$12.2 billion is wasted every year on office capital projects

October 5, 2015 Laura McDaniel

Is your company part of the problem?

JLL found that some of the world’s best companies:

  • Miss capital plan targets for office real estate by $12.2 billion every year, a monstrous-sized figure.
  • 72% of that money is underspent, which, if not managed carefully, constricts money from being directed into new growth areas for your company.

Commercial Property Executive and Jim Dobleske recently released an article exploring this issue.

What could you do with $12.2 billion? A developer could construct three One World Trade Centers in New York City, a country could plan and host a World Cup tournament or you could share $1.67 with every living person in the world.

Or, like many companies, you could waste it on office capital projects.

According to JLL research, Forbes 1000 companies miss their capital plan targets for office real estate alone by $12.2 billion. That’s money wasted and a significant cost savings opportunity going unused.

Not all companies are equal offenders: The financial sector is the largest culprit, accounting for one-third of that waste. The best performers manage their capital spend within +/- 2 percent to plan, while the average company misses +/- 12 percent and the worst performers overspend by 20 percent.

So, what can companies do to combat this? This topic is top of mind for companies looking to rearrange their strategies.

The plan needs to be flexible and monitored in real time, as well as aligned with the larger scheme of the business. For instance, if a significant decision is made, like the cancellation of a project, resources need to be properly allocated. However, knowing where to start on these items can be difficult: here are three ways to begin improving the capital spending plan process, ensuring that it runs smoothly and that the sweet spot of +/- 2 percent is reached.

See the entire article here.

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