Every client Head of FM knows when they have an incumbent facility services provider they want to keep. The Account Director has worked hard at the relationship, and the customers are generally happy. Neither the client nor the service provider wants a re-tender. But “Group Procurement” wants to go through the process, to ensure value for money. So, what is wrong with that?

FM services re-tender

Beware those who know the cost of everything, but the value of nothing

This is arguably the ultimate challenge in FM. It is easy to measure the cost of any service line. But it is more difficult to quantify the value benefits.

The task is made far easier if you have software that generates insights into the performance of each service line throughout the contract period. There may have been investments in new tools, or skills. This may have led to demonstrable improvement in specific metrics. If this is captured and recorded in the FM software, analysed by experts, and reported by data scientists, then both the client and FM service provider are ahead of the game.

This often does not happen, and you may start to see history repeating itself.

End of contract: ‘Groundhog Day’

This may have never happened to you. But it is quite likely that it has!

The FM contract has been running for a few years, and it is close to the contract end date. A tender document is circulated for review, prior to a formal Invitation to Tender (ITT) being issued to the usual firms.

But on reading the ITT, it is quite clearly almost the same as the last time it was used – at the beginning of the contract period. The ITT document has not taken into account all the work that was done over the contract duration.

This puts both teams in a very difficult situation and creates a lot of frustration between all parties. The client Head of FM, and the service provider, will have worked hard together over several years to improve many aspects of the FM delivery. The world has changed; perhaps the client’s market environment has changed. And with that, the focus of FM may have changed. It seems like that has been ignored in the ITT. It feels like stepping back to the beginning, and quantifying everything, just so that Procurement can run a fair contest.

The good news, if this has happened to you, it does not need to happen again. If, you have good analytical support throughout the FM contract period.

Excellence, and continuous improvement, throughout the contract period

FM service line specifications change over time, as they are adjusted to meet specific needs of customer groups at a certain point in time. You might start the contract with one agreed specification across all customer groups. But over three or five years, typically, some customers will ask to reduce the spec, whilst others may want additional services.

This needs to be captured, in analysis and reporting.

Even where the specification stays constant, the service performance against that spec will often (or at least, should) improve over time. At the outset, an integrated or specialist service provider may struggle to hit key performance indicators (KPIs) whilst getting ‘up to speed’ with new buildings and new customers. But, over a period of months, the KPI may be consistently reached, and even mutually agreed for a raised target level.

Again, this needs to be captured, in analysis and reporting.

Can you actually stop the re-tender?

Short answer: maybe. That largely depends on the relationship between the client Head of FM and his or her Procurement team. Also, the type of organization, and its market position at the time.

If the client organization’s strategy is to compete on cost, and there is significant competition in their sector, it is unlikely that you will avoid a re-tender. Procurement will generally have a strong power base, as all efforts are always focused on minimizing operating costs.

Otherwise, given a good relationship between FM and Procurement, and organization strategies where ‘lowest cost’ is not always dominant, then you have some chance of stopping a re-tender.

The service provider Account Director must work together with the client Head of FM, with a good data set, to keep the re-tender away. And also, both must work to keep service delivery at the highest possible level with regard to added value. Data-driven insights can help the client Head of FM and the service provider to plan together.

Share data
The key to this partnership between the service provider and client FM team is to share one software platform. Preferably, across all service lines, and to cross-analyse all data for trends and patterns.

Analysis of data throughout the contract
It is no good trying to compile a good set of data, to present to an incoming procurement manager when they turn up asking the questions. You need to have the data set in place, built up over the course of the contract and analysed at agreed periods throughout. Then, when it is needed (which it will be) it will be available immediately.

How does your software solutions partner provide data-driven insights, which can be analysed and used to demonstrate that value-for-money is being achieved?

Why does this not happen on many FM contracts?

There are some key reasons this does not happen:
1. The majority of FM staff are not ‘IT people’
2. Many FM staff are not ‘financial’ either
3. Both client and service provider staff turnover may also be an issue, leading to loss of knowledge

FMs are mostly great ‘operations’ people. They get multiple tasks complete, with multiple stakeholders, under time and cost pressure. They are the proverbial swan, calm on the surface, with legs paddling fast under the water!

Most client Heads of FM will need some support with data, analysis and reporting. They cannot afford to have service-line experts on their staff, nor can they afford data scientists. That is primarily where the software support from an external, independent provider, can add significant value.

Teach the Procurement lead too

To be fully effective, you must also ‘teach’ Procurement how to use the FM data, and how to use the key metrics, alongside cost data. Many procurement professionals did not train in service environments. They often trained in ‘buying stuff’ – setting a specification, and negotiating prices dependent on order size. FM needs to recognize this, and help procurement professionals to learn the nuances of buying services, when best value varies between clients, and is not always about lowest cost.

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