The challenge:

Identify long-term cost savings and optimize operations for 1.5 million-square-foot-portfolio

The Regence Group and its affiliated companies comprise one of the largest health care insurance organizations in the Pacific Northwest.

• They are serving more than 2.5 million members from offices in four states.
• In an effort to identify long-term cost savings and optimize operations, Regence selected Johnson Controls Global WorkPlace Solutions to provide integrated real estate and facilities management of its 1.5 million-square-foot-portfolio.
• As a result, Regence saved $1.2 million in direct and avoided costs in the first year of the contract.

Formed primarily by the merger of smaller insurers, nonprofit Regence now serves members from 20 locations in Oregon, Washington, Idaho and Utah. Throughout these mergers, Regence worked to consolidate business operations and services to drive efficiencies and consistencies that benefit its members. Similarly, the focus of the facilities management contract with Johnson Controls is to bring efficiencies and consistencies to its facility operations.

The solution:

Taking a centralized approach to operating and maintaining the portfolio

“From a real estate perspective we were operating like separate companies, each managing its own buildings and vendors.

To become more efficient and drive down costs, we needed to take a more centralized approach to operating and maintaining our portfolio and chose to outsource those responsibilities. Johnson Controls provided the experience and tools we were looking for,” says Senka Lenn, director of corporate real estate and facilities management for Regence.

Johnson Controls Global WorkPlace Solutions is a corporate business partner that strategically manages its customers’ corporate portfolio to get their business working as effectively as possible, and in a way that creates real value to the bottom line. With each location operating differently, it was difficult for Regence to quantify the total cost of occupancy and improve portfolio performance. “To identify opportunities for efficiency, improved performance and cost savings, we first needed to get an accurate overview of our assets and standardize maintenance procedures,” says Lenn. “Johnson Controls was able to guide us through this process and because they have a business unit focused on the mid-market, we didn’t get lost in a sea of clients with much larger portfolios.”

Johnson Controls audited each building and worked with Regence to develop site-specific statements of work that would meet each facility’s unique needs, while incorporating standardized maintenance practices across all locations. Key performance indicators were developed to help measure improvements in facility performance over time.

Mechanical equipment at each location was identified and inventoried in an end-of-life format using a computerised maintenance management system (CMMS) implemented by Johnson Controls. “For the first time we really know what all of our assets are, the condition they are in, when they will need to be replaced based on expected lifecycle, and the cost of doing that, which helps us capital plan,” says Lenn.

A dedicated team of Johnson Controls professionals is responsible for operations and maintenance at each facility. The team includes three technicians previously employed by Regence who were hired by Johnson Controls. “This was a smooth transition and our former employees are now part of a larger organization, where opportunities exist that they may not otherwise have had,” states Lenn. Because of the team’s technical expertise and knowledge of facilities, it is self-performing approximately 70 percent of the work across all facilities. Regional operations managers on the team manage any vendors involved with outsourced projects and services.

Facilities management responsibilities include

• exterior services,
• building operations,
• equipment and systems maintenance,
• spare parts inventory,
• lease property management,
• inspections and certifications,
• general management and administrative services.

Johnson Controls implemented its Sequentra® information management technology to efficiently manage the information and processes associated with performing these responsibilities across the Regence portfolio.

Sequentra gives Johnson Controls, Regence and its tenants the ability to collaborate and share data regarding projects in real-time from a single, fully configurable, Web-based interface.

Results and benefits:

By standardizing maintenance practices across the portfolio, procurement and vendor management at the site levels were eliminated, labor efficiencies were created, and costs have been reduced and standardized. And, because mechanical equipment is well documented in the CMMS, preventive maintenance plans are in place which will improve asset performance and maximize lifecycle. Monthly, quarterly and annual reporting of all maintenance activities allows for capital and expense budget planning and improved accountability.

Notable key performance indicators and savings in 2010, the first full year of the contract, include a 99.6 percent on time completion rate for preventative maintenance, and a 100 percent OSHA recordable rate (zero incidence) for safety performance. Johnson Controls procurement secured $260,000 in annual savings by bidding out recurring services. In addition, Johnson Controls avoided more than $40,000 in costs for parts needed to repair legacy controls systems by leveraging spare parts available from a neighbouring branch.

A Johnson Controls hosted call center, along with the CMMS create a central point of operations for all the Regence properties. Service requests once received by maintenance personnel at each facility are now taken by the call center and entered into the CMMS, which drives work orders that are handled by the onsite team. Approximately 97 percent of the service requests are submitted online, which are more efficient to process in comparison to telephone requests.

“We are now able to track requests, identify the type of request, confirm the work order was completed and determine how long it took to complete,” states Lenn. Employees were engaged in development of the program by enlisting volunteers to act as key site contacts, responsible for entering all service requests for their location. “This was a major communications initiative, which Johnson Controls supported us on by working with our facility managers to categorize and prioritize service requests, set response times, manage expectations, and explain the benefits of the system to the company as a whole,” adds Lenn.

“With the team and tools put in place by Johnson Controls, we have improved the operations and maintenance of our facilities, and are better equipped to preserve and increase the value our assets. Our facility managers are now able to focus on project management. And, instead of handling service requests and managing vendors, they can learn more about their customers’ business plans and take a more strategic look at what needs to be done with our real estate to accommodate them.”
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