Facilities Management 2

Property

Management

Sustainability

Risk

Brickwork

Inferior design

Switched on?

Walk the line

Business accommodation should offer

The decor of a workplace can affect

The government wants us to wake up and

Clients and service providers must

more than lights and sockets | Page 5

employee performance | Page 8

smell the CRC. Are you ready? | Page 9

collaborate to avoid danger | Page 11

business-reporter.co.uk

March 2012

Distributed within The Sunday Telegraph, produced and published by Lyonsdown which takes sole responsibility for the contents

Office politics Are your support services boosting or bleeding your profits?

A report on facilities management

Business Reporter · March 2012

an independent report from lyonsdown, distributed with the sunday telegraph

3

Facilities management

1.25m ft

Opportunity knocks

2

KPMG’s UK property portfolio p5

85%

An organisation’s assets have to perform like never before and facilities management is at the centre of this improvement drive Publisher Bradley Scheffer brad@lyonsdown.co.uk Managing Editor Lucie Carrington lucie@lyonsdown.co.uk Editor Steve McCormack Creative Director Neil Darby studio2@lyonsdown.co.uk Sub Editor Amy Dickson amy@lyonsdown.co.uk Journal Assistant Natalie Luketic natalie@lyonsdown.co.uk Project Manager Paolo Emilio Zanini paolo@lyonsdown.co.uk For more information on any of our supplements please contact us: Telephone 020 8349 4363 Email info@lyonsdown.co.uk Online www.lyonsdown.co.uk

business-reporter.co.uk

Supporters

of businesses say the quality of a workplace affects productivity p8

£840k

By Steve McCormack In the current economic climate, an organisation’s assets have to perform like never before. In both the private and public sectors everything from the property portfolio to the workforce needs to be contributing efficiently to business success.

The occupation of property is a major cost to any business, second only to people, so it makes total sense to ensure this asset is performing efficiently. This is the responsibility of the facilities management sector.

Every organisation relies on a mix of functions and services to provide the support essential to its core business operations incorporating a range of services from “hard” (such as building fabric) to “soft” (for example, catering, cleaning, security, health and safety). Ensuring that this support is available in the right form, at the right quantity and for the right price is the task of the facilities management industry. It is a vital function in offices, retail centres, industrial buildings, schools and hospitals.

Estimates for the size of the sector vary hugely, depending on the definition used. Various research puts the value of the UK sector at £95 billion a year and more.

Yet despite facilities management being one of the fastest growing professions in the UK, it remains largely invisible. Too often this lack of engagement leads to key decision-makers seeing the provision of business services simply as a cost rather than having the potential to be a valuable contributor to business success.

More enlightened organisations realise that facilities management is not just about supporting an

“Today’s facilities management is no longer just about turning on the lights and keeping the place clean.

It is about developing a credible strategy for the business to help it gain a competitive advantage” organisation’s main operations. Good practice can also make a significant contribution to a range of key business concerns such as reducing operating costs, enabling better risk management, enhancing business flexibility, improving productivity, reputation, corporate social responsibility and other aspects of the talent agenda.

Smarter organisations realise that facilities management at a strategic level is essential for business success on the national and global stage.

Capita’s savings as a result of its energy efficiency programme p9

87%

of private firms expect London 2012 to disrupt their business p11

£12.4m New look: facilities management involves more than switching off lights

Twenty years ago, it was unheard of to see facilities management represented at board level. Now, many leading organisations have a senior champion who is accountable for the provision of business services either on the board or reporting to the board.

As part of this trend, outsourcing of services had become a compelling solution for many firms and it can potentially reap annual savings of 7-20 per cent of pre-outsourcing costs, according to industry research.

The growth of outsourcing is part of a larger trend that has seen significant changes in the way organisations deliver and manage core operating functions. Today, leading enterprises employ a broad range of service delivery models and techniques, depending on the nature of their business.

In the face of mounting cost reduction pressures, facilities managers are finding ways to increase efficiencies. For example, they are using automation to deliver higher-quality maintenance at lower cost. And through outsourcing, they’re raising skill levels and keeping better track of equipment performance. In short, they’re responding to tightening budgets by coming up with new ideas and practices.

As one industry insider observed: “Today’s facilities management is no longer just about turning on the lights and keeping the place clean. It is about developing a credible strategy for the business to help it gain a competitive advantage”.

Agilent Technology’s reduction in FM costs since 2006 as a result of using a single supplier p13

Contributors Steve McCormack is a writer, editor and editorial project manager with experience in the technology, business, construction and property sectors. He has worked for market-leading professional publications in the UK and overseas, as well as written for the national press.

Doug Morrison has been a journalist for 28 years, covering business and property for newspapers and magazines. Before going freelance in 2003, he was eity editor of Scotland on Sunday following five years as City Reporter on The Sunday Telegraph.

Trevor Merriden was deputy editor of Managament Today and editor of Human Resources magazine. Trevor has written several well-received business books and runs a consultancy dedicated to helping businesses develop “clever content that sells”.

Paul Strohm is a commercial property journalist who has worked extensively in the specialist property press in continental Europe and the UK. He is currently editor of EuroProperty and is former editor of Property Investor Europe.

Business Reporter · March 2012

4

an independent report from lyonsdown, distributed with the sunday telegraph

Industry view

It pays to invest in talent Some companies may regard facilities services managers as a luxury but they can save a business far more than the cost of their salary

Who has the most impact on the key stakeholders of your business? The CEO? The finance function? Sales and marketing? It’s more likely to be facilities management.

“As soon as someone crosses the threshold of your company, the quality of their experience is dependent on the FM team,” says Paul Stephens, operations director at FRL Recruitment, one of the UK’s leading FM recruitment specialists.

“Whether it’s the reception desk, the layout of the building, the catering in the executive dining room or just general cleanliness, it’s all under the control of your FM people.”

The principle extends far beyond the team at the top. “I know an investment company whose CEO has a dedicated chauffeur,” says Stephens.

“When he’s not driving the boss he delivers mail throughout the building. He sees more of what goes on than anyone else, and when the CEO asks, ‘How’s everything going?’ he can really tell him!”

In a typical business the FM budget is exceeded only by HR and IT, so it is surprising that FM professionals are not better understood and appreciated, says Ashley Adams, FRL’s divisional manager for executive search and senior recruitment.

“Many businesses still think of them as caretakers and cleaners, even though that view is 25 years out of date. Because they do not understand the value of FM, companies try to save costs by hiring an inexperienced facilities manager on a low salary – leaving them to make uneducated decisions,” says Adams.

“What they don’t realise is that top FM professionals know how to save the organisation far more than the cost of their salary – whether it’s through lots of little things such as introducing double-sided printing, or saving £1m by renegotiating all the contracts.”

FM is far from being a one-size-fits-all profession – its exponents also need to match the culture of their employer. “If you’re an investment bank where everyone is highly driven and works long hours, the FM team need to buy into that,” says Stephens.

“Compare that with a media company that is stereotypically full of creative types who come to work in casual dress and socialise heavily throughout the day. They need someone who’ll appreciate the creative nature of the staff and tailor the FM provision accordingly.”

The current enthusiasm for outsourcing creates even more issues. “There’s a danger that if you don’t have an educated FM professional in your business – what we call an ‘intelligent client’ – your FM contractors could run rings around you and make a fortune,” says Adams.

“In-house and outsourced FM people need quite different skill sets. In-house people are trying to minimise costs and maximise performance.

In an outsourcing company people need to be commercially astute, identifying extras they can deliver to the client in return for additional revenue.

“People with experience of working in service providers can be invaluable if they move back inhouse because they have contractor experience,” adds Adams.

Given the importance and subtlety of the FM

profession, identifying and recruiting the correct people is a skilled and highly nuanced affair.

“Anyone can place a job advert based on a set of keywords, but that won’t find the best person for the role,” says Stephens. “At FRL we believe it’s vital to really understand the clients’ needs – which are often different from what they think they need – and we won’t work with a company unless we’re given some transparency and access to the top management and hiring personnel. We always go and meet every one of our clients on site, to ensure we have all of the facts.”

