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Facility planning or strategic facility planning recognizes that every decision made in business planning has a direct impact on an organization’s real estate assets and needs.

In the real world of facility management, a plethora of activities falls under the facility manager’s responsibility, causing frequent lapses into a reactive mode to respond to all the requests, orders, regulations, deadlines, and demands of the organization.

Sixteen years ago, when Gary Hamel, then a lecturer at London Business School, and C.K. Prahalad, a University of Michigan professor, wrote “Strategic Intent,” the article signaled that a. A strategic alliances between two international companies make it easy for foreign companies to establish their business. With such an alliance, both companies take advantage of and boost their business. Builds the image of the brand: Strategic alliances with leading companies improves the image of a company in the market.

Facilities are the critical components of an organization’s strategic facility planning since they are the outcome of business decision-making processes and have a long-term impact on the support for the achievement of the organization’s mission and vision.

Linking facilities to core business strategies are one of the imperatives of refined facility management now and in the future. Even greater importance will be given to strategic facility planning in the coming years as budgets continue to be squeezed, and worker performance and productivity are key factors in the knowledge age.

Strategic facility planning facilitates the organization’s strategy by optimizing facilities to satisfy the strategic relationships between the organization, products/services, and facilities.

The strategic facility planning is a two-to-five year plan encompassing the entire portfolio of owned and/or leased space that sets strategic facility goals based on the organization’s strategic objectives.

Strategic facility planning helps facility managers do a better job and ensures that all employees are working toward the same goals and objectives.

4 Steps of Facility Planning

A flexible and implementable strategic facility planning based on the specific and unique considerations of your organization needs to be developed through a 4 step process.

4 step process of understanding the situation, facilities, conditions, and expectations, analyzing the needs and changes required, planning, and then executing an approved plan will be explained.

Numerous tools for each step of the four-step process will also be suggested.

4 step process of facility planning are;

  1. Understanding.
  2. Analyzing.
  3. Planning.
  4. Acting.

1. Understanding

The first step, understanding, requires a thorough knowledge of your organization’s mission, vision, values, and goals. Thoroughly understand the organization’s mission, vision, values, and goals.

Many organizations follow a balanced scorecard of 4 key measurements: financial performance, customer knowledge; internal business processes; and learning and growth.

The strategic plan focuses on the longer-term, big-picture needs, and vision of the organization. Because the SFP meshes with the strategic business plan of each unique organization, alignment is critical for success.

Facility managers must begin the development of the SFP by thoroughly understanding the needs of the organization.

Through existing internal analysis and business imperatives, the work that an SFP team completes is entirely dependent upon the organization’s specific needs and should address both strategic and long-range planning.

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Conversely, it should also address the evaluation of current facilities and the conceptualization, planning, and implementation of new facilities.

A thorough understanding of the current situation is necessary to analyze the needs properly
and compare existing conditions to those needs.

Commonly, strategic plans provide a combination and range of recommendations to maximize the value of a corporation’s assets.

The facility manager considers factors such as the organization’s mission, vision, culture and core values; the current position of the business and its current real estate asset base; its overall direction and the projects currently underway within the corporation; how the business may change; and how those changes may affect the real estate needs of the corporation.

Once these considerations are well understood, a business-driven approach is taken to analyze the organization’s facilities and to set tangible goals and plan targets.

Often, organizations take a strictly cost-driven approach to their facilities.

Although they are quick to implement and are often cost-effective, this approach is nevertheless lacking in vision, fails to adequately address the actual delivery of the business goods and/or services, and has only a moderate long-term impact on improving the overall performance of the business as a whole.

In contrast, a business-driven approach, despite necessitating a longer timeframe, delivers a clear vision for the future, earns employee support, and enhances performance, which strengthens the business competitively.

Using this business-driven approach, the team studies the real estate assets that the corporation currently holds using gathered data, modeling tools, and scenario alternatives.

This data often includes lease and ownership data, building assessments, square footages, space utilization standards, and location characteristics.

