Cost model: Call centres

<B><FONT size=”+2”>Introduction</FONT></B>Recent investment in high-profile call centres by operators such as Freemans, Orange and Capital One is changing the image of the call centre. Previously, shed-like buildings were typical, indicating that premises were not the top priority.
Life-cycle costings show that operating costs are typically 6-8% of total costs over 10 years. But, because 65-70% of long-term operating expenditure relates to staff costs, any measures that improve productivity or aid staff retention are important. These include a high-quality work environment.
Most call centres handle incoming calls, which costs the business money rather than making it a profit. So, operators are constantly seeking innovation in design, location and services that can cut costs and give a competitive advantage.
There is no common property standard for call centres, which can be found in purpose-built and standard office and industrial units. Existing factories and mills are also suitable.
Demand for call centres is forecast to rise over the next five to 10 years, as problems of security, reliability and speed of access on the Internet limit electronic commerce. Thereafter, e-commerce will start to dominate communication.
In the short term, call-centre growth will be driven by the low cost of telecoms and data processing, the growth of direct marketing and the demand for on-line customer support.
The easy availability of a high-performance communications network anywhere in the world means call centres are not restricted in their location. And, rather than compete for labour in traditional call-centre heartlands, operators are considering town-centre and edge-of-town spots with good transport links and existing amenities.
Developments in automatic call distribution, which enable multiple centres to serve the same telephone number, are leading to networks of smaller “virtual” call centres.

<B><FONT size=”+2”>Design issues</FONT></B>Call centres have been operational in the UK for more than 10 years, and their design has an established track record.

<B><FONT size=”+2”>Floor-plate size and layout</FONT></B>Deep floor plates, up to 60 m wide, provide maximum flexibility for the planning and layout of workstations. As an alternative to the established model of large, single-level call-centre development, multistorey buildings with a central atrium have been found to provide flexible space and a more varied work environment.

<B><FONT SIZE=”+2”>Density and centre floor conditions</FONT></B>Occupational density on a call-centre floor is usually high, typically 5-8 m² per person. However, once the space requirements of ancillary facilities are taken into account, the occupation density of call-centre buildings is typically 10 m² per person – not significantly denser than other office buildings.
The layout of furniture and amenity space can break up a large floor plate and help to reduce the impression of density. Arranging furniture into clusters rather than rows avoids regimentation without compromising efficient space use. Such layouts also help to improve teamwork, staff motivation and effective supervision.
Call-centre acoustics are critical. Although a controlled level of background noise can contribute to the “buzz” of a centre, good communication relies on enhanced sound insulation.
Lighting is very important, as many operators continue to specify windowless black boxes. In buildings where extensive glazing or rooflighting is present, effective solar control measures are needed to avoid glare.
Providing for round-the-clock operation influences the building and services design, affecting workplace design, amenity provision, personal and building security. Building services should be able to deal with different loadings as staff numbers vary around the clock.

<B><FONT SIZE=”+2”>Ancillary accommodation needs</FONT></B>In general, 60-70% of net call-centre floor space is devoted to operations. The remaining 30-40% is allocated to support functions, many of which require bespoke accommodation. These include:

