Value engineering is about the relationship between intrinsic use value (for an organisation and its employees) and the market price.
A new level of integrated understanding is emerging. Accommodation is more than just a necessity, it adds also value (an increase of benefits and reduction of costs).
At first sight, buildings may look the same. They can even have the same price. Yet, there are differences that make one building less efficient and more costly to refurbish for the intended work processes than the other. The purchase price is the same, but the value for the user differs.
The first level of value creation often used is less space with better quality and better management. The next level is a hybrid place and space, making third places and home a structural part of the accommodation portfolio. This offers the potential for change and possible innovation breakthroughs in the absence of the main social learn/work environment that avoids or sometimes even inhibit change.
“Value creation by means of the learn/work environment arises from the mix of characteristics (performance) that are relevant to the primary process and the stakeholders.” (René Stevens)
Focus on people and their Behaviour instead of mainly on processes, procedures and structures of the organisation, the Bricks & Bytes. Only when employees share the dream of the organisation does synergy arise and they become intrinsically motivated to increase productivity and add (more) value. Cultures are shaped by their environments.
Smart Management is when the focus of a learn/work environment is on increasing the benefits of the activities in that environment and less on cost reduction of the accommodation.
“Value engineering is about the needs and requirements of an organisation as a whole and the individual user requirements of the employees/students in particular.”
The main focus on cutting costs means most of the time that corners are cut and quality goes down, along with customer satisfaction and brand loyalty.
Does the price of real estate equal the subjective worth attributed to it, or is the worth of the object the same as the (market) value? In ordinary language: is the worth of real estate similar to whatever you can get for it?
- Valuating – Process of determining the market price.
- Market price (value) – An estimate of the price the property can fetch on the market at this point in time.
- Price – Actual trade price in the market.
- Valuation -The ‘best estimate of the actual market price by an expert.
- Appraisal – Process of estimating the intrinsic value for an individual or a group of individuals.
- Intrinsic value (worth) – Personal (subjective) estimate of the intrinsic value by the party/parties concerned.
- Added value (value for money) – The independent simulation of the weighing process of the real estate players in determining their intrinsic value in a given context.
The price is the only thing that really exists, for it is the amount mentioned in the tender brochure or in the lease or sale contract. The (objective) value of real estate does not exist, for it is an individual and therefore subjective estimate in a given context.
If the organisational goals are defined objectively and measurably and translated into the required learn/work environment performance, this limits risks and increases opportunities.
The learn/work environment is a catalyst for people’s performance and therefore has a strategic impact and drive revenues.
Most of the constraints on performance are in business’s processes, not the people. It’s unfair to hold any individual person accountable for a performance result that is constrained by the business system and/or the learn/work environment.
At the heart of value creation is the exploration of the learn/work environment as an interconnected and interdependent eco-system of Bricks, Bytes & Behaviour. Optimizing the feedback/feedforward loops between the inseparable “silos” of Real Estate (RE), Facility Management (FM), Information Technology (IT) and Human Resources (HR).
The model of three domains, Physical, Digital and Social, helps to have the right discussions about how to facilitate an integrated learn/work environment. The domains are partly different and partly they come together and overlap. Sometimes they create synergy but quite often there are also tensions. A good learn/work environment needs to take care of what it does in these three domains. Focus on the balance between the physical, the digital and the social environment.
This model helps to show problems in an unbalanced learn/work environment that narrows its focus on only one or two domains instead of on all three. Measuring the added value of the learn/work environment should address all three domains in an interrelated way.
Addressing the larger framework in which the “silos” exist and interact with each other and the entirety of the whole, re-establish integrated wholeness. This may feel complex at first, but hold in mind that the whole is more than the sum of its “relatively independent” parts. It is in the total eco-system approach, where the real added value is created.
A holistic vision is important here, in which a conductor ensures that the various parts of the learn/work environment (RE, FM, IT, HR) are coordinated in such a way that they optimally facilitate the most important capital of an organisation, the employees. To this end, the conductor coordinates the periodic measurement and analysis of the performance of the learn/work environment. Keep in mind that what is important to measure is not necessarily easy to measure.
“Don’t think of costs, think of value. You don’t need permission to add value.” (René Stevens)
Value creation with the learn/work environment consists of:
- Direct income, through sales (positive difference between book value and sales price) and through rental income (shared use and/or rental to third parties).
- Direct cost reduction, by reducing the number of square meters of floor space and/or reducing occupancy costs per square meter of floor space.
- Indirect benefits, because the learn/work environment positively influences the return from the primary process. Plus contributes to achieving the sustainability objectives as part of the social return.
- Indirect reduction in total operating costs (excluding occupancy costs) through a more efficient and effective learn/work environment for the education process.
The learn/work environment is one of the critical secondary business processes. It requires integration and coherence with other business processes such as Human Resources, Finance, Sales & Marketing and the associated systems, so that in addition to support for the primary process, the internal information provision and external accountability are in order.
By definition and measurement agreements, the sub-budgets of departments and business units can be “added up” to form a consolidated accommodation section in the annual report.
As an organisation, dare to think big, but start small. Without experimentation, innovation is impossible. Experiment and gradually find out which form and speed of implementation suit the organisation best. Have faith in the process. Like anything new, it takes a bit of trial and error before you get it right, but the payoff is worth it.
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