains how standardisation, digitalisation and new management approaches are bringing extra resilience to the company’s global portfolio.
“I love change. I’m happy if things are changing,” says Stefan Kögl.
At Siemens Real Estate (SRE), Kögl is steering the department that is responsible for all new building projects in a multinational giant property portfolio through some very uncertain times.
Shifting regional markets and geopolitical uncertainties are changing customer expectations and forcing a rethink of everything from office layout to factory design. The multinational has also been refining its build strategy, helping to get projects underway as quickly as possible.
“Certainly quality is very important to us,” Kögl outlines, “but our priority is speed.”
It’s a challenging aspiration for a company the size of Siemens. With a portfolio spanning globally and approximately million square metres of space, Siemens spends roughly €300m on new construction projects annually. Currently, there are around 50 construction sites underway, with ten to 20 in the planning pipeline.
- €7bn Assets under management
- 15m sqm Real estate portfolio
- €300m New construction project spend
Streamlining the building process
As SRE is responsible for all the real estate assets within Siemens it is able to mine efficiencies and synergies globally. So Kögl standardised and streamlined the building processes through its Construction Excellence initiative. Introduced in 2015, the initiative is rolled out globally and 20 projects have been tracked in detail. Even though many of these projects are yet to be completed, impressive results are already being realised.
“We have achieved an acceleration of approximately three months per project only in the early phases, with a cost reduction of 12 percent to 15 percent,” Kögl says.
The first actions were to streamline the requirements for factory projects. The designs for manufacturing facilities, covering production lines for around 100 products, were optimised into five types.
Siemens has also standardised its approach to office design and its process is being speeded up by a software tool that provides rapid costing calculations.
“If we know how many workplaces we need, and we know the city, we can quickly calculate our space requirements and the probability of costs.”
He adds that the tool also automatically adjusts for regional variations, taking into account the design adaptations that will be required for different climates and local building regulations. In Germany, for example, level C offices have a width of 13 metres. In China, the width is 25 metres.
Further streamlining its processes, Building Solutions has refined its supply chain, and now works with selected partners for design and project management in each region.
“We exclusively work only with four or five design teams in each region and six project management companies globally. This saves us a lot of time as previously we often had to work with new partners from scratch,” states Kögl.
Siemens’ own building technology products for elements such as building automation, power, fire protection, and security systems are extensively used across its property portfolio. However, Kögl says that standardisation has yet to be extended to other building components. This is not for lack of trying: so far the construction market is a little bit resistant to such suggestions.
“We had a lot of meetings with construction companies and most of them speak about lean construction, but they do not work in this way. They want to decide case by case on how to construct and how to work, so it’s difficult to develop a leaner construction approach,” he comments.
The size and nature of Siemens build projects is also changing, in response to the different requirements.
Although SRE is part of Siemens, some of its products, such as offices, are ultimately sold on or partially leased by external clients. As a result, the offering must keep pace with shifting commercial trends.
“Workspaces are changing. Previously they would be rented by the square metre on long leases. In the future, we expect that customers are looking for shorter leases – and want to rent workplaces, and no longer square metres.”
One strong trend is the adoption of flexible office space, as illustrated by the company’s major programme ‘Siemens Office’. Up to now SRE has rolled out approximately 1 million square metres of its open space office with all the advantages of modern technology, including enhanced IT connectivity.
“It’s a paradigm shift for staff, so it is an HR programme as well as a build programme,” Kögl adds.
Transforming through digitalisation
Disruptive technology, digitalisation and automation are also transforming the markets and the product portfolio of Siemens.
Kögl is convinced that the implementation of digital technologies will bring high benefits and new business opportunities and will be the only way for design and construction teams to become more agile in adapting to these trends.
In 2015 SRE had been starting to develop its digitalisation strategy.
“One major initiative was consolidating our IT tools. Previously we were using a lot of different IT products to manage our assets globally.”
This complex IT structure is now being replaced with a new software platform, Planon, which serves the company’s entire asset management programme.
“Planon is being implemented over the next two years, and will also interface with our building information modeling (BIM) activities,” Kögl says. “This will lead us to a holistic data exchange and will reduce our IT costs tremendously, and we also anticipate it helping us substantially lower operational costs.”
At the same time Kögl’s team started to develop its BIM strategy to cover the whole process from design and construction to operations and it is in the test phase on early adopter projects. Ultimately Kögl’s aim is that construction and design teams will be creating ‘digital twins’ of all new buildings using BIM software. Once the projects are built, data and information will flow in both directions between the virtual BIM models and the Planon platform, helping the company track its operations and maintenance activities.
If the vision is to be realised, Kögl acknowledges, it is essential that the different disciplines of design, construction and facility management collaborate more closely on integrating their BIM and digitalisation activities.
“We really want to bring everything together,” he adds. But he admits that it can be difficult challenging mindsets. Designers and contractors tend only to be interested in optimising the BIM for their own use. “They are not seeing how the landlord can benefit from data at the end of the projects. It can be hard finding people who think in this way. In facility management, we are looking at the opportunities offered by big data and BIM, currently because we see it as a major means of optimising the service.”
Kögl anticipates that Siemens will be running all new construction projects through BIM models within two years. But he admits that retrofitting digital BIM models for the existing 1 million square metres property portfolio is a challenging prospect.
“Siemens goes through a lot of mergers, inheriting a lot of older buildings along the way. Our property portfolio can change substantially year on year,” he says. “We also have to look at the size of the properties and the costs and the benefits of retrofitting them with BIM.”
In facilities management hardly anyone is looking at the opportunities offered by big data and BIM, but we see it as a major means of optimising the services.
New management approaches
Acknowledging that some employees will be feeling culture shock with the rapid introduction of new technologies, Kögl is taking an active method.
“We are training all project managers – around 60 to 70 people – in BIM management, even though we haven’t yet rolled out the strategy globally,” he says. “As BIM is really innovative technology that will change the whole process of design and construction, our people have to understand what it is all about. Then they will become curious and interested and will support the new approach. If we develop a strategy, but don’t explain it to our colleagues, we’re going to meet a lot of resistance.”
Over the coming months, Kögl sees his personal challenge as understanding the opportunities presented by digitalisation. He also expects the digital revolution to change leadership styles.
“Leadership is changing fast. We’re no longer in the situation where the boss knows best. Leadership these days is more about empowerment: bringing the right people together, gathering the knowledge and developing the targets together with the team.
It’s a key focus for the global business.
“Our ongoing challenge is helping our teams and managers define priorities and make the right decisions. We’re having many discussions around this topic across the whole of Siemens at the moment.”
Turner & Townsend is providing advisory and project management services on Siemens’ global real estate portfolio.