The challenges brought about by changes in work methods, relocated workplaces, climate disasters, and earthquakes, which have caused significant damage to properties in several Croatian cities, have also impacted the management of physical assets, both in the private and public sectors.
In this role, the private sector has fared much better than the state, which in most cases has entrusted the management of its properties to companies engaged in facility management. Experts in resource and service management believe that the state has much to learn from private companies about managing its real estate.
Problematic energy
Specialized companies that engage banks, shopping centers, factories, and others for property management as outsourcing make it more economical and commercially viable for owners. Although some companies have their own facility management departments, outsourcing prevails, with several companies in Croatia providing complete technical and infrastructural services.
One of them is Adria Group, and Petar Dalbello, the director of facility management at the company, claims that new challenges in property management primarily affect changes in criteria, especially related to energy consumption. Efforts are being made to reduce consumption for more rational resource use, which has so far been declarative among property owners, but perceptions are now changing intensively, and rational usage is being pursued through user education and monitoring consumption. Investments are also being made in more efficient devices, but much slower than expected due to cost issues.
– A negligible number of green consumers are used, e.g., electric cars, and chargers are currently installed rarely and for the purpose of stops, not savings – explains Dalbello.
Minimal investments
He adds that currently, the relocation of workplaces is significantly less than during the restrictions of the coronavirus pandemic, but it was also noted that energy consumption was significantly lower during the period of intensive working from home. He also claims that the earthquake did not change the way of functioning, i.e., property management, as most buildings did not suffer damage that would prevent them from functioning as before. Dalbello warns of the importance of asset management (AM), which companies have not yet recognized as a criterion for profit growth.
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Namely, it enables systematic property management – preserving the value of the property through technical, infrastructural, and economic management.
– This issue greatly depends from company to company. Generally, minimal investments are made, and the equipment in most business properties is in very poor condition – notes Dalbello, who observes that properties supporting the core business are approached qualitatively and sufficiently invested in, while everything else receives minimal investment, resulting in poorer property conditions.
For example, a manufacturing company invests in production equipment and takes very good care of it, but everything else is left to ‘do its job’ and eventually invests in new. Similarly, companies that depend on sales maintain only what represents the product (store, hotel lobby, production machines…), while support systems for other properties are in poor condition.
– This happens in most cases, although it is not a general phenomenon, but there are quite a few manufacturing companies that do not invest in production systems either because they wait for them to wear out completely… Generally, building management heavily depends on the property owner’s policy – emphasizes Dalbello.
Difficult contract realization
In his opinion, the state has much to learn from the operations of companies when it comes to managing physical assets, primarily because private companies make strategic decisions and define investment strategies based on those decisions. However, everything is generally always based on profitability and the final result. If changes occur in the market, the strategy changes very quickly, and consequently, so do investments.
The director of MIDA Facility Management, Daniel Saić, believes that property management in Croatia is indeed becoming increasingly challenging and dynamic due to the aforementioned reasons. In addition to existing difficulties and changes, he believes that the growing impact of inflation on all categories of inputs should also be taken into account, which significantly complicates the realization of previously undertaken contractual obligations.
A mitigating circumstance is that work after the coronavirus pandemic is slowly returning to normal as many companies residing in commercial properties are returning to initial settings and gradually abandoning remote work, but landlords have been faced with new problems caused by the earthquake. The consequence of the earthquake is new trends in which tenants are increasingly turning to newly built properties that offer a greater sense of security.
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—– The earthquake has shown that constant investment is needed in real estate, just like in any other asset, both in construction substance and in traditional maintenance, and that properties that are better maintained provide greater security, and due to increased demand for them, they bring greater profitability to owners – emphasizes Saić.
Comprehensive care
According to him, the solution lies in quality asset management, which, together with property and facility management, forms a whole that every company or organization owning real estate should have in order to preserve value and make the property more profitable through a planned commercialization strategy, planned maintenance costs, and control of overhead costs.
– Many property owners today think that maintenance and property management is merely cleaning. Without diminishing the importance of hygienic maintenance, I have often found myself in a situation where I said that I am the director of Mida Facility Management and received the response: ‘Oh, you are the ones who clean the properties.’ Hygienic maintenance is a smaller part of the complete property management, which consists of technical, commercial, and infrastructural management. When we talk about quality property management today, we are talking about asset management, which implies comprehensive care for market positioning and performance of the property. Property and facility management are enhanced here by controlling and implementing planned costs and activities so that at the end of the year both the owner and the tenant in the property are as satisfied as possible – emphasizes Saić.
He believes that when it comes to managing physical assets in state ownership, the state can now learn a lot from the real sector because, when looking at the real estate market today, it is hard to find a private property that is vacant, unlike state properties, where the situation is reversed, and a vacant property is the most expensive because it does not generate profit but creates costs.
– The state should first restore its properties to become market competitive and meet all modern standards like private properties. This would give it the opportunity to fill them with higher quality tenants under much better rental conditions. If they then added quality management and maintenance that would follow trends, costs, and take care of the property like a good steward, that property would quickly pay off its investment and bring profitability to the owner, i.e., the state – says Saić.
Company activities
And while many companies outsource the management of their properties, Pliva Croatia has its own team responsible for resource and service management. Part of the activities they engage in also includes property management, but it is important to emphasize that facility management cannot be equated solely with property management. At Pliva, they say that resource and service management encompasses multiple elements to ensure functionality, comfort, safety, and efficiency of the environment in which it operates.
Thus, resource and service management indirectly contributes to achieving the company’s strategic goals as it takes care of quality, safe, and organized working conditions, thereby enabling employees to be more productive and focused on their primary work.
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In Pliva, facility management includes various activities such as archiving, catering, cleaning services, vehicle management, employee transportation services on-site, landscaping, first aid, mail and delivery services, project management, reception services, and information for visitors, security services, maintenance of work clothing, and management of buildings, spaces, and meeting rooms. This means that property management within resource and service management refers to office buildings, laboratories, common areas, properties not in production, and vehicle fleets…
However, along with the management team with professional competencies for resource and service management, Pliva also engages external collaborators for operational services.
In addition, some members of Pliva’s management team are prominent members of the Croatian branch of the International Facility Management Association (IFMA), which globally has over 28,000 professionals. Pliva’s experts aim to further develop their skills through participation in this association, as their quality is extremely important for the thorough and quality execution of Pliva’s core activities: the production, supply, and distribution of high-quality medicines. Pliva’s facility managers aim to expand and exchange knowledge about quality resource and service management, thereby continuously improving the working environment and providing appropriate services for the company’s needs.
