Specification and delivery models

Facilities are often a target for cost-saving exercises, especially in the current climate where we shift towards remote working and digital engagement with our customers. In an effort to be competitive, contractors end up with extremely low margins upon which to shoulder significant operational risks, which isn’t sustainable for either party. By focusing on the model you use for managing the estate, rather than simply going for the cheapest option, you can improve standards while still saving money.

For example, many companies previously relied on an input specification model, where they would spell out exactly how FM services were to be delivered, and sub-contractors had to follow the specification to the letter. However, moving to an output specification model, where the company focuses instead on the results (through specifically designed and tracked KPIs), has proven to be more effective in most cases.

This gives contractors the freedom to use their own expertise to determine the best course of action, rather than being chained to a prescriptive instruction manual (that likely doesn’t reflect best practice). In our experience, implementing this simple change can dramatically reduce costs (in some cases by as much as 40%), without any deterioration in standards.

It’s important to also consider the delivery model. While smaller businesses may handle FM services in-house, it’s often necessary for most larger companies to deploy an outsourcing model to another service provider. Multiple providers are commonly involved, who may then subcontract the work further. With each party trying to make a profit, what may have started as reasonable margins in a cost-cutting programme can rapidly inflate, and the company may end up paying in excess of 30% beyond the expected rate.

On the other hand, a self-delivery model provides greater transparency, along with reduced costs and sustainable margins, but only if you are able to hire and successfully manage in-house talent.

The partnership model

Many of the clients we work with find a partnership model provides the best results for FM. The contractor is guaranteed a fixed margin, but all of the underlying costs are kept visible, even when they’re delivered by a third party. This transparency means the client knows exactly what they are paying for.

When we work with our clients to implement a partnership model, we start with the ‘baselining’ stage, because it’s essential to have a complete picture of the current situation before you start. That means knowing details on:

• The facilities themselves (eg. locations, asset register, condition reports, etc)
• The supply chain (inc. subcontractors and consumables)
• The current process and specifications/standards being adhered to
• Existing equipment and technology in place (for maintaining or monitoring the assets)

The programme deployment process

Once baselined, you could follow a step-by-step deployment process along the lines of:

1. Select contractors and invite them to visit the facility. Look out for multi-skilled contractors, who may charge a higher rate but are capable of doing more work in less time.
2. Request detailed cost models from all contractors. This step ensures all costs are auditable and traceable, making it easier to analyse and compare different contractors and see exactly what you’re getting for your money.
3. Agree on a contract. This should include schedules that cover:

• Operational model, including the operating environment and the service required
• Audit schedule, including the scoring system
• Details of subcontracted services
• How non-compliant results and exceptions are reported and handled
• Maintenance schedules for hard FM assets
• How changes to the process will be introduced and managed.

1. Initial test rollout (or proof of concept) across a limited, but representative, group of sample locations.
2. Full staff training for any new processes or technology (starting with the sample locations).
3. Rollout across all facilities/locations, including training for all staff.
4. Continuous improvement. Audit results are reviewed and additional areas for improvement are identified, with quarterly contract reviews to discuss performance to pre-defined KPIs.

Of course, it’s not as straightforward as a simple 7-step process, and an overhaul to your FM programme like this can take many months (often half a year or more) to prepare for before pulling the trigger. Following the principles above may, however, raise questions and bring forth answers that would otherwise have been overlooked.

Conclusion

FM is an important part of the service your business provides, sometimes the most important in traditional brick-and-mortar or critical infrastructure industries. While it is possible to save costs here, it’s important to do so in a way that doesn’t jeopardise your high standards of performance and the customers’ satisfaction. By carefully considering the most appropriate specification and delivery models, you can save money while still delivering a top-quality service.

Looking for ways to improve your FM programme? Looking to adopt technology to ensure adherence to your programme? Graphite Partners work with businesses across a wide variety of industries to ensure their FM strategy is effective and provides a positive ROI. Get in touch with one of our experts for a no-obligation consultation call.