Practice vs. theory: Short-term financials trumps long-term value creation

Abstract

Purpose: This paper presents findings from the research project “Oscar – Value for Users and Owners of Buildings”, and investigates two research questions: i) What in early phase planning of real estate projects and facilities management creates value for owners and users of buildings? ii) Do respondents in private enterprises, public administrations and hybrid organizations have different priorities during early phase planning of buildings and facilities management concerning which factors creates value for owners and users of buildings? Design/methodology/approach: This study is based on a national online survey (N = 837) among Norwegian owners and users of buildings where the respondents report their emphasis on economic, social, environmental and physical aspects during early phase planning of buildings. The data have been analysed through descriptive statistics, ranking of means and one-way ANOVA supplemented with bootstrapping. Findings: Many Norwegian owners and users of buildings emphasize short-term financials and seem to overlook recent research concerning what creates long-term value such as life-cycle planning and the buildings’ elasticity, flexibility, generality. Respondents employed by private enterprises seem to have a shorter time horizon and a stronger financial orientation than respondents employed by hybrid organizations and public administrations. Practical implications: Increased emphasis during early phase planning of buildings on aspects creating long-term value can significantly increase the buildings’ long-term value creation for owners and users. Originality/value: This is an empirical study with a significant number of respondents. Further empirical research in Norway and other countries based on large N random samples of respondents is needed to establish whether it is possible to generalize this study’s findings.