OPD Conference 2004

How to Challenge the International

Space Budget

Group Real Estate and Facilities Management

04 March 2004
Group Real Estate and Facilities Management

Introduction: The Portfolio Profile

•  ABN AMRO is one of the worlds largest financial institutions with:

  3 million square metres of space (office and retail)
  More than 60 countries
  1.3 billion Euro per annum property cost base
  3,000 properties
  110,000 FTE

•  ABN AMRO’s activities are organised by Strategic Business Unit (SBU), around
three core client segments:
  Wholesale Clients
  Consumer and Commercial Clients
  Private Clients & Asset Management

•  ABN AMRO’s 2003 end of year Results

  record profit for 2003 of 3.16 billion profit
  net profit increase of 31.1%
  ABN AMRO ranks 11th in Europe and 23rd in the world (based on Tier 1 capital)

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 Group Real Estate and Facilities Management

Understanding the Business Goal

•  With the ambition to be in the top 5 of it peer group, one of the areas of focus was
“reduce the property
efficiency and real estate cost savings
cost base significantly”
•  The SBU structure enabled a decentralised model to be pursued and it was
“move from recognised that co-ordinating synergies could realise reductions in the cost base
decentralised to co-
ordinated portfolio •  Global business managers required more transparency of their global business
management with local occupancy due to the geographical complexity
implementation” •  Co-ordinating key property decision making would enable full and objective
alignment of business unit strategies and avoid local decision making in isolation of
“from delegation to co- global plans
ordination”
•  Target significantly reduce in the property cost base

“Delegation” “Oversight” “Co-ordination” “Control”

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 Group Real Estate and Facilities Management

The Issues: Packaging the Problem

“understanding the •  Decentralised portfolio with geographical complexity

issues”
•  Need for greater transparency
“where should the •  No clear definitions, standards or space measurement
focus be?”
•  Opportunity to establish performance measures and targets
“where is the value
•  Space efficiency impact
add”
•  Need for clear process of delivery

•  Co-ordination and Governance

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 Group Real Estate and Facilities Management

The Issues: Establishing Functional Expertise for

Wholesale Division

“creation of:
•  ABN AMRO creates a team of “Functional Experts” to work with regional and local
Group Real Estate and
knowledge centres in property, delivering:
Facilities Management”
“Real Estate Strategy, Workplace Strategy, Project Management, Facilities
“global reach with local Management and Business Evaluation”
feel”
•  Providing international best practice and a high value add governance process

Group Real Estate and Facilities Management (GREFM)

Real Estate Strategy Workplace Strategy Project Management Facilities Management Business Evaluation

Interface with Business at local and regional level

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 Group Real Estate and Facilities Management

Initial Findings, “the 20% impact”

“the initiatives focus is

•  A broad study of the Property Portfolio and its cost base established 8 key high
to leverage high value impact value add categories
add elements of
property services”   Space Planning Efficiency
  Asset Restructuring
  Surplus Space
* “20% reduction from
  Project Management and Capital Expenditure
26sqm to 21sqm
delivers significant   Facilities Management
saving opportunity”   Front and Back Office
  Key Lease Event Planning

“local area space   Scorecard (create property scorecard and savings tracking tool)
measurement was not
•  Top 12 buildings make up 30% of the office cost base
a common
international •  Workstation densities range from *8sqm to 32 sqm, with an average of 26 sqm
standard”
•  Improving the space planning efficiencies of the office portfolio by 20% delivers a
significant saving opportunity

* Note: these measurements are taken from local measurement and not a common international standard

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 Group Real Estate and Facilities Management

Space Planning Efficiency Strategy

“why would one •  Focus on the top 25 buildings with geographical spread
business occupancy
vary so much ?” •  Standard measurement of buildings carried out centrally to ensure accurate space
data

