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dave.wilson@effectivefacilities.com

(First published in 2007)

For organisations that take the strategic decision to outsource Facility Management provision, there are numerous options about how to achieve that outsource. For multi-national organisations in Europe, those options are becoming ever wider, as a genuine international – possibly even global – facility management capability emerges in the marketplace. Our presentation aims to help decision makers understand the options and the factors which will affect the choices.

Anyone who has responsibility for facility management in multiple buildings, especially if they are in different regions of a country, understands that decisions have to be taken about how to procure supporting services. They face a choice of approach: for example, to seek economies of scale by letting a single national contract, or to increase local control by having smaller suppliers provide services in each area or location.  They also face other fundamental choices about issues like where the facility management capability sits, what the client role is, how (and whether) management and service delivery are combined in some way, or provided separately. These are not whimsical or unimportant decisions, of course: they are fundamental choices which should be founded on some explicit strategy and taken with some care. The risk of making the wrong choice, as we all know (especially the first time facility management is outsourced) is that service quality and costs deteriorate rather than improve.

We are of course fortunate now that there is a body of experience in outsourcing services. To that extent, the existence of a multinational cross-border option is simply one among a number of outsourcing possibilities combining various contractual and delivery options with a choice of geographical scope.

However, it is clear to anyone with experience in working internationally that the problems we face are different (and not only in relation to changes in scale) when we work pan-nationally[1]. In other articles [2] I have discussed the barriers to successful international facility management – issues of culture, regulation, currency, law and language, for example – and the extent to which these inhibit successful implementation of pan-national procurement strategies. The key point for us here is that these barriers are not insurmountable and that there may be cases in which they do not apply to an organisation. So what are those cases, and how might you identify whether your organisation can overcome them?

Initially, let us consider some factors that will influence decision making, starting with organisational issues:

  • Scale in each location – does your organisation have similar sized property and staffing in each location, or are they varied in size – for example, with a few large properties and many smaller ones?
  • Organisational homogeneity – how similar are operations in each location in terms of their activity, outputs and practice?
  • Organisational culture – is there a very strong corporate culture that might supersede local cultural constraints?
  • Management style and delegation – is the organisation decision making highly centralised, or do local managers enjoy a high degree of autonomy?

Then we should consider some practical factors:

  • Funding availability – at least initially, there is a premium to be paid when engaging a pan-national solution, because of travel costs and time and the likelihood that the business is adding some considerable expertise (and thus staff cost) to it’s support resources. This can be shown to be off-set in the short to medium term by savings where the service works well, but it requires an initial commitment of additional funds. If funding is not available or is meant to be paid back within the financial year this will have a negative impact on the delivery of the outcomes
  • Data availability – clients need to know where they are starting from in order to demonstrate progress. This applies not only to costs but also to quality of performance. Without a known starting point from auditable objective data you risk not being able to show achievement, and not being able to manage the service supplier effectively
  • Client side management – effective outsourcing usually means a sharp reduction in the client side management team numbers. Have you a vision for an effective but light touch internal client team adequate to promote strategy and planning and to supervise the supplier, but without duplicating their activities? How will local clients communicate their opinions and objectives into your planning?

Finally, let’s consider some possible objectives of an outsource:

  • Cost – this almost always seen as the primary aim. However, are you sure you have an accurate understanding of existing costs? Is your organisation in a position to reduce costs quickly? What contractual and lease constraints exist that might hinder the outsource supplier? Can you control the supplier so that cost reduction doesn’t put at risk your service quality and reliability?
  • Quality – do you know what current service quality levels are? Are they right for your business? How will you measure them under an outsourced arrangement?
  • Risk management – how much risk transfer is your organisation going to allow (or require)? Can your facility management provider bring new ideas or just replicate your current arrangements? Do they really understand your business and your risk profile?

Table one shows how these might affect your approach to structuring an outsourced facility management solution.

Table One: influencing factors in scoping an outsource

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Many organisations fail to consider some or all of these factors when outsourcing facility management. This isn’t exclusive to pan-national procurement: it certainly happens as much within the UK as in scenarios across borders. However, if we look at the organisations who have successfully outsourced pan-national facility management services, they have almost always taken some time – over years, usually – to learn from experience, develop their structures and knowledge, develop their customer expectations, and get to a point where they are positioned with all the elements in the right state of readiness. A problem for those of us in the facility profession (irrespective of whether we work as client or provider) is that some senior directors and managers do not fully understand what is required: they have simplistic or naïve expectations, seeing an outsource as a panacea to cost or quality issues. One thing that experience should tell us is that you cannot outsource problems. Wherever organisations have sought to do this, they have failed. Problem solving, of course is another matter, which is why the consultancy profession exists, and it is often useful to undertake an external, independent, review of preparedness before embarking on procurement of outsourced facility managements in Europe.

So, the risk for both providers and buyers of FM services is the same: inadequate preparation creates significant areas of uncertainty which can jeopardise success for one or both parties to a contract. To avoid this, careful analysis and understanding of the current position is essential, and this may need to be followed by a lengthy period of preparation.

For many clients, it may simply be that their corporate culture and delegated authority to senior managers “in country” makes a pan-national solution unworkable. For others, although such a solution may be attainable, a transition period using local or national outsource suppliers may be required to prepare customers, gather data, test systems and review benefits. As ever, there is no single “best” solution for multi-national organisations to the conundrum of how to configure the outsourcing of facility management, but there are some success factors and indicators which should give a strong sense of direction and provide some rationale for decision making.

 

© Dave Wilson, January 2007



[1] For clarity, in this in article I have used “pan-national” to indicate where the work takes place under one agreement in more than one country, and “international” to indicate simply that services are delivered in more than one country. I am not sure that this is a standard usage, hence this note.

[2] Also see the conference proceedings for EFMC 2006 and World Workplace 2007 among others