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25 September 2018
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FM PROVIDERS ‘CHOOSING SIDES’ FOLLOWING CARILLION COLLAPSE

web_Fac-show-Carillion
[l-r] Sunil Shah, Paul Bagust and Jeff Dewing

22 June 2018 | Bradford Keen


The FM sector is splitting into those that abide by ethical work practices and those that don’t.

 

This was one of the key insights presented by Sunil Shah, managing director of Acclaro Advisory, as he hosted the final Keynote Theatre panel discussion at the 2018 Facilities Show.

 

By using procurement standards and ethical processes, some in the sector are turning down jobs where there is insufficient margin to operate on, said Shah.

 

“Those are the organisations that truly lead and build upon what sustainability means in environmental, social and government parameters. These companies are not just ‘greenwashing’ but are genuinely committed to sustainability targets, processes and outcomes.”

 

The other group, says Shah, “is trying to drive cost down, do not provide compliance nor adhere to standards, nor try to find a way to get more money out of clients that may not be “transparent”, said Shah.

 

This group lives by the motto: “Take the work and find the margin later”, suggested panellist Jeff Dewing, CEO of Cloudfm.

 

Speaking about the collapse of Carillion, Dewing said that the blame could not be placed on Carillion’s directors alone, although they should shoulder much of it. It is, he argued, part of a bigger cultural malaise.

 

“It's also about the people that accept the work through the environment which they've created, where they have to meet targets and goals. That creates bad behaviour.

 

“Once we accept the problem, we need to re-educate the client base, the procurement base, and ourselves. It starts with creating the right environment that forces good behaviour. Until you do that, there will be no change.”

 

Paul Bagust, global property standards director at RICS, argued that there have to be consequences if professionals do not introduce and implement standards.

 

“Discussions about transparency, ethics and responsible business need to be built on a foundation of standards and regulations.”

 

Parties in the supply chain would also better understand “what they’re buying and what they're selling”, said Bagust.

 

”We need more standards to ensure that there is clarity in what people will deliver and what people will receive so we can move this conversation beyond this race to the bottom, which has really held us back as a profession.”

 

All three panellists agreed that how services are procured has to change if the debate is to move on. Dewing said procurement teams needed to have long-term focus on projects and be held accountable for the success of the contracts they procure. They cannot be allowed to transfer responsibilities and then not be there when operational processes do not work out.

 

Dewing went on to make what he called a “challenging statement”.

 

“I think (FM service provider) margins are very healthy. Where people get it wrong is that margin is being eaten up by inefficiencies,” he said.

 

“If you solve inefficiencies within the processes you are delivering, your margin appears. Why should a client pay for a company or organisation's inefficiencies? Everyone is OK to feel sorry for themselves because there’s no margin instead of focusing on what could be done better – rather than what service could be switched off – to generate that margin.”