To provide a comprehensive plan, the facility manager and SFP team explore the various business goals of each unit in the business and integrate these goals into the facility plan analyses.

This input defines future space, and real estate needs to be based on overall corporate goals starting with anticipated services, expected staffing changes, and potential new technologies.

The team uses these needs to predict future headcounts, demographics, space utilization, maintenance requirements, capital investment, and operating costs.

At this stage, a clear understanding of the goals of the SFP, as well as the approval process and measures for success, will be complete and have the second stage follow.

2. Analyzing

Second, exploration of the range of possible futures and triggers is needed to analyze your organization’s facility needs using analytical techniques — such as systematic layout planning (SLP), strengths, weaknesses, opportunities and threats analysis (SWOT), strategic creative analysis (SCAN), or scenario planning.

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Use analytical techniques, such as SWOT analysis, SCAN, SLP, or scenario planning, to explore the range of possible futures and the triggers used to analyze an organization’s facility needs.

Once a clear definition of the business’ situation has been established, the facility manager, planners, and designers begin to consider how to balance current facility needs with long-term needs and issues.

These needs and issues may include workforce demographics, manufacturing processes, organizational structure and culture, community and government regulatory requirements, market position, and capacity rates and volumes. All of these combine to define the individual elements of the SFP.

The comparison of the current inventory and conditions with the future needs provides the gap that the SP will address.

Analysis Tools

Several tools (see Analysis Tools section) may be used to compare, analyze, coordinate, and clarify this gap and the alternatives, scenarios, and recommendations that are made.

Scenario Planning

Scenarios are tools for thinking ahead to anticipate the changes that will impact your organization. Scenarios can be considered instructive simulations of possible operating conditions.

This approach might be used in conjunction with other models to ensure planners truly undertake strategic thinking. Scenario planning may be particularly useful in identifying strategic issues and goals.

  1. Select several external forces and imagine related changes that might influence the organization, such as the global marketplace, technology, change in regulations, demographic changes, etc. Scan newspapers and Internet sources for key headlines to suggest potential changes that may affect the organization. Utilize IFMA’s and other association’s trend reports.
  2. For each potential change, discuss three different future organizational scenarios (including the best case, worst case, and all right/reasonable case), which may arise within the organization as a result of each change. Reviewing the worst-case scenario often provokes strong motivation for needed changes.
  3. Suggest what the organization might do, or potential strategies, in each of the three scenarios to respond to each change.
  4. Planners soon detect common considerations or strategies that must be addressed to respond to possible external changes.
  5. Select the most likely external changes to affect the organization, over the next three to five years, for example, and identify the most reasonable strategies the organization can undertake to respond to these changes.

The product of this process is not a final, cut-in-stone document. Still, it provides insight into how different decisions will affect the organization’s return on investment, cash flow, debt load, work processes, and productivity of its employees.

Scenarios will guide decision-makers and provide advance consideration of the potential impacts of different facility decisions.

Systematic Layout Planning (SLP)

The SLP method was developed by Muther (1973) to create conceptual block layouts.

The method successively adds complex data categories until a block layout has been generated, making it a strategy to the tactical tool.

  1. Document the present operation (Deliverable: flowcharts).
  2. Define the activities and planning horizon (Deliverable: table).
  3. Develop activity relationships (Deliverable: relationship diagram).
  4. Develop a square footage requirements spreadsheet (Deliverable: spreadsheet).
  5. Develop block plan layouts (Deliverable: block plan layout).
  6. Development of an equipment layout (Deliverable: equipment layout).

SWOT Analysis

SWOT Analysis is another planning tool used to strategically evaluate the strengths, weaknesses, opportunities, and threats in a project or a business venture.

SWOT uses business objectives and identifies both internal and external factors that are either favorable or unfavorable to achieving that objective.

The four areas considered are;

  • Strengths: attributes of the organization helpful to achieving the objective and describing how they can be leveraged.
  • Weaknesses: attributes of the organization harmful to achieving the objective and how they can be minimized or neutralized.
  • Opportunities: external conditions helpful to achieving the objective.
  • Threats: external conditions harmful to achieving the objective.

