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#CREate FM 25 Talks is an interview series with CRE change-makers and Doers. With this, we intend to bring out first-hand experiences and best practices on digital transformation, energy management, and sustainability initiatives from industry leaders.

Brief about Shailendra Nath,
A real estate professional with over 2 decades of experience spanning across industry segments, corporates, developers & consulting. His strength lies in the area of facilities management, operations, client management, contract management, and ESG. He has always been passionate about technology and this drives his current interest in Proptech. Throughout the career, he has deployed various strategic projects across different geographies and the Project scopes ranged from technological solutions, supply chain, and organizational structuring initiatives.

Q.1 Can you tell us about your current role or the projects you are handling?

Currently, I am involved in a consulting assignment for a US-headquartered tech firm. The project involves a review of their global real estate operations and contracting environment and support development of a new globally aligned scope on principles of Vested^® 

So one of the focus objectives of this assignment is to help them streamline and standardize the Scope that they are operating or the way they operate the real estate piece across continents. The second part is to explore opportunities within their operations as to how they can enhance their outsourcing partnerships and thus bring in more value to the organization. 

Q.2 Everyone wants to be a part of the change but in this entire process, the thin line between ‘business need’ and ‘want’ is getting blurred. How can a facility manager ensure that particular technology or platform is ideal for his facility?

I would say the FM industry is such that, while we equally manage a lot of costs and risks both, the spending on every real estate resource (staff, O&M teams) is always under pressure and that also implies that we are not always working with the most skilled people on the ground.

“Any tech solution or software can work or will be successful ONLY if the last man on the ground is able to use it and is capable of using it.”

So the first pieces that I think organizations need to figure out whether they are ready for it and before calculating the cost of Technology there may be an impact in terms of the quality of resources that they need to get on the ground to be able to utilize it fruitfully with an appropriate awareness of it. 

 Coming on to the next aspect in terms of requirements. There is a very diverse range of products or solutions that are available in the market having said that it is very important to first have an inside look as to what is really important for you. 

Two different organizations may be in the same business area, which could be the ITeS sector or a banking sector or whatsoever. The business requirements may be different, the portfolio structuring may be different and hence the need for your technology will also be different. One solution may not be suitable for every business or every portfolio. You have to be clear as to what you’re really looking for and then get into the product selection mode. 

From there it comes to I think one of the biggest hitches of spending cost and a solution. So today most of the service providers or solution providers do have a SaaS model. That’s a really desirable way to go forward. So that you are not locking in the capital, you can be flexible so that if at all your first trial fails, it’s not that you have sunk in too much or you just get stuck to something for life, right? 

So I think these are the first few initial steps that one really needs to think of before even getting into a tech selection or implementation. 

Q.3 Whether it is a point solution or the platform? Arriving at the ROI calculation could be difficult. So while selecting such products besides cost what factors should be considered to decide the Impact of the solution?

So outside of cost, as I mentioned earlier, your product selection should keep into consideration your business requirement. Because each Product suite that I have come across tends to have a weak point and plus point/ general feature. Prioritize the business requirements and needs!!

For Example, If you’re in an organization where cafeteria management is very important. Then please select a portal or a solution that is very strong in cafeteria management. If you have a lot of meeting rooms to manage then go in for good hoteling software. 

“It’s neither essential nor desirable to get yourself stuck into buying a large product suite that has numerous features.  Most of them won’t work as great as a specialized one.” 

Focus on your important business needs, your functional day-to-day needs, and choose a solution based on that. If you say that one platform has 100 features and the other one has 120 features another has 150 features and you try to make a call on that then frankly. The reality is that you may never use all those features!

And the Top of that the real feature that you need may not be the strongest point of that platform. So you have already spent the time & resources and you’re not even able to do the most important job which your business needs the support. 

It may or may not be a niche solution as there are larger platforms with multiple features, but each of them has a different Focus. Each of them has a different strong point why you should choose the product which is where the strong point is relevant to your needs. 

If the requirement is very niche then you can consider getting into a custom solution, but it has to be done with a lot of thought and a lot of introspection. It cannot be an overnight job that you can roll out a solution within a week.

Q.4 I am glad that you touch upon the topic of Build Vs Buy, So if we segregate the entire value chain of building analytics solutions from data collection to providing insights. Which part an FM should build on or create differentiation and which to buy from the open market?

Unless you have a very niche solution expectation that is not available in the market that’s when you should go for a captive development. Even then I would suggest working with a solution partner because one task is developing the solution and the second Is maintaining the solution. So even if you develop something over time the solution will always require maintenance, modifications over the course of its lifetime, and as a one-time development, you will not be able to do that. 

