Executive Summary

Today, federal facilities managers are challenged increasingly to ensure the quality of their facilities in the face of limited funds and reduced staff resources. Often, facility managers must try to resolve these issues while also responding to new policy directions and internal and external reorganizations. For all these reasons, managers have been seeking ways to restructure their organizations and reengineer their operations, to best design, acquire, operate, and maintain quality facilities in the demanding new environment.

Toward addressing these challenges, the standing Committees on Design and Construction, and Organization and Administration of the Federal Facilities Council convened a two-day symposium, May 30–31, 1996, to hear federal, academic, and private sector representatives report on their reengineering of facilities management organizations, current trends in their own arenas, and their experience with novel organizational and process solutions.

During the two days, over 25 speakers and 100 attendees participated. Speakers provided a wide variety of information and personal perspectives on facilities management trends. Attendees had the opportunity to question the speakers, identify additional issues, and relate their own experiences. Neither the speakers nor the audience were asked to come to any consensus on the issues or recommendations for federal facility managers. However, over the course of the symposium, a number of recurrent themes emerged from these reports and the final discussion at the meeting's end.



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--> Executive Summary Today, federal facilities managers are challenged increasingly to ensure the quality of their facilities in the face of limited funds and reduced staff resources. Often, facility managers must try to resolve these issues while also responding to new policy directions and internal and external reorganizations. For all these reasons, managers have been seeking ways to restructure their organizations and reengineer their operations, to best design, acquire, operate, and maintain quality facilities in the demanding new environment. Toward addressing these challenges, the standing Committees on Design and Construction, and Organization and Administration of the Federal Facilities Council convened a two-day symposium, May 30–31, 1996, to hear federal, academic, and private sector representatives report on their reengineering of facilities management organizations, current trends in their own arenas, and their experience with novel organizational and process solutions. During the two days, over 25 speakers and 100 attendees participated. Speakers provided a wide variety of information and personal perspectives on facilities management trends. Attendees had the opportunity to question the speakers, identify additional issues, and relate their own experiences. Neither the speakers nor the audience were asked to come to any consensus on the issues or recommendations for federal facility managers. However, over the course of the symposium, a number of recurrent themes emerged from these reports and the final discussion at the meeting's end.

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--> Continuing Change In both private and federal sectors, continuing financial and regulatory pressures, and mergers, consolidations, and acquisitions have led to the long-term trend to downsize or ''right size'' organizations and to reshape structures and processes fundamentally. In the private sector, many changes have been forced by ever growing competition and shorter product cycles—on the order of 18 months for many high-technology businesses. In the federal sector, recent legislative and executive actions—notably, the Federal Acquisition Streamlining Act of 1994, the Federal Acquisition Reform Act of 1995, and Vice President Gore's National Performance Review—have prompted federal innovations and experiments that are widely viewed as the greatest transformations in federal government in the last 30 years or more. Several speakers suggested that facilities managers should recognize that changes in operating procedures and functions will continue into the foreseeable future and should incorporate plans to manage such change into their long-term strategic planning. Communication Today, participants emphasized, communication in general is increasingly important in facilities management of any kind. The growing multidisciplinary nature of facilities management alone makes mutual understanding of the different roles and requirements involved essential. Moreover, open and frequent communications among employees and between employees and management are required for good business process reengineering. Communications between government and industry are also required for government to identify and adopt those commercial practices that will serve it best. Participants noted that interagency cooperation in exchanging best practices has additionally been employed to mutual benefit, and might be developed further. According to several speakers, communicating effectively with the building users or clients is essential in this new environment for the facilities manager to understand users' needs. They emphasized that facilities managers should learn to "market" their services to clients, clearly articulating how facilities contribute to agencies and their missions. Further, to know the customer well, facilities managers must be full

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--> members of the teams involved with staffing plans and process reengineering. People In the various discussions of organizational change, several speakers and participants noted that managers should not forget that people are an organization's most valuable resource. One private sector manager stated that if you do a good job taking care of your employees, they will do a good job serving your clients. Training and a supportive environment are key ingredients to growing as an organization. In this manager's firm, considerable emphasis is placed on developing strong project managers who can assume ownership of a project and, at the same time, be held accountable for results. Leadership and Risk Taking The critical, if more intangible, success factors of leadership and risk taking in quality facility management were also common themes in the symposium reports. In reorganizing or reengineering an organization, strong leadership and a clear future direction for the organization are necessary to success. The open communication encouraged in construction contracting partnerships, despite its potential legal difficulties, was reportedly one of the factors behind the success of several difficult projects. Several new streamlined requests for proposals and procurement processes also proved highly successful, according to the reports. These and other achievements in facilities management were possible only through leadership and risk taking, participants observed. These qualities should be encouraged in federal facilities management, if quality services are to be provided at reduced costs. The Bureau of Reclamation, in its recent award-winning reinvention program, devised an explicit strategy to promote these attitudes among staff. Space Utilization and Building Design In both private and federal sectors, organizational structures have been flattened, with layers of management, along with total personnel, reduced. At the same time, many organizations are reengineering their

