Post on 18-Dec-2015
DISCUSSION ON THE
OUTSOURCING OF FACILITIES MANAGEMENT SERVICES
FOR
TERTIARY INSTITUTIONS
21 October 2010
TABLE OF CONTENTS
Introduction
Comprehension of Facilities Management Services required by a
tertiary institution
Service offerings
• Capability
• Business and operational models
• Organisational structure
Outsourcing – a practical approach
• Mobilisation philosophy
• Pricing
• Client confidentiality
Differentiators
ConclusionSlide 2
INTRODUCTION
In recent years, some major players in the property industry have
embraced the concept that facilities management is a growing discipline
and that it has developed faster than almost any other discipline in the
property industry.
Grigg (1993: ix) summarises this trend by indicating that “…facilities
management has developed faster than almost any other professional
discipline…” and then goes on to state that “…recognition of these issues
(growing facilities management services) is rapidly transforming the way
facilities are managed in the public and private sectors – from offices
through to healthcare, leisure and educational buildings.”
Slide 3
INTRODUCTION
This emerging management discipline can be described as the practice of
co-ordinating the working environment with the people and processes of
the organisation.
It is a combined / integrated approach at all levels within an organisation to
plan and implement support facilities in line with prime business objectives.
Facilities management therefore becomes an integral part of the strategic
thrust of an organisation and is recognised as such by organisations
worldwide.
Slide 4
INTRODUCTION
The philosophy of integrated facilities management is based on the
perception that facilities should seamlessly support the core
business of organisations and that the physical management of
these facilities should be separated from the management of the
core business activities.
Slide 5
INTRODUCTION
Subsequently, in all spheres of business, top management has come torealise that they are actually running two distinct businesses within theirorganisations namely: •their core business comprising products and/or services, and
•the non-core business consisting of all infrastructure and services that support the core business.
Slide 6
INTRODUCTION
•The current school of thought is that organisations should focus their
expertise and resources on products or services that create wealth / add
value - their core business - and that all non-core activities should be
managed by entities that are more suitably structured and resourced.
•Increasingly organisations achieve this objective through the
establishment of a facilities management entity to act as a single point of
accountability and responsibility.
•A single source of knowledge and management support is created.
Slide 7
INTRODUCTION
•It is imperative to understand that the establishment of a facilities
management entity does not necessarily entail outsourcing.
•The key is that an independent entity must exist. Whether this entity is
an “in house”–structure or whether this function is outsourced, will be
determined by specific circumstances relating to the organisation’s needs
and requirements.
Slide 8
COMPREHENSION OF FM REQUIREMENTS FOR TERTIARY INSTITUTIONS
Note: This discussion addresses property related facilities management services only.
Gleaned from JHI’s involvement with tertiary institutions, JHI’s view is that the following parameters are essential to guide the Facilities Management requirements for a tertiary institution:
• The institution must have an “in-house” facilities management entity capable of managing service providers in their respective fields of expertise;
• This entity must form a pivotal part in the planning and managing of the institution’s facilities;
• This entity must be placed in a position where it functions autonomously with regard to the execution of required tasks/projects;
Slide 9
COMPREHENSION OF FM REQUIREMENTS FOR TERTIARY INSTITUTIONS
The envisaged deliverables required by a tertiary institution can be summarised as follows:
• Condition assessment of immovable assets; - Example
• Maintenance management:
• Planned preventative maintenance;
• Day-to-day maintenance;
• Services management;
• Product management;
• Space planning and “churn”;
• Project and construction management;
• Utilities management;
• Risk management (OHS and COID acts, regulatory requirements, insurance, etc.); - Example.
• Budgetary control and financial management;
• Reporting.
Slide 10
COMPREHENSION OF FM REQUIREMENTS FOR TERTIARY INSTITUTIONS
The primary drivers of these deliverables are:
• Consolidation of operations within the tertiary institution;
• To enable the institution to deploy a comprehensive FM model through the process of governance, compliance and ethical business practices;
• To improve the overall service delivery to all stakeholders;
• To drive efficiencies and potential savings;
• To identify and deliver sustainable service levels.
