Strategic Facilities Assessment for a Chicago Area Energy Company

Situation
The purpose of this consulting engagement for a $4 billion energy company was to develop an entire portfolio strategy that included owned and leased facilities, office space and service center locations, and land parcels throughout the Chicagoland area.  The company had not conducted a strategic portfolio or space utilization study in decades and it had downsized its employee base by 1200 people two years prior.  Opportunities to free up capital by restructuring the portfolio while improving operating efficiency and maintaining customer service levels were project requirements. 

Resolution
The assignment included a short and long term portfolio management strategy that addressed best practices in the energy industry, flexible space to accommodate future needs, changes in company ownership structure, improving morale and culture and maintaining a positive image with the city.  The company had reduced headcount in the preceding years and knew that it had excess space but was uncertain as to how much.  The unregulated and regulated companies officed together.  This real estate optimization project incorporated 11 facilities and over 1000 employees. Building consensus among various stakeholders would be essential.

Our Approach Included:

• Interviewing key stakeholders to determine project goals and objectives and decision criteria
• Building consensus among stakeholders with varied priorities
• Interviewing functional managers to determine current and future space needs and utilization
• Appraising all portfolio properties, including highest and best use, zoning and potential political or community issues that a change in use would cause
• Conducting financial analysis of headquarters lease to determine if savings were achievable in a renegotiation and lease extension
• Determining 89,000sf of the 800,000sf portfolio was not being utilized
• Determining headquarters space could be reduced by 43,000sf to 126,000sf by gaining efficiencies and creating a distinct executive headquarters at 130 E. Randolph and relocating other functions to a new “Super Center.”  The Super Center would include Gas Operations, Gas Engineering, Gas Supply, Call Center, IT, Data, Print Shop, Technical Training and Revenue Assurance
• Determining 11 service centers could be consolidated to seven.
• Estimating, after monetization of certain assets, consolidation and renegotiating the headquarters lease, that $10’s of millions could be generated for the company by implementing the new strategy