FACILITIES MANAGEMENT AND THE ROLES OF SERVICE PROVIDERS IN THE BUILT ENVIRONMENT

FACILITIES MANAGEMENT AND THE ROLES OF SERVICE PROVIDERS IN THE BUILT ENVIRONMENT

                                                                         By                                 

                                                       KUYE OLUSEGUN

                                 (2012), dip (property law), hnd, msc, fnivs, rsv

ABSTRACT

Now that FM is gradually gaining momentum in Nigeria relative to developed economies where FM has been in vogue since the 1980’s, this paper aim to further enhance the understanding of FM services and the important roles played by the FM service providers within organisations. To this end, this paper is an overview of the roles of service providers in the FM service industry. Some of the key issues discussed include the nature of FM services, classification of FM service providers; the professionalism required in FM service delivery and the evaluation process of FM service provision among other related issues that are germane to an effective FM services.

1.       INTRODUCTION

Facilities management (FM) is a vital strategic discipline because it translates the high-level, strategic change(s) required by higher decision makers into day-to-day reality for people in their work or living space. It would not amount to exaggeration to say that FM services help an organisation in gaining competitive advantage, enhancing productivity and most importantly, minimizing its operational expenses. Their main function is to optimize an organisation’s primary functions and thus provide support for enhancement of core business process. In essence, FM is about taking responsibility for those support functions and services, leaving the organisation free to focus on its central objectives, whether those involve in manufacturing products, providing specialist services, operating a government department or delivering healthcare – or any other activity carried out on all but the smallest scale (i- FM.net. 2011). In i-FM.net (2011), the European Standard EN 15221.1 defines facilities management as, “the integration of processes within an organisation to maintain and develop the agreed services which support and improve the effectiveness of its primary activities”. Thus, it could be said that FM is key to business organisations. Regardless of the sector – retail, finance, research and development (R&D), education, health or defence – FM provides the backbone from which economic and social endeavour can develop and grow. FM requires management skills, as well as a range of technical skills. Implicit is the need to be able to manage a diversity of service areas in a manner that makes the whole much greater than the sum of its parts. FM adds value to organisations at all levels, and therefore is far from a ‘non- core’ activity. Ensuring the most efficient delivery of facilities services is thus an increasingly critical decision. It is also a decision with far-reaching consequences. Should facilities services be delivered through an internal workforce, a network of outsourced service suppliers, a combination of internal and external service providers or a single ‘total facilities management’ provider?

Though there are few needs which are common to every facility or business, there are many specific needs, unique to each business. Some of the specific facility needs, which, perhaps, may be unique to different type of businesses, are outlined below (Facilitymgt.com, no date):

• Real estate – Employing skilled labour, acquiring good suppliers, reducing material cost.
• Retail and shopping malls – Infrastructure management, power management, safety issues, dusting, cleaning and other miscellaneous needs.
• Offices – Building and ground management, maintenance of building, furniture and furnishings, interior decoration services, etc.
• Sports complexes – Maintenance of sports complex, equipment, necessary preparation for practice sessions and competitions (marking up sports fields, setting up of equipment, bleachers, chairs, etc.) and
• Schools – Maintenance of playgrounds, landscaping, toilet cleaning, lighting, acoustics, furniture, transportation, food services, cleaning, etc.
• Hospitals – Improving procurement of drug supplies, equipment, clinical units, ; building maintenance, waste management and pest control.
• Other facilities include restaurants, bars, movie theatres, banks, etc.

The aim of this paper is to examine the salient issues on the significant roles of FM service providers with emphasis on FM service models, basic consideration in the choice of service providers, expectations of service providers by their respective customers/clients, service monitoring and evaluations among other issues considered germane to FM services. This study also provides useful information that could help guide service providers in their endeavours.