Slide 11
Documents and processes required as foundation must include the establishment of an
asset register as well as the standardisation of aspects such as contract documents,
specifications, work flow processes, etc in order to:
• Ensure that facilities are performing the function that they are designed for;
• Gauge the condition of the various buildings and all its installations;
• Benchmarking;
• Reduce risks for the tertiary institution;
• Manage facilities efficiently and effectively.
Documents and processes required as foundation must include the establishment of an
asset register as well as the standardisation of aspects such as contract documents,
specifications, work flow processes, etc in order to:
• Ensure that facilities are performing the function that they are designed for;
• Gauge the condition of the various buildings and all its installations;
• Benchmarking;
• Reduce risks for the tertiary institution;
• Manage facilities efficiently and effectively.Slide 12
SERVICE OFFERINGS - CAPABILITIES
Condition Assessment
Plan for MaintenanceBudget for
Maintenance
Planning & Scheduling
Information Technology
Procurement & Logistics
Special Purpose Vehicle (SPV)
Outsource
In-House
Day-to-DayPlanned/
Preventative Emergency
Execution of Facilities Management
FM Works Programme
Strategic plans for FM
Man
ag
em
en
t R
ep
ort
ing
Fin
an
cia
l /
Reg
ula
tory
Rep
ort
ing
Standards for FM Strategy for FM
FM Policy FrameworkUmbrella
Personnel(Management, Operational,
Technical)
Capacity
Resources(Materials, Tools,
Transport, Infrastructure)Finance & BudgetingFoundation
Develop, Lease, Procure
MaintainFix, rebuild/refurbish
or dispose
Life-Cycle of Properties
BuildingBlocks
Ad
justm
en
t &
Man
ag
em
en
t of
Ch
an
ge
Mon
itori
ng
of
Perf
orm
an
ce
Pillars
Slide 13
UPGRADE IA
5%
5%
85%
5%
FM– IMMOVABLE ASSET LIFE CYCLE MODEL
PLAN & DEVELOP
CREATE OR
ACQUIRE
OPERATE &
MAINTAIN
REFURBISHOR
ENCHANCE
DISPOSEOR
UPGRADE INFORMATION MANAGEMENT
SYSTEM&
PROCUREMENT
Collect & update:•Asset register•Technical & operational documents•Maintenance budgets & strategy•Guarantees and/or warranties
DISPOSE OF IA
NEED FOR IA
Monitor
& revie
w
Monitor
& review
Monitor& review
•Med. To long term maintenance plans•Upgrade or refurbish facilities•Applications for special funds
•Disposal of or removal of asset from original requirement or use•Upgrade to new requirement & extend asset life cycle use
In compliance with policy, standards & strategy, prepare & conduct:•Condition assessments•Rating & prioritisation•Budgets•Works programme s(re-active or pro-active)
Affected:•In-house•Out-source•JV
Acquire Or Create Via:•Development•Purchase•PPP Deal•S & LB Deal•Lease•Upgrade
Policy, Standards & Strategy
•Reporting•Performance management
•Change management
Slide 14
SERVICE OFFERINGS – BUSINESS MODEL
CLIENT
BUSINESS
WORK SCHEDULING AND RESOURCE ALLOCATION
DRIVERSPV
ENABLERS• CAFM
• CALL CENTRE
• VARIOUS PACKAGES
OF SERVICES AND
FEES
• VARIABLE FEE
STRUCTURE TO SUIT
CLIENTS
• VARIABLE
STRUCTURE
TO SUIT CLIENTS
• EXTERNAL SERVICE
PROVIDERS
SERVICE
OFFERINGS• LOGISTICS
• MAINTENANCE
• MANAGEMENT
• SERVICES
MANAGEMENT
• PRODUCT
MANAGEMENT
• PROJECT AND
CONSTRUCTION
• MANAGEMENT
• SPACE PLANNING
• UTILITIES MANAGEMENT
• CADD SERVICES
• RISK MANAGEMENT
• TECHNICAL EVALUATIONS
(AUDITS)
Slide 15
DOCUMENTS AND
PROCESSES
SERVICE OFFERINGS – OPERATIONAL MODEL
MAINTENANCE
MANAGEMENT
Planned / Preventative maintenance General maintenance
SERVICES
MANAGEMENT
Security
Cleaning
Hygiene
Pest control
Garden services
Refuse removalPROJECT AND
CONSTRUCTION
MANAGEMENT
Project definition
Design concept
Value engineering
Appraisal
Tenders
Contract documentation
