The True Costs of Cubicles

by Rick Brenner

Although cubicles do provide facility cost savings over walled offices, they do so at the price of increased product development project execution delays and costs. Facilities planners and managers typically are not held accountable for project schedules, yet decisions they make can have dramatic project schedule impact. How important is this effect?

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ordon's fingers raced over the keys as he typed. He wasn't in a race, but the plan was finally coming clear in Gordon's mind, and the pieces were now fitting together as if they were meant to, like the pieces of a puzzle. He felt satisfied and thrilled. Then the phone rang, interrupting his flow.

Not his phone — Marcie's, in the cube across from his. He heard her pick up, and listened with interest. Marcie was divorcing, and Gordon was a mildly curious spectator. Married himself, he didn't think of her as a potential partner, but he was curious about divorce, and about how she was getting through it. Marcie's end of the conversation was clipped and cryptic — she probably knew that people were listening. She told the caller she would call back, and then left, probably headed for the conference room around the corner — the one everyone called "The Cone of Silence." Well, Gordon thought, not much learned here, and he went back to writing up his project plan. It would take him another ten minutes or so to get back in the flow.

Cubicles provide cheap office space. Cubicle-based architectures enable businesses to reconfigure spaces much more quickly than they can reconfigure walled spaces, and they support higher densities. From the point of view of Facilities Management, they make a lot of sense.

But compared with walled spaces, cubicles provide little acoustic isolation. People who do brain work experience interruption rates much higher than they would in environments that provide greater acoustic (and visual) isolation. High interruption rates increase the time required to accomplish complex thought tasks, and might even increase error rates, which raises the costs of rework.

Cubicles do provide facility cost savings, but they do so at the expense of increased project execution costs.

Effect on Project Schedules

So it seems that the interests of the company are different from the interests of the Facilities Management function. Facilities planners and managers typically are not held accountable for project schedules, yet decisions they make can have dramatic project schedule impact. Here are just two of many other ways in which facilities decisions affect project schedules.

In-phase infrastructure investments

Organizations make infrastructure investments during quarters when Net Income looks good. For example, we wait until the record-setting quarter to upgrade our internal network architecture, to buy everyone new laptops, or to shut down half of the East-end elevators while we upgrade the motors and software. One effect of such "in-phase" infrastructure investments is that the inevitable disruptions that accompany them arrive at a time when they can cause maximum revenue disruption.

Like infrastructure investment, new product development is often in phase with Net Income. Thus, the disruptions associated with infrastructure investment are often synchronized with major new product initiatives. Consequently, we've developed an impression that new product development is more difficult to manage than it actually is. There are indeed difficulties, but some of those difficulties arise not within the context of the project, but elsewhere in the organization — at the level of the organization responsible for timing infrastructure investment.

Failure to relocate

Many organizations have a heritage of acquisition. As one result of a series of acquisitions over a period of years, they have organizational elements at several sites scattered around the country or around the world. When these organizations work on product development projects, the project team itself can be apportioned across those sites, with critical expertise drawn from those locations that possess it. This situation has led to much research and interest in managing geographically dispersed teams.

We can improve how we manage dispersed teams, but collocated teams will probably be more effective than dispersed teams for the foreseeable future. To really improve the performance of dispersed teams, the best approach is to consolidate them — to relocate people so that the team is no longer dispersed.

Sometimes we fear that if we try to relocate people, they'll elect to leave the company instead, and sometimes, they will. But failure to deal with these problems effectively condemns our organizations to high costs, project delays, increased communication costs, and a higher incidence of shredded schedules. In some organizations, it's time to face the possibility that promises made at acquisition time about never relocating might have been mistakes. It might be necessary to find ways to reconfigure the company geographically to facilitate product development and improve time-to-market. That effort might cause some people to leave the organization.

Accounting for Project Delays

In all three of these cases — cubicles, in-phase infrastructure investment, and geographic dispersion — one of the culprits is the typical accounting system, which fails to allocate accurately the full cost of facilities decisions, because it doesn't measure the cost of delays and disruptions throughout the organization. Accounting systems — even management accounting systems — were never designed for that purpose.

Cubicle costs

As our dependence on the telephone as a tool for business operations increases, we can expect that interruption rates due to telephone calls will also increase. Measuring the cost of interruptions of the thought processes of cubicle occupants is beyond the reach of typical accounting. Still, we can measure the frequency of telephone rings within the hearing of a typical cubicle occupant, and we can make estimates of the time lost to such interruptions.

In cubicle installations, the interruption rate experienced by an occupant is roughly proportional to the number of cubicles in the room. Thus one way to reduce the interruption rate is to reduce the sizes of the rooms that contain cubicles. The facilities planner could make room-size decisions by trading off facilities cost against interruption rates.

Historical trend data for interruption rates in typical cubicle installations could be a useful tool in making such facilities decisions, but unless Facilities is accountable in a budget sense for the impact of such decisions, the trade-off will generally produce lower facilities costs and higher interruption rates.

In-phase infrastructure investments

If the accounting system did measure the total organizational cost of the infrastructure improvements, including the cost of project delays, justifying out-of-phase infrastructure investment would be much easier. To change the organizational perspective, begin by collecting historical data. Estimate the costs of project delays due to facilities improvement projects, and charge them to a facilities budget. This practice motivates development of a new approach to infrastructure investment, one in which we undertake improvements out of phase with Net Income.

Reducing geographic dispersion

To accomplish consolidation with a minimum of losses of key people is a difficult problem. Begin by honestly accounting for the cost of not solving it. Use these cost data to make a case for applying significant resources to a quick and effective relocation solution. Applying those resources in novel ways to provide financial support and to ease stress for the people who must relocate is the key to successful consolidation.

Ideally, these costs should be recognized as acquisition costs. If they are taken into account at acquisition time, the organization and its shareholders will have a more realistic picture of the financial value of the acquisition.

To achieve high levels of organizational performance, we must have cost data that reflect that performance. Allowing some functions to force other functions to bear costs without consequence enables those functions to make decisions that make local sense, and global nonsense.     Top

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Do you want to examine how operational functions contribute to project delays in your organization? Through assessment, consulting, or coaching, I can help you to:

• Assess the use of cost-export practices across operations units
• Model the financial costs of operational decisions in terms of time-to-market
• Reduce the frequency of interruptions in your organization

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