Five steps to a successful FM outsourcing strategy
Managing a diverse and ageing property portfolio within a tight budget is a challenging task. Surprises are the last thing you need. The usual questions that come up are: what assets do I have, what condition are they in, how must they perform, how much money do I need/have, and who will I get to deliver the FM services?
But, somehow, things still don’t go according to the plan. What could be missing? We need to look beyond just the physical assets and ask some other questions. Let’s look at the five most important, and sometimes omitted, things to consider.
Question 1: Have I adequately engaged and aligned all of my stakeholders in the process?
It is easy to think that we are in the business of managing buildings, but we aren’t. We are in the business of managing the needs and expectations of the people who use the buildings. Unless included in the process, people can undo any well-constructed FM strategy.
- Who stands to gain or lose in the process?
Advocates and proponents of any FM strategy have their own reputations at stake, so it is in their interest too to ensure that new systems and providers don’t fail. This ensures new strategies receive a fair go, but can also mean that poor strategies are defended for reputational protection alone until untenable and unrepairable. We also need to consider and manage those who find that the new strategy directly threatens their current or future career, particularly if they were not given an opportunity to contribute to the plan.
- Don’t underestimate the value of delivering the small stuff
It must be remembered that a majority of a building’s users are primarily concerned about the functionality of their building and how any change impacts on their immediate needs. A cut in the low-priority maintenance work such as lights, furniture, broken toilet fixtures and air-conditioning, while a reasonable strategy for short-term budget constraints, will be hard for the occupiers to understand when there are extensive refurbishment works happening on the floor below.
- Facilitate visibility of progress and seek a common vision for success
FM operates in a dichotomy. People expect assets to work all of the time despite many items operating via a legitimate run-to-fail strategy. Unfortunately, an understanding of asset failure doesn’t equate to a tolerance of it.
Keeping everyone on board depends on effectively communicating the strategy, demonstrating what success looks like and being able to measure progress. The current trend toward improved real-time access for job logging and status has assisted in better monitoring FM performance and will go a long way to better expectation management, but communication will never counter impressions of poor performance or dictate how success is measured. People will have their own benchmarks and perceptions of whether a strategy is working or not, but these perceptions can only be addressed by having some common, agreed metrics.
Question 2: Am I achieving maximum value?
- Cost versus price
When all else appears even, the last differentiator is price. However, price is not the same as cost. Price is the amount of money paid to providers and suppliers. Cost is a combination of price and the internal cost of managing and administering the contract service delivery. Failure to adequately dismantle internal structures, develop integration with suppliers or ensure that ongoing management of strategy implementation is minimised are all sources of increased cost for the principal, not the provider. A good measure to assess best value or lowest cost to deliver an agreed outcome is to determine the amount of the principal internal participation remaining. If it is high, the principal isn’t getting the best deal possible, no matter how low the price.
- Cooperation between teams and providers
The separation of service delivery into individual service streams is still very common, even to the point of some principals actively discouraging service providers from cooperating. Whether done in the belief of preserving governance or a fear of relinquishing of control, such situations are explicit examples of opportunities lost. Combining activities across different disciplines can ensure minimum disruption, less rework and, most importantly, minimum downtime. Teams can also provide early warnings to alert each other of actual or potential failure.
- Control and accountability
There are two important issues to consider here. First, asset health custodianship – determining clear accountability for FM assets and how the strategy is to be implemented is essential where the occupier is not the owner. Second, is the process itself. Each time a task gets handed off to another party there is a risk of delay or disruption in continuity, transpositional and translational errors or costs incurred in terms of delays or inconsistent priorities.
Question 3: Is the scope of my FM strategy wide enough to be effective?
- Capturing total asset life cycle cost and performance
Recent interest in building energy optimisation has highlighted the challenge of establishing the right balance between retrofit, repurposing and maintenance programs. Assessment of green-based improvements is forcing FM practitioners to better evaluate total asset life cycle costs across component factors, which may not have traditionally fallen within one area of responsibility. Managing total asset healthcare – including operating costs of energy, depreciated cost, maintenance and replacement – creates an opportunity to holistically manage operations, reduce net asset life cycle cost and to better plan funding and expenses.
- Who looks after the cracks?
There are divisions in FM responsibilities across different geographic zones – maintenance, service streams and components. It is important to divide these responsibilities to improve effective implementation.
