The first step in any business program is identifying the rationale, goals, and time horizon you are working with. These will form the basis of all your decisions and reviews that come after this point. If you do not have a solid basis for why the program should exist, what it is meant to do, and how long you have to do it, nothing else will come together. Most times, these will come from the person(s) that are asking you to develop the program or will ultimately be sponsoring the program. If the goal of the company is to minimize cash spend for the next two years, you cannot put forward a program that is heavy on cash costs. If the company is only willing to sign off on costs for the next two years, you cannot put forward a four year plan. Nothing surprising there, but it can be tricky to nail down sometimes.
For us real estate pros, one of the challenges in this is that real estate projects do not take a vacation while we build future plans. We will be delivering projects while we build this program. We will be delivering projects approved prior to the program throughout the program. We will start projects at the end of the program that will deliver after the program ends. Hopefully, our program will have clear lines for what counts, but our lived reality is much more fluid. It is the nature of these programs that you will naturally start or complete some projects before it is approved that you desperately wish could have been part of the program. Similarly, there will be projects you intensely want to include in the program that just never quite make the cut due to financials or timing. Do not let these derail the program you are trying to build; if things go well you can still leverage the program to get the funding for those on a one-off basis so that they still meet the objectives of the program even if they do not count.
As you get started in creating your real estate program, the first thing you must do is ignore all projects. You cannot allow the shiny details of what you might be able to achieve distract you from getting the program itself setup. The second thing is to step back and put to paper what success for this program looks like once it wraps up. It might look something like this:
Over the next 3 years, real estate is going to deliver $50m of annualized P&L benefits at a cost of $200m ($150m capex and $50m one-time). There will be a 40% average square foot savings of a workplace delivered under this program with all sites having new technology and an improved employee experience. All new workplaces will be designed based on the real estate strategy approved by OpCo in June 2025.
This statement lays out the key components of the plan in a way that makes it very clear what the program is meant to achieve and what it takes to get there.
- Timeline (3 years).
- Financial targets (savings, costs, breakdown of capex and one-times); you can get more detailed if necessary but it is best to be high level at this statement.
- Success measures (square foot reductions, technology, employee experience).
- Project planning methodology (approved real estate strategy).
- Escalation path for when there is push back (approved real estate strategy).
At this early stage, the financial targets and success measures should only be placeholders for desired numbers or best guesses. Many times, a program will start with a savings target, of say, $50m but need to reduce it because the investment appetite from finance cannot justify the costs to get there. Or, it turns out the the program is timed right with large opportunity projects making it possible to get more savings at less cost.
As you get started with your program, walk before you run. This first part is about laying out and socializing the program goals, not seeking approval of those goals. This is what will inform all of the following steps to tell the team how much they need to push on their strategies and opportunities. Some programs end up being easier to achieve than others and it almost always starts at this first goal setting stage.
A word of advice. Go into this step having already done some preliminary math and analysis on your portfolio to know what might be possible. There is nothing worse for a program’s odds of getting approved than setting an early goal of $100m of benefits to come back and only commit to $15m in the final business case. That much change from the original goal without really compelling external reasons will make leaders doubt your numbers for the rest of the program. So while we are ignoring the projects in theory, we do still need a foundation off the side of the desk that we started from.
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