Real Property / Strategic Financial Analysis

Typical Users of Strategic Financial Analysis

Different stakeholders will use the Financial Analysis Console in different ways. This is due to the fact that each stakeholder understands a different set of cost values, uses different metrics to make their decisions, and often has access to only partial information when they must make their choices. This set of short user stories outlines some of the ways different stakeholders can use the Financial Analysis Console.

Because the flow of value and money within an organization is complex, the user stories interweave in a complex way . Every single initiative of any department is achieved only through spending money or allocating capital using contracts (leases, service contracts, projects, and invoices).

Different stakeholders will explore the cost map in a way similar to how cave explorers explore a system of connected caves; they start from the entrance they know – asset value or energy costs, for instance -- and then they explore around bends to see related metrics, such as capital project costs or FCI. They continue around another bend to see related buildings and projects. On the way, they meet up with other explorers on their team who started from a different place – perhaps finance – and they share notes and see what connects. Eventually their understanding of the entire cost map and of their fellow stakeholders roles and goals is complete.

Stakeholder	Task	Achieved by these features of the Financial Analysis Console
Functional Scenarios
Finance manager	Analyze how real estate, infrastructure, and facility capital usage and expenses map to financial concerns: changes to the balance sheet depreciation on the general ledger balance sheet and operating expense roll ups into the 10K and the annual report monthly cash flow	Balance Sheet Use the Infrastructure Net Worth column to review asset value at the end of the last fiscal year and the changes to asset value. Depreciation Use the depreciation category to review capital expenses deductible from income. Cash Flow Review the Mortgage Principal Payments and Outlays for Capital Projects to see costs that affect cash flow that are not included in P&L expenses or income.
Real estate director	Explain how the IFRS and FASB rules for lease accounting will change the cost analysis on the portfolio.	Explain that the Outstanding Lease Commitment Costs – currently a separate off-balance sheet item – will be listed as both a right-to-use asset and as a liability column. Explain that leases will gain yearly interest and depreciation cost categories, parallel to the building mortgage and depreciation categories.
Real estate director	Present to senior leadership how the capital tied up in assets and how the yearly operating budget directly support the mission of the organization. Present the financial context for proposals to buy or sell buildings or properties.	Use the Infrastructure Net Worth, the Analysis Map, and the side-by-side cost analysis comparison to show total assets, asset cost per sqft, and return on net assets by region (that is, by the regions of the portfolio that act together to deliver mission results that are measured in regional profits). Use the Region Asset Map to show buildings within one under-performing region. Filter by high vacancy, high FCI, and show the Market - Book Value. Explain that these are the buildings that are a drag on the return, that they are low impact to the mission, and that their sale could generate the revenue total shown in the sum column.
Real estate director	Compare total cost for leased and owned spaces on an even basis to make buy/lease decisions. Independent of the decisions for financing the buildings, compare total cost for buildings.	Drill into the Total Cost of Ownership roll-up box, which includes all building expenses but no finances. Sort the table by Total Cost of Ownership / Area or Seat or look for outliers on this metric. These are the buildings that are expensive in terms of the space they provide. This expense can be for any reason pertaining to the delivery of the facility – high maintenance costs, high outsourced services costs, high renovation costs, and so on. Turn on the costs for several component cost categories to explore the reasons why these buildings have high costs.
Lease manager	Compare different leases on an even basis.	Drill into the Total Cost of Occupancy roll-up box. Filter the table to show just leased properties. Show Total Cost of Occupancy per Area. This shows the normalized cost of the leases in comparison. Look for outliers, sort for high values to find problems, and sort for low values to find solutions.
Capital planner	Explain to senior leadership the rationale behind the capital expense budget.	Drill into the Capital Projects category box. Use the Region Asset Map to show the location of the projects. Sort by criticality, and mouse over the most critical projects to show their location and the buildings they serve.
Capital planner	Review capital projects by comparing their return, accounting for cost of capital and the present value of future income.	Drill into the Capital Projects category box. Use the NPV and IRR values to compare return.
Asset manager	Explain to senior leadership the return on their investment in real estate, infrastructure, and facility assets.	Drill into the Buildings, Structures, Land, and Capital Equipment category boxes by turn. Use the side-by-side comparison to show asset allocation by region. Use the Regional Asset Map to show the detailed disposition of the assets and the local business dependencies.
Facility manager	Find anomalies and propose cost reduction actions for the cost categories under the facility management purview.	Drill into the Variable Costs roll-up. This focuses the cost map to just the categories under the facility manager's control.
Maintenance manager	Defend the total amount of the maintenance budget. Explain to leadership and stakeholders the extent of maintenance operations and their role in furthering the mission.	Drill into Maintenance costs. Use the table to show Cost/Area and Cost /Seat. Use the stoplight colors to show that these metrics are in line with the company and industry benchmarks. Use the Region map to illustrate Maintenance Cost by building location to show using graduated markers the extent of the cost and the regional missions supported. Use the Space Console drill down on high-expense buildings to show critical business units (such as labs and manufacturing) that are in that building and supported by that expenditure.
Cost analyst	Analyze total cost of providing the real estate, infrastructure, and facility data inclusive of cost of financing and capital. Determine the proper value to use for internal chargeback of space.	Drill into the Total Workpoint cost. Use the Total Workpoint cost / sqft metric to determine total cost of space to the organization. Review how this metric changes by region and by building to adjust chargeback accordingly.
Operations manager	Benchmark operation costs against targets. Defend categories of the operations budget.	Drill into the Operating Expenses. Review the categories of expense (Energy, Services, Maintenance, etc.) in turn to show their metrics in the table Sort by Energy Cost / Area or Seat, Maintenance Cost / Area or Seat, and so on and review outliers. Show that costs – when prorated for the scale of the building – are in target ranges for all buildings.
Energy manager	Identify buildings that are prime candidates for energy remediation capital projects.	Use the Cost Analysis Map to show the relative (and quite large) size of utilities in the overall budget. Click on Variable Costs to show that "Energy and Utilities" has a very outsized footprint when considering only Variable Costs – the costs that can be changed without long-term contractual changes and can be scaled to need and company output. Use the Campus heat map to show Energy Cost / GSF to show which buildings have high, outlier performance and are the prime candidates for remediation projects. Compare the FCI and show that the plan avoids buildings that have a very low FCI and a very low Mission Criticality – as they are likely candidates for disposal. Show the Capital Project Costs heat map to show the magnitude of the proposed spend in the candidate buildings, which have a high Mission Criticality. Use the Space Console to show the business units those buildings support to illustrate why they have a high Mission Criticality.
Technical Scenarios
Business process owner	Change the titles used for different cost categories or roll-ups on the cost analysis map.	Change the titles in the Capital and Expense Analysis (costanal_dir) table.
Business process owner	Change the cost category boxes on the cost analysis map.	Add or remove rows representing cost category boxes in the Capital and Expense Analysis (costanal_dir) table.
Business process owner	Change the cost category boxes that make up the roll-up boxes.	Add or remove the assignment of cost category boxes to the Principal Roll Up or Additional Roll Ups fields in the Capital and Expense Analysis (costanal_dir) table.
Add-in manager	Add a new metric to the cost analysis side-by-side comparison or cost analysis table.	Add a new column to the Cost Analysis Summary (costanal_sum) table. Add a new method to the Java defining the Update Cost Analysis action. Add the new column to the Cost Analysis table datasource and to the Cost Analysis Summary table datasource. Add a new checkbox to the Cost Analysis Map Select Metrics dialog.