FASB / ASC 842 & IASB / IFRS 16 are just the latest acronyms and complexities being added to a service that is already teeming with complexity and confusion. The term “lease administration” can mean vastly different things depending on the organization. First, it may involve owned properties, subleases, and/or other forms of contracts that aren’t just leases. Next, it could involve more than just the administration such as lease accounting and detail about how the associated costs get transferred back to the users or business units. Finally, it can include a vast array of other responsibilities that relate to the property like risk management, environmental, legal or facilities; & so each department may in fact have yet another definition or expectation for this discipline.
Areas for Consideration When Sending an Outsourcing Initiative RFP for “Lease Administration”
- Just leases or also owned properties?
- Just administration or also facilities management or accounting?
- Include document review?
- Which fields should be abstracted?
- How will translations be considered?
- Audit or review?
- Only big leases or all leases?
- Only operating expenses or also base rent, utilities & occupancy payments?
- Buy vs. rent?
- Customized or off the shelf?
- Domestic or international
- Integrated business data
- Internal resources, focused expertise, or a combination
- Independent or tied to other services
- Fee based or contingency
- Project or process work
Ours is a service that is often difficult to fully capture in a couple of sound bites or even in a lengthy RFP response because it can mean different things every time it is engaged. The level of detail required daily, weekly, monthly and annually grows as best practices evolve, big data gets bigger while dashboard reporting looks to condense it down to actionable intelligence and preferences shift as to balancing internal capabilities with supplementary outsourcing. It is not uncommon for a company to already have a software system that they are under-utilizing or about to implement and receive a request for proposal for a very general set of questions/criteria because terms in this industry are widely used but vary greatly in their specific interpretation and application.
This may be why it is not uncommon that long after RFP responses are submitted a secondary effort to REALLY dig into what the company needs takes place and almost completely re-scopes the project/processes. A possible answer seems contradictory at first as we’re often told to “Keep It Simple”. So can we make it simpler by adding complexity and detail? We think so…by making sure the specifics that you are going to require to support your company are in the request. Provide expected deliverables and processes you expect to be included and give specific examples of reports and data elements that you will need with frequencies of updates. Explain how your company defines terms that appear regularly on service provider web pages (See Side Bar). In the spirit of collaboration, here are a few tools we use to narrow things down:
- Outsourcing Best Practices – We firmly believe that clarity results in quality and therefore the following elements help bring that clarity to the project:
- Fee for Service
- Specific Scope of Work
- Articulated Deliverables with Samples
- Goals, Measurements, SLA’s and Expectations Agreed Up Front
- Think through this typical process/cycle and where lease administration might fit in:
If you’re actively writing an RFP and would like more input or good questions that we recommend for getting to the heart of “Lease Administration”…contact us and we’ll send it to you.