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--> business practices. Such organizational changes lead to new work patterns that affect the needs for facilities and the way space is used. In many corporations, headquarters staff is being cut and/or relocated to field offices, reducing or eliminating the need for headquarters buildings. The use of "teaming" approaches, telecommuting, "hoteling" and other shared office concepts, and greater reliance on technology all have implications for the need and use of space. Private companies report that they also expect to use more consultants and part-time workers in the future. This continuous and rapid turnover of space and people suggests that buildings and furniture systems need to be designed with sufficient flexibility to allow for cost-effective reconfigurations as new tenants and new functions emerge. Despite the focus on the bottom line of an organization's ledger, many participants and speakers emphasized that a building or facility must be more than a weatherized, economical box. Buildings should blend with and enhance their surroundings, enhance the users' quality of life, and enable the user to work productively, comfortably, and safely. Federal buildings should also be civic structures that inspire and add value to the community. Productivity Metrics The need for metrics was another recurrent symposium theme. A large number of participants emphasized the implications of any facility's lifetime costs. Over the life of a building, roughly 5 percent of costs go to construction, less than 5 percent to operations and maintenance, and more than 90 percent to personnel salaries and equipment. If the first two investments are leveraged to produce a better quality workplace, it is possible that employee productivity can be greatly enhanced at very low relative cost. For example, if a 1 percent improvement in performance is obtained by investing 10 percent more in construction, the return on that investment is 100 percent. A calculation made specifically for the U.S. Department of Defense, where personnel accounts for 95 percent of total costs, showed that a 3.7 percent productivity gain in personnel would pay for all facility costs over a facility's 40-year lifetime. Speakers noted that this broader view of the lifetime costs of a facility is difficult to convey to decision makers in part because of the emphasis given to facilities' initial costs.

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--> Calculating the effect of workplace on the productivity of the workers who occupy those facilities is difficult, although Carnegie Mellon University and the Army's Construction Engineering Research Laboratories have tried to do so. While this obstacle to analysis has proved stubborn, the speakers noted, it is worth taking on. In manufacturing industries, where the productivity of personnel can be measured in terms of units produced, the quality of facilities in supporting productivity is taken quite seriously. Research on recent business reengineering at Fortune 500 companies, one speaker noted, indicated that, in the course of their reengineering, these companies clearly came to view facilities as enabling factors, and made investments accordingly, even though initially they thought of facilities merely as costs to be reduced. Unlike the private sector, federal agencies do not review project and building operating costs relative to program costs. One speaker suggested that federal agencies should begin to analyze real estate as a production factor in the broader scheme of providing public service, while another suggested that facilities be considered part of an organization's investment portfolio. Maintaining Public Assets Another overarching theme of the reports was the importance of maintaining public assets—an area of federal facility management that has often been neglected. Again, the lifecycle costs of facilities are often ignored in the public sector, in large part because of the way they are budgeted. Great attention is given to initial costs—which again represent only about 5 percent of total facility costs. On the other hand, the budget structures of federal, state, county, and community governments are highly obscure and flexible about the funding of facility operations and maintenance. Federal managers can use maintenance and repair funds for other purposes, and they often do. In contrast, many industries allocate a specific percentage of their annual budget to fund operations and maintenance as a cost of doing business; they recognize that deteriorated facilities will negatively affect the bottom line, through lost productivity, and reduced quality and safety. Federal facilities represent a very substantial investment. They are also intended to serve essential public functions. Deteriorated public facilities affect the quality of public life as well as the productivity of federal employees.

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--> Three strategies would help address these shortcomings, according to one symposium report: designing budgets that clearly reflect all the costs of facility ownership over the facility's life; encouraging responsible stewardship on the part of facility managers; and educating the public about the true costs of ownership. The Department of Defense and Army Corps of Engineers have both begun initiatives emphasizing the importance of lifecycle costs, toward ensuring that investments are optimized and that mission needs are met. Partnering and Other Cooperative Techniques Partnering in construction contracting and other multi-interest endeavors was highly praised by meeting participants. In construction contracting, this approach teams the owner, user, designer, and constructor, who meet early in the project and regularly thereafter to discuss their expectations and roles. Emphasis is given to win/win decision making, in which all involved are treated as full stakeholders. The input and contributions of employees and other interested parties (such as adjacent properties) are also clearly recognized. Some noted that this cooperative approach is greatly rewarding to those involved—and it may be the most effective way to leverage project resources. Particularly when team members can serve as the final decision makers for their constituencies, partnering allows not only well-informed action, but also timely project delivery. The value of other cooperative techniques was also described. A charrette is an intensive brainstorming session that occurs over several days, in which a working group that brings together talent from various disciplines and interests develops solutions to sensitive problems in design. The objectives of a charrette include helping to develop a shared vision for all the stakeholders and educating the client. A charrette was successfully used to establish design guidelines for the problematic facade of the Bureau of Engraving and Printing, which must serve as both the visitors' entrance of a major monumental building and the service entrance for the regular passage of industrial equipment.

