Bridging the gap

15 September 2011

One of the most important relationships in facilities management exists between occupier clients and facilities suppliers. When this connection breaks down, both parties suffer and the prospects for successful contract delivery take a dive.

But what makes this relationship fail? The IPD Facilities Management Benchmarking Group, which conducts research in this area, reported the following responses to that question: inability [on behalf of both parties] to demonstrate partnership; lack of innovation; inflexibility; high cost; poor delivery performance; taking advantage of market prices; 
lack of strategic thinking; 
and supplier consolidation.

Although re-procurement is sometimes desirable, in the UK alone the subsequent hidden costs to the FM industry are in excess of £700m annually, according to estimates. Clients recognise that re-procurement can often lead to greater risk, loss of knowledge and increased short-term costs.

In most cases, clients and suppliers would do well to retain a beneficial long-term working relationship. However some decisions remain beyond the control of the property, facilities and estates departments and their suppliers. For example, if procurement opts for a pan-European supply contract, the FM’s hands are tied.

Experience of appraising both effective and ineffective relationships suggests that while under-performance is normally the tangible outcome of a dysfunctional relationship, the source is often to be found in 
the capability and processes that exist between the parties. So what is going wrong?

A ‘good’ supplier
Most clients begin with the premise that a ‘good’ supplier will provide a ‘service with a quality appropriate to meet the needs of the business at the lowest possible cost’, or similar edict.
The problem for most suppliers is that while they are able to identify an appropriate mix of cost and quality (and the capability required to support these), during the tendering stage, businesses and organisations inevitably change over time and so do their demands. The best suppliers have established adaptive systems and processes – where possible, utilising new thinking and technology, to understand the shifting organisational need – in 
order to enable themselves to continuously realign their facilities services to the changing needs of the business.

At a recent IPD Benchmarking meeting, a group of major occupiers reiterated the sentiment that “suppliers tend not to be strategic and under-deliver in terms of innovation.” However, there are two sides to the argument and suppliers complain that it is hard to be strategic 
or innovative when clients 
are unable, or unwilling, 
to provide them with the necessary information.

Not all suppliers have suitable processes and even the best suppliers do not implement the most appropriate processes in all of their contracts. Sometimes these faults can be clearly blamed on the supplier, but often it is more complex. Often, an excellent supplier can work effectively for one client, while under-providing for another, although still using the same processes and similarly qualified account management. In these cases, the processes that the client occupier can influence that are most strategic are not integrated within the supplier’s processes. This necessitates a 
‘top to bottom’ view of FM service delivery.

Part of the process
The importance of FM capability, and processes specifically, has been recognised in a number of recent publications, including the Office of Government and Commerce (OGC) Property Asset Management Capability Assessment Model (PAMCAM), and the soon-to-be-introduced EN-15221 European standard. IPD and Coretex have developed 
an evaluation approach 
(see Figure 1: The IPD VFM capability framework), aligned with aspects of the European Standard, with three important central tenets:

1. A ‘one-team’ view of 
FM capability (avoiding 
one-sided critiques)
2. Facilities processes need to be effective at the strategic, tactical and operational level, and each level needs to be interconnected
3. The theoretical approach 
to processes appraisal 
needs to be combined with practical experience based 
on how processes and people work together.

In particular, the most effective relationships have processes devoted to:
- Customer relationship management, wherein the FM service has processes in place that aim to further understanding of the organisational need for 
the services it provides and 
will trigger re-alignment 
where necessary
- The alignment of FM to changing business needs, which relies on information from the customer relationship and performance management processes in place to ensure effective change is identified 
and implemented
- Performance management and measurement, which includes jointly developing appropriate measures of performance that 
are reviewed annually
- Assessment and response to business risk, including the understanding of risks to the organisation – legislative, reputational, operational resilience – and how these are managed
 The evaluation and development of people 
on the FM team
- The constant search for and implementation of innovation 
on FM contracts. Typically there are two drivers of innovation: the understanding of organisational need, which allows FMs to create more relevant solutions for the business they support; and the understanding of technological changes which encourage more effective service provision to 
be implemented.

If these processes are in place, the FM function as a whole will be able to evolve continuously to meet changing business requirements and will enable the right balance between cost and quality. These processes need to be represented at the strategic, tactical and operational levels 
and are shown in Table 1.