But when you work with this tech partner, make sure that you have the right partner in place who doesn’t hold you to ransom later and helps you build the platform as time goes by. 

However, I would say almost 99% of cases. I would prefer to go for a ready-made solution because 

A) Those solutions have been developed over a period of time B) They are matured with the experience of every user who’s using that platform. So it’s not just your experience or your knowledge, which has been used to develop but from every user’s experience, and feedback is used to modify it further. 

It’s always desirable to go for a ready-made solution. Most of the inbuilt solutions in my past organizations, I have seen them struggle because when you spend a certain amount of money there are always some afterthoughts that come up as the solution gets rolled out within your organization as well. But then every update costs you money if it’s not in the short term then in the long term you may not have access to the developer or the development process which was used in creating that solution and you end up with an obsolete product, which is no more useful. 

Q. 5 Let’s move to the next question which is also around, cost-effectiveness. Instead of the current cost-plus model do you think performance-based contracts can help FM improve its operational margins? 

Performance-based contracts are certainly desirable, however, they cannot be a one-way street. If a client is expecting innovation, the cost of these has to be thought through as the FM partner will also need returns on their investment to implement such initiatives. The outcome expectation also needs to be balanced.

For example, if a contact says every year the FM has to reduce 2% of energy cost and has an incentive/penalty linked for that then he will do a 2% reduction per year only even if it’s very possible to do a 6% or 8% reduction in the first year. Upfront implementation would only benefit the client and expose the FM to penalties for the remaining term of the contract. Hence, the need to balance performance measurement. 

“It’s about the nature of the Contracting where the client also needs to be sensible about what they are looking for in the contract. I think the Contracting has to be done as a way to a means rather than trying to set up a penalty system.” 

If you’re only talking of penalizing then you’ll not get the best results out of your contract. 

There are leaders (both clients and FM firms) in the market who are getting into those kinds of contracts where they follow a partnership-based approach. They understand what can be achieved and what can not be achieved and wherever there are opportunities for joint investment, they collaborate also, 

Let’s say if you are targeting a 10% energy reduction then there will be Capital Investments that need to be made and there has to be clarity as to how that will be done and how the investment load and the return on investment should be delivered. 

If it’s a cost-plus contract the cost would have to be borne by the client. If it is a performance-based contract where certain targets have been agreed on and certain costs have been agreed on to reach those targets then the cost will be borne based on that model, which is agreed. Could either be the service provider or the client whatever the contract conditions say. 

There was a time when we were all working on Excel sheets and tally came as a game-changer, which is today moved on to ERPs. I don’t know how many of the organizations when they have rolled out those financial ERPs really been able to justify their RoI? 

Ultimately, it’s not about the cost, It’s about the control of information and enabling decision-making based on the information that is available. Accurately captured data will enable correct information which in turn supports timely decision making for the RE Manager and also the CXO’s.

We are living in times when every organization wants to be perceived as a tech-enabled company. For Agriculture, we have Agritech. For finance, we have fintech similarly, from mining to transportation every conventional and forward-thinking firm wants to be known for their technology innovation. 

This is understandable and appreciable, however, there is one industry that is following the same thought process yet creating an example by putting their people at the front. Innovation that is delivered by the people for the people. 

Yes, I am talking about the facility management industry and its strong bonds with its workforce and staff. 

“Connecting People & places, perfectly.”

“Achieve your ambition”

“We are a force for action”

“People make places”

I am sure you must have recognized these taglines of leading facility management firms that are reflecting the immense respect and importance they have for their human resources. A trait that has been seen in legacy organizations that last for centuries.  

Well, In this blog we are going to discuss one specific firm that is celebrating its 120th anniversary this April. A firm that has seen world wars, the great depression, numerous epidemics (financial and health-related) and it stand stronger and growing and molding with the change. You might have guessed it right it’s ISS facility services, a facility management services company founded in Copenhagen now serving the world. A company that was started as a security provider now has evolved into an integrated service provider with offices in 30+ Countries and 59,000+ clients across various industry verticles.  

In this blog, we are trying to touch upon some of the innovative projects ISS facility services teams have delivered for commercial real estate clients.

Smart Energy Management

A multinational firm wanted to start a smart building program across its sites, which can analyze and monitor the energy performance of all its buildings. Importantly it was part of their 2030 Sustainability roadmap.

The team at the ISS introduced the Clockworks Fault Detection and Diagnostic (FDD) solution, to the client and Integrated the FDD solution with the native Building Management Systems. With this, the system analyzed granular data from HVAC, Chiller, compressor, and boilers to provide energy-saving insights. 

The team implemented the energy-saving measures and helped the client to save $202,000 per year while achieving the ROI of one year. 

