The Current form of the Facilities Management Industry FM
When the FM profession began in the 1970's in house teams of engineers, housekeepers and porters, etcetera carried out the work managed by what were then known as Caretakers or Janitors. Many of these characters were housed in pretty poor accommodation such as small windowless rooms in basements. Today, the profession has developed to such an extent that organisations now understand the effect that well-run FM can have on improved productivity and profit.
Senior management teams around the globe now pay far more attention to their facilities operations and those at the leading edge are actively researching ways in which facilities can be re-structured to the benefit of the organisation and/or its shareholders. This is not new, in the late 1980's organisations were, in the case of IBM, setting up management buy-outs in the form of Procord (later to become Johnson Controls) or, in the likes of BP they set up deals with Johnson Controls to operate the whole of the FM service. These trends continue and today major values of contract are placed with the providers.
The industry is valued at around £80 billion and when the telecommunication and information technology values are added the industry is worth around £160 billion per year.
Many organisations have outsourced their services particularly government groups in the hopes of making significant savings in annual costs, in a few cases this has proved to be a benefit but in the majority of situations the process of outsourcing is expensive. This is for a number of reasons ranging from an inaccurate specification through to delivery of poor quality services that detract from productivity and image.
British Airways has proved an interesting example, held up in the 1990's as a market leading, innovative facilities management leader that formed strong partnerships with its external providers. It has recently been shown to be seriously vulnerable to forces beyond its control, where a situation imposed on it through the management of one of its contractors led to severe disruption to that service it provided to its own customers. This illustrates a little of the over-reliance that can be placed on the contract relationships we have in place and, how important it is to think business continuity.
A number of organisations known to us have brought their FM service back in house due to their disappointment with the quality of delivery and productivity. Where they have transferred staff to an external contractor under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) they have, in a number of instances, been disappointed with the process.
It is not all doom and gloom in the provider market, where excellent in house and knowledgeable management teams have been maintained, robust tendering and selection processes have led to strong partnerships being formed with external suppliers. So it does go to prove that a professionally run in house team that has the full backing of its senior management team can be ultra successful and usually more beneficial than a pure outsourced example.
The following diagram illustrates the make up of the supplier market: -
Managing Agents – Work as Providers who operate as a partner who manages the contracts which remain the property of the Employer they work for.
Managing Contractors – Providers who take over (or set up) contracts and manage them in their entirety independently from the Employer.
Multi-Discipline Suppliers – Providers that have in their service portfolio groups of services e.g. reception, mail room and reprographics or mechanical/electrical engineering maintenance, building maintenance and cleaning services.
Single Discipline Suppliers – Companies that specialise in a particular type of service such as couriers or catering.
There are far fewer Managing Agents compared to Single Discipline Suppliers as illustrated by the structure in the triangle. Facilities Managers must ensure they understand the structure of the market place and the players within each sector to be certain that they will select the right partner for a particular set of service delivery requirements. They must also understand the services and quality of service delivered by each sector and type of contractor.
The following diagrams illustrate some of the considerations Facilities Managers must take in to account when they are reviewing the method of structuring and delivering services to their organisations: -
Contract Strategy – The Choice
The decisions required that were referred to in the last section also apply in terms of the choices to be made between the use of entirely in-house, outsourced or mixed economy structures as below: -
1. Contract Strategy – Potential Labour Mix
The following boxes set out some of the considerations that will be used in forming one's opinion and future strategy: -
