Historically, business cases have been challenging for Corporate Real Estate (CRE), in part because they relied on a lot of subjective evidence.
Luckily, now we have access to more and better data—but numbers alone won’t get your business case approved. Whether you’re looking at taking on a new lease, consolidating employees, moving to a new office, or transitioning from a fixed workplace to an agile or hybrid one, here’s what you should know about building a strong business case.
1. Know Your Audience
First, does your company have a standard template or guideline for building a business case? Make sure you have them and are comfortable with the format.
Second, the odds are the executives at your company won’t be impressed with subjective factors or soft dollars. What may seem like common sense recommendations won't hold much water if you can't tie them to a projected dollar amount based on facts.
Hard dollars are still what drives approval. You want to be able to state your case with hard numbers and evidence-based data backing it up. For example, an argument like, “Moving to a new campus will pay for itself in three years due to lower real estate costs,” (with clear cost comparisons) is more likely to get buy-in than simply stating, "A new campus with better outdoor space will create a more positive work environment."
This isn’t to say you should never include soft dollars in your strategic business cases. They shouldn't be a key driver, but should be considered additive to your ROI. Instead, you could say, for example, "We expect the new campus will make commuting easier for most employees, resulting in decreased lateness and absenteeism rates." After the move, you can compare the data (absenteeism rates at the old and new campuses) and gather evidence that proves your hypothesis. In the future, you'll have the data to tie "ease of transportation" or other subjective factors to hard dollars. In the future, you can use this data when calculating total cost of ownership/occupancy (TCO) and, for example, justify subsidizing mass transit for employees who could require a longer commute.
2. Consider the Big Picture
Look beyond just the dollars that could be saved in real estate costs. What is the potential impact on employees? For example - you move to a new campus and the commute is significantly worse for some employees, so approximately 10% of your staff choose to leave the company. Check with HR to ascertain the cost of replacing that portion of your workforce. How will that affect the projected three-year timeline for the move to pay for itself?
In the early stages of building the business case, when you’re still gathering data and exploring possible scenarios, it’s a good idea to check in with the executive team. Make sure that what you’re planning is aligned with the company’s long-term plans (which may have changed since you last looked at your five-year strategic plan). For example, you may be looking at a scenario that moves a division to a different office, only to find out that there are plans to sell that division in the next 18 months.
3. Practice, Practice, Practice
Like most things, the best way to get better at something is to practice it—so get in the practice of putting together mini-business cases for all your plans and initiatives, even if a proper business case isn’t required.
When you work on a move for five people in one department, come in with a well-defined plan that sets objectives and expectations. And then review the business case to ensure you met your goals.
An added bonus to this practice is elevating the work that CRE does within the company. Think of it as a way to “advertise” the CRE skill sets, and then, when it’s time to plan something on a larger scale, not only will you feel more prepared, the executive team and other staff members will have confidence that your team will handle it in a strategic, professional manner.
4. Use Valid, Evidence-Based Data
This is where tools like Serraview make all the difference for CRE. When you bring in data from activities like badge entry swipes and conference room usage, plus validated data from each business group about allocations, you can actually put hard dollars to items that were only estimated in previous business cases.
Look for data in industry benchmarks and documented research. “We’ll have more collaborative space” isn’t as strong as “Records show that companies similar to ours that increase collaborative space see revenues increase.” This can also make your soft dollar items stronger.
5. Remember Change Management
This is something that CRE teams often overlook or underestimate when building their business cases. Moving, whether it’s across the floor or to another building, can have an emotional effect on many employees. Don’t just assume that “millennials want an agile workplace” and neglect how you’ll “sell” any kind of move to the staff. It's important to have a strong change management plan in place to anticipate and mitigate any negative effects the change can have on teams.
Some space management and planning software will let you see estimates on the cost of moving each employee. This is a great start, but you should also talk to other teams that would be facilitating the move—like HR and IT—to get a full picture of the associated costs.
Building business cases don’t have to be onerous for CRE teams. Use these tips the next time you’re putting one together—large or small—and see for yourself.