Benchmarking of Integrated Facilities Management Best Practices How to do it the SpendEdge Way…

Srinivas R 5/12/17 SpendEdge

Future Speak…

The IFM industry is expected to be dominated by REFM service providers who possess high technical expertise in providing core and non-core services.

Abstract

Key Highlights

Shift towards hard services specialization Preference for service providers that possess strong technical expertise to perform hard services.

Focus on providing one-stop solutions for all needs Offering multi-core specialties under one roof.

Integration of sub-contracting and self-delivery of services The preferred Integrator model integrates process, performance, and reporting, across the supply chain.

Delivering value-additions Most buyers prefer engaging with service providers that provide value-added services.

‘Redefining the Procurement Framework of IFM Services’

New operating models and value-driven

procurement offer various opportunities for facility

managers to provide strategic value to the bottom-

line of their organizations.

Progressive buyers have started opting for an

integrator model for sourcing IFM services. This

approach ensures streamlined delivery of business

processes both by sub-contracting and self-

performing activities. However, most procurement

trends in the IFM industry will be disrupted by

upcoming technological enhancements. The main

challenge that lies ahead is in terms of creating

more sustainable facilities.

Bundling janitorial services, pest control,

landscaping, and hardscaping maintenance

typically offers the highest cost benefits (35%–40%

savings) to buyers. Versatility is the key.

The Changing Landscape of IFM Services

Contracting…

The integrator model is the latest flavor in the Integrated Facilities Management (IFM) industry. Bundling of services offers cost optimization, enhanced buyer engagement and loyalty, alongside reliance on the latest technologies and procedures that will encourage long term contracts that are linked with proven performance KPIs. However, alongside the obvious advantages, there are a plethora of challenges too.

What are the Roadblocks Impacting the Industry?

High focus on cost driven factors rather than service competencies (which includes integration,

standardization, and resolution)

Increase in inflation and labor cost pose a great threat to the adoption of long-term contracts

Increase in market competition due to low cost unorganized service providers

Different buildings have different requirements, demanding for various levels of automation control

Focus on globalizing and centralizing IFM operating models

Enforcement of big data and analytics to improve decision-making

Engage in long term contracts linked with performance KPIs

Transition from

executive sponsorship to executive ownership

What should smart procurement managers focus on to mitigate the

challenges?

Progressive Procurement Trends

Focus on providing one-stop solutions for all needs

Since the real-estate and brokerage market is volatile in nature, most leading real-estate service providers have started offering facility management services as well. The acquisition of Johnson Controls Global Workplace Solutions helped CBRE in enhancing its competitive position by providing REFM services through a single platform.

Integration of sub-contracting and self-delivery of services

In large IFM deals, buyers generally prefer self-delivery of services over sub-contracting. However, currently the integrator model is being widely preferred as it integrates process, performance, and reporting, across the supply chain. The KBR Group offers integrator contracts to its buyers which ensures that all the FM services are supplied as

per the contract terms.

Delivering value-additions

Most buyers prefer engaging with service providers that provide value-added services such as waste and energy management. Chubb Alba Control Systems, a subsidiary of United Technologies Corporation acquired EcoEnergy, a business division of Wipro. The acquisition is expected to assist UTC in developing its remote monitoring and building analytics capabilities.

Shift toward hard services specialization

Major buyers have started preferring service providers that possess strong technical expertise to perform hard services. This is expected to minimize the gap between MRO and FM spends in the future. The acquisition of the technical services division of GSH Group by ISS in 2015 was done to gain strong hard service capabilities.

ENGAGEMENT MODELS- A LOOK INTO THE FUTURE

What are the Three Key Issues Faced while Assessing the Potential of Emerging Technologies Through Traditional Research? – Is it Too Little, Too Late?

Organizations can either integrate the functional areas vertically where all facility services are combined or horizontally, where services categorized as strategic, operational, and tactical, are merged together

Vertical integration can help in reducing the number of service providers and attaining economies of scale through TFM contracts

Horizontal integration can help not only in attaining economies of scales, but also economies of capabilities, where the same set of services are bundled for standardized delivery

Is a Hybrid sourcing model the way forward?

STREAMLINING SUPPLIER SELECTION

COST OPTIMIZATION WITH SERVICES BUNDLING

Select providers with successful records of GMP contracting as success against the rigorous GMP

requirements is an easy way to shortlist a service provider’s capability to consistently deliver quality service

Performance benchmarking to be conducted against a baseline set by the buyers. Connect the outcome of

periodic audits to performance based payment terms

Select an IFM service provider with careful due-diligence by checking references to understand their history

of process ownership and the benefits that they brought in versus an in-house team

Structure outcome-based performance metrics to monitor performance

Carefully structure a transition period between the existing FM process (In-house or Outsourced)

to an IFM model

Adopt an internal process facilitator to overcome the communication gap between the

IFM working committee and the key business stakeholders

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RISK MITIGATION STRATEGIES FOR AN EFFECTIVE IFM ENGAGEMENT

RISK TYPES

RISK MITIGATION STRATEGIES

BUILDING THE FUTURE OF INTEGRATED FACILITY MANAGEMENT

SERVICES

Technological Advancements– Restructuring the IFM Industry

GREEN BIM

Building Information Modelling helps in analyzing the building’s life cycle energy efficiency at design phase, allowing revisions, if required

SMART BUILDINGS

Smart buildings use smart sensors which identify inefficiencies across the facility such as water leak or lights left switched on etc., and works to rectify those

AUTOMATED SYSTEMS

Utilization of robotic technology provides

sustainability benefits in terms of reduced energy costs and more efficient resource management.

COMPUTER ASSISTED PLATFORMS

A rise in facilities management mobile

applications facilitates managers to monitor their

operations remotely

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