Brainstorming (AGIR-a gang in a room)

This technique better ensures that various views and aspects are represented, particularly if the individuals are chosen well. The downside may be too much input, which may yield inconsistencies.

However, done properly, brainstorming provides an opportunity for creative, innovative concepts that might otherwise be overlooked.

As such, it is suggested that a professional facilitator should conduct these types of sessions.

Strategic Creative Analysis (SCAN)

Strategic Creative Analysis is a process for strategic planning, decision making, and analyzing case studies. An example of a strategic planning technique that incorporates a SWOT analysis is SCAN analysis.

The process of SCAN is described in Exhibit 1. (Step 3. Includes the Top Rated Objective – TRO).

Benchmarking

Benchmarking is a very useful SFP tool for comparing and measuring your organization against others, anywhere in the world, to gain information on philosophies, practices, and measures that will help your organization take action to improve its performance.

In summary, benchmarking is the practice of being humble enough to admit that others are better at something and being wise enough to learn how to match and even surpass them at it.

Benchmarking utilizes much of the organizational understanding gained in the first step of SFP to compare practices and metrics to recognized leaders.

Networking with peer organizations, competitors, and especially for facility organizations, visiting award-winning service organizations provides insight to bring back and adapt to your operations.

Adaptation is the key—recognizing a good process or practice and use it in your specific way within your organization is the essence of successful benchmarking.

For SFP to serve as the right mechanism to analyze and improve current facility operations, a proactive approach to benchmarking practices and services of those organizations recognized as industry leaders is needed.

Benchmarking may be undertaken as part of a broader process reengineering initiative, or it might be conducted as a freestanding exercise.

Organizational Simulation

Organizational simulation is a prominent method in organizational studies and strategic management. This tool aims to understand how organizations operate.

The organizational simulation can describe the coordination of facility operations based on understanding and analyzing the impact of interrelated facility alternatives and activities.

This method can measure organizational performance and support strategic thinking.

3. Planning

Third, once the analysis is completed, plans for potential responses and periodic updates to existing plans in response to changes in the market need to be developed to meet the long-range needs of your specific organization.

Develop plans that meet the long-range needs of the organization.

At a minimum, the SFP should be reviewed annually and further updated periodically as conditions require.

As a result of the analyses performed, decisions will become apparent, or recommended courses of action can be supported by the completed analysis.

These recommendations will become the essence of the SFP.

To be organizationally mandated, most facility managers will need to present the recommendations to senior management, obtain buy-in (often involving some negotiation and adjustment to the plan), and get final approval and funding for the proposed plan.

IFMA uses and recommends the balanced scorecard methodology for integrating planning into the organization’s objectives, but recognizes that every organization has selected methods for business processes and facility management conforms to align with the organization’s methodologies.

The following are major steps in setting up the plan:

  • Document the primary objectives to be addressed (the gap) in the SFP.
  • Evaluate sites, zoning, costs, labor, competition, and all factors critical for success.
  • Conduct financial and risk analysis to focus on finding the maximum value.
  • Develop alternatives with recommendations and priorities.
  • Develop a process for marketing the recommended SFP to gain management approval.
  • Obtain financial and other approvals needed to launch the action phase.

It is important to note that once approved, and the SFP may continue to evolve and adapt to changing conditions within and outside the organization. The flexibility of a good SFP will accommodate the minor adjustments.

4. Acting / Action

Fourth, take action as planned to implement the strategic facility planning successfully.

Take actions as planned and implement the SFP. Feedback from actions taken can be incorporated into the next plan and/or project to provide continuous improvement to future SFPs.

After approval, the SFP is then ready for implementation.

Implementation of an SFP typically requires the development of a specific project or project to deliver new, altered, or reconfigured space to meet the organizational need. This specific project is a unique process that is supplemental to the SFP.

Specific project planning with take place outside the SFP to fulfill the detailed implementation phase. Some projects, especially large new space projects, may be managed by specialty or contract groups.

