SA Occupiers shows the way

Posted On Friday, 30 September 2011 02:00 Published by eProp Commercial Property News
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David Pierre-Eugene, Head of Group Facilities for Discovery in South Africa, speaks about his organisation’s use of IPD Occupier benchmarking services

Property-Housing-ResidentialDiscovery was one of the first South African organisations to adopt IPD Occupier benchmarking services, and has now received analysis of its occupied estate for each of the last three financial years – 2007-8, 2008-9 and 2009-10.  “Discovery is a value-based company,” explains David Pierre-Eugene, “and our values of intellectual leadership and prudence relate directly to our real estate facilities.  On the one hand we want to provide a great environment in which our people can thrive, while on the other we need to keep real estate costs – the second or third most substantial cost heading in the business – under control.  We use the IPD service to benchmark costs for the overwhelming majority of our leased space in South Africa, principally offices and call centres.  These have a total area just shy of 100,000 sqm.”

Pierre-Eugene has been Group Head of Facilities at Discovery for 11 years, and has thus been intimately involved with the adoption of IPD Occupier benchmarking.  “The most important use of this information is for reporting cost levels up through the organisation to the CEO and CFO, both rental levels and also the costs of services consumed by property – set in the context of averages for competing business space users.  We now know how much our head offices at Sandton are costing in terms of rent per metre, and can place that in the perspective of cost levels across the country.  This gives us a basis for thinking about whether we are getting good value from the property, even if we may be spending somewhat more than those against whom we are being benchmarked.  We may, for example, be in a better location or better quality space.”

“The IPD Occupier benchmarking results provide important evidence to back up our facilities strategy,” continues Pierre-Eugene, “in the financial language that the rest of the business can understand.  This reporting goes into a high level of granularity on the various cost categories such as cleaning, security and insurance; we have many such costs as all our properties are leased on a repairing and insuring basis.  If we were to move our HQ to downtown Johannesburg, rental costs would come down but many of those other overheads would undoubtedly increase; this was something we were already aware of in general terms, but we now have a better idea of the potential financial impact.  Using this kind of statistics ensures that we ask the right questions when we think about big decisions.”

“We have also found it helpful to get our accounts into a form that is compatible with the IPD Cost Code – which is the basis of the South African benchmarking framework.  This means that it is now easy for us to download the data for analysis on a periodic basis, and also that it will be possible to make international comparisons in a consistent way, if we want to include the property we occupy in the UK, for example.  And we are very much looking forward to the participation of increasing numbers of South African occupiers in the service; this will increase the potential for breaking down the outputs into more property types – eg call centres – and more detailed geographical locations.”

“In the shadow of the Global Financial Crisis and increasing inflationary pressures, real estate costs need to be monitored ever more closely,” concludes Pierre-Eugene.  “Given that profit equals income minus expenditure, and that real estate is one of the biggest cost generators, you need to manage your estate with an awareness that goes into granular detail, splitting out key elements such as heating, gardening and lighting.  At the same time the greater emphasis being placed on sustainability means that understanding your space and energy use is at a premium – this will be the only way to maximise the triple bottom line.“

Last modified on Wednesday, 21 May 2014 16:38
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