What to look for in outsourced Facilities Management

Managing an organisation’s operational environment normally involves an ‘unholy alliance’ between facilities management (FM), procurement and the users of the buildings, with pressure coming from finance to reduce costs.

A common comment from many of Purchasing Index’s (PI’s) clients is that FM is a thankless task – users never thank you for getting it right but are all too ready to complain, Alan Low of PI tells SmartProcurement.

Over the next few months PI will be publishing a series of articles based on the findings of their benchmarking services over the last 12 years within the South African corporate world.

It is rare these days to find organisations that hold FM services in-house.

Many of the larger organisations have or are looking to outsource to a single contractor, who then uses sub-contractors to do the specific work. PI is aware of several organisations that are currently reviewing these existing, single-outsource arrangements.

Some of the issues include:

  • Does the organisation actually measure and manage the service level agreements (SLAs) that are in force?
  • Are the SLA measurements still relevant? What other measurements, key performance indicators (KPIs), should be included?
  • Does the contractor apply the same SLAs to their sub-contractors? Does it measure and manage the subs?
  • Do the service providers suggest and initiate innovative practices? How does the approval process work? Are these projects managed to see what benefits they provide?
  • Why are costs increasing above the inflation rate?
  • How do we innovate, particularly around new, greener and energy-efficient initiatives?

Management of this complex supply chain is time consuming and requires up-to-date information.

FM staff often end up micro-managing specific issues (particularly when complaints have been raised by management) – reacting to problems, rather than looking pro-actively at improving the service, instituting innovations and ensuring that there is an accord between the services delivered and their internal customers’ needs.

To manage a moving target one requires good information and appropriate measurements.

PI’s view is that the following needs to be in place:

  • KPIs and information needs to be shared with contractors and sub-contractors – everyone needs to see the same, reliable data. Time is essential here: late service is poor service. Does your organisation share data with service providers seamlessly and do they share information with you? Do you have a control centre in place? Does it measure and manage what is relevant and important (not necessarily ‘urgent’)?
  • Building occupiers are under constant pressure to contain costs and initiate new (green and energy efficient) measures. Do your service providers regularly bring new initiatives to your attention? Do they suggest how these could be implemented in your environment?
  • Many contractors benchmark their costs from building to building. Do they share these with you?
  • Most contractual arrangements have a finite life. But putting large outsourcing agreements out to tender is expensive and time consuming. How can you use external benchmarks to prove that the current arrangements are efficient and cost effective and so justify a continuation of the current contracts?

It is PI’s view that customers and service providers need to share information – successful outsourcing arrangements are partnerships where the outsourcer is an extension of the organisation it serves. Relevant and timely information needs to be collected and shared (both ways); service providers must understand the organisation’s ever-changing strategy and requirements.

Too often service levels are high just after contracts have been implemented and just before they are due to be renewed; in between the service performance is unsatisfactory.

If you are interested in participating in PI’s benchmarking services and adding to the scope of the benchmarks, please contact Karen van Staden (Karen@pibenchmark.co.za) or Alan Low (alan@pibenchmark.co.za).

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