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It is critical in these cases that facilities stay involved as a core team member, to ensure integration of the planning and operational phases of the specific project.

Regardless of the tools used in the development of an SFP, the SFP should be viewed as a living document that reports findings and makes considered recommendations for implementing the plan within a realistic time frame, yet maintains the flexibility to adapt as business requires.

While implementation is in progress, flexibility to adapt to changed conditions may be required.

It is prudent to view an SFP as the “current SFP” since any major change in market conditions, economic outlook, or other forces could require varying degrees of change to the original document.

This is another reason that scenarios are very helpful—since they anticipate some of these potential changes. The SFP is a major facility management tool used to support the organization—alignment with the organizational vision, mission, goals, and objectives are always critical for the success of the SFP.

Documentation of especially successful or problematic portions of the SFP, if noted, can provide valuable feedback for the next iteration of planning.

The cyclical nature of planning and continuous improvement provides opportunities to learn from each process. The following diagram is a process model developed for SFP accomplishment.

This process model integrates the sequential activities, participants, deliverables, and inter-relationships for an individual organization to be successful when implementing the 4-step SFP process.

The process model includes three layers of participants (executive management, facility manager, and staff) and roles illustrating who implements each of the tasks in the SFP development process.

The SFP team needs to be closely connected to implement activities from the project launch through to the final implementation phase, and hand-off for the development of the tactical facility plans to support the organization’s business planning.

Major activities are aligned with the four-step process and include tasks such as data gathering/benchmarking, analysis/synthesis, scenario development/forecasting, and SFP implementation.

The process model ends with the hand-off to a tactical facility plan, which often is the facility management annual plan or budget.

Feedback through all phases for continuous improvement is shown with arrows in reverse. It should also be noted that there are no hard and fast lines indicating when one phase ends and the next starts.

Plans flow at different rates due to different organizational requirements and managerial direction. The precise transitions are unimportant but need to follow your own organization’s requirements.

Facility Planning and Facility Managers

Facility managers know that they need to become more proactive and strategic is important, but finding the time to devote to strategic planning is often a struggle.

As Stephen Covey teaches, we need to prioritize what is important rather than simply urgent to gain maximum effectiveness.

Strategic facility planning is a process that can lead to better, more proactive delivery of services from a facility management organization to its stakeholders.

The time taken to carry out strategic facility planning is well spent in that it helps to avoid mistakes, delays, disappointments, and customer dissatisfaction.

It can allow facility plan implementations to run more quickly and smoothly.

Since strategic facility planning is not a daily task, many facility managers are unfamiliar with the best way to accomplish this type of planning, or perhaps have been asked by senior management to provide a strategic facility plan quickly and are not sure where to start.

Facility managers may still be unsure how to initiate the strategic facility planning process and need to obtain information on methods and techniques useful for successfully implementing a strategic facility planning to correspond with their organization’s needs.

While every organization is different, all organizations strive to become more competitive, effective, and provide the best workplace possible for its employees. This is the role facility managers fulfill, and strategic facility planning is an exercise that is considered another tool to add to the “FM tool belt” needed for success.

Conclusion

The cyclical nature of constant planning for the changing future and adopting plans along the way are normal events. These changes and updates must be managed to ensure they are achievable.

The strategic facility planning identifies the type, quantity, and location of spaces needed by the organization. It contains two main components, the first being an in-depth analysis of existing facilities and the other an achievable and affordable plan to meet the organization’s needs.

Using the organizational business plan, the differences should be identified between the current situations and analyzed needs.

Gap analysis, a business resource assessment tool enabling an organization to compare its actual performance with its potential performance, is an appropriate tool to be used.

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Financial analysis is also required to determine the yield on the highest return at the lowest risk.

A proactive approach to benchmark practices and services of leading organizations in the industry will be helpful for strategic facility planning and serves as a mechanism to understand, analyze, and improve the current facilities operation.