Equally important is understanding the candidate. “They need a track record of solid FM delivery, as well as good commercial and financial knowledge,” says Stephens. “Cultural fit is very important, and qualifications may be necessary, ranging from a HND for a technical person to an MBA for an FM director.”

He also expects an increase in merger and acquisitions activity in the FM sector, which will provide its own staffing challenges for providers who will look to integrate

different corporate cultures, add services to boost margins and expand overseas.

FRL Recruitment combines a number of tools to support clients and jobseekers to find the perfect skills and culture fit. These include online testing of engineering, helpdesk and admin personnel as well as psychometric, scenario, numerical and language testing.

It also has a large referral network, networks at industry events and uses social networks such as LinkedIn. The company’s website – www.frluk. com – sits on page one of Google results for various keywords, which attracts the best talent. The company is due to launch a recruitment app for the iPhone and other smartphones, specifically for the FM industry.

Andy Linger, FRL Recruitment’s business development director, says continuous improvement is the key: “This is an industry with a complex network of stakeholders and where service levels and margins are under pressure.

Strong client relationships and an ability to be flexible as a recruiter is a must to ensure a robust working relationship.”

You won’t always find the right person by placing an ad. “People don’t realise that FM is a very tight-knit profession,” says Stephens. “We have over 45,000 people on our database and we know almost everyone of note in the profession.

Often we’ve watched their careers evolve and people we’ve placed in senior management roles become our clients when they themselves are recruiting.”

FRL’s industry-wide knowledge is also invaluable as a key part of its selection procedure: the 360-degree reference.

“We don’t just gain references from people the candidate has worked for but from people who’ve worked for them and alongside them, to find out what they’re really like,” says Samantha Jackson, divisional manager for soft services.

FRL Recruitment is a true specialist provider and offers facilities management recruitment with a human touch.

0207 652 9677 www.frluk.com

Business Reporter · March 2012

an independent report from lyonsdown, distributed with the sunday telegraph

Facilities management

5

Just another brick in the wall?

There’s money to be made – and lost – in bricks and mortar, and how organisations manage their accommodation could be fundamental to their success

Collaborate or stagnate At KPMG, facilities managers work hand in glove with the property team to ensure flexible space and cost-effective services

By Steve McCormack

By Steve McCormack While the cost of accommodation is a major contributor to business overheads, traditionally the return on this investment has not been a focus of strategic concern. But under pressure from today’s economic conditions, the drive to optimise the cost and effectiveness of the space that organisations inhabit has risen up the agenda and is fast becoming a boardroom issue.

The Institute of Cancer Research faces very specific accommodation issues.

The overriding purpose of its property estate is to provide sustainable, costeffective and adaptable leading-edge research and teaching facilities. To this end the institute has been reducing the number of disparate buildings in its portfolio and upgrading the estate over the past 15 years. This has involved co-locating research scientists wherever possible to nurture an atmosphere of collaboration.

According to director of operations Steven Surridge, managing a portfolio that comprises both offices and research facilities brings its own challenges and opportunities. “Laboratories are often used outside the normal 9-5 and are filled with specialist equipment resulting in high energy use. However, as with our offices, we need to provide as much adaptable, flexible and energyefficient accommodation as we can to keep pace with the changing nature of the research we undertake. We also continually review utilisation to ensure space is used efficiently,” he says.

Meeting business needs Occupying property is a major cost to conventional businesses – the second largest after personnel – so getting better performance is essential.

As Surridge has recognised, today’s service

Jargon buster Outsourcing: involves procuring services from external providers, normally covering both the service (or services) and management of the service.

Bundling: is an alternative approach in which two or more services are ‘bundled’ together and placed with a multi-discipline contractor.

Integrated services: is when multiple service lines are delivered as a package by a single provider. The advantages lie in greater efficiencies on the “shop floor” and reduces management costs.

Total facilities management: is when a provider takes responsibility for the delivery and management of all required services on the client’s behalf. TFM solutions can be sourced from FM specialists or from diversified contractors.

More than bricks: workplaces must be flexible, adaptable and energy-efficient spaces

managers and real estate professionals must provide appropriate space to meet business needs while ensuring maximum levels of use. The greatest challenges organisations face relate to the need to maintain flexibility in the face of certain dramatic changes in functionality, technology and worker and customer demands. Buildings and other assets must also be developed and managed to promote the corporate brand and culture while enhancing productivity, innovation, worker satisfaction and positive public perception.

Buildings today operate in a 24/7 business environment and, as such, managing the firm’s property is about more than making sure the lights work and there are enough sockets.

Today’s workplaces must support and exploit ever-changing technologies. These include “smart” building management that automatically monitors occupancy, energy usage, security, waste management and so on; and the latest in workstation booking systems that enable organisations to manage space in an optimum way.

Yet the provision of corporate services has long been perceived as a technical issue with little impact on the running of the business occupying the commercial space.

The big divide “Traditionally there was a big divide between the property department, seen as high level strategic, and the day-to-day operation of buildings, seen as the role of facilities managers,” says Alastair Young, head of property at KPMG. “But if you are designing the buildings of tomorrow you need the input of the operators of today as stakeholders to make sure you get the right buildings that not only look good but actually work for you.”

Driving this change has been the dual pressure to cut costs while reducing the carbon footprint.

Paul Francis is chief operating officer at HCP Social Infrastructure, an organisation that

manages the delivery of services to a wide range of infrastructure projects. “It is essential that property managers understand the organisation’s strategy and goals if they are to contribute to delivering those goals,” he says. “There is a danger that elements of the business will go off in different directions instead of pulling together.”

Outsourcing property services has become a means of introducing broader and deeper expertise into the service provision mix. However, Francis warns that successful procurement that

“If you are designing the buildings of tomorrow you need the input of the operators of today” – Young

“If you want to have buildings that are successful in operation, we believe it is critical that those responsible for operating the facility are involved from the design stage as stakeholders,” says Guy Stallard, director of facilities at KPMG Europe.

“Only by combining our property and operational expertise can we hope to cater for the large cultural changes ahead.”

KPMG has a UK portfolio of approximately 1.25m sq ft and is looking to drive down energy usage and create a better staff environment that encourages flexibility and collaboration. For major regional or national buildings, single floor plans of 20-30,000 sq ft provide most flexibility for the agile business of the future, resulting in the firm disposing of properties that do not fit the bill.

The company’s award-winning Canary Wharf headquarters epitomises these values. The 400,000 sq ft development houses more than 5,000 staff and has been designed to significantly exceed the requirements for reduced carbon emissions. It is a showcase for the organisation and is central to its strategic use of space as well as creating a platform for its corporate social responsibility agenda.

Accommodating future developments in building management technology and the ICT that supports business activity are also seen as key areas as is the ability of staff to work on the move, which has had a major impact on the use of office space.

“There are no assigned offices at Canada Square,” says Alastair Young, head of property.

“What is more, the majority of meeting rooms were previously designed to accommodate 4-6 people, but we found that small groups were equally at home meeting in ‘collaboration’ spaces, coffee bars and lounges. We now design fewer, larger meeting rooms with more square footage given over to open plan. Recognising and responding to such trends in a fast-moving environment is critical.”

drives through efficiencies requires long-term relationship building with suppliers. “Too many organisations adopt a ‘subby-bashing’ role with frequent re-tendering to drive down costs without considering the effect on service levels,” he says.

Getting the rules right Facilities professionals are also increasingly involved in compliance issues. They have to be experts in a range of health and safety issues from regulations around chemicals to the law relating to corporate manslaughter. “It is the role of the facilities manager to provide the board with assurance that these regulations are addressed and complied with,” says Francis.

However, it is widely recognised that there is no single or perfect approach to managing corporate property with organisations employing a broad range of solutions that work for them.

The mantra for property managers must always be: know your business inside out.