2.     FACILITIES MANAGEMENT (FM) SERVICES

The WordWeb Dictionary (2008) defines service as, ‘work done by one person or group that benefits another’. Grönroos (1990) indicated that, service is an activity or series of activities of more or less intangible nature that normally, but not necessarily, take place in interactions between the customer and service employees and / or physical resources or goods and / or systems of the service provider, which are provided as solutions to customer problems. The customer in this case could be regarded as the organisation which owns the facility or facilities including other end-users (employees, residents, etc.) of facilities as they are the actual consumers of the real estate products. In the workplace for example, the workers are the end users, or the consumers of the services who needs to be supported as the primary actor benefiting all the other parties. Relating this to FM, service providers could be said to be the facilitators of facilities management processes in the sense that they are necessary and valuable partners to the Facilities Manager in the area of effective and efficient facilities operations, maintenance, repairs, supply of goods/service, consultancy services, etc. According to Jegadeesan & Balasubramaniam (2009), service represents an underlying capability offered by a service provider that meets the goals of one or more service consumers.

In general, services are solutions to customers’ problems and provided in interaction between customers and service providers (Fitzsimmons & Fitzsimmons, 1994). Thus, service providers should approach all services through the lens of the customer, i.e. by understanding what benefits the customer can gain by utilizing any particular service (Edvardsson, Gustafsson & Roos, 2005). In order to effectively solve customer problems, the service providers must thoroughly know and understand their customers (Grönroos, 1990; Paloheimo, Miettinen & Brax, 2004). In service literature, the customer is commonly portrayed as one entity, which – given the various roles of the different actors in most organisations – is possibly too simplistic. Bell (2001) advocates the role of the workers benefiting from workplace services as being the most important party in the workplace service provision (Miettinen, 2007). However, in carrying out these services, they are faced with challenges such as none availability of spare parts for old equipment; inadequate knowledge/awareness of new technologies, inexperience, inadequate skill, and lack of appropriate understanding of the objective of providing facilities, among others.

Within this fast growing professional discipline, service providers have extensive responsibilities for providing, maintaining and developing myriad of services for the client organisation. These range from property strategy, space management and communications infrastructure to building maintenance, administration and contract management. Effective FM contributes to the delivery of strategic and operational objectives. On a day-to-day level, effective FM provides a safe and efficient working environment, which is essential to the performance of any business – whatever its size and scope of works. As indicated by Jegadeesan & Balasubramaniam (2009), effective FM can, amongst other things:

• deliver effective management of an organisation’s assets;
• enhance the skills of people within the FM sector and provide identifiable and meaningful career options;
• enable new working styles and processes – vital in this technology-driven age;
• enhance and project an organisation’s identity and image;
• help the integration processes associated with change, post-merger or acquisition;
• deliver business continuity and workforce protection in an era of heightened security threats.

Any organisation considering its needs for support services and for procuring the most advantageous solution should begin by analysing the strategic importance of FM in achieving the main purpose and objectives of the organisation’s business. The need to secure the most efficient, effective and economical way of delivering business support services should also be regarded as a critical consideration when making strategic decisions about the future delivery of facilities services. Therefore, some of the basic questions to be asked and for which such organisation must provide answers to include the following (Actionfm.org, n.d. & i-FM.net, 2011):

• What is the ‘essence’ of the organisation’s proposition – its strategy, structure, operational ethos, future vision and corporate culture?
• What is the organisation doing – expanding, contracting, changing direction?
• What is the corporate strategy – is it supported by a delivery model for facilities services which enables that strategy to be achieved?
• Does the organisation have a strategy for FM and has it taken full account of the intentions of the Board?
• How would the organisation’s Corporate Social Responsibility agenda be affected by its FM procurement strategy?
• Has the organisation developed its own sustainable estates strategy and how are decisions about FM services tied to this?

The full scope of business support service requirement needs to be understood in its specific local context. The relationship and role of FM services must be assessed alongside other key issues including finance, human resources,  information technology (IT) knowledge base, logistics, level of experience in asset management, property management and other related professional services that requires proper management both at strategic and operational levels in order to maintain a facility properly. IT Service Management Forum Limited (2007) indicated that the responsibilities associated with facilities management cover wide areas of business functions, including:

• Maintenance of furniture and electronic appliances (like lighting systems, HVAC systems and others)
• Space utilization, interior designing etc
• Conducting inspections, approvals and payment of associated fees and costs
• Safety and security
• Overall cleanliness of the organisation
• Maintenance of expense records
• Maintaining stable financial position of the organisation
• Check if the activities of business are in compliance with Federal, State and Local laws with regard to zoning, reporting of income, operation of a business and employee practices

