FM April/May 2015

SOLUTIONS FOR THE BUILT ENVIRONMENT FACILITY MANAGEMENT

WORKPLACE HEALTH

How mBraining can help you make better decisions

APRIL | MAY 2015 $10.95 inc GST

SUSTAINABILITY New environment-friendly flooring technologies ACCOUNTING How to avoid becoming a zombie company

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PROPERTY Are your properties at risk from non-compliance

APRIL | MAY 2015

CLEANING | OH+S | STORAGE | GREEN BUILDING | FLOORING | LIGHTING | ENERGY EFFICIENCY | SECURITY | FITOUT | HEATING + COOLING | FIRE SAFETY

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20 | Property feature

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ince the Commonwealth Work Health

Typically, architects, consulting engineers, builders and trades

and Safety Act came into force in 2012,

spend an average three years designing, coordinating and

there have been major reviews of facility

constructing a building. After achieving practical completion,

management practices relating to new and

the defects liability period begins and the builders move on

existing buildings and how the application

to the next project. The construction industry does not fully

of new legislation, technologies, risk management and

understand what the facility manager, who has to run this

organisational reporting requirements will affect properties.

building for the next 20-plus years, needs.

Today, facility managers are becoming more responsible and

Discussions over several years regarding the two allied industries – construction and facility management – exposed

therefore they are demanding better information with which

deficiencies in one and a lack of direct connection between the

to run a facility effectively. They need builders, architects and

two. The need to improve and connect one industry to another,

engineers to provide superior information about the facilities

together with the likely mandating of BIM management, is now

they are building. Why? Simply it comes down to financial

even more compelling.

implications. If the facility manager is not managing the risks of the insurer, then higher insurance premiums will ensue.

Currently, the construction industry market is serviced

Therefore, all facility mangers must ask these questions:

by individual trades and builders who are contractually required to deliver ‘as-built’ construction documents called

l Can the property be managed efficiently? And will there

Operations and Maintenance (O&M) manuals whenever a new

be an effective systems maintenance/service schedule

building (facility) is constructed, completed and handed to a

delivered for the building at practical completion?

property owner.

l Can the as-built documentation be used as a financial

After practical completion and the conclusion of the defects

management schedule or a legal compliance brief for the

liability period (DLP) the final handover of the O&M manual

owner?

occurs before the parties walk away and the owner of the new

l Will the as-built documentation be suitable as a taxation

facility is left to manage the operation for the duration of its

dossier for the owner’s chief financial officer?

commercial life. For the past 35 years, the construction industry

l Will the as-built documentation reduce the operating costs

has been delivering O&M manuals this way, but this current

of the building?

industry practice no longer meets today’s commercial needs or

l Will the as-built documentation support Work Health and

mandatory obligations, leaving property owners at risk.

Safety (WH&S) risk management plans for all stakeholders?

Despite builders’ best efforts, according to several Australian

l Will the as-built documentation contribute to good capital

state government public works departments, 80 percent of

expenditure management in the format that is provided to

project O&M manuals are still not complete even two years

the facility owner and operator?

after practical completion.

The short answer to all these questions is, no.

The build history (as-built documentation) delivered in the

The construction industry’s current practice of supplying

form of O&M manuals contains the data that is required to

paper O&M manuals in four-ring binders is archaic. The

create facility management service delivery plans. The way the

traditional O&M manuals information assembled is irrelevant

builder is directed contractually to collect, collate, format and

for today’s regulations and, due to the sheer volume of data

deliver the data has a direct influence on the integrity of the

collected, rifling through piles and piles of paper is not an

‘as-built’ documentation to the property owner.

efficient way to access vital information.

Why is the building industry still specifying O&M manuals?

Is the quality in as-built O&M manuals causing non-compliance?

The current construction industry practices for O&M manuals are no longer acceptable, as they are fragmented, conflicting

DESIGN AND CONSTRUCTION

FACILITY MANAGEMENT

3 YEARS

30 YEARS OR MORE

and poorly connected from one phase of a project to the next.

To find a solution and begin to change the current practices regarding the delivery and content of project O&M manuals, we need to ask ourselves: l What is the O&M manual really used for and who will

ultimately use it? l Who specified the required O&M manual?

FM APRIL | MAY 2015

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PRACTICAL COMPLETION

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YEAR 11+

YEAR 10

YEAR 9

YEAR 8

YEAR 7

YEAR 6

YEAR 5

YEAR 4

YEAR 3

YEAR 2

YEAR 1

RICHARD GAPPER of OandMs suggests some basic yet important questions all facility managers must raise in order to efficiently manage their facility.

YEAR 0

l Who delivers the O&M manual and what problems arise

from it? l When should the O&M manual be delivered? l What is wrong with the current O&M manual?