Trailblazer: KPMG headquarters, Canary Wharf

Business Reporter · March 2012

6

an independent report from lyonsdown, distributed with the sunday telegraph

Industry view

Data holds the key to better business performance The need to standardise data across companies’ multinational sites is adding fresh impetus to the drive for outsourcing from single suppliers Outsourcing non-core activities used to be seen by multinational companies as simply a way to save money. This is no longer the case. Today, leading companies appoint outsourcing providers as part of a deliberate business strategy: the aim is to have specialist partners who can add value to non-core functions, while the company focuses investment and resources on its core business.

In terms of facility management (FM), outsourcing is increasingly seen as a strategy to create the most efficient and effective working environment, one which will help the organisation’s people and the core business perform better. Depending on the business, this might be about ensuring that a production line is kept running at full capacity, a critical data centre is kept operating 24/7, a research and development laboratory complies with legislation, or that a customer visiting a shop has an experience that is worthy of a brand.

However, a s t he industry globalises and matures, a real opportunity exists

Holden: harness data to drive efficiency

for multinationals to take advantage of the data that global FM companies can provide.

Many FM outsourcing partnerships are now in their third decade. In that time, companies have moved from looking at outsourcing FM on a country-by-country basis to the current position, where companies are increasingly seeking others who can provide FM solutions on a pan-continental and global basis.

There are a number of reasons for this. As organisations have sought to be more efficient in non-core areas of the business, they have consolidated their supply chain and removed the internal cost of managing and processing multiple vendors.

In addition, as business has become more

global and companies have moved to international operating structures, the value of the consistent service that a single supplier can deliver has become much more important. Companies increasingly want to know that their buildings are operated to consistent quality standards, regardless of whether they are in Boston, Berlin or Beijing.

The drive for greater efficiency and effectiveness has been fuelled by the global economic challenges of the last few years. It has prompted many companies to take a much more aggressive look at their business models and has led to significant expansion in FM outsourcing.

However, the trend to appoint fewer or single suppliers is also driven by the need for

standardised performance data. In order to make that jump to the next level of efficiency, companies need to have consistent data about their buildings’ performance. The ability to collect and analyse this data will become more important to multinationals as it allows them to identify hidden opportunities for improvement.

As the industry has globalised, expectations have increased regarding suppliers’ capability to deliver and measure performance data consistently everywhere they operate.

The new generation of cloud-based data platforms, which receive building information from multiple sources including building management systems, energy meters and security systems, will allow FM providers to support their customers’ core business in new ways. Information from a multinational’s entire building portfolio will be collected, analysed and used to benefit the core business in ways that were not previously possible. For example, the data could be used to pinpoint how a particular maintenance regime has reduced production costs at a manufacturing facility and the system could then be introduced globally. Similarly, such data could reveal that a pharmaceutical company is using too much energy for a laboratory process at one of its sites compared to other locations in its global portfolio.

This requirement for consistent global processes, data management and analytics to support the customer’s core business will be one of the main features of the global FM industry in the future.

Guy Holden is vice president and general manager of Johnson Controls Global WorkPlace Solutions www.johnsoncontrols.com/globalworkplacesolutions

Unleash the power of the human touch One service company is recreating its business culture to meet its vision of personal-focused working that benefits customer, employee and shareholder When facility services company ISS starts a new contract with a customer wishing to outsource some of its services, its main focus is to ensure the transition happens in an orderly way and with, as it describes, a human touch.

“ISS is all about providing service. We have delivered services for more than 110 years and today we cover more than 50 countries worldwide.

We clean, we cook and we provide care – serving more than 200,000 public and private sector customers every day. Our focus is on how we can add to the success of our customers,” says Jeff Gravenhorst, group CEO of ISS A/S. “We have a well-developed process for designing and implementing solutions for our customers. Regardless of whether the customer wants to outsource one or multiple services, we always put their needs first, and we ensure that every employee delivering the service at the customer’s site is treated with respect and is taken care of,” says Gravenhorst.

When taking on a new contract, ISS interviews all transferring employees to understand their capabilities and ambitions regarding future work opportunities. ISS’s unique delivery model, where services are delivered by its own employees and not through subcontractors, means that all workers are offered a job with the current customer, or at another similar contract, if the employee would prefer to move.

The goal of ISS is to “unleash the power of the human touch”. By this, ISS aims to further develop and fine-tune the business culture in a way that

Jeff Gravenhorst

ISS service delivery

recognises the unique qualities of each individual customer. In doing so, ISS management will be focused on giving employees the opportunity to engage in a meaningful way, as well as the chance to use their skills and energy to benefit customers and shareholders. Equally important, it gives employees a sense of pride, motivation and satisfaction from “a job well done”.

“It is important for ISS that every employee understands their role in delivering world-class services to our customers. We are convinced

that the best way to get happy customers is through happy and engaged employees,” says Gravenhorst.

In 2011, ISS was ranked second on the International Association of Outsourcing Professionals (IAOP) Global Outsourcing 100 list.

This reflects ISS’s continued mission to become the world’s best outsourcing provider, and marks the fourth consecutive year of improvement.

The ISS Group was founded in Copenhagen in 1901 and has grown to become one of the

world’s leading facility services companies. ISS offers a wide range of services such as cleaning, catering, security, property and support services as well as facility management. Global revenue in 2011 was DKK 78 billion (£8.7bn).

ISS entered the UK marketplace in 1968 and has over 43,500 employees in the UK alone with more than 530,000 employees worldwide.

0845 057 6600 www.uk.issworld.com

Business Reporter · March 2012

an independent report from lyonsdown, distributed with the sunday telegraph

Industry view

7

Going the extra mile for customers Photography collection showcases experts doing the essential facilities service jobs Successful delivery OF facilities management services is built upon great local relationships and depends upon ensuring employees have the right tools, training and motivation to go the extra mile for customers. In a celebration of its employees, Rentokil Initial recently commissioned awardwinning photographer Matthew Lloyd to capture the spirit and expertise of its people. Called Experts in the Essentials, the collection’s subjects range from cleaners and cooks to pest controllers and hygiene technicians.

John Young, Rentokil Pest Control, uses infrared technology to find pests which can’t usually be seen.

The full collection can be viewed at: www.rentokil-initial.com

Mark Hardie, Rentokil Specialist Hygiene, described by a customer as “one in a million”. It takes a very special team to deal with a house that hasn’t been cleaned for 21 years. It took them two weeks, working 10 hours a day.

Tom Turner, Rentokil Pest Control, takes every precaution when it comes to health and safety, especially when fitting bird-proofing.

Heather Jones, Initial Facilities, won her customer’s Best External Contractor Award for both 2010 and 2011.

Debra Roberts, Initial Facilities, voluntarily runs an afternoon cookery club where she teaches pupils about nutrition.

Charles Boadu, Initial Facilities, whose quick thinking saved the life of a member of public when a passenger climbed on to rail tracks.

Business Reporter · March 2012

8

an independent report from lyonsdown, distributed with the sunday telegraph

Facilities management

Living in a material world Employers are looking more closely at the working environment in a bid to motivate and engage their workforce – and hopefully drive up productivity In difficult times, organisations look very closely at anything that will improve performance. Hardly surprising, therefore, that a recent survey of businesses showed that 85 per cent of respondents agreed that “the quality of a workplace impacts on the productivity of its users”.

The desire to do something about the working environment is clearly It’s taken a long there, with 82 per cent of businesses time to change committed “to improving the experience of its workplace for occupiers/users”. entrenched The question is, how? Partly it’s about thinking, changing the mindset within many organisations that still look narrowly particularly given at their facilities as nothing more My organisation recognises thatthan the quality ofliability. a a costly While the need the size and scope workplace impacts on the productivity of its users for efficiency is a prerequisite, many of the facilities organisations don’t fully appreciate the Disagree strongly 2% potential their working environment has management Disagree to boost productivity.

