Minimising Loss, Accelerating Recovery in Commercial Real Estate
The topic of the Sandford Fleming Forum on May 28, 2020, resilience in commercial real estate, could not have been more timely. We were in challenging times but the lessons on how to accelerate recovery and thereby minimise losses always apply.
The epidemic was a stark reminder that hardening against specific threats will not be enough but rather investing in ways to ensure a timely and appropriate recovery is key.
The Sandford Fleming Forum introduced BOMA Toronto’s Technical Guidance Note on Operational Resilience in the Commercial Real Estate sector for Operations Managers. Nick Martyn (RiskLogik) and Steve Horwood (Ainsworth) presented emerging technologies that can help detect defects and failures early, before they cause substantial losses. These are products that can rehearse facilities managers in virtual reality the management of a crisis. Necessity drives invention; it just needs to be properly informed.
In light of the circumstances, it was decided to change our usual meeting format to a one-hour on-line panel discussion.
A preview of the presentation slides can be found here.
Alec Hay, MC (University of Toronto, Southern Harbour) - Introduction to BOMA Toronto's Technical Guidance Notes on Operational Resilience in the Commercial Real Estate Sector
The contingency plans that we write after crises, often focus on the cause of the crisis. These plans declare that we will be ready for the next time. Yet, it is how we manage the effects of the crisis upon our operations that decides our survival. It is not how we manage a particular hazard.
The one thing that we can control is our own operation, not the flood or pandemic or wildfire. That is what our focus must be on. If we aren’t operating, we aren’t in business. It doesn’t matter how many corporate plans and measures we have in place.
Every operation has a number of actions that together deliver a product. Each activity has its own tolerance of interruption before it impacts the operation. We also know how low our overall performance can get and still be sustainable. This equates to a net zero cash flow. We can work out how we can efficiently run a net-zero cash flow operation that satisfies all external obligations. Our market will tell us how long it is willing to accept our service interruption. This time tolerance for you to restore a minimum sustainable level of performance is the business operations Planning Point. It means that we can calculate what resources we need to get to there, and to then maintain that level of performance. We must stabilise our operations through the crisis.
When we know what it takes to achieve and maintain stable operations, it changes our calculations. We can make informed decisions about cutting resources, taking out loans and other measures. Almost. We must first work out how we will recover and the resources required to support it.
The process of recovery is a strict sequence of restoring all the activities that make up normal operations. It means that we can recover in balance with our customers’ needs and the available resources. However, we must be stable before we can recover. Restoring an activity depends on having the resources. Some of those resources may be unique, and you will not wish to lose them. Be careful cutting costs and taking out loans, in case you hurt your own recovery. Recovery is resource-intensive, so competing demands for the same resource can hurt your ability to recover. Manage today with an eye on the future. As with so much in life, it’s a question of understanding the consequences of your decisions.
You now know what each activity depends upon, during normal operations and through recovery. You therefore know what it means if anything that you depend upon fails. That means that you can manage the impact of those failures.
It is impossible to predict where and when the next failure will happen. Instead, you can decide how a failure will impact you. Societal, climate and technological changes will cause failures. So will shocks like pandemics, wildfires and floods. Knowing how that failure will impact you means that you can better manage your response and be ready to recover as soon as the situation allows. This is part of Incident Sequencing, which is the 3rd Driver of BOMA Toronto’s Technical Guidance Note on Operational Resilience in the Commercial Real Estate sector.
A military engineer by training, Alexander Hay specialized early on in fortifications and infrastructure protection design. His career has involved practising in many countries around the world, often in the more austere and challenging environments in Scandinavia, the Dinaric Alps, the High Arctic, Middle East and Central Asia. Through his career he has been responsible for many high profile projects including the construction of humanitarian aid convoy routes into the interior of Bosnia during the civil war, the first intelligent building in the High Arctic, and the infrastructure development planning for the NATO estate in Afghanistan.
He has worked in the policy and contract strategy realm and in both design and construction. He is founding principal at Southern Harbour Limited, an infrastructure resilience and protection planning consultancy and remains closely engaged with the [Federal] Critical Infrastructure Protection Community of Practice. A Chartered Civil Engineer and licensed in Alberta and Ontario, he is professional reviewer and Fellow of both the Institution of Civil Engineers and the Institution of Royal Engineers. He speaks internationally on infrastructure risk and resilience, and is past chair of the BOMA Toronto climate change resilience committee. Author of numerous books, articles and research papers and a director of Rethink Sustainability Initiative, he is a Principal and International Secretary of the Register of Security Engineers and Specialists. He is a keen proponent of multidisciplinary working and critical thinking and seeks greater collaboration between academia and industry.
