FM SERVICES PROCUREMENT – BEST PRACTICE

Facilities Management has become a strategic part of any business, just like HR and IT has become in recent times, organisations view of the role of FM is changing, from an operational, back-office team to a strategic function that will contribute to the achievement of organisation’s objectives. The following are some of the reasons for the change in perception of FM role in business:

 

1. Provision of best place to work, live and play for employees that allow them deliver on their mandate,

 

2. Role of FM in creating a functional, safe, efficient, secured work environment on employee retention

 

3. Role of FM in creating an image of a functional safe, efficient, secured, compliant work, live and play environment on the image and reputation of the organisation

 

4. Effect of FM operational and capital planning and budgeting on achievement of organisational financial objective of value for money; cost reduction, revenue growth and profit

 

5. Effect of FM operational activities on the organisation’s social objectives on sustainability

 

6. Effect of FM operational activities on the organisation’s ability to be compliant with various local and international laws on environment, safety, security, health and wellbeing of building occupants.

 

In view of the above, decisions to outsource FM has moved from being only a cost based decision to a

 

strategic business decision, however, a lot of organisations have failed to follow the steps that will ultimately

 

lead to contract failure and re-tendering.

 

What are the key Steps in FM Outsourcing?

 

The following are key activities and processes to follow and who is responsible:

 

1. Pre-Tender – Information Gathering and Creating the Framework

 

S/N	Activities	Responsibility
1	Define the objective and purpose of the project	FM & Management
2	Determine the scope	FM & Management
3	Establish the complexity of the project	FM
4	Determine the length of the project/contract – see chart A below to	FM
	serve as a guide
5	Establish the criteria for FM Partner selection	FM/Finance/Procurement

 

• Determine and agree the process for FM Partner selection. The FM/Finance/Procurement following are various processes used for vendor selection:

 

• Open tender method with the use of RFI, RFP model – RFI – Request for Information is use to general data about the potentials of the market to have appropriate partner(s) for the intended services. RFP – Request for Proposal is more a demonstration of the ability of the FM Service Provider to deliver the intended services at the scale, complexity, cost and performance matrix the client intends.

 

• Use of Preferred partner model – Can be based on the result of the RFI which is then used to select a vendor will work with the client to develop all

 

1. RELATIONSHIP BETWEEN CONTRACT COMPLEXITY AND CONTRACT DURATION

 

Credit: Hannah Davis of Faithful & Gould; 27-01-15  Deciding the Duration of a Facilities Management Contract.

 

2. Pre-Tender – Tender Document preparation

 

S/N	Activities		Responsibility
1	Develop an RFI Document – Containing all requirement needed to		FM/Finance/Procurement/
	qualify to be a partner – Content of an RFI –		Legal
	•	Corporate Registration document
	•  Regulatory compliance documents – subject to jurisdiction
	•	Information  and  data  about  general  experience  and
		specifically relevant experience and length

 

 

	•  Management and management experience
	•	Coverage
	•  Scope of service capability
	•  Financial Capability – Annual report and accounts
2	Develop the contract performance management criteria; timeline		FM
	for measuring performance; KPIs; etc
3	Collate the details of all the various components of the project –		FM
	Asset register; asset location; current asset status;
4	Develop the RFP document based on scope of services,		FM/Finance/Procurement/
	complexity of the project; duration; contract terms and contract		Legal
	performance management criteria. FRP must contain all
	information; details, data, that will enable the FM potential
	partner to provide a response that will be useful to make a
	decision
	The following should be in an RFP Document:
	•  Description of the building, including location, size, usage
		and whether owned or leased; occupancy; opportunity for
		expansion in size or no of occupants; like change of use
	•  Details of scope of services to be provided
	•  Details of any specialised equipment and services as well
		as the details of the OEM
	•	Detailed Asset register
	•  Detailed criteria for evaluating the RFP
	•	Detailed draft contract
	•  Detailed Performance management criteria when the
		contract is award
	•  Detailed templates for responding to the RFP – Technical
		and Commercial
	•  Payment terms and payment process
	•  Drawings and layouts for the building
	•  All technical details for the various equipment in the
		building
	•  List of all consumables required to be used for delivering
		the services and their manufacturers
	•  Rates list for consumables and services
	•  List of all equipment required and their manufacturers
	•  State the contract length when awarded
	•  Qualification and experience of resources required for the
		delivery of the project
	•  Licences required for the delivery of the services
	•  Requirement to operate in the building
	•  Service delivery methodology template
5	Collate the current total cost of provide the FM services		FM/Finance
6	Establish the best cost acceptable for the project based on the		FM/Finance/Procurement
	objective and purpose of the project

 

3. Tendering Stage

 

Depending on Option taken – Open or Preferred Vendor model, the below is for open tender model. In issuing RFI you may decide to separate the technical from the commercial and do it in stages or you can decide to combine both in one submission.