6% Barry Varcoe, global head of corporate 7% industry Neutral real estate and facilities management Agree 64% at Zurich Financial Services, embraces Agree strongly 21% a more strategic approach: “[Our 0 10 20 30 40 50 60 70 80 team’s work] touches the lives of not only employees but also customers and visitors every day, so what we are about

By Trevor Merriden

My organisationsurvey is actively promoting Workplace

remote/flexible location working for all staff

My organisation that the quality of a Disagree strongly recognises 8%

workplace impacts on the productivity of its users Disagree

16%

Neutral 15% Disagree strongly 2% Agree Disagree 6% Agree strongly 14% 7% Neutral 0 10 Agree Agree strongly

47% 20

30

40

50

64%

21%

My organisation recognises that30the quality of a 60 0 10 20 40 50 workplace impacts on the productivity of its users

70

80

My organisation the different workplace needs Disagree strongly considers 2% of its oldest and youngest generations within the workforce Disagree 6% 7% promoting Neutral is actively My organisation Disagree strongly 5% Agree location remote/flexible working for all staff Disagree Agree strongly Disagree Neutral strongly 0 Agree Disagree Agree strongly Neutral

21%18%

8% 10 9%

Agree0

20

30

40

50

16%

60

44%

70

80

15% 10

Agree strongly

24%

64%

20

30

40 47% 50

14%

My organisation 0 is actively 10 promoting 20 30 remote/flexible location working for all staff

f Facilities Management Disagree strongly

40

50

8%

Disagree

16%

Neutral

15%

My organisation considers the different workplace needs 47% of its oldestAgree and youngest generations within the workforce Agree strongly

Disagree strongly

14%

0

10

5%

Disagree Neutral

20

30

40

50

18%

Source: British Institute of Facilities Management

24%

Agree Agree strongly

44% 9%

My organisation considers the different workplace needs 0 10 20 30 40

50

is delivering value through making our properties a productive asset.”

Varcoe can point to new offices in Singapore as an example. The premises, which opened last April, reflect new working patterns common to many organisations, with staff spending much of their time out in the field with customers rather than in the office with colleagues. At the same time, Zurich has to provide facilities at its own premises for staff to meet more local customers.

Varcoe’s team has therefore redesigned a more realistic set-up for a mobile workforce, with proper facilities for those working on site combined with what Varcoe calls a “business centre” for customers who want to come and visit.

The objective is to enable those who work there to achieve their true potential and greater productivity. Or as he puts it: “We don’t run buildings. We support people.”

The practical steps that Varcoe has come up with are arousing considerable interest within facilities management.

The Corporate Real Estate and Facilities Management Forum has been set up online by Varcoe and his colleagues for both customers and competitors to share FM ideas. Its most popular forum subject is proving to be the impact of the workplace environment on business performance.

Recent research suggests that the “asset” mentality to facilities management is taking root, with 71 per cent of respondent organisations positively supporting the notion of the corporate workplace as “a strategic asset” in the development of the organisation.

It’s taken a long time, however, to change entrenched thinking, particularly given the size and scope of the facilities management industry.

Chris Hoar, chief executive of the Facilities Management Association (FMA), believes we are all affected by facilities management in ways we don’t realise – car parking, security, office equipment, lifts, the canteen, power supplies, maintenance and IT support.

Therefore many people, says Hoar, “only really notice facilities management when things go wrong”.

In some ways, this role of facilities management as a hidden operation in an organisation is exactly what is required.

Huw Thomas is head of property and facilities at easyJet and while his brief is wide, his basic objective for success is simple. “We tackle anything and everything that doesn’t fly or involve computers. W hen we’ve had no complaints then we know that we’ve done our job,” he says. However, Thomas also understands the powerful potential of the working environment to shape the enthusiasm and productivity even in a cost-conscious airline such as easyJet. For example, the easyJet main offices are to be found in aircraft hangar 89 at Luton airport and Thomas is currently consulting staff over fitting out a new 30,000 sq ft office wing. The new wing is opening next month and Thomas is half-way through a consultation on what members of staff do and do not want. The design is unashamedly no-frills – each

person’s work space only has a phone, computer and desk with no storage space, reflecting the company’s paperless culture. Interestingly, the suggestion for colour scheme improvements shows an organisation whose staff want things to look very much the same on the inside as on the out. “To our surprise, staff told us they want even more orange,” admits Thomas.

In the case of easyJet, therefore, the working environment reinforces the company culture. Understanding this, says the FMA’s Hoar, is what sets a good FM service provider apart when it comes to delivering business results. “Of course, cost is important, but choosing a provider should be all about matching culture and DNA. The provider needs to replicate the values of the client organisation,” he says.

Only then can facilities management help a business not only cut costs but also unlock that extra effort and productivity from its workforce.

Channels of continuity Channel 4 Television has a reputation for innovation and staff are known for their restless creativity. The workplace they inhabit encourages this Julie Kortens, corporate services director at Channel 4, says she is insistent when it comes to connecting facilities management, people and performance. One example of the channel’s innovation is the link between internal services (the canteen) with output (TV programmes). Channel 4 has a strong stable of programmes about food and so it seems right that the ethos of the Big Fish Fight, in which the channel’s top chefs, led

by Hugh Fearnley-Whittingstall, champion of sustainable seafood, is replicated in what the staff are offered to eat. Similarly, Jamie Oliver’s long-standing campaign for freerange food is also reflected in the menu.

The impact of seeing a business that links its creative output so directly to the services it provides for staff cannot be understated in creating a positive working atmosphere. Kortens is also responsible for a multimillion-pound refurbishment of the Channel 4 building and regularly

updates the board on the subject. On many other FM matters, Kortens runs regular focus groups for all staff and in particular a working group of PAs – the real users of many of the services her team provides – to gain valuable feedback and development for many initiatives.

As with many organisations, Channel 4 uses an outside service provider and for a vibrant and creative business the match of cultures means absolutely everything in their choice. The acid test is whether the people who work for the FM provider are indistinguishable from those on the Channel 4 payroll. The signs are good: one staff member recently urged Kortens not to replace a highly regarded in-house receptionist in favour of an outsourced alternative. Kortens was delighted to explain that the individual in question was in place as the result of an outsourcing initiative some 17 years earlier.

Business Reporter · March 2012

an independent report from lyonsdown, distributed with the sunday telegraph

Facilities management

9

Lightbulb moment for business From “stealth tax” to smart meters, the government is keen on pushing the issue of energy efficiency to the forefront of industry agendas – and it’s been a much-needed wake-up call for some organisations

By Doug Morrison Few areas of business are more tightly bound up in red tape than energy use, and one of the most controversial regulations – the so-called Carbon Reduction Commitment (CRC) – is destined to rise up the boardroom agenda once again this year.

The CRC is a levy on energy use and applies to organisations with electricity consumption of more than 6,000 megawatt-hours a year or, in other words, an annual energy bill of about £500,000.

The levy, based on the past year’s energy usage, is due for the first time this spring and the government can expect a repeat of the “stealth tax” accusations that business groups fired in September 2010 when details of the CRC were unveiled.

At a time of economic uncertainty the levy is hardly welcome in the boardroom. As Bill Wright, energy adviser to the British Institute of Facilities Management (BIFM), suggests, it will “artificially increase” the cost of energy, which is rising anyway. “It’s going to come as quite a shock to some companies because it will be charged as a lump sum,” he says.

Albeit by default, the CRC has forced businesses to invest in energy efficiency and think more about sustainability. Facilities management is at the sharp end of that process.

After the initial outcry, private and public sector firms settled down to register their energy usage with the Environment Agency and await their appearance on the first CRC performance league table, which was published last autumn.

Healthy competition Critics branded that first league table as a reflection of how well firms prepared for the CRC rather than an accurate measure of UK plc’s energy efficiency. But the league table will be revised annually; the movement up or down the table will show whether firms are doing better or worse than their peers. The CRC, it seems, will become competitive as well as controversial.

“It frightened a lot of boards into thinking about energy for the first time, which was really good news,” says Wright. “It needed bringing to people’s attention. The CRC certainly achieved that.”

