A Private Health Insurance Company – Strategic Facilities Plan
The Challenge
A Private Health Insurance Company with sales of over $1.5 billion a year was experiencing steady growth and was close to outgrowing their current office space. Additional office space was required to meet their growing needs. The Client had several options. One was to buy a building they were already leasing off-site. Another was to develop an under-utilized 80-acre parcel of land, currently housing their headquarter offices, to accommodate the additional office needs. This under-utilized lot was located in what had become a very popular area for shopping, restaurants and offices, and development could potentially provide additional revenue streams.
Client executives struggled with the decision and ultimately asked Teel StratVisor Group to help them objectively assess their options for new office space and determine a plan for their excess land.
What We Did
The first decision Teel StratVisor Group helped the Client make was whether to build additional office space on their 80-acre parcel of land, lease additional office space off-site or buy office space off-site.
Using an objective Strategic Decision Scorecard, the best decision for the Client was to build on their existing plot of land next to the current Headquarter offices. Once the decision was made to build on the existing land, two additional scorecards (one to evaluate financial structure plans and one to consider developer structure strategies) along with two financial models were created and used to identify the highest value, most cost-effective, and most operationally efficient decision combination for the Client on the best use of their excess land. The scorecards and financial models addressed options such as selling the land outright, keeping the land and leasing it back or forming a joint venture with a developer.
Due to the impact of a severe hurricane on the local economy, several key scorecard decision factors were modified and the weights of importance on those decision factors were updated. The updates addressed the change in the Client's priorities and changes in market conditions. The decision was made to have a developer build additional offices near the current offices to accommodate over 1400 additional employees and to lease it back from that developer.
Once that decision was approved by the Board of Directors, Teel StratVisor Group was then asked to assist the Client in the creation of a developer Request for Qualifications (RFQ) as well as in the analysis of the responses. Through the objective scorecard process, the Client's choices were narrowed down to the top 2 developers. The Client then chose one developer to implement the facility plan.
The Result
As a result of working with Teel StratVisor Group, the Client received the following benefits:
- A 3-5 year Strategic Facilities Plan
- Objective scorecards used in the development of the Business Case and analysis
- Financial Implications modeled for a 20-year horizon
- Comprehensive RFQ and scorecard to analyze and rank potential developers
- Assistance in the communication with the Board of Directors and, ultimately, approval
Timing: 5 months