 

S/N	Activities	Responsibility
1	Advertise or select from industry list; however; its best to advertise	Procurement
	and issue RFI and give quality time of at least 3 weeks
2	Collate responses from the RFI and analyse in line with the agreed	Procurement
	selection criteria and shortlist at least 5 responders
3	Inform successful responders and un-successful responders telling	Procurement
	them what they did not do well
4	Issue RFP to successful bidders and give them minimum of 4weeks	Procurement
	and up to 12 weeks depending on the complexity and size of the
	project.
5	You may also request for pre-tender submission meeting to clarify	Procurement/FM
	the RFP
6	Collate responses from the RFP and analyse in line with the agreed	FM/Finance/Procurement
	criteria and select at least 3 responders for the next stage
7	Invite the 3 shortlisted for presentation and discussion on their	FM/Finance/Procurement
	service delivery approach and commercial to ensure there is
	general understanding of both parties on the expectations and
	requirement for the tender.

 

4.	Award
S/N	Activities		Responsibility
1	Select the winner of the tender process and inform both the		Procurement/FM/Finance/
	winner and the un-successful tenderers		Legal
2	Invite the winner to Pre-Award Meeting to review and agree the		Procurement/FM/Finance/
	following:		Legal/HR/ FM Partner
	•	Scope
	•	Service delivery methodology
	•	Finance price
	•	Performance management system
	•	Implementation plan
	•	Mobilization plan
	•  Requirement for a successful contract implementation
	•  Appointment of contract contact for both sides
	•  Terms of the agreement to be signed by both parties
	•  Contract kick-off date
	•  Issue Letter of Award
	•	Staff transfer issues
	•  Requirement to operate in the building
	•  Agree milestone for performance management
	•	Agree reporting framework
	•  Agree duration of the contract
3	Agree a contract Kick-off Meeting date and arrange the meeting		FM/Procurement/Finance/
	to cover the following:		Legal/HR/HSE/Security/FM
	•	HSE Briefing	partner/Outgoing	FM
	•	Security Briefing	Partner etc
	•  Invoicing and payment process briefing

 

 

	•	HR processes briefing
	•	IT briefing
	•  Conditional assessment plan by the new FM partner
4	Sign agreement		FM/Procurement/FM
			Partner
5	Mobilisation and Go live		FM Partner/FM

 

1. RELATIONSHIP BETWEEN CONTRACT PERFROMANCE AND CONTRACT DURATION

 

Credit: Hannah Davis of Faithful & Gould; 27-01-15            Deciding the Duration of a Facilities Management Contract

 

 

5. MANAGING THE FM CONTRACT

 

One of the most important aspect of FM services is not the process leading to the award, but the work done by the client team after the contract as had been awarded. As detailed, it is important to set up a process that will support the FM partner to succeed while at the same time monitoring and managing in line with the terms of the contract. It takes an average of 12months to 36months in most cases, depending on the complexing of the project, from stage 1 of the process to the date of the contract award, with the attendant human and material resources deployed to the process. It is therefore imperative for the process to succeed.

 

 

S/N	Activities	Responsibility
1	Appoint a contract management lead – The role of the person is to	FM/Management
	be the liaise between the FM Partner and the company; he is
	responsible for ensure the contract succeed not working to ensure
	the vendor fails.

 

• Organise regular review meetings, with the following objectives:

 

• Reviewing how the contract is progressing and what challenges the FM Partner is facing and how can the company can help to solve them; See chart B above; management effort is required to ensure the FM partner succeeds, it is important that the company and the contract management lead sees the need to ensure the success of the project, this is not about the partner but about the company. Failure of the project has major impact on the achievement of overall business objectives.

 

• What is the level of achievement of the expectations and

 

	objectives of the contract; what is the FM partner and the
	company doing to ensure the expectations are met?
The following operational review meetings are recommended,
post first year meeting can change depending on the complexing
and size of the project. It is important to note that these meetings
must be held and actions from each are followed-through:		FM/ FM Partner
•	First 3 Months – Weekly
•	Next 3 months – Bi-Weekly	FM/FM Partner
		FM/Procurement/Finance/
•	Next 6 Months – Monthly
		Legal/FM partner
•	Subsequently – Quarterly

 

• Contract Review Meeting should be held as follows and in line with the terms of the contract, with the sole purpose of reviewing performance of the FM Partner in line with the terms of the contract, and set milestones for improvement if needed. if it’s a performance based contracting where there is reward and penalty; this should be included as part of the objective or the contract

	review meeting.		FM/Procurement/Finance/
	•	First meeting -3 Months after contract award
			Legal/FM partner etc
	•
		Subsequently – Quarterly
4	Annual Review – Depending on the terms of the contract and type
	of the contract; the annual review meeting is to agree that the
	Partner can continue for another year, in line with the length of the		FM/Procurement/Finance/
	contract or decide to re-tender
			Legal/HR/FM partner etc
	•	5 – 6 weeks before the end of the contract year
5	Mobilisation and Go live		FM Partner/FM
6	Reporting
	The following reports are critical and must not only be sent but also		FM   Partner/FM   Contract
	reviewed regularly by both parties:		manager
	•	Condition assessment report
	•	Daily/Weekly reports
	•	Monthly report
	•  Quarterly and Half yearly report
	•	Annual report.

 

 

Conclusion

 

The above is an effort to provide the best practice guidelines for outsourcing FM services, please note there may slight jurisdictional changes; but largely, if the above is followed; you are sure of looking back at the process after 6 – 7 years and feel that things are working as designed.

 

FM Services Contracting, as you can see, is a multi-departmental function; the FM department takes the lead and is responsible, however, all other departments have a major role to play in achieving desired result.

Dr. MKO Balogun