FM is regarded as a customer-oriented service, meaning that customer service should be viewed as an integral part of the value which FM provides to its customers as well as an important measure of the effectiveness of FM (Bandy, 2003). To this end, FM service will only makes sense if it supports the core business of the client (Barrett, 2000). Therefore, the outcome of facilities services in workplace should enhance the work of the organization. According to Cant (2010), FM is at a watershed. He argues that the business climate emerging from the economic crisis is radically different from the past when the trend towards outsourcing FM services singly, bundled or under total FM contracts was the norm. Cant explained that while FM has been able to provide outsourced services to client organisations for more than 20 years, its success can largely be attributed to improvements on what were highly inefficient business operations at that time. Going by the way things is going in the FM service sector; Iannelli (2009) offers the following valuable insight into the types of transactions likely to be prioritized in the near future:

• Establishing a global presence: Given the need to serve clients in multiple geographies, and the inherent benefits of scale, many facilities services companies will use the current environment as an opportunity to fill out their global footprints.
• Focusing on security: Security services have been one of the most active sub-sectors during the last 12 months, with several consolidators making acquisitions. Private-equity buyers are struggling to find financing for deals because of constricted credit markets; however, as they re-emerge as aggressive buyers, they will likely be focused on targets that are recurring revenue businesses in growing sectors, such as security
• Developing one-stop shopping: With vendor consolidation likely to accelerate in a difficult environment, the emphasis on one-stop shopping will continue to drive
• Going Green: Firms with specific capabilities in sustainable facilities management will be a major focus for acquirers in the current market. FM service providers will need to bolster their capabilities in maximizing energy efficiency and minimizing carbon
• Filling in the niches: There are a number of niche industries that require specialized FM Many of these niches are also cyclically resistant (healthcare, infrastructure, technology, etc.). As a result, service providers with the ability to meet the unique needs of facilities owners will continue to be high-demand acquisition targets.

3.       FM SERVICE MODELS CUM SERVICE PROVIDERS

As indicated by Atkin (1999), there are three types of FM service providers, namely: managing agent, managing contractor and total facilities management. They range from the use of an external organisations or individuals who manage the client organisation’s own employees, through the appointment of a contractor to manage some or all service providers, to an arrangement where all facilities are managed by an external entity offering a single point of responsibility. The service provider may sub-contract some services to vendors. Here, integrated facilities management refers to the delivery of all or most Facility Management services by a single, service provider who has broad accountability for service and cost performance. On the other hand, vendors are those external organisations that provide limited, specific services and they are responsible for performing specific assigned tasks as opposed to having overall responsibility for facility performance (Atkin 1999).

Figure 1: Backgrounds of FM service providers in pictorial form

Source: Atkin (1999).

There are a number of contracting options that range from encompassing all services and one contractor or single services amongst many suppliers. FM company is a company delivering and providing a wide range services either directly or by sub-contracting, where the emphasis is primarily on management ability (Alexander, 2003). The different service provision models are very competitive but used sometimes for different situations. They are all management services but placed slightly differently in the FM Framework according to the Centre for Facilities management (Alexander, 2003). For example, the companies concerned with the “Single Service Contracting”, concentrate on the delivery of one type of service such as cleaning, security, maintenance of lightning, etc. When companies draw together different types of service to provide a range of service delivery this is called a “Packaged Service”, or multiple services. For example, a security company may offer manned guarding, burglar alarm systems and electric entry (Alexander, 2003).

a)       Managing agent service model

In the managing agent model, the arrangement is adopted when the organisation has determined that it wishes to retain its own employees, but does not have the skill or expertise with which to manage them efficiently and effectively. By bringing in an external organisation to manage the facilities, the organisation is essentially appointing a client representative – managing agent (Atkin, 1999).

