By Source One Management Services
By Anthony Ott, Project Analyst
Facilities maintenance and management serves a critical function to any organization that owns property. Whether dealing with the anticipated annual inspections or mitigating the unexpected such as leaks or other repairs, staying on top of facilities maintenance is vital to the well-being of the building’s owners and occupants.
Luckily for companies looking to proactively manage facilities operations but lack the dedicated internal resources can seek support from consultant firms for facilities categories. Internal procurement organizations can quickly get this strategy off the ground by using historic data on hand as a benchmark for consultant bids during the RFP (Request for Proposal) process. In addition to potential hard-dollar savings from consolidating the category and the sourcing process, procurement teams should consider soft-dollar savings as well—having a consultant manage the facilities space reduces paperwork, the burden of sourcing many individual categories, and more.
If you’re considering outsourcing facilities management, there are pros and cons.
Process improvements and strategy development. Consulting firms provide subject-matter expertise and best practices for the facilities maintenance category. They dedicate resources to researching, reviewing and implementing latest and greatest advancements in the space. At the very least, a fresh perspective on the category can bring to light process improvement opportunities for your organization. Even more so, a well-developed strategy can transition a company from a reactionary model to a proactive cost-saving, value adding model driven largely by a preventative maintenance program.
Implementation of reporting and asset management. While your company may lack the internal resources and bandwidth, facilities management firms can fully invest the resources required to develop and maximize value through reporting and asset management software. A consistent and accurate risk assessment profile will allow an organization to accurately budget for capital work and minimize failures/emergency situations that lead to costly downtown and premium service rates. The consultants’ familiarity and ownership of these software systems ensures information from contractors will be submitted in a manner that can be entered, such that once updated, the software systems will be continually built with clean data.
Preventative maintenance program development. Preventative maintenance as opposed to reactionary service provides cost savings due to a number of factors. Preventative maintenance minimizes downtime, promotes energy efficiency, limits expensive emergency repairs, and maintains manufacturer warranties on products and equipment. A consulting firm can implement the necessary organization and uniformity from multiple preventative maintenance programs with numerous mangers and fragmented data to one holistic program. This consolidation of facility equipment and warranty data in one place benefits the customer company on a day-to-day basis as this database cleanly houses relevant information about the facility.
Cost and single point of contact. The cost savings from the transition to a consultant go beyond the RFP process and benchmark against historic rates. Hiring a consultant presents soft dollar savings internally from payroll, time keeping, human resources, and benefits. In addition, there are soft-dollar savings presented from the reduced need to execute procurement initiatives for the facilities maintenance categories and fewer invoices to process. Finally, a consulting solution provides the benefit of a single point of contact across an organization.
While there are some significant benefits, outsourcing facilities management does have drawbacks.
Higher cost to transition. Once the consultant solution is implemented, a company faces a much timelier and expensive process in changing away from this solution. Any change would then have a much bigger impact on category as a whole as suppliers across all facilities operations are subject to change. In the past, decisions to switch one supplier for HVAC (Heating, Ventilation, Air Conditioning) or janitorial work would likely have little to no effect on neighboring suppliers in the waste or landscaping categories. Under a consulting model, change would cause a widespread disruption in services.
Loss of control. Electing to utilize a consultant to manage facilities maintenance may be cost-effective, but the customer company sacrifices the ability to directly handle the workforce. In addition, unique customer requirements and dissatisfaction with work performed become more difficult to communicate.
Staff turnover. Consulting firms tend to have a higher turnover rate than an in-house team. Therefore, a consultant is likely less familiar with the unique specifications and requirements of a particular facility than someone internally. This increases the difficulty in communicating the correct information to contractors.
Redundancy in management roles. Along with high turnover, adding a consultant is effectively adding another cog in the machine. With an additional moving part, there’s a greater chance of miscommunication and delays in execution. Adding duplicate roles eases the burden on internal staff by simply communicating with account managers at consultant firms, yet this individual is then, in many ways, just repeating that step with the contractors.
Response time. The added layer of communication will inevitably slow down response time for urgent, emergency repairs. This can be mitigated by retaining relationships with local suppliers and/or training an in-house team to handle emergency and other small repairs.
Ultimately, deciding to work with a facilities maintenance firm is a complex decision—one that requires a detailed look at both your company’s current approach and goals. Working closely with relevant internal organizations can ease the process by identifying key decision factors specific to your company’s needs, such as cost reduction, specialized suppliers, and service level agreements. The key is getting a detailed understanding of your organization’s needs to formulate a go-to-market strategy to select the right facilities maintenance firm.
Anthony Ott is a Project Analyst at Source One Management Services. Ott supports the execution of strategic sourcing initiatives for Source One’s Fortune 1000 clients, including performing detailed research and data analysis, developing market assessment reports, and identifying cost savings opportunities. His attention to detail and analytical skills are proven assets in conducting audits and ensuring ongoing compliance.
Source One has been a leading Procurement Service Provider supplementing client resources with cost reduction, strategic sourcing services and spend management solutions since 1992.
Source One's experienced sourcing professionals work closely with clients' in-house staff to reduce spend, optimize existing budgets and increase the efficiency of operations by using proven sourcing and purchasing strategies, best practices, innovative technologies, and an unsurpassed database of market intelligence to help clients achieve the maximum level of savings possible. Ongoing monitoring and monthly audit processes further ensure that savings remain competitive and sustainable.
The Source One process develops a secure and responsive supply base that is capable of providing quality, delivery, costs, technologies, flexibility and services to meet the current and future business needs. Source One has strategic sourcing and cost reduction solutions for businesses of all sizes, from the small to the mid-market and including the Fortune 500. More on the web at www.SourceOneInc.com
George E. Krauter
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