Outsourcing FM tasks and managing your service provider
Facility management is part of the business value chain that creates competitive advantage. It impacts on a building’s efficiency and working environment, as well as the productivity and well-being of employees.
For most organizations, facility management is a considerable cost factor and being of such importance, how can this investment best be managed?
Outsourcing facility management
Facility services – including cleaning, maintenance, and catering – are usually completely or partially outsourced. The outsourcing method will depend on the size of the property portfolio and the business’ strategy for managing non-core business activities.
These services can be contracted out to specialist providers, such as dedicated engineering or cleaning companies. Alternatively, they can be outsourced to a main provider, which can bring with it the benefits of unburdening the client organization, smooth coordination through a single point of contact, a streamlined billing process, uniform reporting, and the potential for cost savings through economies of scale. This is known as ‘Integrated Facility Management’ (IFM). IFM contracts typically specify conditions of compliance and factor in appropriate levels of compensation for missed targets.
IFM also holds some risks that have to be correctly managed. Due to its cost focus, it tends to underinvest in the process of continuous improvement. Knowledge transfer to the service provider can lead to strategic misalignment and may pose a threat to the continuity of operations when the collaboration is stopped.
An organization can mitigate these risks by outsourcing the operational/tactical level but keeping its strategic FM management in-house. We call this “smart sourcing”. It involves third-party expertise for drafting the tendering specifications and monitoring the quality of service delivery through a standardized methodology.
KPI/SLA tracking is further facilitated through a client-side software platform (CAFM) with automated metrics and centralized data management. This enables businesses to stay in control of their own data and to have greater knowledge of their service needs. It gives power to better negotiate existing contracts or ensure continuity of service if suppliers are changed in the future.
The traditional input-based model (specifying hours of work and tasks to be executed) has largely been replaced by an output-based model, focusing on expected service quality. Providers get more autonomy in organizing the work as long as they meet agreed service levels.
A more recent evolution, enabled by smart building technology, is the shift to outcome-based service delivery. This is a new collaborative model, in which work is no longer executed according to fixed schedules but dynamically targeted where the services are needed most. This is enabled through smart buildings: combinations of wireless sensor networks, big data analytics and visualization, and direct communications with service providers and end users through mobile apps. Cleaners, for example, get direct instructions on their mobile phone, based on real-time information from sensors about space usage, occupancy, and people activities. End users can also give instant feedback or even ask on-site teams for extra services.
Norm-driven service management
It is important to keep in mind that outsourcing is no miracle solution – outsourcing your problems will not make them go away. Think about your processes and put your house in order before talking to service providers.
The European Standard for Facility Management provides guidance on how to prepare facility management agreements (EN 15221-2) and manage service provider relationships for the full range of facility services.
FMs are advised to follow its recommendations to select the right metrics (EN 15221-3) and improve and benchmark performance (EN 15221-7). By describing best practices, the standard also helps FMs steer clear of avoidable mistakes.
A typical problem area are RFPs. When tendering specifications are too vague, suppliers can offer low prices. As a client, you might save some money at first but will almost certainly end up paying more once it becomes clear that the services provided do not meet your needs.
Setting KPI targets can be tricky too. A first mistake consists in having too much of a focus on the operational level, and failing to draft strategic KPIs. FM leaders should ensure that facility management focuses on what is right for the business, by selecting a set of top KPIs in line with company strategy. Another common mistake is that there are too many KPIs, which are not consistently tracked, due to missing data or unclear measurement methods.
Whichever sourcing and service model you choose, maintaining a measure of the quality of delivery is crucial for controlling services. Closely monitoring execution against agreed SLAs can be achieved with a client-side CAFM tool (Computer Aided Facility Management). It enables an organization to take control by measuring output, quality, and timeliness of services according to accepted standards and agreements.
MCS Solutions supports organizations to optimize FM efficiency and costs, through independent domain expertise and integrated software and technology solutions. Please contact us if you would like to learn more.