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.