Since differences in organizational type, culture, and processes strongly influence how strategic facility planning is accomplished, the recommended strategic facility planning will need to be adjusted by the different types, cultures, and processes of your specific organization.

The purpose of the SFP plan, therefore, is to develop a flexible and implementable plan based on the specific and unique considerations of the individual business.

Opinions expressed by Entrepreneur contributors are their own.

In Franchise Your Business, author and franchise consultant delivers the ultimate how-to guide to employing one of the greatest ever -- franchising. Siebert shares decades of experience, insights, and practical advice to help grow your business exponentially through franchising while avoiding the pitfalls. In this edited excerpt, Siebert digs into the details behind just what makes franchising a growth strategy you might want to consider.

The primary advantages for most companies entering the realm of franchising are capital, speed of growth, motivated , and risk reduction -- but there are many others as well.

1. Capital

The most common barrier to expansion faced by today’s small businesses is lack of access to capital. Even before the credit-tightening of 2008-2009 and the “new normal” that ensued, entrepreneurs often found that their growth goals outstripped their ability to fund them.

Franchising, as an alternative form of capital acquisition, offers some advantages. The primary reason most entrepreneurs turn to franchising is that it allows them to expand without the risk of debt or the cost of equity. First, since the franchisee provides all the capital required to open and operate a unit, it allows companies to grow using the resources of others. By using other people’s money, the franchisor can grow largely unfettered by debt.

Moreover, since the franchisee -- not the franchisor -- signs the lease and commits to various contracts, franchising allows for expansion with virtually no contingent liability, thus greatly reducing the risk to the franchisor. This means that as a franchisor, not only do you need far less capital with which to expand, but your risk is largely limited to the capital you invest in developing your franchise company -- an amount that is often less than the cost of opening one additional company-owned location.

2. Motivated Management

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Another stumbling block facing many entrepreneurs wanting to expand is finding and retaining good unit managers. All too often, a business owner spends months looking for and training a new manager, only to see them leave or, worse yet, get hired away by a competitor. And hired managers are only employees who may or may not have a genuine commitment to their jobs, which makes supervising their work from a distance a challenge.

But franchising allows the business owner to overcome these problems by substituting an owner for the manager. No one is more motivated than someone who is materially invested in the success of the operation. Your franchisee will be an owner -- often with his life’s savings invested in the business. And his compensation will come largely in the form of profits.

The combination of these factors will have several positive effects on unit level performance.

Long-term commitment. Since the franchisee is invested, she will find it difficult to walk away from her business.

Better-quality management. As a long-term “manager,” your franchi­see will continue to learn about the business and is more likely to gain institu­tional knowledge of your business that will make him a better oper­ator as he spends years, maybe decades, of his life in the business.

Improved operational quality. While there are no specific studies that measure this variable, franchise operators typically take the pride of ownership very seriously. They will keep their locations cleaner and train their employees better because they own, not just manage, the business.

Innovation. Because they have a stake in the success of their business, franchisees are always looking for opportunities to improve their business -- a trait most managers don't share.

Franchisees typically out-manage managers. Franchisees will also keep a sharper eye on the expense side of the equation -- on labor costs, theft (by both employees and customers) and any other line item expenses that can be reduced.

Franchisees typically outperform managers. Over the years, both studies and anecdotal information have confirmed that franchisees will outperform managers when it comes to revenue generation. Based on our experience, this performance improvement can be significant -- often in the range of 10 to 30 percent.

3. Speed of Growth

Every entrepreneur I've ever met who's developed something truly innovative has the same recurring nightmare: that someone else will beat them to the market with their own concept. And often these fears are based on reality.

The problem is that opening a single unit takes time. For some entrepreneurs, franchising may be the only way to ensure that they capture a market leadership position before competitors encroach on their space, because the franchisee performs most of these tasks. Franchising not only allows the franchisor financial leverage, but also allows it to leverage as well. Franchising allows companies to compete with much larger businesses so they can saturate markets before these companies can respond.