Sadly, the current practices for delivering O&M manuals is nothing more than a recorded history of the project build

APRIL | MAY 2015 FM

26 | FINANCE

How to avoid becoming a zombie company

L

ike the traditional walking dead, ‘zombie

able to repay interest on outstanding debts. However, if the

companies’ wander aimlessly and unsteadily,

company is incapable of paying down the actual debt to an

not quite alive, but still moving. The term 'zombie companies' has become more common, as low interest rates let otherwise

agreed timeline, then it may already be a zombie.

3. Putting a hold on growth. Generally, zombie companies aren’t able to invest in new businesses or hire new staff.

struggling companies battle on. In the past, many of these

When organisations need to put a prolonged stop to growth

underperforming organisations managed to slip under the

and expansion, especially if the market conditions are

radar, escaping insolvency by virtue of the fact that financiers were unlikely to enforce their security and the companies were therefore able to meet their basic obligations.

In 2014, such companies were able to repay the interest on their debts, keeping financiers at bay, but they could not reduce the actual debt itself. This trend could continue well into 2015, since there is no expected increase in interest rates in the near

average, it can be a warning sign.

4. Failing to secure additional finance. When companies have reached the point where they are only covering interest and not paying off the actual debts, smart financiers and investors will become more hesitant to continue funding the business.

5. Extending creditor payment days. Companies that

When a company becomes a zombie, there are two options.

is unlikely to have adequate cash on hand, but can also mean

future. However, for these organisations to avoid going under in

consistently exceed suppliers’ trading terms and use the

The first is to try to save the company with an overhaul of

it is difficult to identify problems until it is too late. To avoid

the long-term, they must change course.

Australian Taxation Office (ATO) as a financier, by either

management practices and operational procedures. The second

this, organisations should put in place a clear reporting system

not forwarding on statutory liabilities or entering into

is to put an end to the cycle and shut the business. Either way,

that includes debt recovery policies and procedures. Cash

its resources are stretched thin, letting it meet immediate

repayment programs with the ATO, are providing indicators

a zombie company cannot be allowed to continue to wander

flow policies should be reviewed to ensure the business is

financial obligations, but providing no room for growth, debt

that they may already be among the walking dead.

aimlessly, as it has the potential to take others down with it.

maximising its potential for income.

but, unless its operating practices change dramatically, it is

Reading the signs of distress

companies need to watch for escalating costs, excessive

likely to become insolvent sooner or later, regardless of bailouts

While business managers should be aware of economic

downtime and maintenance programs that aren’t working.

or other support. This leads to losses for lenders and investors,

indicators when evaluating their business, they should not

To overcome production issues, companies must constantly

and can have a flow-on effect to the rest of the economy,

use them as the only source of information when determining

monitor output to ensure they are achieving the most from

resulting in higher unemployment, for example.

their level of exposure to risk and overall confidence. Different

available resources, and reducing waste and inefficiency.

indicators can have positive or negative effects depending on

When there is a lack of a well-defined and balanced

An organisation can be termed a ‘zombie company’ if

reduction or investment. It may look for bailouts or handouts

Production problems can also be a sign of distress and

Some companies need support or even a bailout because of extraordinary circumstances, while others simply need

the type of business or industry. For example, a high Australian

organisational structure, and there are no clear tactical plans or

a longer foundation period before they can start to turn a

dollar is good for importers, but not for exporters.

strategies, then the organisation may be in trouble. To combat

profit. But when an organisation consistently underperforms

Businesses should watch the key economic indicators,

this, businesses should prioritise planning, including putting

financially and is doing the bare minimum to meet its financial

including: the currency value at home and in the international

effective processes in place for succession planning, formal

obligations, it could be a sign that the business is about to reach

market, interest rates, whether big businesses are cutting major

business planning and performance management.

‘zombie’ status.

projects or staff, cash burn rates, changes in invoice payment

These are the five key signs that indicate a company may be

times and the stock market.

headed in this direction.

An economic downturn is not the only cause of business

1. Covering the bare minimum. Companies that can

failure or zombie-ism. The most important thing businesses

The business should also be flexible enough to respond to changing market conditions in a timely fashion, letting it maximise revenue opportunities.

If the organisation has an unbalanced product range,

only cover the bare minimum, such as running costs and

can do is objectively assess their own business and whether

declining gross margins and unrealistic pricing policies, then it

interest-only repayments, may be headed for zombie status

it is showing signs of distress, and then take action before it is

will be vulnerable to the competition. It is also inadvisable for

if they can’t improve their position in a reasonable time-

too late.

organisations to rely too much on a few customers or industries

frame.

The most obvious sign of distress is if the organisation

2. Paying interest, but not the debt. After paying initial

has inadequate cash reserves to cover contingencies. Poor

costs such as rent and wages, companies should at least be

FM APRIL | MAY 2015

cash flow control systems not only mean that the company

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for income; diversification can reduce risk.