Sustainability and building management

A global IT company wanted to meet Its published sustainability goals by reducing its annual energy consumption and creating a productive and efficient workplace.

ISS’s facility management team deployed a fault detection diagnostic solution over the client’s 15 buildings. With proactive maintenance schedules, they manage to carry maintenance and repair work on off-hours without disturbing the client’s workforce.

With all the solution implementation efforts, ISS helped the client to save $372,000 in annual utility costs. With all the proactive measures it also able to reduce the cold reactive call by 95%. In total, the savings help the client to reduce their operational expenditure by 10%. 

Mobile engineering

A multinational corporation wanted to outsource technical and maintenance-related services for their US locations. With this move, the client wanted to replace the existing in-house maintenance team and other outsourced vendors which will reduce operational costs and increase efficiency. 

With the proactive team of trained professionals, the FM team carried out a comprehensive maintenance strategy for energy-intensive assets and Implemented their own workplace management application FMS@ISS to reduce the response time and reactive calls. 

34 technicians were available to the client on-demand basis, who helped them save $579,000 within 5 months while delivering 100% in-scope services.

Customer experience and Productivity

A tech company was on a mission to create a great and engaging workplace experience for their employees, customers, visitors to help them improve their productivity and satisfaction at work. Note that the firm was part of FORTUNE’s “great place to work for” list.  

ISS’s FM team appointed workplace Experience Managers, an entirely new post to boost employee engagement and productivity. It also implemented ISS’s flagship workplace management application FMS@ISS at clients’ locations and offered ancillary tools such as Capital planning and brought financial transparency. 

As a result client’s work environment was ranked A+ and the customer’s retention score was improved to 72/100, which was based on salary, benefits and workplace environment.

There are many success stories, from ISS facility services where they have proved to be a people-centric organization that is excelling and innovative in every aspect of facility management from technology to business model innovation. If you like these success stories then give a big shout-out to the ISS team and congratulate them on their 120th anniversary. To read more about them click on this link.

On 17th March, Department for Business, Energy & Industrial Strategy, UK recently released a proposal to introduce a performance-based policy framework for rating the energy and carbon performance of commercial and industrial buildings in the UK.

According to the framework, commercial spaces of a size larger than 1,000m² will have to declare their annual energy consumption in order to achieve the energy ratings. This will be a mandatory exercise for all the eligible buildings, which according to a survey covers only 7% of the commercial properties in the UK but responsible for 53% of all the energy consumption in commercial and industrial buildings.  

The framework came on the backdrop of the UK’s pledge to achieve net-zero greenhouse gas emissions by 2050. This will complement or rather add more value to the existing Energy Performance Certificate rating (EPC) and reproduce NABERS’s performance benchmarking structure for building in the UK. 

The BEIS is following a consultative approach to hear from building proprietors, occupants, landowners, investors, asset management consultancies. Since this is a highly celebrated step by the UK Government, we thought of sharing a breakdown of the framework and key takeaways for the quick read.      

1. The advantage over ECP:

Energy Performance Certificate (ECP) has been there for a long time to evaluate the standard of the building’s fabric and services. However, when it comes to energy consumption or emission, evidence suggests that there is almost no correlation between a building’s EPC score and its actual energy and carbon performance in practice. It’s a difference between theoretical modeling and practical energy usage. Hence there was a requirement to develop the framework that counts on ‘how the building has been operated and not just designed’. Performance-based schemes place the occupant at the center of the equation. In order to reach a fair assessment, performance-based schemes will typically look at a building’s energy intensity on an m² basis (in order to standardize for size) and factor in the building’s operating hours and the number of people using it.

2. Dynamic benchmarking:

Unlike other green building standards and certificates, the Proposed performance-based rating system is dynamic in nature (types of building benchmark) and needs to be renewed annually. Energy use and carbon emissions from a building will be benchmarked against similar building types and rated on a scale of 1 to 6 stars where 6 stars could represent the best and 1 the worst. 

3. Transparency in assessment:

Eligible buildings would need to disclose their performance score to everyone, which will make sure that the large businesses and organizations are transparent on their environmental commitments and ready to make informed decisions to improve them further. Building owners or tenants can voluntarily choose to share their first year’s rating with the public however from the second year onwards they will be obligated to share it with everyone. Although most of the global organizations publish their sustainability measures through annual reports and participating in EP100, RE100 or other target-setting initiatives this mandatory policy will bring that transparency to mid-size businesses.    

4. Incentivizing Performance:

The government believes that the framework will help investors, tenants, building owners take that extra step to improve their building’s performance which can later be translated into increased asset/property value, lower insurance premiums, or performance-driven financing packages, etc. government will also think upon rewarding those buildings who have improved the performance over the period of time or market-driven mechanism to penalizing low performing buildings.   

