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Chargeback

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Overview

Chargeback is the process by which you can recover the costs of providing real estate to the business units who use or request space. Chargeback is often seen as one of the most effective leverage Corporate Real Estate has to drive accountability and financially responsible behaviors around the use of space throughout the business. The theory being that when the high cost of real estate hits a business unit’s bottom line, they will be more inclined to only use or request only what they need and in doing so reduce their hoarding on excess or vacant space.

Serraview supports two options for calculating how much space each business unit can be charged:

  1. Simplified Workpoint Allocation Model
  2. Sophisticated Prorated Space Allocation Model

Simplified Workpoint Allocation Model

Pros:

  • Quick and simple to configure and run.

Cons:

  • Arguably not as fair/equitable to every business unit as businesses who use low-density floors (with more space per workpoint) will pay the same amount per workpoint as businesses on highly dense/efficient floors (with less space per workpoint).
  • Does not support the allocation of space to sub-tenants.

Sophisticated Prorated Space Allocation Model

For details, refer to Prorated Space Allocation Model.

Pros:

  • Fairer distribution of space amongst business units and sub-tenants.
  • Aligned with industry space standards such as BOMA and REBNY.

Cons:

  • Requires more effort (and cost) to setup and maintain.

Chargeback Process

A number of Serraview clients have a chargeback process in place, but not all. Chargeback for space is more likely to be used when an organization is already doing Chargeback for other expenses.

The decision whether or not to run a chargeback process is most commonly decided at a high-level within an organization, e.g. CFO/CEO, however the push to change to a Chargeback process for space often originates from Corporate Real Estate with information collected using Serraview.

Clients who use Serraview for their Chargeback process can implement a more frequent Chargeback cycle due to removing a lot of manual work (floorwalks, printouts, manual calculation). Doing Chargeback more frequently provides regular and immediate financial benefits to business units who relinquish space.

Serraview's simple and clean reporting style can be provided to the business units as part of Chargeback drives engagement and encourages them to analyze their use of space. Note that the Chargeback statistics are recalculated every 2 minutes.

After initial setup, the Chargeback process runs concurrently with a Validation cycle, which is where the business provides information about their use of space on a regular basis.

For more information, refer to Chargeback Recommended Practice.