Major Utility Company - Analyze Current Financial Decision Making Process and Provide Future Direction
The Challenge
As part of a major image overhaul, a public utility company with over 3,000 assets needed to analyze their internal financial decision-making processes with regard to their corporate real estate portfolio, to improve agility and responsiveness to their customers and internal business units.
As a state-regulated utility provider, regulatory issues as well as business drivers needed to be considered. Teel StratVisor Group was retained by the world’s largest real estate services provider to assist with the assessment of the current financial status of their Client’s portfolio and to provide recommendations for future direction.
What We Did
The StratVisor team developed and documented the Client’s current state using the following approach:
- Interviews of key Client personnel including strategists, analysts, legal experts, portfolio managers and transaction personnel
- Analysis of Client’s internal financial tools and comparison to industry norms and standards, and best practices
- Analysis and documentation of Client’s internal workflows of real estate transactions and financial decision making processes
- Review of federal and state agency regulations and implications with regard to operating its real estate assets as a separate entity e.g.: Holding Company, Real Estate Investment Trust and Joint Venture.
Next, the StratVisor team conducted research into emerging CRE trends with a particular focus on regulated industries and documented the financial concepts of Holding Companies, REITs, and Joint Ventures and illustrated the pros and cons and implications to the client’s business for each concept.
Key client personnel participated in StratVisor’s Strategic Diagnostic Survey, for users of corporate real estate, that compares and ranks real estate and organizational management, strategic planning, operations and infrastructure positioning to that of other major corporate real estate organizations.
The Result
The StratVisor team drew the following conclusions from its review:
- A lack of alignment of real estate and core business strategies, making servicing customer and business units’ needs difficult
- Financial analyses did not capture all business drivers, thus skewing results; plus, results could not always be implemented due to funding constraints
- Protracted internal approval processes greatly encumbered an agile decision-making process
Additionally, the StratVisor Strategic Diagnostic Survey identified the following areas for improvement:
- Space Utilization
- Technology Optimization
- Strategic Planning Goals
The team created four sets of decision-making tools, each comprised of a filter, process map and scorecard, to help evaluate the following:
- A Preferred Ownership Structure
- A Preferred Legal Structure
- Financial Implications
- New Lease Structure
The client also received:
- Gap Analysis of current to future state
- Best Practices in own/lease decisions
- Customized Portfolio Optimization Framework
- Summary of emerging CRE trends in regulated and unregulated industries
- Overview of State and Federal Regulations governing Real Estate transactions
- Detailed next steps/timeline for implementing improvements to workflows
Timing: 3 months