But energy efficiency still escapes the attention of many. In February, British Gas reported that thousands of businesses were wasting millions of pounds by keeping outdoor signs, lights and computers on overnight. Some 46 per cent of business electricity use occurs outside normal working hours. The subtext of the research was that companies can cut this waste by using British Gas-issued smart meters (which show how much energy is being used and the real-time cost) – a technology the government wants to see promoted across the energy industry.

Energy incentives Soon, householders and businesses stand to gain from the “green deal”, the government’s flagship policy for improving the energy efficiency of the built environment. But information on how it will work is sketchy.

It is essentially a government-backed loan scheme for the installation of energy-efficient products, and though the impact on housing has

hogged the headlines, the policymakers want commercial property to benefit as well.

Eco-friendly heating and lighting systems in older buildings could in theory be funded through the “green deal” when it is due to come into force later this year. But with the government consultation recently ended, there is so far little detail to go on.

Wright says: “There is a golden rule which states that the [energy] savings made should

exceed the value of the loan but nobody’s fully sure what the rate of interest will be and who will be providing the finance.” The government’s recent track record is patchy, he notes. Cuts to the so-called “feed-in tariff” for solar panels have brought widespread criticism and halted many installations by companies.

Demand for another government scheme, the Renewable Heat Incentive – where a payment is given for self-generated renewable heat – has

also been low since its launch in November 2011.

But Wright adds: “Businesses should look at this.

If you can get ground-source heat pumps or a biomass boiler, this is a good incentive.”

At the same time, the government-backed Carbon Trust has helped to put in place energysaving programmes at some of the UK’s biggest companies, including Capita Group, the outsourcing giant that has 38,000 employees working from more than 300 buildings. The measures introduced at Capita have led to a reduction of 4,400 tonnes of CO2 over three years – and cost savings of £840,000.

Working relationships The Carbon Trust helped Capita identify capital allowances on energy-saving investment, for instance. But John Kost, Capita’s safety, health and environment director, says a key reason

The measures introduced at Capita have led to a reduction of 4,400 tonnes of CO2 over three years – and cost savings of £840,000

Building blocks to greener living British Land is rethinking accepted landlord-tenant practice to boost sustainability and drive energy saving, having already cut usage by 15 per cent British Land, one of the UK’s largest commercial property groups, is challenging accepted practice between landlords and tenants – and it is doing so in the name of sustainability.

The company is rewriting the traditional landlordtenant relationship with the aim of collectively reducing energy use at its York House headquarters (pictured), the 90,000 sq ft office building it shares with four other companies in London.

In April 2009 they all signed a carbon reduction memorandum of understanding, which in the context of the usual landlord-tenant relationship – tough negotiations over rent and service charges – was a pioneering move all round.

But the benefits have been dramatic. British Landinfluenced energy use has been cut by 48 per cent and occupiers’ energy use reduced by 15 per cent.

The total savings are 3.2m kWh, which has reduced carbon emissions by 1,416 tonnes and led to a saving of £178,000.

The various measures include big-ticket items

such as a smart meter and energy management system. On a more humdrum, but nonetheless effective level, British Land has encouraged the occupiers of the building to cut their electricity use by fitting power-saving software to computers and replacing traditional light bulbs with energy-saving alternatives.

Overall investment in sustainability has totalled £500,000, including energy-saving equipment, water-saving devices, recycling areas and facilities for cyclists. There has even been a biodiversity drive at the site in London’s West End – the roof garden features 30 plant species.

Justin Snoxall, British Land’s head of business group, is now applying the lessons of landlord-tenant collaboration as well as the energy management technology across the group’s office portfolio. “We’re able to give tenants better data before they make investment decisions around energy reductions,” he says. “We can give them much better payback information, and we can verify it.”

for the success of the programme was down to “using the relationship with the Carbon Trust to add value to the strong facilities management team already in place”.

Kost explains: “I knew we would be taking control away from the individual for things such as temperature, lighting and printer default settings and that the facilities managers would be in the firing line for any complaints. I also needed to get their full support for taking responsibility for energy consumption at their sites and taking the lead as energy champions.”

As a result, the Carbon Trust helped Capita create an energy reduction template, which the facilities managers could use to survey their own buildings. The trust also provided training for the managers to educate them on the best ways to ensure that every Capita building operates as efficiently as possible.

According to Paul McKinney, the Carbon Trust’s head of advice dissemination, a company’s sustainability agenda invariably falls to the facilities manager, which is why the trust has devoted some of its resources here. It is the facilities manager who has to engage employees in cutting energy use as well as make the case to the board for investment.

For companies that have not yet been compelled by regulation to cut energy use, there are some easy “quick wins”. Switching off computers and lights at night does not cost anything but can mean savings of up to 10 per cent, McKinney says. A further 10 per cent can come from modest investment in energy efficiency technology, with a two or three-year payback.

This is good practice and worthwhile, says Richard Waters, the Carbon Trust’s principal adviser to large businesses. “But the true sustainability leaders,” he says, “are scratching their heads about their whole business models and asking if there are transformational ways that they can effectively drive revenue without a significant reliance on natural resources.”

Business Reporter · March 2012

10

an independent report from lyonsdown, distributed with the sunday telegraph

Industry view

Protecting properties with people Empty properties are a magnet for vandals and squatters – but an innovative property protection scheme offers building security to property owners and affordable accommodation to local working people To the would-be vandals, the disused church in Liverpool looked an easy target. Just climb up the bell tower, force a window, and create all the mayhem they pleased. But when they were half way up, the silence was suddenly shattered by thundering chords from the church organ.

Because the church, although disused, was not unoccupied. It was actually home to a local chef and a pilot, specially installed there as guardians

by Ad Hoc Property Management, which protects vacant properties in the UK ranging from houses and flats to offices, schools, hotels, sports centres and libraries.

Left empty, each would face a battery of potentially ruinous threats, says Ad Hoc’s marketing manager, Zoë Oakes. Squatters can do considerable damage and be costly and timeconsuming to evict. Equally asset stripping – the removal of lead roofing, copper piping, even boilers which are taken and sold for scrap – can be a very costly problem.

But there is more than one way to safeguard empty buildings, and you won’t find uniformed security guards, barking dogs or boarded-up windows at an Ad Hoc-protected property. Just ordinary people living orderly lives.

“Our premise is very simple: your building is infinitely more protected if it has people living in it,” says Oakes.

Ad Hoc takes on the running of the empty property and makes it habitable, installing temporary kitchen units and showers if necessary.

It then brings in guardians on a licence agreement to live in the space as if it were their home.

“We place guardians strategically to ensure maximum protection for the property,” says Oakes. “A smaller building may require just one guardian, while a school or a large care home may have 10 or more.”

Guardians usually provide their own furniture and are allowed to decorate their temporary homes, within reason. But, crucially, they sign a licence agreement, not a tenancy, so they have no tenants’ rights and landlords are guaranteed to get their property back at just 16 days’ notice.

“The benefit for our guardians is that we can almost always offer them alternative accommodation, and they pay very little for a room,” says Oakes. “Our rehousing rate is 98 per cent, and someone can have their own room in London, including utility bills, for just £300 a month, even less elsewhere in the UK.” Ad Hoc vets and interviews all its guardians.

Most are aged 25-35 and all must be in full-time work and have a landlord’s reference. Guardians must abide by certain rules: no parties, no smoking, limited overnight guests, and so on.

They are expected to report problems such as leaking roofs and to organise absences so that the building is always adequately occupied. If a property is considered particularly vulnerable, Ad Hoc can install paid watchmen to cover short unoccupied periods.

And for landlords who would prefer

commercial occupation rather than residential, Ad Hoc recently launched Commercial Workspace.

This enables young companies to take office space in a wide range of empty buildings for around half the current market rate, with a notice period of just two months.

Although its principal function is protecting property, Ad Hoc makes most of its revenue from the guardians’ licence fees, so its charges to landlords are remarkably small: usually just £30-50 per week.

“We offer savings of up to 80 per cent compared with more traditional security methods,” says Oakes. “And because we also offer very affordable accommodation, it’s a win-win for both property owners and guardians.”

