1 Challenge the future ERES 2015, Istanbul, June 2015 Adding Value by Corporate Real estate Definitions, parameters and practical applications Dr. Theo van der Voordt Delft University of Technology Faculty of Architecture Dpt. of Real Estate & Housing

2 Challenge the future Management of building-in-use Realization Construction/ implementation) Preparation Briefing and design Initiative CREM = the management of a real estate portfolio by aligning the portfolio and the services to the needs of the core business in order to obtain maximum added value for the business and to contribute to the overall performance of the organisation

3 Challenge the future Initiation Briefing & design Management of building-in-use Construction Teams / individuals Organization Area Building / places Stock / portfolio Society stakeholders physical environment Demand Supply

4 Challenge the future Content  Exploration of the concept of added value + added value for whom?  Applications in health care practice  Conclusions and practical implications  Next steps

5 Challenge the future Definitions of Added Value of CRE & PRE The ability of real estate decisions, processes and inputs to create shareholders wealth Rutherford and Nourse, 1988; Manning, 1991; Manning and Roulac, 1996; Manning et al, 1999; Lindholm et al, 2006 Contribution of CRE/PRE to organisational performance and the attainment of organisational objectives from a point of view of different stakeholders De Vries 2007 The trade off between benefits and sacrifices, taking into account the needs, preferences and prerequisites of all stakeholders Jensen, Van der Voordt, Coenen (2012); Den Heijer 2011; De Vries 2007; Van der Zwart 2014; Riratanaphong 2014;

6 Challenge the future Adding Value by Real Estate INPUT REAL ESTATE levels areas portfolios buildings places OUTPUT PERFORMANCE levels society organisation user groups individuals THROUGHPUT Value adding management real estate (input) adding value (throughput) improved performance (output) added value = Δ output Δ output = output before real estate intervention versus output after real estate intervention Output can be measured with Key Performance Indicators (KPIs) in connection to various stakeholders Adapted from Den Heijer 2011

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8 Challenge the future De Vries 2007

Various stakeholders strategic policy makers functional users controllers financial technical managers physical focus on university focus on real estate strategic operational campus decision source: Managing the university campus (Den Heijer, 2011)

10 Challenge the future Adding Value by CREM/PREM in Dutch health care practice

11 Challenge the future Methods Analysis of documents and interview, jointly conducted with MSc students, post-MSc students and 1 PhD student SectorN Cure (hospitals) CREM5 Cure (hospitals) CEO5 Cure (hospitals) FM8 Housing with care for the elderly - CREM16 Mental health care - CREM20 TOTAL54

Nine added values Van der Zwart 2014 (research 2010)

13 Challenge the future Johan van der Zwart 2011

Thesis Jeth Prevosth Hogeschool Rotterdam 2011 Added value of hospital facilities Summarized in Prevosth & Van der Voordt FMN 2011

Findings Number of respondents marking the value in top 3 of most important values

16 Challenge the future Measures to increase user satisfaction (patients, visitors, employees)  Creating a pleasant ‘healing’ environment where people feel at home, safe and welcome (hospitality)  Better signposting to support way-finding  Attractive indoor climate (temperature, ventilation)  Daylight and outside view  Sufficient privacy (more 1-bed rooms)  Places for social interaction  High quality of semi-public places e.g. waiting rooms  Spatial lay-out supporting one-stop consultations  Nice ICT facilities, etc.

17 Challenge the future Eye hospital, Rotterdam

18 Challenge the future 18 Deventer hospital

19 Challenge the future Measures to reduce investment/running costs  Sharing facilities by New Ways of Working and new ways of consultation  Strict space allocation  Standardisation of spaces  Sustainability measures to reduce energy consumption  Process optimization by Design & Build, DBFMO  Check of Service Level Agreements on cost-effectiveness  Outsourcing  Collaboration with other hospitals  Etc.

20 Challenge the future Measures to increase productivity  Spatial clustering of related care processes  Well considered location of operation theatres  Sound logistics of transport (beds, food, medical facilities)  Attractive indoor climate to avoid a Sick Building  Place and time independent access to medical data  Smart use of ICT and other technology (robots)  Lean supply of facilities and services (just in time delivery)  Etc.

21 Challenge the future Housing with Care Mental health care Cure FM Cure CRE Cure CEO Total N=16N = 20N = 8N = 5 N = 54 User satisfaction63 (11)73423 Innovation44 (9)13416 Productivity44 (13)42-14 Cost reduction-6 (17)33113 Flexibility37 (16)2--12 Risk control15 (13)21110 Healing environment7N.A.1 8 CultureN.A.1 (6)2227 Positive image21 (6)2117 Opportunities to finance13 (9)2--6 Sustainability4N.A.- 4 Prioritised values

22 Challenge the future Different priorities - dependent of:  Internal context: vision, mission, strategy, culture  External context: political, economic, competitors  Phase in the life cycle Conclusions - 1

23 Challenge the future  Range of definitions output oriented or ratio between output and input  Various stakeholders shareholders (Lindholm 2008); 6 types (De Vries 2007); 4 types (Jensen 2010); 4 types (Den Heijer, 2011);  Various types of added value 7 types (De Jonge 2002); 9 types (De Vries 2007), 7 types (Lindholm 2008); 12 types (Den Heijer 2011), 6 types (Bradley 200; Riratanaphong 2014); 9 types (Van der Zwart 2014) Conclusions - 2

24 Challenge the future Practical implications – Input to:  Raise awareness among decision-makers of opportunities for value adding management.  To evaluate the current real estate strategy and tactical/ operational decisions regarding care real estate.  To explore potential synergy and conflicts between different values from the perspective of different stakeholders.  To discuss how design choices with a long-lasting impact on the use value, experience value and future fit with the organisational vision, mission and objectives and the interests and needs of different stakeholders

25 Challenge the future  Search for a more standardized AV-framework  Search for standardised KPIs  Search for practical guidance Next steps

26 Challenge the future Next step New Book 2016 FM and CREM as Value Drivers How to manage and measure added value Edited by Per Anker Jensen & Theo van der Voordt Background & Introduction 12 value parameters Reflections, Conclusions & KPIs 2015

27 Challenge the future Senior researcher at the Center for People and Buildings Delft, Netherlands Associate Professor Corporate Real Estate Management Faculty of Architecture, TU Delft Department of Real Estate & Housing