Figure 2: Managing agent model

Source: Atkin (1999)

The managing agent approach offers considerable flexibility for the client organisation to find and then hold on to the combination of contracts that suits it best. In this approach there are no obstacles when some services are part in-house and part outsourced. The managing agent role attracts especial significance since the client organisation would be using the agent to contribute expertise and exercise judgement when deciding between in-house and outsourced service provision (Atkin, 1999). The managing agent model can offer a fairly new perspective to the FM service delivery. Besides the expertise in making decisions between in- house and outsourced services, it can offer a neutral perspective, advantages for problematic quality monitoring and to ease the laborious continuous in-house benchmarking.

b)       Managing contractor service model

In the managing contractor arrangement, there is one contract between the client organisation and the appointed contractor. In this model, subcontractors will be under contract to the managing contractor and will therefore not have any contractual relationship with the client organisation. This means that organisations will have a single point of contact with the contractor on all matters pertaining to service provision (Atkin, 1999).

Figure 3: Managing contractor model

Source: Atkin (1999).

In this model, the managing contractor plays the central role of FM. Clients usually rely on the managing contractors judgement in decision-making and give them option to choose the contractors. In many cases, this enables the clients to concentrate on the core business and therefore has no need to use any resources to FM or PM. According to the literature, managing contractors can get performance-based fees and use open book accounting, where the client can monitor the spent money and evaluate the done work as well as the subcontracted services.

c)     Total facilities management (TFM) service model

TFM companies may deliver and manage a wide range of services either directly or by sub- contract. TFM offer their clients a comprehensive service with their primary emphasis being their management ability. With TFM model, organisations are able to give the full responsibility for managing their facilities to a single organisation for a fixed price (Alexander, 2003; Atkin, 1999). In this model, one FM service company delivers all of the needed management and services.

Figure 4: Total facilities management model

Source: Atkin (1999).

TFM model offers an advantage for one organisation to manage and run all facilities services. It is considered to cause less transactions and costs compared to the multi-level contractor models. As indicated by Cant (2010), TFM model is ’sustainable’ because it generates cost savings and increases management knowledge and efficiency.

4. CHOOSING THE RIGHT FM SERVICE MODEL: The Pros and Cons

Understanding the characteristics of each service model will help in the understanding of their alignment with the organisation concerned, resources and the set of skills required to manage, and their respective advantages and disadvantages. Furthermore, Cant (2010) believes that expert service provider organisations know as much about their client’s needs and business as anyone. The key, he says, is genuine collaboration – between the client and supplier, and particularly between suppliers. This, Cant (2010) refers to as a collaborative model and collaborative management wherein suppliers are the experts; they know their service, and what is required, but they have not necessarily had the influence and leverage to help them make the service provision better, nor can they continue to reduce their margins in order that managing agents or TFM service providers are able to retain their margins into which they tend to fall. As indicated by Burkhalter (2011), selecting the right service model by any organization is a fundamental determinant of such organisation’s success. Executing the plan very well is important, but does little good if wrong plan is selected. Corporate structure, size, sophistication and culture will all influence the choice of service model, which must be well aligned to optimize potential. Burkhalter (2011), classified service model options into three major categories; these are:

a) Best of breed services approach: This service model places the FM organisation in direct control of a number of specialised service providers. These may range from real estate transaction management, design and construction management, all the way to operational functions such as maintenance and general services. This model allows for the selection of the best possible service provider for each function, effectively putting FM in a General Manager’s role. By selecting the best service providers for each function, it enables service excellence. Taking this approach will require attention to governance processes and consistency. The FM staff must assure that uniform standards are in place and met by all providers, that accountability systems are in place and equitably exercised, and that sufficient resources are in place to manage a large number of contracts and

b) Bundled services approach: The bundled service model describes a one to one relationship between the FM client and a service entity that directly provides all It provides a consistent approach to all services and strong cross-functional coordination since all have the same reporting and reward mechanisms. Additionally, it provides a single point of contact for the FM group, thus lowering the internal management resource requirements. The advantages to this model are consistency, economies of scale, and transparency. It is incumbent on the FM client to establish a contractual and relationship framework that maximizes these benefits while allowing flexibility to continually press the “art of the doable” upon the provider.