020 73545458 www.adhoc.eu

The gamekeepers of industry Many firms believe contracting multiple services to one supplier is a simple way to reduce costs and management input. But does this bring value for money?

The average facilities management (FM) provider only lives up to half its name.

“Most FM companies are actually facilities services providers,” says Jon Bourlet, director for corporate facilities management at Eddisons, a leading firm of chartered surveyors. “They don’t really ‘manage’ anything – and they’d much rather their clients didn’t either.”

Contracting out a wide range of services to a single supplier might sound like a good way to achieve economies of scale and reduce management effort, but it plays right into the service provider’s hands, argues Bourlet. And the promised cost reductions don’t materialise when all factors are included.

“With a one-stop-shop, all the costs are lost into one big bucket. It’s this muddy water that enables the service provider to reduce the amount of labour it puts into doing the job until it’s just minimally covering the terms of the contract. You end up with a provider that’s hugely incentivised to deliver as little as possible while charging as

much as possible,” he says.

Take a cleaning contract. In this classic commodity market, the only way a service provider can undercut its rivals is by spreading its labour more thinly. So corners are cut, quality of service declines, the client ’s premises quickly become nastier places to work, and productivity suffers.

Similar logic applies to e n g i ne e r i n g a nd maintenance contracts.

Rarely with liability for replacing equipment at the end of its life, the contractor cuts back on servicing and planned maintenance in favour of a “fix it when it breaks” approach – thereby shortening the useful life of the equipment and increasing the client’s capital replacement costs.

The client could, of course, devote many hours to selecting best-of-breed service providers and many more hours to micro-managing its relationships with them if they had the retained

and outsource the rest”.

But supposing outside experts undertook to design and manage all these contracts? To identify best-of-breed suppliers, handle pay ments, manage the relationship and ensure that the s e r v ic e de l i ve r e d really matched the strategic and day-today needs of the client?

Supposing they also prov ided detailed, real-time information that the client’s senior management could access and analyse at will?

“That’s what we do,” says Bourlet. “We’re the ‘gamekeepers’ who keep the ‘poachers’ – the service providers – on their toes. There’s no conflict or vested interest in our Is someone watching over your suppliers? business model.

“Our role is to design, procure and expertise, but most don’t. This is deliver the bespoke solutions that fit precisely what most organisations our client’s business requirements, want to avoid when they follow the ensuring the client gets the right mantra of “focus on your core activities services, to the right standards, at

the right price and from the right contractors.”

Sophisticated web -based technology, coupled with a 24/7 UK help desk, enables client management to access real-time information on the delivery, cost and quality of any service – whether planned or ad hoc – and to drill down to any required level of detail.

“We give the client huge visibility of all the service activity and costs associated with every work order,” says Bourlet. “And in delivering an end-to-end solution, we present the client with a single monthly invoice, having processed all the supporting paperwork through our workflow management system, saving significant finance management input.

“Our own core expertise is management. Our business model gives our clients all the comforts of an in-house management model while they enjoy all the benefits and savings of outsourced delivery.”

0870 702 9238 www.eddisons.com/fm

Business Reporter · March 2012

an independent report from lyonsdown, distributed with the sunday telegraph

Facilities management

11

Fail to prepare, prepare to fail With 18 per cent of organisations having no plans in place for the Olympics upheaval, firms must act now to get a headstart on the hurdles ahead

By Doug Morrison

A clearing in the woods Large and complex outsourcing contracts can quickly become a risk. Business Reporter speaks to industry experts on how harmony between suppliers and customers can be created to steer clear of danger

By Doug Morrison

“Where the client’s risk stops and ours starts can be a moving feast, and our role is to bring clarity here” – White

At a Royal Institution of Chartered Surveyors (RICS) conference on strategic facilities management in London in February, more than 80 per cent of the delegates said they outsource their facilities and maintenance management. But only 56 per cent said the outsourced activity met the anticipated business expectations.

That is a surprising shortfall in expectations, and though only a straw poll, the disparity was indicative of the scrutiny on outsourcing at a time when revenues are under pressure.

Nick O’Donnell, director of estates and facilities at King’s College, London, believes that the transfer of risk between principal and supplier – so-called risk management – is a priority area for large organisations and feeds into facilities management on many levels.

“Much outsourcing is an attempt to migrate risk from one party to another. Often people hope to transfer risk but they don’t want to, but nor are they capable of managing it themselves,” he says.

O’Donnell, who oversees 6m sq ft of freehold space across almost 100 buildings in central London, says that the “skill set of risk management” will be a key requirement in future facilities managers – understanding how suppliers and companies each manage risk and finding harmony between them.

“Risk management should be there to help inform decisions and allow people to understand some of the risks their businesses face. But it should be focused,” he says. “If you have a risk register of over 50 key items it becomes difficult to manage. In facilities management we’re all familiar with complex risk registers that run to hundreds of pages where it’s difficult to see the wood from the trees.”

With a mix of in-house and outsourced facilities management, King’s College is typical of many large organisations. There is a 100-strong, directly employed facilities labour force, while some security, cleaning and catering services have been outsourced. The running of one 66,000 sq metre research and teaching facility has been farmed out entirely to a private sector partner.

Taking risk seriously In that sort of complex environment it is easy to understand how risk management is potentially fraught. There has been extraordinary growth in

facilities management and outsourcing over the past decade. Security in the workplace, IT, health and safety, disaster recovery and contingency planning are among the many activities that fall under the facilities management umbrella. So-called “total FM” providers (where the majority of service delivery is procured through one operator) have become an influential presence on the business landscape.

Richard White is enterprise risk director at facilities management provider MITIE. He believes risk management has become a boardroom issue, not least because of the uncertain economic climate.

“We see in our clients an increasing focus on risk in its widest context and also operational risk,” he says. “So if a client decides to outsource services they want to ensure we’re not bringing further risk to their boardroom.

“On the operational side, where the client’s risk stops and ours starts can be a moving feast, and our role is to bring clarity here. We have 63,000 people and we must ensure they are well trained and competent so they minimise the risk to themselves, to our clients and to us.”

Drawing boundaries Ashley Rogers, a director at facilities management firm Eddisons, believes in clear boundaries between clients and service providers. “There’s a lot of talk of suppliers acting as principal on your behalf. It’s not a model I believe best services either party,” he says. “The rising number of company failures means the risk to suppliers in that chain is increasing.”

However, all the big FM providers tend to come out with a familiar refrain when it comes to risk management: “It’s about helping our clients achieve their business needs.” But as King’s College’s O’Donnell suggests, such large firms have grown so big that the danger lies in them being more answerable to their shareholders than their clients.

He says: “They are without doubt bigger than some of their clients, and clients recognise that. But I’m always surprised when I read the annual accounts of some of our suppliers and I wonder, ‘how are we (the client) contributing to all of these profits?’

“Profit is not a dirty word but you have to occasionally take a look at your supply chain and say, ‘we’re not working for the shareholders of XYZ Mega Corp’. We’d rather they were working for us.”

Few events will present more challenges to business continuity in London than the Olympics this summer.

The heightened security in London during the Games has been the obvious concern to businesses and politicians, but another challenge is ensuring staff get to work during a time of likely upheaval to transport.

A lack of planning may see some firms miss out on the expected economic boost to London, according to a recent survey of 1,200 firms by BT. The survey reveals that 65 per cent of public sector organisations and 87 per cent of private businesses anticipate some form of disruption to their work as a result of London 2012.

But 18 per cent of organisations in both sectors have no plans to mitigate supply chain disruptions, should they occur.

More t han four in 10 firms said they are expecting problems with staff wanting time off or not being able to get to work, making it the most significant knock-on effect.

Almost half of the respondents plan to improve flexible working

for staff to reduce disruption.

The Royal Institution of Chartered Surveyors (RICS) is one of the organisations advising the Metropolitan Police on the needs of businesses during the Olympics – an “information exchange” as RICS’s global commercial director Johnny Dunford calls it.

Dunford says: “At the grassroots level, all businesses are more savvy about business continuity and they tend to have plans and contingencies in place. “ T he sec ur it y for t he Olympics is very integrated.

