Asset Management Comes out of the Dark Ages

by Edie Fee

In earlier days, asset management was merely asset tracking. We created spreadsheets and simple data bases that gave us factual information about real properties such as address, square footage, rental rate or purchase price, and lease expiration date. From this, we created simple reports that were useful in guiding our day to day activities related to real estate management. At best, this information helped us identify properties that we were interested in and from there we began the traditional search through archives of files to get additional information, especially if we wanted such items as site plans, floor layouts or pictures.

Those are the “dark ages” of Asset Management, claims Mark Douglas, President of FM International, a nationally recognized firm located in Tustin, CA which specializes in Asset Management systems. Douglas adds, ” The asset management systems of today link a variety of tabular data as well as graphical data with such elements as Electronic Document Management Systems (EDMS), computer aided design (CAD) drawings and Geographic Information Systems (GIS). They provide a common access interface so that queries can be entered and within minutes, produce a comprehensive data package including maps, architectural drawings, copies of original documents and detailed tabular data.”

C. Loren Doll, Ph.D., a principal of FM International, notes that traditionally such a data gathering process took weeks. Doll adds, “The tragedy is that all of the software tools to gather meaningful asset data are currently available. It’s just that few organizations have recognized the benefits of implementing these systems.” Doll elaborates that those that have asset management systems are now able to gather data in a way that they can do strategic planning regarding the deployment of their assets. “One benefit is in identifying revenue generating opportunities. This could be as simple as identifying potential cell site locations to identifying opportunities for subleasing or disposal of property.”

Public organizations seem to be leading the pack in investigating Asset Management systems. One such organization is the Metropolitan Water District. The district currently has a pilot program to test the feasibility of capturing relevant data about each of their assets, whether they are buildings, land, rights of ways or processing plants and accessing the data via an Asset Management system. As an example, MWD currently requires several weeks to do an analysis of a potential cell site, because the data is physically in a variety of repositories all over the LA area. Once their asset management system is in place, this inquiry will take minutes.

As with many organizations, opportunities are often lost because the process to pursue them is so cumbersome.

Another example is the San Diego Unified School District. They are looking at ways to capture site data and various equipment and property inventories to facilitate their annual site surveys. They currently go through a cumbersome process prior to the beginning of each school year to assign classrooms and students. Thousands of man-hours will be saved in this process alone through an asset management system.

Universal Studios has just launched a venture to develop an Asset Management system which includes the computerization of ordinance data. They feel that considerable productivity gains will be realized by automating many elements that are needed during master planning. They will be able to rapidly do strategic “what-if” analyses on each property they plan to build as they expand their site. Again the time to do the analysis goes from weeks to minutes.

“Some interesting organizational implications emerge from having an asset management system,” relates Louis Masotti, Ph.D. from the UCI Graduate School of Management. “We must now look at real estate assets as something to be strategically managed and that can have considerable value when put to appropriate use by an organization. Real estate assets must be reviewed and analyzed with the same degree of attention as organizations typically give their human assets. There is considerable value hidden behind mounds of paper just because organizations have not implemented the tools to adequately access them.”

The State of California has experienced a five to eight percent reduction in occupied space through consolidation of facilities. Identifying which properties are to be consolidated and how best to achieve this can readily be done through an asset management system. The County of Los Angeles estimates that it will save millions a year once it has an asset management system to assist them in identifying these consolidation opportunities.

So how does an organization come out of the dark? “Just start”, says Mark Douglas. “Start implementing the tools that assist in capturing data about your assets in electronic form. Then develop a plan to convert your data to electronic form and begin entering it” This can mean, insisting that all architectural drawings be done using CAD, whether you draw in-house or use an architectural firm to do them. It also means recording data about each of your assets in a comprehensive state of the art database such as ORACLE. Next start scanning related documents, such as deeds, leases, site plans – anything in graphical form that you may need to look at later in evaluating the property. Also, take pictures of the properties. Use services such as those offered by Seattle Film Works to capture them on disk so that they can also be entered into a data base.

Douglas closes by stating that’ “having an electronic repository of asset information provides the foundation for implementing a comprehensive asset management system that will prove its value with the first inquiry.”

Edie Fee is a principal with The Corporate Relocation Group, a San Juan Capistrano, CA consulting firm that specializes in the strategic analysis of corporate real estate assets.

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