The primary risks in this model are the single point of failure nature of a one to one relationship, and potential uneven service performance across the entire portfolio. The latter increases in leverage the more dispersed your portfolio is. An additional risk is that

the line between client and provider can become blurred, even internally. In worst case scenarios this can make the FM group seem irrelevant or without influence. For this reason alone FM groups that adopt this model must have strong internal executive leadership. Selecting a single provider may indeed be the right choice, but it is always important that both parties clearly understand who is serving whom.

c) Integrated services approach: Similar to the bundled services approach, the integrated services approach provides a strategic alliance between client and one contractual Unlike the bundled approach, the Integrator is able to source individual functional services from the best providers available in a given market. The integrated services approach is in many ways a combination of the first two models with most of the benefits of the best in breed approach. Additionally, it transfers the responsibility for management and coordination of multiple service provider contracts to the integrator, thus allowing for a smaller internal FM function. While there is still the dependency risk of the one to one relationship model it is diminished by the integrator’s ability to individually source functional service providers. This model also has the advantage of placing technology in the integrator’s sphere of responsibility. They then must assure that a wide array of service providers deliver information via the same or compatible technology applications so that data management, analysis and reporting are consistent and transparent across functions.

Risks inherent in the integrated services model include the integrator’s ability to manage a number of service providers in an integrated and transparent manner, and a poorly constructed governance system that allows individual players too much autonomy. Care should also be taken during the development phase to assure that the total management structure and cost across the service spectrum is optimized. FM groups should insist that they be given full visibility into the contractual and management framework between the integrator and its multiple service providers, to assure that an unhealthy and costly management bureaucracy is not being implemented.

5. FM SERVICE PROCUREMENT: Basic considerations

Before decisions are taken regarding the FM model to be applied and the preferred procurement option to be adopted, detailed consideration must be given to a number of fundamental issues and questions relating to the organisational culture of the business. The answers will influence the delivery and integration of FM within the provision of other business support services. These issues and other basic consideration, depending on the nature of the organization and scope of FM services required, may include the following:

• The role of ‘Facilities Manager’ and the extent of local decision making/empowerment to be allowed. This may include consideration of the relative merits and importance of maintaining either an on-site or remote presence in respect of FM service delivery.
• The role of the property / facilities professionals as ‘client’ or ‘account managers’ in supporting and providing an interface between the client/end user and the contractor/supplier.
• The role of the service provider g. service manager, operations director, etc., in determining the service standards and levels of provision to be provided.
• Establishing the procurement matrix for services and providers and defining the interfaces, crossovers, and boundaries between suppliers.

• Developing a shared understanding of the preferred relationship model e.g. partnering, strategic alliance, client/contractor.
• Management arrangements. Defining reporting lines; delegation of authority to end- users/customers and suppliers; authority limits and controls; effective management of reactive maintenance; need for responsiveness, accountability and
• Access to information – availability of timely and relevant management information on utilization and cost of assets to inform investment decisions.
• Securing customer/stakeholder engagement and feedback – achieving involvement and satisfaction – monitoring and performance measurement/management.
• Contract monitoring, compliance and conflict resolution.
• Incentivisation (i.e., the act or process of providing incentives to make something more attractive) – this could include profit sharing between users and suppliers resulting from innovation and improvement.
• Communication – two way flow of information.
• Establishing clear lines of responsibility.
• Service standards – range and quality of service.
• Security, resilience and business continuity – corporate and local responsibilities
• Balancing on-site management and delivery with affordability.
• Access to services – frequency of use and demand, required skill levels, market availability, specialism, cost of services, business impact resulting from failure.

