On Business - Eight Ways to Control Costs and Boost Profits

Spring 2012

Commercial real estate firms that are not fully using their IT professionals on both the business and technology sides of the company are potentially leaving profits on the table. Thomas A. Russo, CIO, Akridge, a full-service real estate company headquartered in Washington, D.C., suggested eight ways the IT department can help control costs, enhance building efficiency and give the leasing department exciting things to talk about on building tours.

1. Energy Management

Proper building energy management can save 20 to 30 percent of the annual energy cost in a building. The key, according to Russo, is for the IT people to work closely with those operating the building. “If I were a prospective tenant looking for new space and not offered after-hours HVAC control via a website and lighting control, I would not consider the space,” he said.

Thomas Russo

Thomas Russo

In a typical building, a key energy management problem is that the building engineer and property manager are not focused on energy savings. Instead, they are concentrating on the operations of the building. When it comes to energy management, the prevailing philosophy is “If it’s not broken, don’t fix it,” according to Russo.

“Buildings are most efficient the day they are handed over from construction to operations,” he noted. “From that point forward, they go downhill. With the use of technology and auditing, you can prevent that from happening.”

2. Building Efficiency

Real building efficiency was not controllable in the past, but it is today. That is, when a motor was installed, it functioned until it failed and then it was replaced. “With new software,” explained Russo, “we can monitor that motor as it operates. If it is supposed to draw 700 watts of power and it is now drawing 800 watts, the software will alert us.”

Russo offered another example that is a painful fact of life for virtually every building owner and property manager. When all is said and done, it costs over $100 to change a light bulb in a building - not the five dollars that the light bulb actually costs. Some estimates place the cost at $168 per bulb. “If I can predict that 40 light bulbs are going to fail after about 7,000 hours of use and I know on a real-time basis how many hours they have been in use, I can schedule someone to change all of those 40 light bulbs at once for a big cost savings.”

3. System Integration

Big cost savings are available through integrating various systems in a building as well. This includes tying the simplest systems and the most complex, according to Russo.

“Here’s one example,” he said. “Everyone is putting motion detectors in offices to turn lights on and off because it is the green thing to do. Typically, everyone leaves the office at 5 p.m. and if the motion detector does not sense any motion for half an hour, it will shut off the lights in those offices around 5:30 p.m. What about installing a control system connected to the motion detectors in all of the offices that are set to turn off the lights at 5:05 p.m. if no motion is detected? This one control could save 25 minutes of energy use in all of the offices in the building.”

4. Monitoring and Maintenance

Technology has allowed buildings to switch strategy from preventive maintenance to predictive maintenance. If a motor is running at 125 percent on the fifth floor, building maintenance can be notified to look at it. Perhaps the maintenance people will discover that no one changed the filter on the device. If they now replace the $10 filter, perhaps they can save a $500 motor. Without monitoring the motor in real time, the maintenance staff would either wait to change that filter until the regularly scheduled time or, perhaps, need to replace that motor in August in the middle of a heat wave. Russo said that being able to monitor building equipment also means that when something goes wrong, perhaps a compressor, a new one can be ordered and installed over a weekend.

5. Process Automation

Another big cost saving in the building is to automate as many systems as possible, according to Russo. He said that the IT department is best positioned to undertake this. For example, the accounting department may be steeped in Excel spreadsheets, but IT could possibly incorporate a software program into the process so that data needs to be entered only once rather than on 50 separate spreadsheets, for a big savings in time and money.

“You need to look at each process from start to finish and make it work more efficiently,” said Russo. “But the automation process has to be simple enough for the lowest common denominator or it will not be used.”

6. Tenant Satisfaction

To achieve great tenant satisfaction, building processes have to be changed and upgraded in a seamless and hopefully, invisible way. Russo offered an example of one building his company successfully upgraded: “I gave a speech at a green conference in Washington, D.C., and spoke about a building that we manage and all of the things we have changed in the building in the last three years. After the session several people who were tenants in the building came up to me and said that they had been in the building the past couple of years and they had not noticed a single change.”

7. Advanced Communication

A big tenant demand today that requires the IT department, according to Russo, is so-called ubiquitous communications -- that ability to take a cell phone call while driving to work and continue the call going into the garage, up in the elevator, down the hall and into the office.

“Five years ago, no one was asking for in-building wireless,” he said. “We put in the first in-building wireless system in the Homer Building in Washington, D.C. It was a game changer. Today, we will not consider building a building that does not have this system in it. We have retrofitted a lot of our buildings now and it makes our occupants feel safer.”

At the Homer Building, the in-building wireless system handles life safety, wi-fi, Verizon, T-Mobile, Nextel, Sprint and AT&T. Russo estimated that the cost of retrofitting a building with this system would probably cost about $1 per square foot.

8. Market Differentiation

Russo recommended that when you make these technological improvements to a building, owners should tell tenants and prospective tenants about them because so much is invisible. “If you sell the best, safest car in the world but no one knows about it, it is worthless. So that means educating the leasing department and building occupants about all of these great features in the building,” he said.

Russo said that to fully use the resources of the IT department, the head of the department needs to be included in the boardroom and not relegated to the backroom. “Sitting in the boardroom learning about the ‘pain points’ of the company from the CEO, CFO and HR will give the IT person a mental picture of where everyone is. Without being included in the boardroom, the IT professional cannot fully understand what is going on with the company and how to plan for the future.”

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