Monique Arkesteijn, Ruud Binnekamp and Hans De Jonge
One of the long-standing issues in the field of corporate real estate management is the alignment of an organisation’s real estate to its corporate strategy. To date, 14 models…
Abstract
Purpose
One of the long-standing issues in the field of corporate real estate management is the alignment of an organisation’s real estate to its corporate strategy. To date, 14 models for corporate real estate (CRE) alignment have been made, as well as four comparative studies about CRE alignment. Some of the CRE alignment models indicate that they strive for maximum or optimum added value. However, because most models take a so-called procedural rationality approach, where the focus is not on the content of the decision but on the way that the decision is made, “how a CRE manager can select an (optimum) alternative” stays a black box. The purpose of this paper is to open the black box and offer a Preference-based Accommodation Strategy (PAS) design procedure that enables CRE managers to design a real estate portfolio, makes use of scales for direct measurement of added value/preference, and allows the aggregation of individual ratings into an overall performance rating. This procedure can be used as add-on to existing alignment models.
Design/methodology/approach
The objective of this paper is to test if participants are able to successfully perform the PAS procedure in practice. The PAS procedure is in essence a design methodology that aims to solve strategic portfolio design/decision-making problems. In accordance with problem-solving methodology, mathematical models are made for two pilot studies at the Delft University of Technology. This paper describes a second test of the proposed procedure for designing a real estate strategy. The application of real estate strategy design methods in practice is very context-dependent. Applying the PAS procedure to multiple context-dependent cases yields more valuable results than just applying it to one case.
Findings
The PAS design procedure enables CRE managers to select the (optimal) solution and thereby enhances CRE decision-making. The pilot study results reveal that, by completing the steps in the PAS procedure, the participants are able to express their preferences accordingly. They designed an alternative portfolio with substantially more added value, i.e. a higher overall preference score, than their current real estate portfolio. In addition, they evaluated the design method positively.
Research limitations/implications
The positive results suggest that designing a strategy by using the PAS design procedure is a suitable approach to alignment.
Practical implications
The PAS design procedure enables CRE managers to determine the added value of a real estate strategy and quickly and iteratively design many alternatives. Moreover, the PAS design method is generic, it can be used for a wide range of real estate portfolio types.
Originality/value
The PAS procedure is original because it considers CRE alignment as a combined design and decision problem. The use of operational design and problem-solving methodologies along with an iterative procedure, instead of empirical/statistical methods and procedures, is a novel approach to CRE alignment. The PAS procedure is tested in a second pilot study to provide an assessment of the methodology through the study by testing it under different conditions to the first study. The novelty of this pilot is also that it allowed testing the procedure in its purest form, as the problem structure did not require the additional use of linear programming.
Details
Keywords
Monique Arkesteijn, Bart Valks, Ruud Binnekamp, Peter Barendse and Hans De Jonge
This paper aims to describe the development and test of such a design method to achieve alignment, which utilises the preference-based accommodation strategy (PAS) design…
Abstract
Purpose
This paper aims to describe the development and test of such a design method to achieve alignment, which utilises the preference-based accommodation strategy (PAS) design procedure. One of the long-standing issues in the field of corporate real estate management is the alignment of an organisation’s real estate to its corporate strategy. A classification of alignment models shows that no model yet exists that is able to design a real estate portfolio and makes use of scales for direct measurement of added value/preference, and allows the aggregation of individual ratings into an overall performance rating.
Design/methodology/approach
To perform the steps in the PAS design procedure, a mathematical model is designed and tested according to formal design principles. The PAS design procedure is iteratively repeated with the participants in a series of interviews and workshops. In the interviews, the participants determine their preferences and constraints as prescribed in the procedure; in the workshops, they design alternative portfolios using the mathematical model. The objective of the research is to formulate, test and evaluate if participants are able to perform the PAS design procedure.
Findings
A methodology is developed for designing a real estate strategy that uses explicit scales for measuring value/preference and enables aggregating individual preference ratings into an overall rating taking into account both quantitative and qualitative portfolio properties. The tests of this design method with the participants reveal that by completing the steps in the PAS design procedure, users are able to determine their preferences accordingly. They were also able to design an alternative portfolio with a higher overall preference score than the current real estate portfolio. In addition, the design method is evaluated positively by the participants based on their experiences, the attractiveness of the method and perception of effectiveness of the method.
Research limitations/implications
The positive results suggest that designing a strategy by using the PAS design procedure is a suitable approach to alignment.
Practical implications
The PAS design procedure enables corporate real estate (CRE) managers to determine the added value of a real estate strategy. Because the PAS design method is generic, it can be used for a wide range of real estate portfolios.
Originality/value
The first CRE alignment model uses stakeholders preferences to design a more optimal real estate strategy.