While it is all very well understanding what needs to be done, it is considerably more difficult indentifying deficiencies in current processes, or, more importantly, improving on these.
Experience of working with both occupiers and FM suppliers helps to identify a number of key components in the processes that need to be reviewed:

- Triggers to the process are any stimuli which initiate a series of actions or reactions. They can include diary dates for regular meetings with customers, business budget processes that require property and FM information, or just a complaint to the helpdesk
- Inputs into the process, ie external data flowing into the system. For example, when the reason for the process is to 
ensure that the utilisation of the property portfolio is aligned 
with the business needs, two inputs could be the size of 
the current portfolio and the number of people who use the portfolio (information could 
be from telephone lists or 
HR records)
- The ‘output’ is the information flowing out of the process. 
Using the utilisation example, this could include a statement of the utilisation of every property in the portfolio
- The person responsible for the process needs to be committed and at the correct level to ensure the process is delivered. For example, ensuring that complaints and feedback are handled suitably could be the responsibility of the helpdesk manager as they have control and understanding of 
most of the data required for 
this process.

Assessing relationship management
To illustrate how this approach can be applied to a specific process area, the rest of this article will focus on customer relationship management (CRM), which, in the authors’ experience, can make the difference between services being seen by the business as valuable, or not (difference between the perceived perception and actual).

CRM is an important starting point for any FM service to adapt and align within the service going forward. It can be seen as when the whole property and FM team seek to understand the changing business requirements.

At the strategic level, there needs to be a clear understanding of how the demand for the business’s services are likely to change and how this is likely 
to affect the services the business provides. For example, one client established a new product line for China that required a local manufacturing capability. In this case the property and its facilities played an active role in defining the need and solution and delivering the change. In the past, the same company would often leave it to the business unit to organise, seeing handover to the property function only when the building had been acquired. The person responsible for the strategic CRM process(es) will be able to understand business information and the implications on the long term property and FM supply.

Capturing data
At the tactical level, information needs to be gathered to ensure that localised changes in the business are understood and 
new opportunities captured. Again, to use an example, the property team had a weekly process to capture localised changes to business delivery. 
They identified a client was running a large product promotion and needed additional space for a telesales team. This was for a one-month period and included day and evening shifts, requiring additional cleaning and catering services. The person responsible for this tactical CRM process was the building manager, who could also influence move projects 
and negotiate service changes with suppliers.

At the operational level, 
a process based on feedback identifying both successful and unsuccessful FM services is important. To rely on just a complaint-based mechanism does not demonstrate good CRM. 
The best suppliers actively seek out feedback - one in particular 
has a detailed interview process with users of the service on 
a monthly basis, which feeds 
into a corrective action plan process. The person responsible for this process is a central communication manager who ensures information is provided by the local FMs and that the corrective action plans are recorded and monitored.

In the case of one utilities client, it was identified that they had weak processes to support the relationship with key business units. Issues that emerged included a significant growth of ‘expert clients’ within the business units and poor relationships with suppliers and their perceived performance. Roughly five years ago, both parties decided to implement improved processes to understand the organisational need of their services. Since this decision, there has been an exceptional working relationship between the user, in-house property team and supplier. While the service continues to change, improvements to the CRM process have definitely saved money.

In summary
High performance is reliant on the balance between cost and quality meeting the organisational need. Achieving this would allow most organisations to retain their long term FM contracts. The evidence suggests that efficient and effective performance is underpinned by highly developed and integrated management processes. In the case of the poorer performing client-supplier relationships, some, or all, of these processes are inadequate 
or missing.

Depending on how the FM contract is orientated, strategic and tactical processes cannot be initiated and maintained by the supplier alone. Instead, they needing to be embedded and owned by the client. Thus, the ability of the supplier to understand the business, align services and innovate accordingly is reliant on the processes estab–lished by the client as much as themselves.

Often, the more these processes evolve to support each other, the greater the level of supplier effectiveness (assuming the supplier is proficient to begin with). Long term partnership 
has some obvious analogies 
with sport: long term managers, able to develop effective 
working relationships, 
such as Clive Woodward and 
Alex Ferguson, have time to implement effective processes 
to ensure success. The same 
can be said for those in FM, although organisations need to know they have a manager they 
can work with in the first place.

Through the development of a large database of accurate and up-to-date information, looking not only at outcomes (efficiency and effectiveness), but the capabilities and processes underpinning FM delivery, it’s possible to further 
the industry’s knowledge of the factors that drive superior outcomes in FM.

Glenn Corney is the international product manager of IPD; Michael Ripper is a director at Coretex International. IPD and Coretex 
jointly deliver an FM ‘value for money’ service.