Abstract
The trend of outsourcing operational property management services by the property owners has had a prominent role in the Finnish real estate sector. At the same time, value creation has been scattered across many players such as the owner, the property manager and several service providers. This paper aims to analyse the value creation practices and mechanisms between two partners, a real estate owner and its property management company, in order to assess the current value creation. The assessment is based on a lean partnering framework presented by Lamming (1993). The customers are office tenants in the Helsinki business district. The case findings showed that the expected customer value was challenging to deliver, because waste activities disrupted the value creation. The partners had also adapted some of the value creation practices differently, which caused turbulence in value creation. In addition, the partners had missed the power of doing improvements jointly, but prefer to use bidding to establish value creation. However, through lean thinking the organisations found a much-needed new approach to develop their partnership. The principles of lean management made the problem clearer and enabled the organisations to start dealing with the relevant challenges.
Highlights
The trend of outsourcing operational property management services by the property owners has had a prominent role in the Finnish real estate sector
The case partnership practices discussed in the interviews and workshops are presented through the lean partnering framework adapted from Lamming (1993)
In the case a lot of confidence was placed on bidding, which was seen as a key tool to survive and to establish value creation
Summary
The trend of outsourcing operational property management services by the property owners has had a prominent role in the Finnish real estate sector. This paper aims to analyse the value creation practices and mechanisms between two partners, a real estate owner and its property management company, in order to assess the current value creation. In the real estate sector the value creation for the customers, for example for the users, has been scattered across many players: the owner offers the premises, the property manager manages daily value creation on the operational level, where several service providers deliver a spectrum of services. In lean management a lot of attention has been aimed at waste elimination and at cooperation and partnering between the different players in order to enhance value creation. Because the value creation in real estate sector is diffused, it is essential to acknowledge the impact of the partnering and cooperation practices and related process mechanisms on value creation. In this paper value creation for the customer is studied in a partnership of two or-
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