FM for raising bottom line
FM for raising bottom line
Facilities and related support services represent a significant cost in most companies. Optimization of these services can make a huge impact on a company’s financial results.
Facilities management (FM) and support services form a sizeable portion of spend in most companies. It represents planning, control and operational management of facilities related to services that support client needs and the optimal acquisition of cost-effective external service delivery.Therefore, optimization of these services can have a huge impact on a company’s performance.
The components of facilities management:
– Space Management
-Infrastructure (Information and Communications Technology)
-Facilities & Properties Management
-Sourcing & Vendor Management
Benchmarking enables firms to identify opportunities for improvement, learn about the impact of volume variances, monitor what best-of-breed companies achieve and understand how targets are set.Benchmarking needs to be done periodically and at high levels of sophistication. It can be accomplished by:-
- Customer surveys to determine perceptions of quality and operational performance
- Calculating staff costs, cost/square foot, breakdowns of activity costs, risk incidents/hours worked etc.
- Identifying internal best practices Benchmarking suppliers’ costs, operations, and performance
Managers typically believe that their real estate sites and facilities are not comparable with external benchmarks. They also have difficulty consolidating large amounts of internal data on building and property usage. Performance benchmarking has the following benefits:
- Sets performance measures for property and facilities managers
- Forecasts demand for workplace environments, refurbishments, and service levels
- Helps determine whether to outsource, to whom to outsource and set contractual targets
Adopting Industry Standards
Using industry standards is an important decision for operating within a self-regulating compliance environment, achieving optimal cost, and operational efficiency. Several industry associations actively monitor legislative actions, industry codes and standards. They periodically publish guidelines around standards and measurements, allowing the exchange of professional expertise, relationship-building, sharing knowledge of industrial information, and industry trends, etc.
FM as a function has been considered for outsourcing only in the last few years in view of the profession becoming more mature and complex. Organizations increasingly recognize the difficulty and cost associated with retaining all of the necessary expertise and technical resources. More companies are turning to single-source providers to manage aspects of their facilities. Decisions regarding the outsourcing of non-core functions are based on some of the following criteria:
- Management to focus on the core business and save time and effort on support activities
- Considerations regarding in-house capability or outsourcing of services
- Leverage established capabilities of FM companies that specialize in this domain
The selected facilities service providers need to demonstrate that their performance matches industry standards as well as the metrics of peers and competitors. One of the challenges for outsourcing providers is that once buyer companies experience initial cost benefits through outsourcing, they continue looking for cost savings. They use the new lower cost base as the standard to achieve further reductions, not considering that business costs increase every year.
Technology will play an integral role in facility management Applications in e-sourcing, e-procurement, business planning, and management will help achieve improvements in process effectiveness, monitoring of costs and benefits among several options.
Optimizing Support Services
In the face of mounting cost reduction pressures, facilities managers are finding ways to increase efficiencies through higher-quality maintenance at lower cost. This is accomplished with reduced capital expenditure and less time and people/square foot. Facilities managers with access to deeper domain expertise& technology have the ability to better track equipment performance They are constantly trying to improve efficiency through better planning and scheduling or including time-saving products for maintenance tasks.
For instance, the FM managers rely on handheld devices to minimize paperwork and boost the accuracy of data collection. Other new approaches include conserving energy through energy audits and related improvement programs, employing temporary staff to assist in-house staff with unplanned work and ensuring facilities run at full capacity all the time.
Balancing Outsourcing and “In-sourcing”
Outsourcing tends to follow cyclical patterns, balancing cost and quality.The most common down-sides of outsourcing are the normal service quality problems, lost in-house expertise and smaller, de-motivated service staff count. The benefits of outsourcing include:
- Transfer of personnel responsibilities: This means that once an employee gets sick, the service provider will find a replacement at no added cost. This eliminates the need for the buyer to find a replacement and pay for extra work.
- Changing employees that do not give standards of performance: This is easier to demand from an outsourcing provider.
- Possibility of greater learning: Large outsourcing companies tend to provide the possibility of greater learning for facility management specialists when in- house organizations don’t offer similar opportunities.
Excerpts from the White Paper by GEP, a USA based global provider of consulting, outsourcing and technology solutions.