As indicated by Silen (2012), Clean India Journal (2012) & Buildotech Magazine (2012), service procurement needs to lead the sourcing related activities to ensure they are properly performed from beginning to end. Procurement should establish the process that will be followed, and guide the organisation through that process. Responsibilities, among others, may likely include the following:

• Developing the sourcing strategy (out-task, bundle services, integrated facilities management)
• Determination of what will be included in scope (service level agreements – SLA)
• The awareness of the capabilities of the marketplace and current trends
• Define supplier requirements
• Perform quality assurance of information supplied to and received from bidders
• Serve as the primary interface with bidders
• Receive proposals from bidders
• Ensure all required material is submitted
• Develop the evaluation criteria
• Ensure a fair assessment is conducted
• Evaluate and score bidders with input from the team
• Prepare the business case with input from the team
• Recommend FM service provider selection
• Lead negotiations

Thus, creating the right team will enable the company to select the right FM service provider. A structured process ensures everyone clearly understands his/her role and all of the required activities are coordinated and performed in a systematic and controlled manner. This includes the activities prior to going to market, as well as those leading up to the selection of the successful bidder. It is often beneficial to utilize the services of an external consulting organisation with experience in the FM space. They have done this before, know what needs to be done, have proven tools and processes to guide the process, and understand the capabilities of the marketplace. They can manage the complexity of the process and ensure activities are performed in the most efficient manner. This is particularly important when the FM spend that will be outsourced is significant.

6.       FM SERVICE PROVIDERS’ SELECTION CRITERIA

Service providers’ evaluation may need to consider the input to service transition, addressing the relevance of the service design, the transition approach itself, and the suitability of the new or changed service for the actual operational and business environments encountered and expected. Key to outsourcing success is the identification of the best fit service provider. The risks of working with the wrong service provider may include:

• Slow implementation or mobilization of services
• Delays in the deployment of expected processes and technologies
• Disruptions with employees or third party vendors
• Service delivery failures

Although Redding (no date) supported strong contracting structures, it however warns that strong contracts cannot compensate for gaps in service provider capabilities. Consequently, it suggests that during the selection phase, efforts should be focused in two areas:

1. Assessing the service provider’s organisation and capabilities
2. Evaluating the service provider’s proposed service delivery

According to Redding (op cit), a careful understanding of each of these two points is an important part of service providers’ selection. Furthermore, Redding (op cit) suggested a number of factors that could be considered in the Service providers’ evaluation process. These include:

• Geographical footprint: Can the service provider effectively deliver services in the required regions?
• Proven processes: Does the service provider have the competence, knowledge and to transform client operations?
• Personnel: Is the service provider having enough employees, which are capable and well-motivated?
• Technology: What are the service provider’s specific technological capabilities?
• Partnering and cultural fit: Will the service provider be able to build a successful partnership with the organisation requiring the service?
• Third party vendor relationships: Does the service provider have any existing relationships with the local third party vendors who will be delivering complementary services?
• Business stability: Is there confidence that the service provider will be financially stable over the life of the service agreement?
• Relevant experience: Does the service provider have industry experience with accounts of similar job size and complexity?

If a service provider is able to demonstrate the ability to deliver the required services, it is essential to consider whether their proposed service delivery is the best fit. A good Request for Proposal needs to solicit:

• A detailed, itemized, financial bid put in a consistent template used by all Service Providers.
• Requests for “data” about the Service Provider’s solution and capabilities (for example, when asking about the Service Provider’s technology solution, asking how many locations the Service Provider has deployed the same technology solution).
• Details about how the Service Provider’s proposed staffing, processes and technology.
• The details of the implementation plan, all activities and milestones identified.
• Pricing should be based on Service Provider acceptance of the Client’s contractual terms and conditions.

The table below contains critical areas of the service providers’ evaluation criteria.

Table 1: Service providers’ evaluation criteria

Source: Silen (2012).

7.       FM SERVICE MONITORING AND EVALUATION

As indicated by IT Service Management Forum Limited (2007), monitoring and measurement underpins FM service and the 7-Step Improvement Process, and is an essential part of being able to manage services and processes, and report value to the business. Many organisations today measure at the component level, and although this is necessary and valuable, service measurement must go up a level to provide a view of the true customer experience of services being delivered. This is to ensuring that the service will be useful to the business and this extends into ensuring that the service will continue to be relevant by establishing appropriate metrics and measurement techniques. IT Service Management Forum Limited (op cit) outlined four basic reasons to monitor and measure; these are to:

• validate previous decisions that have been made
• direct activities in order to meet set targets – this is the most prevalent reason for monitoring and measuring
• justify that a course of action is required, with factual evidence or proof
• intervene at the appropriate point and take corrective