Managing property portfolios intelligently in Asia - five common mistakes

Brian Shuptrine

Managing Director, Southeast Asia


There’s one question that we hear more than any other when talking to senior executives about portfolio management: how do we make it work in Asia? The potential benefits of taking a portfolio–level approach rather than a project-by-project are well-known - more consistent delivery, cost savings, continuous improvement – yet they seem to be difficult to deliver on the ground. Leaders are perplexed because models that have yielded great results in other parts of the world are not having the same impact in Asia.

The reasons for this are, of course, many, complex and interrelated. In this article we explore a few of the biggest challenges we have observed and how to overcome them.

1. Misunderstanding value

Perhaps the biggest hurdle for portfolio managers in Asia is the mindset that says: how can we buy this product or service for the lowest possible price?

For a one-off transaction, lowest price might mean best deal. But intelligent portfolio management requires a long-term, holistic view. It demands that those managing a portfolio focus on the organisation’s core business goals and take decisions that add value by contributing towards those goals.

A number of our clients are looking for a supply chain that will help them become more efficient operationally by delivering innovation over the longer term, and they are starting to realise that lowest cost is not always the right approach.

Considering only the most fundamental business goal of profitability, making a lowest initial cost purchase may not be the right choice. Intelligent clients are now looking at the total cost of ownership: capital cost, operational cost, maintenance, replacement and the value that purchase adds to the company.

2. No-one told the procurement team

Often the senior leadership team will be committed to a portfolio management approach; they appreciate the difference between initial cost and long-term value and understand that supply chains must be deployed and motivated over longer timescales. However, we commonly discover that this message gets diluted in other parts of the organisation.

This is perhaps more obvious in the approach of the procurement department. Working to its own particular KPIs, almost certainly focussed on driving costs down, the procurement team is a force to be reckoned with.

The practice of negotiating the price several times, coupled with the competitive nature of business in Asia, means that sometimes what is procured does not match the long-term strategic objectives. This creates a disconnect between the initial goal and the final outcome, resulting in a quantitative-based service.

Changing to a portfolio-level approach requires a major cultural upheaval. A few emails and meetings will not be sufficient. It may also make sense to set up different rules of governance and different teams when procuring programmes of capital works.

3. The one-size-fits-all approach

A common misconception is that intelligent portfolio management is about ensuring that all parts of all projects in all regions are doing things in exactly the same way. This is not necessarily the right approach, and it’s the reason why many portfolio managers in Asia are failing to see the results they hoped for.

Some organisations impose processes and procedures from developed markets onto developing ones. Others try to find a one-size-fits-all approach for the Asia region, with its diversity of languages, cultures and maturity. We recommend neither approach.

The way to overcome this type of hurdle is to create a layered system, founded on some very simple tools to which complexity can be added for more mature markets. For instance, we might recommend that in some Asian markets, the number of ‘gateways’ where progress and resources are checked between phases is fewer than elsewhere.

In some cases, it may even make sense to exclude a region from the portfolio management system since the level of investment does match the benefits to be achieved. It's better to be realistic than to invest time and resource where it cannot be rewarded.

It's better to be realistic than to invest time and resource where it cannot be rewarded.

4. Buying off-the-shelf tools

One of the selling points for intelligent portfolio management is the single source of truth: all the data you need, all in the same place and presented in a way that informs decision-making. Without that, it’s impossible to look at multiple projects simultaneously as part of a programme.

This was the problem facing a major retail operator. With multiple capital projects underway, the programme leaders were struggling to collect data that was timely, comparable and meaningful. Having tried a proprietary software system, they came to us for help.

Our advice to them, and our advice generally, is to create a data collection, management and analysis system that suits the way you do business and the markets in which you operate; rather than trying to force your particular portfolio data into off-the-shelf systems. It’s important to think about this and get it right from the earliest possible stage.

5. Unrealistic expectations

Organisations must recognise that there will be a variety of competencies and maturity levels among their own employees and in the supply chain. Any strategy for introducing a portfolio level approach should take this into account.

Don’t expect change to happen overnight. It takes time, resource and a well-planned change management strategy to create new behaviours and cultures.

In conclusion

Moving to an intelligent portfolio management approach is a journey. That journey must start by understanding the true value of what you want to achieve.

Perhaps the biggest step is to engage with your organisational stakeholders, particularly the procurement team. Their ‘buy in’ to the long-term benefits is vital.

Recognise that one size does not fit all. Similarly, set up tools and systems that suit your own particular way of working.

And last, but by no means least, get professional advice early

To sum up:

  • understand the true value of what you want to achieve, engage your organisational stakeholders and procurement get their ‘buy in’ to and alignment with the long-term benefits
  • be flexible and recognise that one size does not fit all
  • set up your tools and systems to align with your ways of working
  • get professional advice early.