• <B>Training</B> Training is provided both within dedicated accommodation and on the call-centre floor. Training space can fill 10-15% of the net internal floor area.
• <B>Amenity space</B> Call-centre operators must provide a wide range of facilities to attract staff, such as restaurants, gyms, shops, cashpoints and crèches. Amenities typically account for 10-15% of the net internal floor area.
• <B>Processing</B> Accommodation for mail and payment processing, credit card embossing and other support functions may be located in the call centre.
• <B>Communications and frame rooms</B> Main communications rooms need to be in a secure location, preferably where there is the least risk of an external fire source. Insurers may require the communications compartment to have four-hour fire resistance. BS 6266, the Code of Practice for Fire Protection for Electronic Data Processing Installations provides non-mandatory guidance.
• <B>Development constraints </B>
• Call centres’ operational requirements mean that existing office space often has to be adapted. Constraints that may need to be addressed as part of a fit-out include:
• <B>Toilet capacity</B> The high occupational densities of call centres require above-average toilet provision. In many centres, 70-80% of the workforce is female, and alterations to the proportion of WCs to a 60:70 ratio may be needed. But it is good practice to retain a standard level of male toilets to provide for long-term flexibility.
• <B>Means of escape</B> Existing stair capacity can restrict density of occupation. Converted buildings may require extra staircases to meet statutory escape distances.
• <B>Parking</B> Some 60% of call-centre employees travel to work by car and excess parking capacity is necessary to cope with demand at shift changeovers.
• <B>Building services</B>
• Mechanical and electrical services installations must cater for a high density of occupation with fail-safe back-up services.
• <B>Loadings</B> The density of staff and IT on a floor creates a cooling load in excess of 100 W/m². The optimum design solution to provide for high loadings is often displacement ventilation.
• Other advantages of displacement ventilation include: speed of installation, high-quality internal environment, relatively low energy costs and on-floor flexibility to accommodate change.
• Displacement ventilation works best in buildings with high ceilings and requires a raised-floor void of 400-750 mm.
• <B>Back up services</B> Many call centres need secure 24-hour operation without risk of interruption to service or data loss. Diverse feeds are used and standby power is typically provided for lighting, small power, security and critical mechanical services, such as air-conditioning to communications rooms.
• An uninterruptable power supply is typically specified for desktop IT, data and communication systems, CCTV and access control. Multiple back-up systems are provided for UPS and standby generation, critical mechanical and electrical services and telecoms installations.
• <B>Extensive security systems</B> Call centres often have internal and external CCTV, together with access control and monitoring.
• <B>Data and communication systems</B> The key issues in communications design and installation are resilience and flexibility, low cost and future-proofing. The pace of development in call-centre software is extremely fast and systems are continually upgraded, so flexibility is essential.
• <B><FONT SIZE=”+2”>Future trends</FONT></B>Forecasts show demand for call centres in the UK will continue to grow as the range of telephone services diversifies and as more low-cost phone-based operators enter mature markets, such as retail banking.
• However, in the medium term, the development of the Internet and other forms of e-commerce will affect the provision of customer service.
• Call centres are being affected by the following:
• <B>Customer needs</B> Call centres need to respond to customer preferences for different forms of contact, using phone, fax, e-mail or face-to-face meetings. The development of computer–telephone integration technology is facilitating the diversification of services offered by established call centres.
• Contact centres catering for face-to-face meetings are predicted to become smaller and more wide-ranging. They are also set to be situated in central urban locations.
• <B>Labour availability</B> Pressure on labour markets in established call-centre locations is encouraging operators to diversify. As unit sizes decrease, dedicated amenities will cease to be economically viable, and centres will be drawn to urban locations that benefit from good amenities and transport links.
• <B>Technological developments</B> The cost of flat screen technology has fallen 50% over the past 12 months. Terminals now cost £1500-2000 apiece, making them a viable option. Lower electricity consumption and heating loads can reduce the running costs of both cooling and power installations, and can also reduce the size of workstations.
• <B>Transport</B> Transport links will become important as measures to discourage car ownership are implemented by government and local authorities. But out-of-hours working will continue to demand the provision of parking space.
• <B>Speculative development</B> Purpose-built speculative call centres are emerging as a development sector. Facilities are being provided in a range of configurations, including multi-let developments where shared central facilities are provided as part of the package. It is likely that the quality of these speculative buildings will be relatively high, so as to provide higher investment value than a traditional “shed”. Requirements for long-term flexibility may encourage a trend towards smaller centres housing up to 300 staff.
• <B><FONT SIZE=”+2”>Procurement</FONT></B>The key issues affecting the procurement of call centres are time-related. The speed of the design and construction programme is paramount as the rates of growth operators are experiencing require additional capacity to be brought on-stream at relatively short notice. On any project, the management of phasing is also critical, either to allow the early handover of parts of the building for specialist fit-out, or to permit phased operation of the centre itself.
• Security of programme is vital, particularly where an investment in additional capacity is co-ordinated with a marketing initiative. Effective cost control and the transfer of cost and time risks to the contractor are also key issues. Design-and-build, design-and-manage and management routes are preferred procurement options.
• Design and build, based on either a lump-sum contract or packages, can offer a high degree of price certainty, but allow less flexibility for design changes. Early involvement by contractors and specialists is the key to fast construction, and two-stage tenders can be used to appoint contractors early. However, on many projects, clients are unable to define their design criteria at a early stage and so do not benefit from design-and-build procurement.
• Management routes allow building to start before the design is complete and are well suited to fit-out projects, where design, procurement and construction overlap.
• The ability to deliver space fast is critical, particularly on phased projects. Construction management requires close client involvement and, although CM projects are managed intensively, it is not possible to provide absolute cost certainty. Hybrid two-stage arrangements are being deployed to address this problem – for example, a CM appointment is converted to a lump-sum guaranteed maximum price deal once procurement of the packages is substantially complete.
• <B><FONT SIZE=”+2”>Cost breakdown</FONT></B>The cost model features the new-build construction of a call centre with a gross internal floor area of 7900 m². The costs in the breakdown are for the building only and do not allow for site preparation, external works, drainage and external services.
• The model incorporates elements of fit-out, including demountable partitions, catering installation and structured cabling. Costs of loose furniture and equipment are, however, excluded.
• Also excluded are the costs of standby generation and uninterruptable power supply, for which the specification can vary widely according to end-user requirements. In the case of the model, where 100% redundancy is a client requirement, the specified standby generator sets would cost £500 000, and the UPS would cost £1m. Together, these would add £225/m² to the cost of the scheme (including builder’s work, preliminaries and contingencies).
• Costs are current in July 1999, based on a location in the Midlands. The level of pricing assumes procurement on the basis of a competitive tender, with design responsibility for elements such as roof cladding and engineering services being taken by specialist contractors at an early stage. Adjustment should be made to the costs detailed in the model to account for variations in phasing, specification, site conditions, procurement route, programme and market conditions.
• <B>Acknowledgements</B>
• DL&E would like to thank Gordon Carey of Carey Jones Architects and Ken Giannini of DEGW for their assistance in the preparation of this cost model.