The police are making a huge effort to engage with the business community to understand their needs and how businesses will react. After all of the experiences over the past few years – from the 7/7 bombings to the anti-capitalist demonstrations of 2011 – people are more able to cope with disruption. That’s not to say that the activists don’t move on with their thinking, too.”

In an Olympic context, the Westminster-based RICS is an employer as well as an adviser, which is why Dunford says it is likely to make more use of its Coventry office this summer.

4 in 10 87%

firms say transport will be main issue

of private sector expect disruption

Business Reporter · March 2012

12

an independent report from lyonsdown, distributed with the sunday telegraph

Industry view

Value for money In a world where cost-cutting is king and efficiency is essential, we ask three industry experts about the role of facilities managers today

Graham Forrester

Ian Broadbent

Noel Clancy

Why should senior managers be concerned about FM?

How has the recession affected facilities managers?

It’s a major cost, typically accounting for 15 to 35 per cent of outgoings. It has a direct impact on productivity: research by Ginsler found that an improved workplace can increase productivity by 19 per cent. And it encompasses significant risks affecting business continuity, environmental impacts, health and safety and so on.

It’s increased their visibility and focus. Property and facilities often represent an organisation’s biggest cost after salaries, and when times are tough it’s vital that overheads are tightly controlled.

Many facilities managers have huge budgetary responsibilities, and they can make a major contribution by enabling the organisation to get better value from its contracts.

What are the major concerns for companies that outsource their FM?

How can organisations ensure their FM aligns with their business needs?

By conducting regular reviews, especially after any significant change in the business environment. Reviews should include the competence and responsibilities of the FM team and the quality of service they provide. For example, the systems, processes and procedures that support FM and how their performance is reported to senior management, and that contracts with key FM suppliers are regularly benchmarked to ensure best value.

Who is best placed to carry out a strategic review of facilities services?

Senior management needs to sponsor the review to ensure the necessary commitment from key stakeholders. The senior FM team are obviously key players, but they may be too close to the organisation’s current strategy to have a fully objective view, and they may lack the necessary time and breadth of market experience.

Independent consultants can add a broader knowledge of best practice in the industry and have access to a lot of independent data.

What are the typical benefits of a strategic review?

It ensures service standards are aligned to the needs of the business and its staff. It improves morale in the FM team. And it can bring significant cost savings. Our clients have reduced overall FM costs by up to 30 per cent through a combination of re-skilling and streamlining their staff, renegotiating contracts, bundling together services that were provided separately, and improving the use of IT to closely monitor service and satisfaction levels.

Does outsourcing to one of the major service providers achieve best value?

Sometimes. But every organisation has unique needs and may require a solution that is at least partially bespoked. Before signing a single-source contract you need to assess all the options and define in detail the type and level of service you require.

Graham Forrester is associate director of facilities management at AA Projects, a multidisciplinary management and property consultancy. www.aaprojects.co.uk

Has this changed the perception of facilities management (FM)?

The increased focus on spend has forced organisations to look at FM differently and appreciate the value of doing it well. FM has grown up a lot in the past 20 years, where organisations would have a maintenance person, a catering supervisor, an odd-job man, and so on. Bringing all these functions together under one hat, responsible for managing the entire property and services portfolio, has enabled facilities managers to become more skilled and professional.

So FM is becoming a profession in its own right?

Yes, and young people are choosing it as a career path. FM qualifications are now aligned with Ofqual standards, and they are available at all levels, from apprenticeships to master’s degrees. FM professionals have also taken on new responsibilities that weren’t traditionally part of FM, such as reducing energy consumption for both financial and environmental reasons.

How can organisations help their facilities managers to improve?

Being an FM professional can be quite lonely, so it’s useful to be able to network with other facilities managers. Often it’s a question of time rather than money. The British Institute of Facilities Management’s (BIFM) 14 regions organise dozens of events throughout the year, and our continuous professional development programme includes mentoring, best-practice guides and face-to-face and online training.

What makes a good facilities manager?

You need broad knowledge of the areas you’re responsible for, and the ability to manage a wide range of people, from cleaners to skilled technicians. You need to understand the needs and aims of the organisation and how you can add value to these. And you also need to be calm in a crisis, because when something goes wrong everyone will rely on you!

Ian Broadbent, chairman of the (BIFM), the professional association for facilities managers. www.bifm.org.uk

Continuity of provider and critical services; clients can spend considerable time selecting a provider only to find an M&A activity undermining that choice. Mutual dependency is crucial.

A major FM business that doesn’t perform could cause significant consequential loss but not ‘feel’ the lost profit following contract termination. Finding a flexible, aligned partner who you can trust, work openly and honestly with, and one that needs to succeed is crucial.

But aren’t big suppliers able to offer a better value, one-stopshop approach?

Yes and no: too many larger FM players hide behind the “total FM” or “one-stop-shop” strap line. Few total FM suppliers deliver services themselves – most rely on a multitude of sub-contractor relationships that are often weak or untested. At Shepherd FM we self-deliver around 80 per cent of our services and we will be pushing that to 90 per cent in the next 12 to 18 months.

Is there too much of a short-term approach?

Right now, definitely. Unrealistic expectations mean that sound proposals do not fly because suppliers want instant returns or clients demand unrealistic payback. Investing in people suffers because TUPE (transfer of undertakings) leads to providers treating staff as a borrowed asset, which is the wrong approach.

FM providers can help investment to flourish by giving clients clearer business cases aligned to their core needs.

What else is on clients’ minds?

Protecting their business and general survival. Traditional business continuity continues to be critical, but there’s the added threat of growing social and civil unrest. There’s a great onus on service providers to identify and disperse potential high risk by adopting remote monitoring technology coupled with intelligence that can alert security personnel and clients as soon as their business is under threat or the landscape changes.

Other than the economy, what’s the most pressing issue today?

Because of the games we believe many London businesses will consider large-scale home-working programmes. This will create considerable ICT challenges, as home-workers rely on remote connections to corporate networks. No one knows how the networks will cope. Post games, some businesses forced to work in a remote fashion may embrace home-working if output improves. This could have a negative impact on the London real estate market.

Noel Clancy is CEO of Shepherd FM, a SME privately owned full service FM provider. www.shepherdfm.co.uk

Business Reporter · March 2012

an independent report from lyonsdown, distributed with the sunday telegraph

Facilities management

13

Different city, same experience Consistency and accurate data are key to managing facilities in global and multi-site firms

By Paul Strohm

When sites are strewn across several countries the potential headaches are multiplied and practical difficulties emerge

By Doug Morrison

For a company attempting to manage its facilities across a number of locations there is a range of potential difficulties.

These largely stem from the surplus of contractors that may be involved, from cleaning to catering to the various maintenance requirements, some of which may be highly specialised.

Administration of contracts is likely to be complex; quality control is a constant requirement and so too is the need to monitor cost effectiveness. A tough call in one country, but when the sites are strewn across several the potential headaches are multiplied and practical difficulties emerge owing to differences of culture, custom and law.

A lightness of touch is usually helpful says Richard Sykes, chairman of the Facilities Management Association. “The key is to adopt a ‘glocal’ approach where you keep the systems and outsourcing in terms of driving costs down on a global level but you also keep it local. You don’t get rid of the local management, you don’t lose the local image or the local service but the client gets consistent service whether they are in Tokyo or in London.”

Increasingly, many companies have flexible workforces and want to know that whatever site an employee is working from, systems and the standard of working environment will be the same.

If the facilities management process is on target this consistency manifests itself in the look and feel of a catering unit or in agreements that specify how many times an office is cleaned in a certain period. It is often a question of what people expect to see in an office, the design of the office, the look and feel of the reception and the way that customers are greeted.

However, achieving this can be difficult when you don’t have consistent service providers, says Guy Holden, vice president and general manager of Johnson Controls Global WorkPlace Solutions.