4. Staffing Leverage

Franchising allows to function effectively with a much leaner organization. Since franchisees will assume many of the responsibilities otherwise shouldered by the corporate home office, franchisors can leverage these efforts to reduce overall staffing.

5. Ease of Supervision

From a managerial point of view, franchising provides other advantages as well. For one, the franchisor is not responsible for the day-to-day management of the individual franchise units. At a micro level, this means that if a shift leader or crew member calls in sick in the middle of the night, they're calling your franchisee -- not you -- to let them know. And it's the franchisee’s responsibility to find a replacement or cover their shift. And if they choose to pay salaries that aren't in line with the marketplace, employ their friends and relatives, or spend money on unnecessary or frivolous purchases, it won't impact you or your financial returns. By eliminating these responsibilities, franchising allows you to direct your efforts toward improving the big picture.

6. Increased Profitability

The staffing leverage and ease of supervision mentioned above allows franchise organizations to run in a highly profitable manner. Since franchisors can depend on their franchisees to undertake site selection, lease negotiation, local marketing, hiring, training, accounting, payroll, and other human resources functions (just to name a few), the franchisor’s organization is typically much leaner (and often leverages off the organization that's already in place to support company operations). So the net result is that a franchise organization can be more profitable.

Unfortunately, it is difficult to quantify or prove this contention. This much we do know: Research done during the past 10 years shows top quartile franchisors put an average of 40 and 45.6 percent to the bottom line in 2001 and 2002 respectively. How many industries can you think of where net incomes in this range are even possible?

7. Improved Valuations

The combination of faster growth, increased profitability, and increased organizational leverage helps account for the fact that franchisors are often valued at a higher multiple than other businesses. So when it comes time to sell your business, the fact that you're a successful franchisor that has established a scalable growth model could certainly be an advantage.

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When the iFranchise Group compared the valuation of the S&P 500 vs. the franchisors tracked in Franchise Times magazine in 2012, the average price/earnings ratio of franchise companies was 26.5, while the average P/E ratio of the S&P 500 was 16.7. This represents a staggering 59 percent premium to the S&P. Moreover, more than two-thirds of the franchisors surveyed beat the S&P ratio.

8. Penetration of Secondary and Tertiary Markets

The ability of franchisees to improve unit-level financial performance has some weighty implications. A typical franchisee will not only be able to generate higher revenues than a manager in a similar location but will also keep a closer eye on expenses. Moreover, since the franchisee will likely have a different cost structure than you do as a franchisor (she may pay lower salaries, may not provide the same benefits packages, etc.), she can often operate a unit more profitably even after accounting for the royalties she must pay you.

As a franchisor, this can give you the flexibility to consider markets in which corporate returns might be marginal. Of course, you never want to consider a market you don't feel provides the franchisee with a strong likelihood of success. But if your strategy involves developing corporate units in addition to franchising, you'll likely find your limited capital development budget won't allow you to open as many locations as you'd like. Franchisees, on the other hand, could open and operate successfully in markets that are not high on your priority list for development.

9. Reduced Risk

By its very nature, franchising also reduces risk for the franchisor. Unless you choose to structure it differently (and few do), the franchisee has all the responsibility for the investment in the franchise operation, paying for any build-out, purchasing any inventory, hiring any employees, and taking responsibility for any working capital needed to establish the business.

The franchisee is also the one who executes leases for equipment, autos, and the physical location, and has the liability for what happens within the unit itself, so you're largely out from under any liability for employee litigation (e.g., sexual harassment, age discrimination, ), consumer litigation (the hot coffee spilled in your customer’s lap), or accidents that occur in your franchise (slip-and-fall, employer’s comp, etc.).

Moreover, it's very likely that your attorney and other advisors will suggest you create a new legal entity to act as the franchisor. This will further limit your exposure. And since the cost of becoming a franchisor is often less than the cost of opening one more location (or entering one more market), your startup risk is greatly reduced.

The combination of these factors provides you with substantially reduced risk. Franchisors can grow to hundreds or even thousands of units with limited investment and without spending any of their own capital on unit expansion.