A global approach to property

Neil Bullen

Global Managing Director, Real Estate

Multinationals should consider adopting programme management approaches to better manage their global property portfolios

Smart use of the discipline of programme management is helping clients achieve a level of visibility, control and improvement not possible before.

A company’s property portfolio jostles with people and ICT as the biggest cost item on the balance sheet. But, until fairly recently, it could be difficult to manage and deliver value because the tools for controlling it across multiple countries didn’t exist.

In-country CRES teams (Corporate Real Estate Services) -historically isolated from the activities and direction of the wider business- were often left to plan for and deliver property capital investments in their own way, often creating inconsistent and poor value projects.

But the global financial crisis has changed things. With severe constraints on capital came an opportunity for the CRES community to play a new role in corporate efficiency and success. The questions no one dared to ask before began to be whispered with increasing insistence: How do we plan for and control capital investment needs better across our global portfolio? How do we get better visibility of performance? Where should we spend capital to deliver best value to the company? How do we use the expertise and capability of suppliers to help us deliver a step change in performance?

Programme management as a solution

The introduction of programme management – typically at a global, cross-portfolio level – is about establishing an effective control framework over the top of all projects, with the aim of optimising delivery. It brings common standards and approaches, plus control and visibility of performance at every level. This provides a clear basis for optimising both the planning and delivery of projects within the programme.

A different sort of job

Challenges from making the transition quickly have taught us two main things. The first centres on the company’s in-house capabilities. The CRES function must alter radically – in role, approach and capabilities – to meet the demands of a programme management model. It moves from being a geographically diverse, project-focused delivery capability, to a central, aligned, commissioning-based organisation responsible for owning the standards, providing governance, driving assurance, and optimising the investment programme. That typically means far fewer people doing very different things. 

Secondly, the early rush to adopt programme management models revealed the constraints on the supply side. There is a clear trend to integrate the property supply chains – everything from programme and project management, design, real estate services and contracting. 

Supply side integration

I believe it is possible to over-integrate. Taken to its logical conclusion, utopia might be a single supplier doing everything globally. In the early forays, we saw clients attempt just this, appointing a single provider for all property-related services in all regions, including contracting. But I see a withdrawal from this now. Partly, it’s for operational resilience reasons, as it leaves the client with a single point of failure and with no constructive source of performance tension. What’s more, simply do not have the skills, capacity or global footprint necessary to be a bona fide single source.

What we’re seeing more of now is a compromise between the utopian view and what the market can supply effectively – often, a single programme management provider organising a small number of best-of-breed supply chain partners in everything from design, to real estate services, to contracting. This layered model is increasingly being seen as the most resilient and effective. These supply chain partners are already familiar with working with each other at the interfaces – although the client still has a leading role to play in setting the tone of how collaboration should work.

Corporate and office