After months of uncertainty, the University ended its relationship with facilities-management company Trammell Crow earlier this month.
In 1998, Penn hired the Dallas-based firm to take charge of managing the school's construction endeavors, as well as services for the off-campus properties of Penn-owned realty group University City Associates. Although hailed by many Penn administrators at the time as the new way of doing business, the original contract was drastically scaled back less than two years later, with Penn again assuming management of its on-campus facilities.
The last part of Trammell Crow's role at the University came to an end this summer on what administrators called "amicable" terms.
From now on, the University will be responsible for its own capital projects, and multiple external providers, to be selected in a few weeks, will control UCA's property management.
"Economically, it made sense," Vice President for Facilities and Real Estate Services Omar Blaik said of the decision to terminate the relationship, which was originally slated to end this December but when reviewed in June was cut short. "It's favorable for us, it's favorable for them."
"We both came to the conclusion that it wasn't serving either of us as well as we had thought," University President Judith Rodin said. "Trammell Crow saw less profit than they had anticipated in the contract, and we felt that we could potentially have a more productive and more efficient operation on our own with more limited outsourcing."
Though the company did not live up to original expectations, Penn's multi-million-dollar contract with Trammell Crow -- which manages commercial real estate worldwide and at other academic institutions including Villanova University and DePaul University in Chicago -- did lead to the preservation of Perelman Quadrangle and the Quadrangle dormitory complex, the construction of Huntsman Hall, the UCA's expansion and the implementation of the Neighborhood Preservation and Development Fund of West Philadelphia.
However, administrators had been tight-lipped for months about the viability of the outsourcing deal. In interviews with the Daily Pennsylvanian last spring, Rodin said only that Penn was engaged in a process of "review" of the relationship, and all former Executive Vice President John Fry would state was, "I think together, there are some things that we have not yet achieved, but I'll leave it at that."
Despite some notable accomplishments, the partnership, which both parties touted during its conception as the first of its kind, had been a rocky one from the beginning. The University's first announcement of its agreement to outsource through Trammell Crow initiated public outcry and even a lawsuit over employee benefits and students and staff expressed anger over lack of campus input in the executive decision making.
And it was a deluge of problems including understaffing and inefficiency that led to Penn scaling back the original contract from 10 years to three years and reassuming on-campus facilities management less than two years after the partnership was first announced.
And while this new arrangement was an improvement over the old one, the tough times continued as projects, including the Houston Hall and Perelman Quad renovations, ran into long delays. Even now, endeavors such as the Schattner Dental Building construction and the filling of several retail vacancies along Walnut, Sansom and Locust streets remain unfinished.
Blaik characterized the termination not as indicative of the relationship's failure, but instead as the natural result of Penn's financial and structural evolution over the past several years.
"The objectives we set out to accomplish four years ago have been accomplished," Blaik said. "We are the envy of the rest of higher education, in terms of how we run it, how efficient it is, the kind of expertise we bring to the table... Outsourcing was a significant material part of our strategy to turn around the department, and as such, it has been a tremendous success."
Because Penn has hired most employees involved with former Trammell Crow projects in-house, administrators said projects will continue as scheduled.
Rodin said that the University will now use outsourcing only on a very limited basis, hiring individual experts to help manage Penn's real estate and only large companies to tackle the contract management of major construction projects.
"We have a lot more in-house expertise now than we did when we began our relationship with Trammell Crow," Rodin said. "We'll make decisions now on an as-needed basis."