Quality control
Quality assurance
Cost management
Final accounts
OFFICE
INSTALLATIONS
Interior design
Space planning
Asset tracking
Programmes Budgets
Tender documentation
Contract administration
Quality control
Quality assurance
Cost management
Final accounts
Debriefing
Relocation
“Churn”
UTILITIES
Accounts
Electricity
Sewerage
Water
Refuse
CAD SERVICES
Record drawings
SAPOA records
Office installations
Workstation layouts
Asset registers
Evacuation plans
Databases
RISK
MANAGEMENT
OHS and COID Acts
Regulatory requirements
Disaster prevention
Emergency procedures
Housekeeping
Inspections
Legal liability
Insurance
TECHNICAL
BUILDING
EVALUATIONS
(Condition
Assessments)
COMPUTER AIDED
FACILITIES MANAGEMENT
STRATEGIC
OBJECTIVES
APPROVAL
FRAMEWORK
RESOURCE
ALLOCATION
EXPENSE
MANAGEMENT AND
CONTROL
ASSET REGISTERS
STANDARD
DOCUMENTS
WORK FLOW
PROCESSES
DATA
FINANCIAL
CADD
CALL & QUERY
APPLICATION
LOGISTICS FM SERVICES / DELIVERABLES
Slide 16
The Facilities Management entity, whether outsourced or “in-house” must be autonomous as far as work flow processes, scope of work and method of execution is concerned, but control is exercised by linking job descriptions and task lists to outputs.
Structured co-ordination between top management and the Facilities Management entity has to take place and operations are standardised throughout the organisation.
In essence the execution must be managed in an IT-environment achieving centralisation and standardisation of information, streamlining of administration, the driving down of costs and the countering of the lack of skills.
The Facilities Management entity, whether outsourced or “in-house” must be autonomous as far as work flow processes, scope of work and method of execution is concerned, but control is exercised by linking job descriptions and task lists to outputs.
Structured co-ordination between top management and the Facilities Management entity has to take place and operations are standardised throughout the organisation.
In essence the execution must be managed in an IT-environment achieving centralisation and standardisation of information, streamlining of administration, the driving down of costs and the countering of the lack of skills.
Slide 17
OUTSOURCING – A PRACTICAL APPROACH
Project Setup
Confirm Steercomm
Confirm Scope of works
Confirm:•Structure;•Financial Proposal;•Reporting•Mobilisation;•Execution.
SignProject Charter
Component 1
Mobilisation
Workstream 1:
Setup of:•Section 197 Transfers;•Vacancies;•University Staff;
Workstream 2: Review and understandingof:•Policy and procedures;•Systems (Operational & Financial);•Reporting
Workstream 3: Review and take-on of:•Building maintenance plans & Budgets;•Soft and hard service contracts;•Utilities.
Workstream 4: Consolidated of take-on data and confirmation of start up programme
Component 2
Facilities Maintenance Plans
Workstream 5: Building technical audits to determine:•Scope of hard & soft services (Condition and requirements);•Preparation of short -to long-term maintenance plans & budgets;•Short term Risk & OHS Act requirements.
Component 3
Documentation & Reporting
Workstream 8:Preparation of all technical documentation in order to:•Draw up scope of works;•Generic or Project specifications;•Tender documentation;•Review, analysis & recommendations.
Workstream 10: Preparation of relevant tender documentation
Component 4
Conclusion of Mobilisation
Sign offScope of Works &
Deliverables
Operational Start-up Workshop:
Stellenbosch University & JHI
Operational Phase:Ongoing management,
reporting, review & change management
accordingly
Ad-hoc projects and small works as and when
required.