5. Adoption from the NABERS scheme:

NABERS, Australia has been one of the most successful performance-based schemes for commercial buildings. Since their inception office buildings in Australia have seen their energy use per square meter reduce by 38%, including a 34% reduction over the last decade. It measures actual impact (reduction of energy intensity) rather than predicted value according to the building’s design.

Ratings are primarily divided into two categories A) Base building rating which covers the performance of central building services, for individual tenants controlling a particular portion of the building. B) ‘Whole building’ rating to measure all the energy use in the building, ideal for the building owner/occupiers or single tenants

With this framework, the building’s performance rating will showcase how the building is performing, on emission indicators against similar building types to prospective buyers and tenants providing insights on the running costs they can expect if they occupy the building. A performance-based rating will provide more reasons and data points to a potential buyer to make a precise and reliable purchasing decision.

Are you managing any properties that come under the eligibility criterion of this scheme? Do you think this type of national-level benchmarking will create a market-driven environment to accelerate the adoption of energy efficiency measures in commercial buildings? Do you think your building needs a building analytics software for energy efficiency? Let us know your thoughts.  

Let’s consider a scenario where you have been bidding for the FM contract for a particular facility, you have all the necessary details on the scope of services, KPIs, and work plan provided to the client or property owner. Then the news comes out that you have finally won the contract and you will be managing the facility for the next 3 years. 

What will be the first thing you would do? You have been competing with other FMs to reduce the cost of services which makes it obvious that it has to be related to budget planning. How much will you invest in O&M to get the committed performance? Or how will you ensure your investment is getting paid off?

Well, as far as budgeting for digital Initiatives which takes care of O&M is concerned there are a couple of ways one should plan investment activities for successful returns. In this article, we are going to highlight those 5 practices for effective budget planning.

1. Stage investments

Once you assess the entire facility you would get to know that there are a few add-ons you would be needed to get the complete picture of asset operations. It could be installing more sensors, communication devices, or retrofitting existing ones.

List down all the changes you would like to make to the existing asset data management systems and divide the investment into 2-3 stages based on the purpose it solves or budget it requires. Now correlate it with your other digital initiatives and ensure that every round of investment has maximum benefits before going to the next one. 

2. Application / Platform or both

It all starts with how you are planning to manage your asset and operations data. In most of the facilities, there are different ways to maintain process or asset data. for example, there will be different applications to manage asset maintenance, inventory for the spare parts, work order or help desk. 

Also, each facility has Its own challenges and targets when it comes to asset performance. Hence it’s up to the facility manager whether he wants to go with a point solution that focuses on one or two use cases only or the integrated platform which can take care of managing raw data and providing insights via multiple modules.

Of course, both the options have their flexibility, scalability and open integration difference and the FM should consider them all before budgeting for the same.     

3. Always go for Pilots 

The building analytics market is growing tremendously day by day. Numerous innovative solutions are entering the market. Some of them are backed by mighty legacy players and the rest are bootstrapped startups. Being the nature of innovation, finding a proven solution in a niche area could be difficult as most of the solutions wouldn’t get that first leap of faith from the client. 

This is more of a change management decision rather than the functional one. It’s highly recommended that every FM team should have allocated resources and planning to engage with startups on various initiatives. Starting with the small-scale APM pilot project gives the needed visibility and confidence for the application to scale in the future.  

If you remember, We have already addressed our thoughts in a two-part series on how to plan and execute APM trials.

4. Allocating Workforce upskilling

Any Digital transformation initiative would require upskilling of the staff without which it is a complete futile initiative. It’s not just technical skills but also people management that plays an important role here. The workforce should be well equipped with the knowledge and benefits of the new application that has been implemented hence the training or upskilling cost should be factored in while planning for the yearly budget. 

5. Data migration costs

This is one of the highly ignored areas of planning which often surprises with hefty cost components. Let’s consider you have been using a proprietary BMS dashboard to monitor your HVAC network. Now you come across an insightful application that does a lot more than your proprietary dashboard and now you would want to transfer your raw data to the new application want to build the data connector. Since your old BMS did not come up with a data-sharing feature or cost an additional license to transfer the raw data then it can be a big headache and hindrance to the process. 

This could be a big problem if the data is not being centralized and stored in different applications. If the data transfer is not cautiously monitored then there could be a loss of data in the process, hence all care to be taken. 

Budgeting for the FM’s digital applications is a multi-layer process. There are operational, technical, and behavioral components that influence the decision-making process. It is important to check whether every investment/budget-related decision aligns with the long-term digital transformation goals and adds value to the O&M team’s efforts.