PLANT OPERATIONS ANCILLARIZATION

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PLANT OPERATIONSANCILLARIZATION

• THE UBC STORY

2
Outline

• Strategy,
• Organizational behaviour,
• Finances,
• Marketing,
• Lessons learned
• Next steps

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STRATEGY Situational Analysis

• Frame the Problem
• Scarce Resource Allocation implication on
  academic mission.
• Industry Facilities Management
• UBC Plant Operations
• Horizontally integrated medium scope firm,
  regulated monopoly owned by UBC.
• Director reports to the AVP of Land and Building
  Services, and the VP Finance Admin.

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Product - Customer Matrix
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STRATEGY

• Profitability Cost Avoidance
• Growth
• Higher service standards,
• New buildings OM, and
• Contracting-in.
• Cyclicality
• Summer renovations,
• Shoulder season maintenance, and
• Aging facilities.

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STRATEGY PEST Analysis

• Political
• Subject to institutional and government
  influences.
• Environmental
• Demands for global leadership in sustainability.
• Socio-Economic
• Aging buildings and Deferred Maintenance.
• Opportunity cost associated with the impact of
  facilities condition on the recruitment and
  retention of researchers, professors, as well as
  students.
• Construction sector escalation presently
  increasing 1 per month.
• Technology
• Automation of all work request processes.

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STRATEGY PORTERs FORCES

• Barriers to Entry High
• Collective Agreement(s),
• Economies of Scale,
• Learning Curve,
• Buyer Power High
• Price Sensitivity,
• Bargaining Leverage, and
• Propensity to substitute.

• Supplier Power Rising
• Importance of Volume,
• Supplier concentration.
• Rivalry Low
• High growth, but
• Monopoly.
• Substitutes High
• Buyer Propensity to switch.
• Relative price.

COMPETITIVENESS DRIVEN BY BUYER POWER, NON-PRICE
COMPETITION (REGULATED)
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STRATEGY Competition

• Competitor Analysis
• Moving,
• Minor Renovations,
• Project Management,
• Custodial,
• Maintenance,
• Landscape, and
• Waste Management

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STRATEGY Current Strategy

• Corporate
• Horizontally integrated firm with broad scope
  (many products one market), responsible for
  stewardship of land and buildings by maximizing
  the efficient allocation of scarce resources.
• Positioning
• Align services with Academic mission and reality.
• Competitive Stance
• Provide high quality, customer focused
  value-added services that are unattainable in the
  local marketplace
• Functional
• Contract out construction greater than 50,000.
• Reduce waiting times for work done in-house.

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STRATEGY Value Chain

• Sources of Competitive Advantage
• Resource scheduling of internal trades,
• Utilization of afternoon and graveyard shifts,
• Strong knowledge of campus buildings,
• Attendance management, SafeStart, employee
  recognition, and apprenticeship programs,
• FME add-ons used for real-time tracking of FFS
  hours, productivity, and response times.

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STRATEGYInternal Characteristics - Aging of
Building Inventory
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Organizational Behavior

• Culture,
• Academic mission gap,
• Union influence,
• Growth vs. contracting out.
• Employee conflicts (new vs. old),
• Non-negotiable
• Morale,

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Cultural Shifts Conflicts 1
Morale Participation
Innovation Growth
Productivity Goal Setting
Documentation Control

• Frost, Peter (2004). Organizational Culture. MBA
  Integrated Core, Sauder School of Business,
• University of British Columbia, Vancouver Canada

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FINANCES Transitions

• Significant implications
• More work done in-house (1997 to 2000), expanding
  workforce. Entire ACA done by in-house crews.
• Labour charge-out rates
• Previously underestimated. Only included base
  hourly rate and benefit premiums. Productivity
  factors such as sick time and vacations as well
  as direct costs not included.
• GPO under funded
• New expense obligations passed onto the
  department without corresponding funding.

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FINANCES Revenue Growth
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FINANCES REVENUE SHIFT
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FINANCES 2003/04 ACTUAL
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MARKETING Process

• Opportunity Identification (SWOT),
• Market Research (Customer Surveys),
• Forecast demand,
• Segment markets,
• Select the value (competitive positioning),
• Manage the marketing mix (service standards and
  price),
• Manage the communication mix,
• Manage customer loyalty and retention.

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MARKETING The Plan

• Current Situation
• Aging Buildings,
• Minimum operational funding,
• Workforce being reduced via natural attrition,
• Opportunity Analysis
• Links with University mission,
• Faculty student recruitment and retention,
• Managing unrealistic and seasonal demands,
• Leadership in transition,

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MARKETING The Plan

• Objectives (Targets)
• Minimize response times,
• Higher service standard (Level 2),
• Reduce FCI (Facility Condition Index),
• Maximize productivity,
• Marketing Strategy
• Align programs with Academic priorities,
• Manage unrealistic demands,
• Celebrate success,

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MARKETING The Plan

• Action Programs,
• TREK Initiatives (Classrooms, labs, social
  space),
• EcoTREK,
• Campus Renewal (FIMP),
• Profit and Loss,
• Zero-based budget,
• Productivity 71 (1390 billable hours per FTE),
• Routine Response less than 3 days
• Eliminate accumulated debt.

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MARKETING The Plan

• Controls,
• Real-time tracking of
• FFS and GPO hours,
• Productivity, and
• Work request response times.
• Reports
• Budgets (Monthly),
• Annual Forecasts (Quarterly),

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LESSONS LEARNED

• Ensure the ancillary model encompasses an
  integrated approach,
• leverage and anticipate implications of cultural
  conflicts and shifts.
• Balance financial pros and cons,
• Transparency and resilience.

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NEXT STEPS

• Foster departmental relationships,
• Align value chain advantages with product
  positioning (reduce costs vs. add value),
• Enhance strategic alliances,
• Implementation of plans.

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Thank you

• Contact Information
• David Woodson,
• Associate Director Operations Engineering,
• University of British Columbia
• David.woodson_at_ubc.ca
• (604) 822 - 2773