Component 5
Slide 18
OUTSOURCING - MOBILISATION PHILOSOPHY
Workstream 6: Preparation of hard & soft service contracts:•Conclude maintenance & service contracts for both soft and hard (Mechanical, electrical & Civil) requirements;•Conclude necessary inspection contracts & License Agreements (e.g. WAC, SAMRO, ASIB, etc)
Workstream 7: Sign-off & approval to proceed
Workstream 9:Preparation of the necessary reporting documentation for:•Performance evaluation based on the SLA;•Effectiveness & efficiency of Facilities Management of portfolio;•Financial control within budget and works orders;•Management and review of service contracts.
OUTSOURCING - STAFF TAKE-ON METHODOLOGY
Should a “staff take on” be required (outsourcing), the process is summarised as follows:
•The appointed external company will meet with the Human Resources Department of the university to obtain the details of the employees and their conditions of employment, retirement fund, medical aid schemes and other benefits for comparison purposes with that offered by the external company.
(Caveat: The university will need to discuss the business reasons for change, operational requirements and management agreement conditions or transfer of a business or part of a business as a going concern, with their employees affected by the Section 197 requirements);
•After the external company has developed an understanding of the service conditions of the affected staff, we will do a gap analysis on conditions and propose a way forward. We will take care not to put employees in a worst off position;
•It needs to be ensured that relevant trade unions, if applicable are invited to participate in the process at inception;
•The external company and the university will then arrange a meeting / meetings with the employees affected by the Section 197 transfer and explain the process;
Should a “staff take on” be required (outsourcing), the process is summarised as follows:
•The appointed external company will meet with the Human Resources Department of the university to obtain the details of the employees and their conditions of employment, retirement fund, medical aid schemes and other benefits for comparison purposes with that offered by the external company.
(Caveat: The university will need to discuss the business reasons for change, operational requirements and management agreement conditions or transfer of a business or part of a business as a going concern, with their employees affected by the Section 197 requirements);
•After the external company has developed an understanding of the service conditions of the affected staff, we will do a gap analysis on conditions and propose a way forward. We will take care not to put employees in a worst off position;
•It needs to be ensured that relevant trade unions, if applicable are invited to participate in the process at inception;
•The external company and the university will then arrange a meeting / meetings with the employees affected by the Section 197 transfer and explain the process; Slide 19
OUTSOURCING – STAFF TAKE-ON METHODOLOGY
• Both the external company and the tertiary institution have to embark on a comprehensive change management process to smooth out the transit, including culture management. (Facilitated sessions, workshops, induction programmes, etc.);
• As part of the consultation process a communication strategy will have to be implemented which will incorporate the following: Weekly progress feedback updates, mailbox for staff concerns and comments on the consultation, comprehensive list of questions and answers available to all staff affected and “roadshows”;
• ICAS counseling support must be provided to the affected staff ( ICAS = independent counseling and advisory service, including physiological, legal and financial support);
• Affected employees must be invited to visit the external company’s offices, meet their new colleagues, familiarise themselves with the office environment and their new working area;
• The external company will draft letters of appointment confirming the new employees’ continued employment and confirm an effective date.
• Both the external company and the tertiary institution have to embark on a comprehensive change management process to smooth out the transit, including culture management. (Facilitated sessions, workshops, induction programmes, etc.);
• As part of the consultation process a communication strategy will have to be implemented which will incorporate the following: Weekly progress feedback updates, mailbox for staff concerns and comments on the consultation, comprehensive list of questions and answers available to all staff affected and “roadshows”;
• ICAS counseling support must be provided to the affected staff ( ICAS = independent counseling and advisory service, including physiological, legal and financial support);
• Affected employees must be invited to visit the external company’s offices, meet their new colleagues, familiarise themselves with the office environment and their new working area;
• The external company will draft letters of appointment confirming the new employees’ continued employment and confirm an effective date.
Slide 20
OUTSOURCING - PRICING
A “cost plus” fee structure is proposed when considering outsourcing is
considered.
However, it should always be borne in mind that fees/costs must not be the
major factor in the decision to outsource or to manage facilities “in-house”.
Although affordability is a vital aspect of the decision, the seamless support
of the organisation’s core business must guide the decision.
