Helping an Australian University cut costs

Summary

Faced with budget constraints and the need to realign to a new strategy, this Australian University reviewed the way property, buildings and facilities services were delivered and identified annual cost savings of over $4M.

The Situation

Having completed a strategic review of the property division, this Australian University, engaged Grosvenor to develop a business case for change. Faced with budget constraints and an ambitious program of redevelopment, our client needed to reduce the costs while also improving the level of service provided to faculties and colleges.

The Challenge

The operating costs for the university’s property and related infrastructure had been growing annually for a considerable time. At the same time, senior faculty and other internal customers were dissatisfied with the performance of some of the services and, what they considered was a lack of customer focus. Having developed and published a new strategic plan for their major campus, our client needed to identify ways of reducing costs to ensure funding was available for an ambitious new development pipeline.

The business case needed to identify a new operating model for the division that would save costs, improve the focus on customers while also creating a structure that was more responsive to future changes.

The Project 

Engaging with senior faculty, business managers and the property divisions Grosvenor developed a shared vision of what an improved property division would look like. Key measures for success and key risks were agreed that would form the metrics against which the options for change would be assessed.

A detailed analysis of current costs together with internal and contracted resources was undertaken to clarify the current cost base, contracting structures and resourcing model. Using several of Grosvenor’s assessment frameworks, the following key findings were surfaced:

• much of the current internal resourcing was delivering operational functions and could be sourced at a lower cost from the market
• there was no single channel for customers to access advice or property input into their business plans, nor was customer satisfaction the key success measure for internal staff
• legacy systems and processes were hindering, rather than helping, customers access the services they required.

Options Considered 

Options for change were considered across two dynamics

• Organisational model – what are the geographical, functional, asset and client-based structures that could be used?
• Contacting model – what should the university continue to deliver through internal resources and what should it contract to the market and what are the successful contract structures used in the market?

Multiple options for both organisational change and contracting models were assessed against their ability to reduce costs, improve customer service and, provide future flexibility. Finally, a set of risk assessments were undertaken to ensure the risks associated with the changes could be managed.

The Result

A new operating model was developed which included a mixed geographical and customer-based structures.

A new function was included into the structure with accountability aligned to faculties and with a team whose role it was to ensure property services were meeting customer needs. This team were also charged with developing faculty accommodation plans and strategies to meet current and future business needs.

A new contracting strategy was developed which aggregated operational and low-value transactional functions from work order to invoice payment. Leveraging the service provider market much of the basic data management functions were identified for outsourcing under a managed services model. The same model commonly used by corporates and governments alike.

The financial outcome was a 27% reduction in costs representing over $4M pa. The new contracting model would also ensure that the cost of service delivery was more dynamic with the ability to scale up or down services and resources to meet changes in the portfolio.

While not all the recommendations were adopted, the business case provided the evidence required to have the changes endorsed and implemented.

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