Facilities Management: To outsource or not to.

 

News : Zambia Daily Mail.

Publicado por FAMASE el 25/07/2012 (ENG)


 



By NCHIMA NSANJE



IN the previous two articles we discussed the definition of Facilities Management (FM), the benefits and the challenges in an organisation. Assuming that we all agree and I hope we do that FM is an integral part of any business, the next question for a business would be; should an organisation have an in-house team or should it outsource?



FM is concerned with operating and maintaining all types of properties. This function may be performed by in-house corporate staff or by an outside firm specialising in FM. The latter arrangement has become more common as the scope and complexity of FM has exceeded the capability of building occupants.



In this article we look at outsourcing, explore the steps that need to be undertaken to have a successful relationship/partnership between the property owner and the facility management company. Due to the complexity of this topic, it has been divided into two parts.



Part one will look at outsourcing from the client side and in the next issue part two will discuss how FM companies can meet the expectations of the client



Companies will outsource because they want to focus on other goals, they also anticipate that outsourcing will reduce costs and improve operations.



Generally outsourcing should present the following benefits:



•Cost reduction and certainty



•Increased strategic focus



•Better access to facility management technology and best practices



•Improved workforce training and management



•Data driven performance benchmarks



•Increased operational flexibility



•Transfer of some financial and operational risks to service providers



To achieve these benefits, organisations should take time to develop a strategic outsourcing plan. To do this organisations should explore their motives for outsourcing, identify actions needed to make the best selection of partners, and establish a methodology for determining and measuring the critical success factors.



The first step in the strategic outsourcing plan is reviewing the vision for the FM enterprise. Many outsourcing ventures have failed because of insufficient attention upfront to where the organisation outsourcing is headed and what it wants to accomplish through outsourcing.



The direction of the FM enterprise needs to be analysed in relation to the overall corporate vision to make certain FM goals and objectives are in synchronisation with those of the organisation.



I am aware of a few attempts where organisations have tried to outsource their FM operations in Zambia. Whilst I am not privy to the details, I doubt I have seen any successful story! I can only speculate like you from where I stand what could have gone wrong.  Organisations should, prior to engaging into these marriages, consider the risks involved with outsourcing.



THE RISKS OF OUTSOURCING



I think top of the list among organisations in Zambia is the perceived loss of direct control. This perceived risk can actually cause a client to feel that they are exposed to greater risk than may actually be the case. Outsourced service delivery is not risk free, but rather presents a different, not necessarily greater, risk profile when compared to a self-managed service delivery solution.



The following are the associated risks of FM Outsourcing:



•Critical service or asset failures



•Service provider underperformance



Financial underperformance



•Cultural rejection



•Loss of knowledge



•Labour risk



The most effective method of dealing with the risks associated with outsourcing is for the client to understand and manage risks through each phase of an outsourcing initiative. The phases in order of occurrence are as follows:



(1)PREPARING FOR OUTSOURCING



Organisations which do not prepare adequately for outsourcing often discover that they did not accurately convey the true cost or scope of the delivered services, have correct service level information or have adequate support from their senior leadership teams.



(2)SERVICE PROVIDER SELECTION



Key to outsourcing success is the identification of the best fit service provider.



(3)STRUCTURING THE OUTSOURCING DEAL



Outsourcing Facility Management is inherently riskier for the client than the service provider. A well designed contract will appropriately balance the risks and rewards inherent to this type of relationship



(4)DEAL NEGOTIATION



Negotiations should be based upon a clear agenda which addresses a service provider’s detailed review of the client’s contractual terms and conditions. By limiting negotiations to these areas, both parties can focus on working through a tightly focused negotiating agenda.



(5)TRANSITION



Transition refers to the activities required to mobilise the delivery of the resources to an account. This is the busiest and most complex part of the entire process. Management of transition activities can determine the overall success of the outsourcing relationship and sets the tone of the business relationship.



Transition is a time-consuming process. The contract on which I am attached is up for tender at the end of the year, the transition process as an example for this contract will be six months.



(6)SERVICE PROVIDER GOVERNANCE



Once the deal is negotiated and the service provider is on site delivering services, the client’s facility management team must adapt to the responsibilities of service provider governance.



Governance is the process by which the service provider will be managed to ensure effective service delivery, consistent with the goals of the outsourcing initiatives.



This overview is exactly just that, an overview. Structuring of such deals is a complex process and I recommend that organisations considering outsourcing engage a consultant with the right skills to prepare a road map which spells out the technicalities that need to be considered for a successful partnership.



It is possible to structure an outsourcing relationship so that it delivers on the strategic promise that both clients and service providers desire. The challenge is in creating a partnership.



The author is a Facility Services Professional with extensive exposure to the FM industry both locally and internationally.  He works for one of the leading blue-chip International Facility Management Companies in Perth, Western-Australia, and holds Bsc in Land Economy from the Copperbelt University in Kitwe and an MBA with a major in Project Management from Edith Cowan University in Perth.



 



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