Is the Service Provider solely responsible for the failure of a contract?
“Outsourcing cleaning to a contractor does not always work,” laments Dr Marla, Medical Director, AJ Hospital, Mangalore. The hospital has given up the idea of outsourcing after its experience with contractors over the past few years. “We now have our own in-house workers who maintain the premises.”
Several reasons can be arrived at for the failure — choice of contractor, non-deliverance of specified requirement, coordination & supervision, defining SOPs, implementation of SLAs… and so on. But at the same time, several FM heads have found the outsourcing model as a positive approach to successful operations and productivity.
One of the major factors determining the success is the choice of contractor, as it is important to find the right service provider and the sub-contractors. The success in outsourcing is no doubt choosing the correct service provider and this can be done in a robust and competitive way through the tendering exercise, suggests Craig Little, Director at Davis Langdon, an AECOM Company, UK. “But, this is only part of the solution for success. It must first be recognised that outsourcing is the right solution. Outsourcing may not be the correct solution for all organisations. In some cases it may be that in-house service provision will deliver best value.”
The points that the FM head should include are the frequent changes made by the contractor, the staff employed, their grooming & attitude, communication pattern and qualification of workers. Adds Craig, “In most cases, client organisations are looking to transfer operational and commercial risk to the supply chain. This can be achieved by ensuring that a good service specification is produced and is linked to SLAs and KPIs, which links performance to pay in a risk/reward scenario.”
In order to make all this possible, it is important to know enough to write a good contract for the service required. Having worked on both sides of the fence as a manager for 40 years, Derek Joyner, FM-Head, English Heritage, UK, warns that there are a few areas that must be in place from the beginning “or you surrender control to the organisation you appoint.
“A contract must cover all aspects of the work in any given scenario from day-to-day chores to disaster management. Inclusive within that should be SLAs for each part of the work aspects to be covered. For example, we even specify the types of fixtures to be used in some areas. On top of this are the KPIs which are attached to some form of penalty system when service is below expected contractual requirements. For me nothing concentrates the mind more than when you are hit in the pocket. It is imperative that the FM head retains the right to remove any of the outsourced staff who fail to maintain or ignore the standards set.”
“It is easy to think that by bringing in an outsource company, all your troubles become someone else’s… I’m afraid not… As FM head you have to become the policeman, judge and jury to protect your organisation.”
From the suppliers’ end, there are several additional requirements of the FM-outsource relationship worthy of noting, says Consultant Chris Arlen from Greater Seattle area.
“FM must participate in governance throughout the contract term and not just at the beginning. Often when things are running smoothly, FM stops attending joint review meetings, or providing insight into upcoming strategies or initiatives. When this happens, suppliers may be fully compliant but FMs have stopped noticing. It is a two-way street, requiring long-term commitment of FM’s time.
“There is no point penalizing suppliers for not meeting agreed service levels when the metric is influenced by others outside the supplier’s control. Some suppliers will accept SLAs during a bid process with the assumption that they can negotiate the SLAs back to reality after they have been awarded the contract. But unfortunately that’s not always the case.
“KPIs should be the vital few, not the useful many. Measuring performance takes resources (time, technology, oversight). Having too many KPIs doesn’t ensure clarity. It is the important few that give insight. FM must work with suppliers to identify those. There is no “one universal set of KPIs” that works everywhere.”
“However,” says Craig, “the single biggest thing that most clients do not consider, is that in spite of engaging the best service provider and having the set of contract documents in place, if the client team is not equipped to monitor the contract, it is likely to fail in some areas.”
As Steven Jackson, Facilities Supervisor at Capital Area District Library, Michigan, puts it, “The FM head must monitor who is actually doing the work, do they know their work and are they honest with recommendations.
“This will enable the FM head to correct issues in accordance to the contract. Regardless, there is a learning curve and as a Facility Manager, one must be part of it. Remember you are ultimately held accountable for the results.”
Rodney Wilson, Facility Manager at Georgia-Pacific LLC, Oshkosh, Wisconsin, adds, “Outsourcing can be beneficial and I would recommend a service provider which engages its own supervision/supervisor. As far as quality of service monitoring is concerned, your specification should define service levels/quality, not the actual tasks. If definitive tasks are to be defined, then the time cycle and scope of work should be accurately defined. (Example: restrooms to be cleaned to a defined quality standard, must also specify the cleaning of ceramic tile on a weekly basis and the specific day and time to ensure that cleaning does not interfere with the use of facilities). Personally, I would never return to direct employees in functions such as housekeeping, janitorial or landscaping, as it takes too much time to manage and train, and the turnover is too high so you are constantly recruiting for replacement.”
In essence, there are many factors that lead to a successful outsourcing contract, though there are instances of people quickly blaming the service provider for failures, which is not the case always.