Perhaps one of the most critical aspects of corporate real estate management is the subject of process management and the software that supports it. Process management is a major subject in the topic of quality management. It has been a topic that has dominated management subjects for decades. Most software applications have specific functionality that addresses process management; particularly around work flow.
There are many definitions of process management. Wikipedia’s is fairly representative of most definitions:
“Process management is the application of knowledge, skills, tools, techniques and systems to define, visualize, measure, control, report and improve processes with the goal to meet customer requirements profitably.”
In the field of corporate real estate, process management is central to the efficiency and effectiveness of the organization. Real estate management involves a multitude of processes and disciplines that are inter-related, inter-dependent, and in many cases time sensitive. Just the process of creating a lease involves a number of steps, a number of approvals, and finally a number of data points. Here’s a simplified process flow for the creation of a lease which is typically a subset of the broader set of processes in completing a new office project
· Create a statement of requirements (square footage, headcount, target area,. etc)
· Seek sign-off on requirements definition from tenant organization
· Scan lease data base to determine if there is available capacity to meet requirements in the targeted market area
· If nothing available in inventory, launch site search with broker/tenant rep
· Narrow prospective locations to three possibilities
· Complete test layouts of three candidate locations
· Complete market analysis of targeted market (typically completed by broker/tenant rep)
· Initiate lease negotiations with prospective landlords, owner reps.
· Complete financial analysis of three prospective lease deals
· In parallel complete lease authorization (financial approval) of three deals. I prefer seeking a generic approval that gives the CRE team some latitude in negotiations.
· Finalize lease negotiations and complete lease documentation
· Conduct legal review of lease. (adjust as necessary)
· Once lease is finalized, complete interior designs, and order furniture and equipment.
· Initiate and complete leasehold improvements (LHI)
· Abstract lease and enter lease data base.
· If a relocation, complete move plans with tenant organization
· Complete the move
· Conduct post project review, finalize “punch list.”
This is a simplified list of the key steps in a leasing project and each step involves different players, different responsibilities, and various dependencies. Also, the process is sequential, each step must be completed before moving to the next step. Another key element of the process flow is the exchange of data. Leasing projects create significant data that typically must be shared across the CRE organization, with other departments, external service providers and various management representatives.
Process management impacts organizational design. Ideally the organizational responsibilities and structure should align with key processes to ensure efficiencies. In the next blog post, I’ll focus on the organizational topic and explore how work flows (process) influences organizational structure