Facilities Management – Single Source Facility Services

Facility Services Management is a diverse and critical operations function that affects all stakeholders, including commercial Landlords, tenants, visitors, workers and the local community. Engaging facility management instead doing it yourself gives you back your time, reduces your risk, and offers a single point of responsibility via the single source supplier for the facility management.
But, there are often fears from the smaller commercial owners, especially in regard to control and accountability.

Consider the Opportunities

The first opportunity for the customer is the convenience of “one call will fix all”, but there is another less obvious opportunity for the customer and that is the investment by the vendor in the customer, keeping the vendor loyal and proactive.
If multiple services and/or a portfolio of property is served by the facility manager vendor, the vendor has greater exposure. It is in the interest of the vendor to ensure all parties are constantly satisfied with the performance of the facility manager’s staff and suppliers. The vendor has a greater risk as more “eggs are placed into the same basket”.

Risk

Customer Risk

The risk to the customer is “single vendor captivity,” i.e. will the vendor price gauge as it is unlikely the customer will return to the market for adding new services or if there is a minor change to the scope; hence, over time, the client might lose “touch” with market value of some services.
Can the services Facility Services vendor become “complacent?”
Has the vendor maintained their “diligence” in that their service delivery? Has the “proactive enthusiasm of initial start-up waned sufficiently to affect performance?

Facility Services Vendor Risk

As the same for the Customer, the vendor can lose “touch” with the market over time and be charging too little.
Complacency can cause the vendor can “settle in”, become comfortable, and no longer seek to improve, expand and grow their business. They can become complacent in that they will absorb too many costs, which should, legitimately, be passed on to the end client.
Relationships with existing tenants and management can grow in a positive manner which can make it harder to charge the true value of additional costs involved in the works.

So is it “wise” to have a single point, one contractor, to provide all your facility services, or is it a false economy?

We can make positive and negative arguments from both points of view, at the end of the day, it comes down to the situation and the individual circumstances of both the client and vendor. Our view is it makes economic sense, on both sides, to have a single point of responsibility, with monitoring systems and KPIs in place to ensure reporting and pricing is always maintained to a standard that promotes proactivity by staff on site. A review every three to five years is worthwhile and economical. It keeps the vendor “on their toes,” and it keeps the client aware of market fluctuations and the opportunity for improvement for both parties.

Have you had the Same Facility Services Vendor for more than 7 Years?

Is it worthwhile changing, have your costs for operations increased significantly? Has the performance of the asset in both presentation and in returns improved, stagnated or declined? Has the Facility Services Vendor grown their business or changed direction, moving on to other “pastures”?
Financially, Does it stack up? What are your costs? And what are your peers paying in the same market?