Speakers:
Nick Martyn (RiskLogik) - SiteLogik: Expoliting BIM Data to Achieve Operational Resilience
This brief overview of SiteLogik will cover the tools and techniques used to discover and simulate operational risk when buildings are exposed to external or internal hazards. Using flooding as the example, we will briefly explore how Building Information Management data can be exploited to simulate the effects of inundation on building sub-systems and model the consequence of their failure on operations. We will briefly discuss mitigation simulations to support benefit cost ratio analysis and the achievement of business resilience objectives.
Nick Martyn is the founder and CEO of RiskLogik. RiskLogik provides network based risk analysis tools and advice to help businesses and public sector organizations sustain operations under all conditions. Nick founded RiskLogik in response to the growing frequency, intensity and impact of hazards to business operations and critical infrastructure, and the consequential impact on sustainable development and civil society world-wide. The motivation to found RiskLogik emerged from his experience in Afghanistan developing the Afghan National Development Strategy where key leaders were faced with dramatic and complex decisions to make but had little evidence to help them reduce the complexity to actionable alternatives they could have confidence in. In 2009 he founded the Masters of Business Administration for International Development (MBA4ID) in the Sprott School at Carleton University. Nick is a retired Canadian Army Officer with 30 year’s service, and five years spent in Afghanistan. He is a graduate of the Royal Military College of Canada and the Canadian Forces Command and Staff College and currently a graduate student in Civil Engineering, focusing on infrastructure resilience at the University of Toronto.
Steve Horwood (Ainsworth) - Maintenance Activities That Informs Operational Resiliency & Enablement
As a commercial building owner, manager, or operator, achieving increased levels of operational enablement and resiliency is simply a better business. Moving forward it is expected that tenants, risk managers, insurance providers, compliance and regulatory, and health professionals, will place a premium dealing with owners, managers, and facilities that demonstrate operational resiliency.
For many, you may feel that achieving an improved level of operational resiliency involves complex activities and capital resources. You may also feel that buildings in your portfolio, due to age, design, existing infrastructure, or occupancy mix and use, have conditions that limit achieving increased resiliency preparation, planning or results.
Yes, there’s truth that many factors and decisions made during project and site development, design, engineering and construction inform some of the achievable resiliency parameters – and it may be some of these decisions and characteristics where you perceive challenges.
There is good news! There are many activities you and your team can explore with your service providers, engineers and other trusted associates that do not represent significant resource allocation. It’s possible that you are already completing many of these activities but not doing so within the strategic context of resiliency. The activity outcomes may not be summarized, consolidated, reported and actioned on as part of an Operational Resiliency & Enablement Plan.
This briefing document is provided to illustrate some new perspectives that should be considered as part of your current facility maintenance and janitorial activities including:
- HVAC
- Electrical
- High Voltage
- Building Automation
- Sanitary
- Building Shell
- Janitorial
- IOT
There is little doubt that you are already completing scheduled maintenance activities and completing cleaning with your janitorial service provider. Perhaps one of your frustrations may be collecting building data but not converting this data into meaningful and measurable performance gains. Typically, the measurement of the programs will be scope, schedule, HS&E, and Q.A. compliance. Extending from this may be a series of primarily lagging KPI’s or SLA’s. Important indictors absolutely.
What isn’t usually evaluated or understood within these “hard & soft” services is the opportunity for commercial building operators, managers and owners to extract lagging and leading indicators that not only contribute to performance improvement across all building functional areas, but inform the owner on matters that increase operational resiliency, reliability centred maintenance, and maintaining a healthy and vibrant facility ecosystem. Furthermore, there are hard and soft activities that inform the other – difficult to leverage as their contracts are procured separately and owners and managers have not traditionally connected them.
Our goal is to bring a slightly different perspective for you. That your path to increased levels of operational resiliency planning and performance can be achieved through contributions made by your hard and soft service providers.
Steven Horwood is the current Vice President Sales Effectiveness at CGI Ainsworth and former Vice President of Sales and Operations for Neelands Refrigeration. During his 14 years with Black & McDonald as Service Division Manager and later Business Development Manager he developed a keen interest in sustainability and the strategic value that it can bring to companies. A graduate of Concordia University, he is a noted coach and strategic planner, developing cost efficient operating systems that realise the Corporate Social Responsibilities of businesses while reducing their operating risk and costs.
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