It is not news to any real estate professional – there is confusion about the contemporary identity and functions of Facility Management (FM) and Property Management (PM). In public discourse and in daily business interaction the differences and similarities among these management professions are blurred and unclear. Consequently, it leads to wrong end user expectations or interpretations.
“What is the difference between Facility Manager and Property Manager?” is a frequent, practical question or “Where is the borderline between Property Management and Facility Management?”
So let us focus on a concise comparison between FM and PM. There are at least six significant differentiators:
- For the Facility Manager the building is a means to an end – the end being the optimal work environment
- Facility Manager is a representative of the building User/Occupier
- Facility Manager’s priority is to increase the User‘s primary business effectiveness and productivity
- Facility Manager acts on the principle: consideration of the whole lifecycle of an asset
- Facility Manager is focused on end user and occupier workplace needs and demands
- Facility Managers control the expense side of the property/physical assets budget for their user/occupier client
- For the Property Manager the building is an end in itself
- Property Manager is a representative of the building Investor/Owner
- Property Manager’s priority is to increase the building‘s Net Operating Income and value
- Property Manager acts on the principle: consideration of the planned business cycle of an asset, which is lease determined
- Property Manager is focused on Owner/Tenant relations management in order to achieve balance of interests
- Property Managers control all property generated revenues and expenditures for their Investor/Owner clients.
The differences between FM and PM derive from the varying agendas of User/Occupier and Owner/Investor, respectively their priorities.
Investors prioritize their goals as follows (Jim Ricker):
- Income – maximize Return on Investment
- Value – increase the Yield, thus the value of the property
- Customer relations – manage Owner/Tenant relations to achieve maximum occupancy, therefore max cash flow
- Operations – efficiently maintain the property in order to achieve the first three goals
Users prioritize their goals in almost reverse order as compared to Investors:
- Operations – maintain the property in support of the occupier’s core business activities and end users demand for continuous, effective and efficient work environment
- Customer and end user relations – ensure that FM services are optimal cost/quality ratio and directed to supporting high productivity of primary business processes and end users
- Value – preserve and maintain the value of the property based on whole asset lifecycle consideration
- Income (from property operation) – it is neither priority, nor responsibility
There are more differences like: the hierarchy of tasks; separation of primary and support business processes; approaches to end users, to clients and customers; degree of application of FM and PM in private and public sectors.
The Common Ground
Covey says: “Strength lies in differences, not in similarities”. In real estate in particular, I would go a step further and say that,
The daily operations and responsibilities in FM and PM are overlapping to very significant extent. The key competencies and skills of the Facility Manager and Property Manager, which are demanded by the clients (regardless investors or occupants) are so similar, that job descriptions converge in 75% of their content.
On operational level FM and PM manage ever-growing number of services in the areas of maintenance, hospitality, accommodation, safety and security, logistics, technical infrastructure, workplace, ICT, cleaning and waste management, open grounds, business services and many others. Both Property and Facility Managers use alike management and analytical techniques; methods; procedures; IT solutions. They perform corresponding management functions as strategic planning, risk management, service management, financial planning and control, performance management, quality management, people and change management, energy management, outsourcing, benchmarking etc.
The picture of built environment management will not be completed without adding Asset Management to the comparison. That will be addressed in a forthcoming article. Since I promised to be concise, let’s highlight that,
Managers answer to What and How, leaders the Why.
In our case, I would say: contemporary Facility and Property Managers provide the answers to plethora of questions What and How. When it is up to leadership, the perspective of Investors and Occupants drive the answers of Why.
Written by: DeyanKavrakov, FRICS
Partner at TCM, Board Member at BGFMA | Posted by: Max-Migold Ltd.