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--> Flexible Project Delivery Systems To provide quality facilities in this fast-changing environment, facilities managers must be flexible. There is no one best method of contracting for facilities, or of managing or financing projects, presenters said. Facility acquisition methods should be chosen based on the individual project and situation. All the contracting methods available for project delivery should be assessed against project requirements, because the acquisition method chosen can affect the delivery schedule, the quality of the facility, life-cycle costs, and the extent of supervision required. Factors in decision making should include, for example, expertise of staff, criticality of schedule, ability to issue performance specifications, tolerance of risk, expertise of available design and construction firms, complexity of the project, and ability to make decisions as quickly as the contractor requires. Speakers also described several specific innovations in project delivery systems, to overcome some of the drawbacks of particular approaches while maintaining their benefits. For example, one symposium report described a design/build strategy that relied on a greatly streamlined request for proposal, minimal documentation from proposers, and a one-step evaluation process, with a highly successful outcome. Other speakers described their successful use of simplified procurement processes. As in the case above, some of these success stories depended on identifying a limited number of very carefully chosen technical selection criteria, including the past performance of the contractor and/or architect. According to the symposium reports, recent acquisition reform laws have provided other powerful tools for quality project delivery at lower cost as well. These tools include the ability to limit award consideration to the best qualified; awards based on best value, rather than simply lowest bid; and multiyear and multiple task and delivery order contracts, which provide new incentives for vendors to compete. A large number of speakers, based on their own experience, praised the best value approach particularly, for achieving the best quality design and delivery within the constraints of cost. Also in keeping with the new legislation, a variety of commercial standards and practices have been successfully adapted to government use. Examples include the General Service Administration's (GSA) use of professional design specifications in place of its own, and the Naval Facilities Engineering Command's use of the contractor's quality assurance

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--> program, rather than the Navy's. The use of performance, rather than procedural, specifications in construction contracting was also endorsed by some participants. Quality and Cost Control Several reports noted the value of quality and cost control programs. Development of the new Health Care Financing Administration headquarters relied on the general contractor's project quality planning process, which the industry has recognized as a best practice in total quality management (TQM). This practice identifies specific project roles and objectives, and trains and tracks personnel to meet these goals. One speaker noted that TQM can make innovation and significant change in business processes possible. The Department of Veterans Affairs (VA), with its annual construction budget of approximately $1 billion, analyzed all the agency's construction change orders, to identify problem areas and issue corrective design alerts. In one case, they found, over $1 million could be saved annually simply by correcting an electrical wiring diagram. The VA has also analyzed the activity flow within its surgical suites and other medical departments to develop new design guidelines. In the design programs of GSA's Public Buildings Service, post-occupancy evaluations have been used to validate design criteria, to ensure that users' needs are met. Many speakers, representing private and public organizations alike, emphasized that business process reengineering should be based on a rational process, such as TQM, to avoid well-intentioned, but sometimes unsuccessful, attempts to control costs. Increasing Use of Electronic Technologies The use of electronic and computer technologies to communicate and accomplish tasks continues to grow, and shows every sign of growing further. Notable developments in the public sector include the communications networks ARNET and FACNET, and the General Services Administration's electronic catalogue, with electronic ordering and payment. In facilities management in particular, it was observed, electronic technologies will likely be used increasingly, because of the reporting

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--> requirements of outsourcing programs, quality assurance, and increased regulation. Such technologies can permit real cost savings—if they are carefully implemented. (The term "shelfware" has been coined to cover the vast amount of software that is acquired but never used.) Four areas of computer-aided facilities management (CAFM) show more immediate promise, according to one symposium report: space and asset management, strategic space planning, facilities/conditions assessment, and infrastructure support project communications. Such technologies permit data to be integrated among business units for efficiency, more efficient project management, the calculation of features (such as floor space and adjacency and trip space analyses), and the calculation of optimal facility investments. Additionally, business use of the Internet, World Wide Web, and videoconferencing are all expanding rapidly. Outsourcing and Out-tasking Outsourcing, the hiring of a private full-service vendor, and out-tasking, the hiring of a specialized vendor for one or two services, are now commonly used in both public and private sectors. Outsourcing and out-tasking are often pursued for cost savings, but several symposium speakers observed that this purported gain may be overrated. More important, they suggested, outsourcing and out-tasking can achieve the flexibility needed to respond to continuing change, can buy superior expertise, and can allow the organization to focus on its core mission. Outsourcing may also be used as a catalyst for change in an organization. One speaker noted that with the outsourcing of facilities services functions comes the need for facility managers with project management and contracting skills. Outsourcing contracts can benefit from including performance incentives, to achieve better services and cost savings for both organization and vendor. Next Steps Symposium presenters and participants identified several follow-on activities prompted by their reports and discussions. The productivity of federal facilities and the quality of the federal workplace might be explored, to help clarify the most cost-effective investments in federal facilities. Other

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--> topics of interest included the management of renovations and smaller projects; these projects represent a large part of federal facilities management, will likely be of greater relative importance in the fiscally constrained future, and may offer special lessons in management. Finally, participants noted the value of the present exchange for their own roles in facility management, and suggested that a similar symposium be held in two years' time, to exchange information again on new developments and practices.