- What about the new stuff? Looking over the horizon
A complete FM strategy has to consider current assets as well as the assets likely to appear in the future. Understanding not only who will take responsibility for these assets, but also where the funding will come from to maintain them, can be a problem. This is particularly the case when the cost of getting a new building does not include the ongoing maintenance costs; for example, in some mining towns, once the main operation moves on, the infrastructure is bequeathed to the town. Unfortunately, the cost of running such large buildings doesn’t come with it. Another problem is when a new facility, while an architect’s fantasy, has not considered the maintenance process. It is important to consider maintenance issues when designing or acquiring an existing building.
Question 4: Is my procurement process helping or hindering my strategic goals?
- Who is running the process?
While the procurement process needs to run a structured, independent assessment process, it cannot be successful when it is removed from the owners and implementers of the actual FM strategy. The drive to comply with governance and policy while struggling to achieve meaningful comparative metrics and provide protection and advantage to the principal, particularly in the government sector, can result in a tender process, which is not only complex but in some cases cannot actually be delivered. Procurement should be the cooperative enabling of a desired outcome by the FM strategy owner, not an abdication of a process to be picked up again once the shortlist is delivered after an Expression of Interest (EOI), because by then it may be too late.
- Do I really need that? And can it be delivered within my budget?
When designing an FM strategy and implementation plan, it is vital to do a hard assessment of the whole scope before starting the procurement process, in order to overcome over-specification of service levels or standards. Even idealistic FM strategies can fail if the scope of the assessment was not comprehensive in the first place. This can result in clumsy reconfigurations, which don’t deliver the core items adequately and hence cause a problem in the long run.
- Evaluating the soft stuff early in the process
People are a pivotal consideration in a successful FM strategy, but this is not limited to the owners and occupiers of buildings. The relationships developed between all parties including those between suppliers and providers and the principal are essential. But often it is not until a relationship has begun to sour that closer attention is given to this area. As a result, there can be breakdowns in outsourced service contracts owing to the divergent values and expectations of those involved. It is important to assess risk management via joint interviews of future key roles and to mandate minimum periods for nominated staff to avoid potential breakdown in relationship.
- In for the long haul or not?
Getting an outsourcing provider to effectively invest in a customer’s business fully and thus deliver maximum value back to the principal needs a quid pro quo of security and the ability to achieve payback on that investment. Contracts of five individual year options will not gain the same investment or commitment as a single five-year contract.
Question 5: Have I created a self-learning FM structure and strategy?
- Planning for contract evolution
One of the greatest challenges facing procurement is how to make sense out of disparate value propositions. We recognise that the delivery of services in terms of standard and efficiency are never static or consistent over the contract term, but we rarely see an allowance for evolution of an FM contract being built in to the original scope. The attainment of efficiencies, economies of learning, scale and system refinement are rarely captured or reported adequately – clearly, a missed opportunity for both parties.
Consideration should also be given for penalties or abatements that commence at the start of a contract, at a time when such efficiencies and the ability to best manage high performance is at their lowest. However, as it is in no one’s interest for a contract to fail in the early days of inception, provision for higher standard key performance indicators (KPIs) and, if necessary, abatements, should be gradually introduced over the life of the contract.
- Encouraging adaptation and innovation
Contribution from the collective intelligence and experience of all stakeholders in the FM process should be actively encouraged. If there is one key reason for outsourcing other than the delegation of a non-core function, it is to capture the collective wisdom and experience of a specialist provider. The problem is, are both organisations structured and culturally prepared in order to implement any adaptations and innovations presented? Calls for better value from the FM provider in the contract need to be matched with systems to evaluate and implement any ideas or else the innovations will inevitably dry up.
- Harnessing technology
New and more powerful FM software is creating the long awaited tie between asset condition, maintenance, performance and life cycle assessment. Today, mobility, total transparency, real-time access to job status, asset performance and building operating parameters are at the touch of a button. But beware: technology is only as smart as we allow it to be. A poorly set up or dated building management system can result in a considerable energy (and, as a result, financial) loss.
- Using current asset data capture to enable future strategic decision-making
It has been reported that many buildings could immediately achieve an initial Green Star rating simply by starting to measure the existing building performance. Similarly, building owners may not even be aware of the available data that had been collected previously. Analyse the data you have already collected over the years; it may assist in helping to shape future FM strategies for your buildings.
Delivering a successful FM strategy goes well beyond the operational aspects of maintaining the physical assets. Relationships, contract structure, communications and planning for future change are all essential. There are, of course, more potential questions than just these five, but even if you only address these, your chances of success will have already been enhanced.
Bret Butler is Urban Maintenance Systems Pty Ltd’s executive manager of building services.