Demand-Based Building Operations by John H. Vivadelli, President AgilQuest Corporation

The process called “telework” (sometimes referred to as telecommuting, workforce mobility or other terms) employs technology to separate the activity called “work” from the physical location called “work.” With telework, work is something you do, not a place you go. Telework uses technology to move work to people, reducing the need to move people to work.

Traditionally, organizations conducted knowledge-based work from a rented or owned-office setting. But today several forces are combining to reduce the linkage between work and the use of dedicated office space:

• For a broad range of occupations, advances in computer and communications technologies enable productive work from almost anywhere,
• Work now involves more collaboration, increasing the percentage of time that people employ group space, and
• Driven by a craving for work-life balance, workers demand choice in workplaces, both in type and location, to match their task for a particular hour or day.

Telework, combined with average absence from the office due to vacation and sickness (12 percent to 15 percent of a work year), travel, client visits and work in collaborative environments, drives down actual daily use of owned and leased office space to between 30 percent to 50 percent during the hours of 8 a.m. to 5 p.m. in the United States and Europe.

The portion of office space that now lays vacant every day presents an opportunity for building occupiers and owners. If a building could be operated differently to take advantage of its daily vacancies, the infrastructure could be leveraged to increase the number of people a building could support.

The Demand-Based Workplace Model

The Green Building Council gives LEED (Leadership in Energy and Environmental Design) points for telework that eliminates a commute to a traditional place of work, based on the logic that reducing vehicle ridership translates into less gasoline consumed and less CO2 pollution released into the atmosphere.

Telework in all its forms, not just work from home, creates another opportunity to take a second bite at the apple: Eliminating unused building infrastructure cuts C02 emissions by curtailing energy consumption for heating, cooling and lighting, or avoiding new office construction. To achieve this reduction, office space occupiers employ workplace processes, policies and occupancy management technologies that change the “Assignment Based Model,” based upon the allocation of one person to one desk regardless of circumstances, to a “Demand Based Model,” in which some portion of the workforce schedules desk space only when needed. Treating office space as a shared asset, the Demand Based Model frees organizations to take advantage of telework-induced vacancy.

The Demand Based Model for operating commercial office space borrows logistics practices commonly employed in the airline, hotel, car-rental, manufacturing and distribution sectors. These other industries use processes, practices and demand-management technologies such as reservation systems, distribution systems and the like to leverage the use of expensive capital assets to achieve maximum utilization. Indeed, if any enterprise in these other industries utilized their capital assets at the same rate as U.S. businesses utilize commercial office space, it could not long continue as a viable entity. No hotel or manufacturing plant could survive at 30 to 50 percent utilization.

So it is with commercial office space. For large audit firms, breaking the 1:1 Worker-to-Workplace ratio became a matter of survival in the 1990s.

The Key Strategic Metric for Building Efficiency

The Worker-to-Workplace Ratio defines the key strategic metric for efficiency in the commercial real estate sector. Thanks to the leverage it provides for infrastructure reduction, this ratio exceeds the importance of “dollars per square foot,” “square footage per workspace,” and other traditional Assignment-Based Model metrics.

In the Assignment-Based Model, “square footage per person” and “square footage per workspace” are equivalent (e.g. 250 sq ft) because of the 1:1 relationship between workers and workspaces. By contrast, in the Demand Based Model, “square footage per person” is driven by an increasing Worker-to-Workspace Ratio. Starting with a standard of 250 square feet per person, a 5:1 Worker-to-Workspace ratio would result in 50 square feet per person.

The traditional “workplace optimization” model of creating more workspaces in a building by reducing the square footage per workspace reaches a point of diminishing returns when smaller work space impacts the productivity of the worker using it. Many organizations would consider 150 square feet per workspace (including common areas) very efficient. However, the Demand-Based Model achieves almost unlimited leverage, by going from 1.2:1, then 2:1, then 5:1 and even higher. So the organization can still offer very nice, large spaces in which to work and drive down occupancy costs, waste, energy use and CO2 footprint simultaneously.

The Case for LEEDS Points

Should LEED points be awarded to an organization that manages its building, or some part of it, as a shared use asset? I would contend that it should. By doing so, the organization gives people the means to:

• Select the workspace they need for the task of that day - at home, suburban location, downtown location, private office, open workspace, or collaborative workplace.
• Automatically connect their voice extension to that location, and
• Allow them to move work to where they are, rather than vice versa.

The organization then can manage the workplace based on demand and continuously measure actual use of the building asset. As workers vacate a workspace, it becomes available for others to use. The result: A building designed for 3,000 workspaces may now house over 4,000 workers.

Let’s consider the environmental impact of saving 1,000 workspaces:

1,000 workspaces x 200 square feet per workspace = 200,000 sq ft (or 33 percent) of building infrastructure either avoided or available for divestment. Apply this 33 percent factor to waste water reduction, power consumption and associated CO2 reduction and ozone depletion, materials (steel, carpet, glues, gypsum, cabling, plumbing, etc.) avoided and construction waste and landfill saved.

Now consider the economic impact:

200,000 sq ft x $100 per sq ft construction cost = $20 million avoided. Because it costs only 5 percent more to build a building using green techniques, the Demand Based Model actually becomes the funding mechanism to apply all the other green building best practices to the building under construction.

In actuality, the economic impact is much greater for large organizations. For a company with 50,000 workers and 30 percent of its workforce operating at a 2:1 ratio, the cost savings is $150 million annually or $1.5 billion over a ten-year lease.

In Summary

The Demand-Based Model for building operations delivers value in many ways:

• Reduced cost of construction and operation that can fund green building techniques
• Improved employee workplace choice and productivity
• Reduced energy consumption, and
• Reduced CO2 emissions for building operations

The Demand Based Model for building operations gives building owners and occupiers an opportunity to impact the environment in a positive way, improving the work/life balance for employees, while delivering significant economic value to the organization – true Triple Bottom Line results.

AgilQuest Corporation, founded in 1994, provides workplace management software and service solutions that make an organization’s workplace as agile as its workforce. The Company’s products and services enable its worldwide customer base to not only manage their daily workplace operations (shared desks, collaboration rooms, and assigned desks) but also to measure actual utilization of every workspace in an organization. Customers save tens of millions of dollars by reconfiguring, sharing, or eliminating underutilized workplace assets; empower their workers to choose and reserve all the corporate resources they need whenever and wherever they need to work; and save energy by reducing the amout of space needed to support their workforce and eliminating unnecessary