Businesses should keep a close eye on sales trends both within the business and in the broader industry. If sales are

APRIL | MAY 2015 FM

30 | WORKPLACE HEALTH

So important are these discoveries that there are dedicated

How to use mBraining to make great decisions

l values – processing what’s important to you and your

fields of medicine and research including neurocardiology

priorities (and its relationship to the emotional strength of

and neurogastroenterology.

your aspirations, dreams, desires etc), and

Utilising the practical methodologies of neurolinguistic

l relational effect – your felt connection with others (e.g.

programming, cognitive linguistics and behavioural

feelings of love/hate/indifference, compassion/uncaring,

modelling, Grant Soosalu and Marvin Oka have synthesised

like/dislike etc).

a wide range of research findings into an integrated approach.

The findings are published in their book entitled mBraining –

Gut brain prime functions

Using your multiple brains to do cool stuff.

l core identity – a deep and visceral sense of core self,

MBraining is a new field of human development (developed

by Soosalu and Oka), which suggests that everyone, particularly leaders or those making important decisions, will

Decision-making should not be left to the mind alone, it should be a cohesive result of thinking using all the three brains inside the human body – the head, the gut and the heart.

have far more success if they are able to practise accessing all the resources in their head, gut and also their heart. In doing this, they align their conscious and unconscious intuitive

and determining at the deepest levels what is ‘self’ versus ‘not-self’ l self-preservation – protection of self, safety, boundaries,

hungers and aversions, and l mobilisation – motility, impulse for action, gutsy courage

and the will to act.

abilities, and are able to harness that priceless wisdom within

S

them. The mBraining research and behavioural modelling

Head brain prime functions

has shown that each of these three brains offers a unique

l cognitive perception – cognition, perception, pattern

intelligence, each with specific areas of competence: everal years ago, I was leading a large

out differently if you had made a better decision, or taken a

team of people who had a huge portfolio of

different action – that is, a decision made on ‘feeling right’ as

Heart brain prime functions

responsibilities, including managing key

well as meeting all of the standard ‘thinking’ criteria?

l emoting – emotional processing (e.g. anger, grief, hatred,

suppliers. During this time, we went out to tender for a supply contract that was worth

There’s a growing body of research on the importance and

recognition etc l thinking – reasoning, abstraction, analysis, synthesis,

joy, happiness etc)

meta-cognition etc, and l making meaning – semantic processing, languaging,

narrative, metaphor etc.

value of intuition or ‘following our gut feel’. This technique is

around $30 million and I made the decision to delegate this

particularly useful in decision-making and proves that using

tender process to several members of my highly qualified

our intuition – combined with our knowledge of a subject

and experienced team. As a result, they managed a thorough

– results in better, more powerful decisions than just using

and detailed process and came up with the recommendation

knowledge or ‘head thinking’ alone.

to change to a new supplier. Although I was happy that they had followed the correct process, I have to be honest – this

So what is intuition?

supplier just didn’t feel right to me.

There are numerous theories on intuition, many supporting

Even when the time came to sign the contact with the new

the concept that intuition is our unconscious mind, merely

supplier, I procrastinated for days and really didn’t want to

trying to pass information on to us. When doing this,

go ahead with it. However, unable to articulate a good reason

it provides access to far more accurate detail, than our

why I felt this way, I chose to override my gut feeling and went

conscious cognitive mind could ever do on its own.

ahead and signed the contact.

As a result, the next two years of working with that supplier were a complete nightmare. Yes, technically the supplier could deliver and did everything they said they

Can you imagine how powerful it is to be able to access your intuition in order to gain more information to work with when taking action and making key decisions?

Humans not only have brains, we have hearts, guts,

would – but, in reality, the fit between the two organisations

emotions, values, identities and strengths that make us who

didn’t work at all. The head-based decision process that was

we are. Therefore, in order to reach our highest potential, we

used to choose the supplier wasn’t enough to get the right

need to understand and utilise our whole self – not just our

outcome and my gut reaction was actually giving me much

thinking brain.

more accurate guidance.

Have you ever made a decision or taken an action that,

How does this impact you?

despite following the correct process, or being logical, just

Think about those times when you are relating with your

didn’t feel right? Maybe you found it hard to put into words,

customers and stakeholders, when negotiating service levels

but you just felt something wasn’t quite right in your gut?

and contracts or when dealing with stressful crisis situations.

Did you go ahead and do it anyway, only to discover later

Can you imagine how powerful it would be to add the

on that things didn’t work out or had serious consequences?

knowledge of your intuition into these processes?

We are often told to ‘follow our gut’ but, in reality, how

Recent neuroscience findings support the concept that if

many of us do this? Have you ever wondered what would have

you want to become a true leader, then you need to use all

happened if you had actually listened to what your gut was

the intelligence available to you – not just the brain inside

telling you? Would the outcome have been more positive?

your head. Science has confirmed that we have at least three

Think back to how many situations may have turned

FM APRIL | MAY 2015

‘brains’ – one each in our head, heart and gut.

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