Property: What`s the true cost per metre?

It`s every property portfolio manager`s dream - to be able to get, at the touch of a button, the true cost per metre, right now, for any part of the portfolio, as well as be able to project accurately the cost per metre for any relevant future period.

However, with most of the IT systems available for property portfolio management there`s no way of getting all the information that`s needed, up to date and integrated, in one place and in a format suited to the user`s role in the business.

Most real estate management IT systems are made up of as many as five different applications, each dealing with different parts of the overall management process. Getting them to exchange and integrate data is very nearly impossible, so data has to be integrated manually. Which is where the errors creep in. And the data itself is often old or wrong because it gets updated in one application but not in the others.

Who would want to be a property portfolio manager?

Let`s assume there`s facility management software that could make the true-cost dream a reality if we asked for the right things. What should we ask for?

That`s easy - a single, affordable system that could take over day-to-day administrative duties and also act as an accurate collector of meaningful, comprehensive cost, revenue and inventory information - enabling real estate managers to focus on strategic and value-adding activities.

How would such a system work?

Well, for starters, it would provide a central facility (a `real estate contract`) for managing all real estate transactions - whether leasing out or in, dealing with customers or dealing with vendors. It would therefore eliminate the confusion of handling multiple contracts and save a great deal of time.

It would enable the assignment of any number of rental `objects` (such as spaces in buildings/floors, individual rooms, parking spaces) to the contract. Office space could be combined with warehouse space, for example - or an apartment with a parking space. Rentals from different buildings or business entities (sites) could also be combined into one real estate contract.

Then, when defining rental conditions (rental costs) and other contract rules (such as dates and adjustments), assigned rental objects could be combined with similar conditions (costs) or notification rules into rental object groups. Rental agreements could be made for all the objects in the contract, for a single object, or for a group of objects. A certain amount of space from the available pre-defined pooled space could even be extracted during contract creation, making it is easier to generate new rentals in response to changing space demands.

That puts ticks next to a whole lot of items on the wish list.

Next, this magical contract facility would provide comprehensive date and deadline management features to help keep track of contract terms, automatic extensions, notification rules, rent adjustments and re-submissions.

Calculation rules would enable the setting of rents for a rental object based on its particular parameters and existing measurement factors (such as price per area or price per unit).

Let`s assume there`s facility management software that could make the true-cost dream a reality if we asked for the right things. What should we ask for?

Marco Bronze, principal enterprise management consultant at SAP

Contract terms would help assign different posting rules to different costs. These posting rules could contain alternative customers or vendors and different payment rules. For internal rentals, costs could be charged to a particular order or project as well as to a specified cost centre.

More ticks. But we`re not done yet.

This application would be tightly integrated with the general ledger, accounts payable and accounts receivable systems as well as those for plant maintenance, projects, asset accounting and document management.

So, it would automatically perform maintenance and renovation through scheduled or unscheduled tasks, provide notification of breakdowns and reports for each specific master data record (building, land, rental spaces...)

It would calculate and assign depreciation costs and manage charge-back activities - bringing all the information together in a complete portfolio analysis.

And it would provide other reports - including vacancy, portfolio inventory, leases, payment terms and upcoming key dates. All of which would be accessible through a portal, giving colleagues and external business partners real-time, accurate data needed to do their jobs better.

But you`ve been really lucky. This facility management software also thinks in high-level strategic terms. So, it is linked to a strategic enterprise management application that enables users to determine the market value of real estate assets and establish KPIs, simulation scenarios, and what-if analysis to help in making buy, sell or leaseback decisions. It delivers the results in detailed reports, overview lists, or portfolio graphics.

Oh, and by the way, pictures of the property, floor plans, and original leases can be attached to the portfolio.

Best of all? This is no wish list. All this functionality already exists. Maybe your board needs to know about it?