Program Management
line
Program Management
1) Beginning
2) The Corporate
Impediments
3) The Industry
Impediments
4) A New Way
of Thinking
5) Elements of
Program Management
6) Why the need for a
new “class” of vendors?
7) A Better Way
Part 2: The Corporate Impedimentsline
We observe four fundamental reasons why corporations don't adequately pursue these cost savings opportunities.
1. Senior Management Apathy:
Real Estate and the process of evaluating and securing space is seen in most companies as a "support" task, with senior management much more concerned with other pressing “core” issues and responsibilities. They are generally unaware of the inefficiencies of the current system and the available value from new processes is not readily apparent. Senior management is understandably busy with “running the business”. It’s simply not on their radar screen.
2. Suboptimal Organizational Structures:
Most companies do not have a comprehensive approach to facilities projects from an organizational standpoint. The three main functions of real estate, human resources and information technology are independent silos in most organizations. There is little encouragement to drive these organizations to proactively collaborate, as they must if decisions are to be optimized. Additionally, the “users” of the space often report up through the organization on separate lines from these staff organizations, and the real estate group frequently has further organizational distinction between real estate, design, construction and facilities management. Budgets are established independently, turf infighting exists, and differing motives are in play.
3. The Budgeting Process:
Budgeting processes within corporate real estate often mask the opportunity to capture value or reduce cost. These budgets are generally established based on historical experience or on what is “acceptable” to management, and are not reflective of market potential. As in government agencies, real estate managers are heavily motivated to never exceed budget, but rarely praised when projects come in below expectations.
Thus, budgets are established at inflated levels and cost reduction opportunities are neither recognized nor realized. In corporate real estate cost budgeting, unlike sales/revenue budgeting, setting the bar higher doesn’t pay career dividends.
4. Organizational Inertia:
Corporate real estate managers and their peers in human resources and IT have been doing business a certain way for a long time, and the risks and uncertainties involved in a major rethinking of the process keep the organization mired in old ways of thinking and traditional processes. Insecurity leads to status quo, and status quo means higher costs.