Is TFM in the ‘Just Too Hard’ Box?

Chris Herbert, Director of 4C Associates, a leading procurement services company, gives his advice on how to get the best results out of Total Facilities Management.

Most organisations live in an increasingly competitive market and strive to at least maintain their cost base and focus on key areas that provide competitive advantage. While facilities expenditure has long been deemed non-strategic by most companies, the approach has been to maintain the status quo and address only those areas that present disruption to the smooth operation of the business. Now as companies run out of ideas for reducing supplier margins or small specification improvements, Total Facilities Management (TFM) is becoming increasingly popular.

In reality, the TFM approach (while having total in the name) is seldom in my experience actually a total approach, but instead a journey that may take several years to complete due to a range of limiting factors.

Firstly, specification -- Organisations often operate facilities based on custom and practice with knowledge confined to individuals within it and the supplier base. Once the business decides to embark on TFM they quickly discover a whole load of activities and costs that have little or no specification, and a history of cost increases and change control.

Some of these limiting factors include the supplier base. There is an increasing number of suppliers who claim to offer a TFM service across the UK and even a small few that offer an EU-wide scope. These organisations are often strong in areas of high business concentration, but very limited in more rural locations. Many businesses with multiple sites are built close to business-related resources, or in areas that attract great local business rates. This often results in a tiering approach by suppliers to achieve coverage and ultimately requires a high degree of management support.

In terms of existing supplier agreements, contract termination alignment (or lack of it) is a common constraint, often due to a historic fragmented approach. Long-term contracts or leasing agreements are in place, but all terminate at different times, and frequently break-clauses are not in place, or carry high termination charges.  There are also in most cases multiple local supplier relationships that have years of support and trust; dealing with those situations requires care and attention to ensure consideration to all parties.

The TFM Journey

There are ways to make progress, TFM is a journey, not a big bang. This doesn’t mean real step changes cannot happen, but does require good planning and investigation to begin with. In years one to three it’s about modest 5 percent to 10 percent improvements in cost and efficiency through consolidation and simplification. In years three and beyond it can deliver significantly higher returns as the TFM programme matures and provides more sophisticated opportunities.

Start with what do we want to achieve?  Create a charter aligned to overall business objectives. Is improvement in service delivery or cost the main driver? There is seldom one answer, so set clear measures of success and ensure the business is aligned from the start.

Stop it, Outsource it, Insource it, Technology?

Stop it? Often FM services have been in place for a long time and may no longer add value, if you don’t need it, stop it.

Outsource / Insource?  Look at both, as internal costs can be higher than external ones, but the reverse is also true. If tasks can be performed more efficiently, or as part of the existing cost base, it can make sense to internalise them and make them part of the everyday job.

Technology? There are many examples of how things can be improved by utilising technology such as automated cleaning assets, or CCTV for security.

What is my current contract status?  Create a log of all agreements detailing termination dates and liabilities and description of goods and or services provided. Segment these into the normal subcategories of hard or soft FM, and further level 2 categories such as electrical, HVAC, cleaning, security. This allows bundling opportunities and defines a timeline to create a phased plan that is easy to communicate to the business, prioritisation for cost optimisation and takes account of contractual or sensitive relationships.

Are there preferred suppliers with TFM capability? Very often these services are fragmented with local and national suppliers with wide-ranging capability, or specialised skills. The ability to consolidate within your current supplier base provides an opportunity to leverage costs quickly, helping to fund the programme from the outset. Matching suppliers with your bundling / phasing plan more often than not finds a good fit, or it may be necessary to find new suppliers for some areas with clear specifications.

Do I currently have ‘go to market’ specifications? This simply means: will non incumbent suppliers understand them?  Most companies have input rather than output specifications. Input specs describe time, tools and tasks, whereas output specs describe the desired results, for example, operational uptime for assets, or simply no visible marks for window cleanliness.

There will be gaps in specifications, but the best way to resolve these is to create simple templates and work with internal stakeholders and incumbent suppliers to capture the key information. Set realistic timelines and focus on getting enough information to ‘go to market’ but remember suppliers have vast expertise, so perfecting specs is rarely necessary and will deliver reducing returns.

It’s not an easy task, but with initial planning, business engagement, questioning the status quo and building realistic plans and timelines it is possible to take TFM out of the ‘too hard’ box and drive real step change in service delivery and cost.

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