Fees payable should therefore be market related and based on the
finalisation of the scope of work and the involvement required from the
external organisation.
Slide 21
OUTSOURCING - CLIENT CONFIDENTIALITY
When considering outsourcing, the tertiary institution must ensure that it engages with a value driven organisation with a professional credibility.
As a minimum, the following controls must be put in place:
• Client focused structures;
• Separate physical location of staff in offices;
• Firewalls between client operations (System, mindsets, data, etc.);
• Ring-fenced data and systems;
• Access control on systems;
• Confidentiality is part of every staff member’s conditions of appointment.
.Slide 22
OUTSOURCING MAY ADD THE FOLLOWING VALUE:
•Utilisation of “battle-tested” procedures, processes and documents;
•Exposure to the latest facilities management trends in the commercial property industry;
•Lowering of costs due to economies of scale;
•Benchmarking with industry norms;
•Countering of the shortage of skills;
•Countering of shortage of capacity.
OUTSOURCING MAY ADD THE FOLLOWING VALUE:
•Utilisation of “battle-tested” procedures, processes and documents;
•Exposure to the latest facilities management trends in the commercial property industry;
•Lowering of costs due to economies of scale;
•Benchmarking with industry norms;
•Countering of the shortage of skills;
•Countering of shortage of capacity.
Slide 23
DIFFERENTIATORS
The following are examples of savings achieved by means of outsourcing exercises in the commercial property industry
Procurement Soft Services : Financial institution Cleaning : R10-million p.a Security : R14.4-million p.a. Total saving : R26.6-million of R85-million portfolio spend
o Procurement Soft Services : Listed property loan stock company Cleaning : R130,649 p.a Security : R339,883 p.a Hygiene : R129,926 p.a Saving : R691,501 p.a of a total R3.46-million p.a portfolio spend
o Procurement Soft Services : Private property company Cleaning : R399,280 p.a Security : R340,537 p.a Hygiene : R124,700 p.a Saving : R1,012,582 p.a of a total R5.38-million p.a portfolio spend
The following are examples of savings achieved by means of outsourcing exercises in the commercial property industry
Procurement Soft Services : Financial institution Cleaning : R10-million p.a Security : R14.4-million p.a. Total saving : R26.6-million of R85-million portfolio spend
o Procurement Soft Services : Listed property loan stock company Cleaning : R130,649 p.a Security : R339,883 p.a Hygiene : R129,926 p.a Saving : R691,501 p.a of a total R3.46-million p.a portfolio spend
o Procurement Soft Services : Private property company Cleaning : R399,280 p.a Security : R340,537 p.a Hygiene : R124,700 p.a Saving : R1,012,582 p.a of a total R5.38-million p.a portfolio spend
Slide 24
DIFFERENTIATORS - SAVINGS
Although there are many “value-add” aspects
evident when outsourcing, there is no clear cut
answer whether tertiary institutions should
outsource the management of their property
related facilities and infrastructure or not.
Although there are many “value-add” aspects
evident when outsourcing, there is no clear cut
answer whether tertiary institutions should
outsource the management of their property
related facilities and infrastructure or not.
Slide 25
CONCLUSION
Should outsourcing be considered, the following aspects are crucial to consider:
• The institution must have an “in-house” facilities management entity capable of managing service providers in their respective fields of expertise;
• This entity must form a pivotal part in the planning and managing of the institution’s facilities – it must have the “ear” of top management;
• When considering outsourcing, the tertiary institution must ensure that it engages with a value driven organisation with a proven professional capability and credibility;
• A phased approach must be implemented;
• The human aspect of outsourcing must be managed professionally.
Should outsourcing be considered, the following aspects are crucial to consider:
• The institution must have an “in-house” facilities management entity capable of managing service providers in their respective fields of expertise;
• This entity must form a pivotal part in the planning and managing of the institution’s facilities – it must have the “ear” of top management;
• When considering outsourcing, the tertiary institution must ensure that it engages with a value driven organisation with a proven professional capability and credibility;
• A phased approach must be implemented;
• The human aspect of outsourcing must be managed professionally.
Slide 26
CONCLUSION
Thank you
Slide 27