•  Local interpretation of space categories differ around the globe - standard

definitions had to be established

•  Key Performance Indicators developed to enable value add comparison of data

•  Benchmark both internally and externally for peer group best practice

•  Set a space occupancy target that challenges the property teams and business

•  Identify opportunities

•  Align with business strategy

“to challenge you must •  Align with Key Lease Event planning
first understand”

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 Group Real Estate and Facilities Management

Top 25 Buildings: Square Metres in Excess of Target

“12 square metres per •  Global target of 12 square metres Net Internal Area (International Standard) per
workstation target” workstation with a 2 +/- square metre tolerance depending upon local legislation,
cultural expectation, size of building and functional business requirements

•  Range of excess of -4 to 13 square metres (165,000 sqm in excess of target)

sqm

N.America Europe S.America Asia Pacific

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 Group Real Estate and Facilities Management

Top 25 Buildings: Cellular Offices and Workstations

“workstation
standards are found •  Workstation footprints are globally in line, (with a few exceptions in historical
locations) - average of 4 square metres
not to be the key
driver of space •  Cellular space varies more due to cultural differences and building specification
efficiency”
•  The majority of users sitting at workstations don’t need to be affected
sqm

N.America Europe S.America Asia Pacific

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 Group Real Estate and Facilities Management

Top 25 Buildings: Dedicated versus Non Dedicated Space

“50/50 target” •  Detailed analysis was carried out on the Non-Dedicated space to establish the
impact on the occupancy efficiency and a target of 50/50 ratio was set
“focus on non-
dedicated space •  It was evident that management and control of support areas would play a major
efficiency to deliver part in reducing the excess space in particular locations - not the users desk space
savings”
sqm

N.America Europe S.America Asia Pacific

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 Group Real Estate and Facilities Management

Top 25 Buildings: Opportunity and Priorities

“reduce the delivery •  With additional dimensions - volume of space (size of the bubble) and cost per square
task to priority metre (on the X axis) the chart below identifies the priority locations
locations”
•  Those locations that exceed the targets will be converted over time as opportunities
arise (relocations, restacks and business strategy change)
sqm

Target Zone

€’s

Note: differences in cultures and business lines e.g. Private Clients, Investment Banking and Asset Management would require additional space needs

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 Group Real Estate and Facilities Management

User Impact

“making the space •  80% to 90% of the user base would not have their workstation standard modified
more efficient enables a
•  cellular office allocation and size would impact the middle tier of management
give back of
functionality to the •  redistribution of non-dedicated support space would provide a “give back” to all of
user” the users through:
  more efficient secondary circulation and effective layouts
  align space requirements with all businesses in a location, greater sharing of resources
  creating formal and informal meeting spaces in the workplace encouraging collaboration

•  Project in the Head Quarters building in Amsterdam demonstrates this re-alignment

of space:
  20% improvement in space utilisation to 15.2 sqm per head with additional functional
space of:
–  24 meeting / conference / project rooms
–  17 group storage rooms (assisting with the clear desk policy)
–  6 team “think tank” spaces encouraging collaboration
–  12 lounge / quiet areas for concentrated working

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 Group Real Estate and Facilities Management

Recommendation

“measure against •  During the standard project life cycle space measurement and analysis should be
targets during the carried out to ensure that both business and design changes are tracked and
project life cycle” monitored - informing business leaders of non-compliance and financial impact

Existing Proposed
“inform business Project Cycle Space Analysis Project Cycle
leaders of non-
compliance and Concept Concept
impact”
Space Analysis

Design Design
Space Analysis

Implementation Implementation
Space Analysis

Delivery Delivery
Space Analysis

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 Group Real Estate and Facilities Management

Conclusions

“transparency provides •  Understand your portfolio and create a demand challenge environment
informed decisions”
•  Identify the specific areas of improvement through accurate measurement standards

•  Establish challenging targets that allow priorities to be set

•  Analyse space at key stages of a project life cycle and understand the impact

•  With these tools in place we deliver:

“full transparency to global business heads, leading to -

informed businesses, making informed decisions”

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