Almost without exception, commercial property is viewed by occupying businesses as an overhead and therefore a liability.

A property portfolio is usually the subject of scrutiny at times of financial pressure for business and all too often, in order to make short term cost savings, variable costs are slashed and the fixed costs are largely ignored.

By taking a more strategic view of a portfolio and re-engineering both the fixed and variable costs, there is often great opportunity to release value giving short, medium and long-term financial and operational gain.

Seth Love-Jones of TFT Consult, pictured, explores ways of releasing such value from a property portfolio by re-engineering both the variable and the fixed costs. Variable costs - facilities costs/service re-engineering

The most frequent target for occupiers looking for short-term property cost savings is in variable costs. As most property costs are fixed costs with long-term commitment (rent, rates, etc), short-term savings have to be found from the variable costs. These will normally include the costs for maintenance, cleaning, security, catering and the staffing cost of the facilities team. However, the full implications of making short-term cost savings to these items are rarely fully understood by the business at the time.

Make the costs visible One way to ensure that the implications are known is to make the costs and services provided very visible to the business. The first step is to ensure that the costs are readily identifiable in isolation to any other costs. If you extract the property costs and show them as separate cost lines, then the impact of cutting, and the real benefit of working the property harder, will start to become visible.

Define and agree service levels Once these costs are identified, the services provided need to be directly aligned with the needs of the business. Realignment itself can often reduce costs or improve services to the extent where you can generate a clear value.

Informed business decisions Clearly identifying the cost of property and agreeing the services levels that the business requires will ensure that you are able to make informed decisions at times of change. Without this information, arbitrary cost reduction targets will be set, which inevitably lead to the underperformance of property unable to support the business or give you any added value.

Renegotiate with suppliers In order to get the costs and service levels for outsourced facilities services at an optimum level, you need to review the contracts. Most organisations have a clear idea of the timing of these opportunities for their major fixed costs but the same cannot be said for the expiry and renewal of their service contracts. With changing business requirements and shifting buying power, most contracts can easily be renegotiated. The currently competitive market for facilities service providers is inevitably good news for your business.

Fixed costs - property strategy and occupational review An often ignored opportunity for short and medium term savings is the way a business occupies and uses its property. However, the fundamental mismatch between the speed at which property can be 'turned on' and 'turned off' and the speed of change within a business can cause continual turmoil to those with the responsibility of housing the business.