Time is our most precious commodity. However, what are the monetary implications to a CRE project when time itself becomes nonoptimal and this precious commodity is wasted? This week's blog post explores this common reality and a possible solution to work smarter, not harder.
Anyone who has ever worked on a corporate real estate (CRE) project is aware of the various types of costs associated with one. There’s hard costs--everything from sheetrock to office furniture--and soft costs--architectural fees, permits, equipment rentals, taxes, etc.
Both types of cost are factored into the project’s budget, and while sometimes unexpected expenses can come up, those who have managed a CRE project are more than likely prepared.
However, there is another, more intangible cost that’s oftentimes overlooked, predominantly because it’s not easily factored into a project’s budget--the cost of wasted or unoptimized time.
In the broad scheme of things, the costly implications of wasted or unoptimized time are more steep than you may think. Why? Because while projects consider time in terms of the labor of contractors--i.e., external costs--they don’t usually consider the time of your own internal project managers, C-suite, individual contributors, decision-makers, etc.
Most people will agree with the phrases “time is the most precious commodity” and “time is your most valuable asset.” Conversely, where time goes from a precious commodity to something nonoptimal, is when it’s wasted.
Everyone’s time is valuable--from the ground-level project manager who lives by keeping a project running on schedule, to C-suite members who approve budgets and plans--everyone’s time costs money.
Imagine the Corporate Real Estate Manager—i.e., your project manager (PM).
This person is constantly liaising with external contractors and internal contributors/decision-makers. A PM for a CRE project often spends hours configuring plans and collecting information to effectively communicate a project’s progress and overview.
For example, a contracted architect may present three different floorplans for the PM to present to their C-suite for approval--each floorplan has differing details, costs, etc.
The PM knows they can’t just send three different plans to the C-suite--none of C-suite members have the know-how or bandwidth. The PM must convert these floorplans into a view that summarizes the various cost implications and details of each plan.
The PM creates three different presentations that summarize and convert these plans into a consumable manner. After, they can go back to the architect, and communicate which floorplan the C-suite wants to go with.
Let’s say the whole process took the PM a total of 16 hours:
The average salary for someone in this role is approximately $100,000 per year. If you take a 40 hour work week and multiply it times 52 (weeks in a year), and then divide it by their salary, their time costs roughly $50 per hour.
Using this formula, these extra steps cost a total of $650.
Now, $650 may not seem like a lot of money in the broad sense, however, it’s still time spent doing a task that could be automated with the right technology. A singular view where the architect could configure floorplans that could then be easily digested by stakeholders.
Plus, we haven’t even gotten to how much six hours of a C-suite member’s time costs.
Continuing this example, let’s say the PM had to present to their CFO, CEO, and CHRO. And for the sake of it, let’s also say their VP of HR and VP of Finance were included in these presentations as well. The PM’s company is based in New York City, so salaries are on the higher-end of the average pay scale. The average salary for each of these roles are as follows:
Using the same salary to hourly cost formula we previously used (40 hours times 52 weeks divided by the yearly salary), just one hour of time for each of these roles costs roughly:
Now, multiply these average hourly rates times six--i.e., the three, two hour-long presentations:
To get all these decision-makers in one meeting, for just six hours, costs the company a “hidden” or unaccounted for project cost of $5,730.
And that’s only if they decide on one of the three floorplans the project manager presents to them. Let’s assume the worst case scenario and say these decision-makers don’t like any of the plans––they want three more floorplan options.
Not only was $5,730 wasted one their end, but the project manager has to go back and spend more hours coordinating with the architect to come up with another round of floorplan options. Once this process is repeated, the company will have wasted upwards of $10,000––a $10,000 cost that wasn’t accounted for in the project’s budget.
These extra time-related costs--that aren’t factored into a project’s budget--are plentiful, and the above hypothetical situation is just one type of scenario a project can experience. Imagine all the other instances of nonoptimal time during a complex, CRE project.
What makes this particular scenario so troublesome, is the fact that it can be avoided altogether. CRE projects are now more complex than ever, making cutting out unnecessary steps, essential for a company to approach their future of work.
The PM shouldn’t have to spend hours at a time converting floorplans into digestible formats, just like the C-suite and other decision-makers shouldn’t have to sit through hours of presentations.
When Henry Ford implemented continuous manufacturing to his line back in 1913, he did so to make the best possible car, in the most efficient and most cost-effective way possible. He saw the value and cost of time, and processes that could work more efficiently.
As we approach the evolving CRE space, it’s important to view project delivery like Ford did manufacturing--we must ask ourselves, "How can we work smarter, not harder? How can we be more efficient and truly optimize time?" We don't skip steps, however, we should try to optimize steps at every corner so the project runs smoothly, efficiently, and with cost in mind.
Luckily for us and our digitally transformed world, technology continues to raise the bar by providing us with solutions that enhance collaboration and most of all, save time. Because if we know one thing it is this--optimized time, optimizes spend.
As you look to technology to bid nonoptimal time in your CRE project, adieu, consider the below two questions and points:
Q1. Are we able to quickly and accurately evaluate multiple real estate options, to match our project’s needs?
The chances are, no, but the right technology should be able to quickly iterate real estate options that are at proper scale and reflect actual costs. It should also centralize and make accessible any disparate data points such as pricing, materials, etc. CRE teams and stakeholders should be able to quickly look at an entire project holistically and get accurate estimates as well.
Q2. Are we equipped with an efficient means of collaborating--i.e., “showing and telling”--with those who may not have a background in design?
Like any large, complex project, being able to show non-technical folks progress and updates is oftentimes a significant pain point--resulting in wasted time converting various files into a concise and sufficient view.
The right workplace design platform should be able to provide a virtual, 3D-view, that captures the essence of your workspace. From designers and architects, to project managers and executives--teams and stakeholders alike should be able to experience their floorplans come to life to so they can make more informed, collaborative decisions.
We’d love to show you how Saltmine can help enable fast, efficient collaboration to effectively reduce wasted time and cost for your CRE project. Click the link below to schedule a quick, personalized demo.
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