According to Holden, accurate and consistent data is becoming more important for businesses managing a

More than a lick of paint Plantronics’ new UK headquarters is a testimony to the US company’s position as one of the world’s leading suppliers of hands-free headsets for phones. Its design has been deemed so successful that it is being replicated at the firm’s other European offices, and even in China and the US. An old, outdated building in Wootton Bassett, near Swindon, has been redesigned and refitted to promote the idea of flexible working and shows the headset technology at work, day in, day out.

W h il e ke e n to c r e a te a m o r e comfortable and productive environment for its staff, the company also wanted a “showcase” for its business customers,

global office portfolio. Increasingly firms are asking, for example, why the building in Madrid is costing five times as much as the one in Manhattan, he says. “It is no longer acceptable to say ‘this is just as good as we happen to be locally’.”

Good data allows facilities to be benchmarked and compared and when operating cost data is combined with real estate data – lease expiry dates, building occupancy, and so on – building use can be optimised.

Facilities management has become more complex; particularly where the process involves more than one site and IT systems are needed to gather the

data produced. This is one of the main incentives for a company to outsource its facilities management to a single provider.

Holden argues that cost savings and a need for increased business focus often provide the prime motive for outsourcing: “Generally you find a lot of these outsourcing initiatives are driven by economic pressure to cut costs. Often companies have reached a decision that they don’t want to run non-core services themselves, they want to focus on and use their shareholders’ money for that core business.”

Of course, every company’s facilities management needs are highly individual which makes generalisation about cost savings difficult. However, industry figures suggest that a company can save 15 to 20 per cent of its facilities

management budget by engaging a single service provider to manage all of its sites, attributable to economies of scale.

US-based measuring equipment manufacturer Agilent Technologies has saved $19.5m (£12.4m) since 2006 by employing a single external facilities manager and in one separate, concentrated seven-month economy drive cut its expenses by $4.9m (£3.1m) by rethinking its suppliers and the services it uses.

A common argument in favour of employing one external facilities manager is that if a large, multi-site corporate uses separate service providers there is still a need to co-ordinate and manage them all.

The size of Agilent’s facilities emphasises this point – it has 150 sites and 15m sq ft of real estate in 30 countries.

Inevitably, says Holden, this becomes unproductive: “You’ve got to interface with all of your suppliers, with all your contract managers and do all invoice processing and the things that come with dealing with multiple vendors. If that has to be done in-house, it is inefficient.”

In the case of healthcare insurance organisation The Regence Group, which has a 1.5m sq ft portfolio of offices in 20 US locations spread across Oregon, Washington, Idaho and Utah, the company saved $1.2m (£761,000) in direct and avoided costs in the first year of its contract with Johnson Controls.

Data was the key. As each of Regence’s sites operated differently, one of its first tasks was to calculate the total cost of occupancy and develop portfolio performance. “To identify opportunities for efficiency, improved performance and cost savings, we needed to get an accurate overview of our assets and standardise maintenance procedures,” explains Senka Lenn, Regence director of corporate real estate and facilities management.

“From a real estate perspective we were operating like separate companies, each managing its own buildings and vendors.

To become more efficient and cut costs, we needed to take a more centralised approach to operating and maintaining our portfolio and decided to outsource those responsibilities.”

Plantronics’ HQ is designed to wow current – and future – workers says George Coffin, Plantronics’ facilities manager for Europe, Middle East and Africa (EMEA).

His role includes managing major construction works such as the UK office redesign, which was completed last year.

As with all aspects of Plantronics’ facilities management, the redesign programme is being carried out with some sensitivity to the local businesses.

“You may be in a Plantronics office but you don’t want to detract from the fact you’re in a Plantronics office in Cologne or Amsterdam or Madrid or Milan,” he says. “You want them to have regional identities.”

Coffin heads a small in-house facilities management team that oversees all of

Plantronics’ EMEA offices and outsources the basic FM work – maintenance, cleaning, catering – to local firms rather than one multinational service provider.

This is partly due to a corporate aim to work with local communities but also because of Coffin’s slightly jaded experience of the big “total FM” suppliers.

“I know they would like our business because of who we are,” says Coffin. “I also feel that they’re brilliant for a few months, and then things go stale and I don’t get the attention my people deserve. With smaller, local companies, I want them to have that wow factor when they walk into Plantronics – and they do. I honestly believe they look after us better. There’s more pride.”

‘Showcase’: Plantronics’ UK headquarters

Business Reporter · March 2012

14

an independent report from lyonsdown, distributed with the sunday telegraph

Industry view

Go for a deeper shade of green A holistic approach to environmental issues can enable companies to cut spending and increase revenue – and it doesn’t require a huge capital outlay either The business benefits of being kinder to the planet are widely acknowledged. Canny companies realise that as well as saving them cash and making them more competitive, it strengthens their brand and makes them more attractive to customers.

But while the destination is clear, many organisations have little idea of how to reach it – unless they have a partner that is already far advanced on the journey to being “deep green”.

Skanska was named as the UK’s greenest company across all industries in The Sunday Times’ Best Green Companies Awards 2011.

“Green is part of our culture and it drives our whole agenda,” says Jon Chown, director of Facilities Services. “It ranges from recycling centres replacing waste bins to the fact that our policy is for company cars to be below 130g/km CO2 emissions.”

Skanska believes that many organisations could go greener without significant capital investment and has helped a number of clients to prove it.

The London headquarters of a major consumer of energy, which has 4,000 employees and over 150,000 visitors per year, has achieved annual energy savings of 11.5 per cent, equating to more than 2,800 tonnes of CO2 and more than £350,000 in energy bills.

This was achieved through measures such as increasing energy awareness and encouraging

greener behaviour among staff, weekend lift closures, heating delays and altering the timings of chillers.

None involved significant capital costs.

“Several other environmental benefits resulted from the project,” says Chown. “Almost half of waste is now recycled, nothing is sent to landfill, there’s been a 29 per cent reduction in total water usage, and sustainability is now embedded in all service processes within their business.”

At Derby Hospitals NHS Trust, Skanska Facilities Services, the integrated property management specialist, worked with the trust and some of its partners to reduce energy consumption and raise environmental awareness among staff.

Measures have included monthly energy meetings, an annual energy awareness month, regular information in the trust’s magazine, and the creation of “environmental champions” among the staff to help raise awareness of waste, energy costs and water saving.

“We’ve already cut our carbon emissions by nearly 4 per cent – an estimated saving of around £180,000 annually – and we’re committed to further reductions in the future,” says Paul Brooks, the trust’s head of facilities management.

“These savings were achieved using best

practice techniques, without investing large sums in infrastructure upgrades and having to wait several years to see a return,” says Chown.

“Energy saving projects are often very simple and can potentially be introduced across a variety of buildings, whether or not they’re owned or managed by Skanska.

“They’re often seen as a first step in reducing a building’s carbon footprint and could be taken further with the use of a Skanska green retrofit. This involves redeveloping a property’s infrastructure, focusing on improving the building’s energy, carbon and water efficiency.”

When capital investments are required Skanska’s advice is to consider long-term environmental efficiency. “We have years of experience in this, and we have models that calculate where the best returns and quick wins are likely to be,” says Chown.

Skanska can also advise on how to benefit from funding and grant capital, such as the government’s Green Deal for local authorities.

Other green measures have more to do with planning and management. Many organisations have too much real estate, thanks to the increasing tendency for people to work away from the office.

“We can look at a client’s property portfolio and its long-term business plan and advise on where to upscale or downscale,” says Chown.

“Like many green issues this is often not on the boardroom agenda, which tends to focus on increasing revenue rather than reducing expenditure.

“By taking a holistic approach to going greener, we believe companies can do both.” www.skanska.co.uk/Services/Facilities-services fs.enquiries@skanska.co.uk

Unlocking value in unlikely ways Procurement’s role in facilities management is about more than securing the best price. It also has to be a catalyst for challenge and change By its very nature, facilities management is not a core component of most businesses. Complex, fragmented and highly operational, it’s an unattractive area for the uninitiated. However, procurement has recently been making great strides in the area of FM, unlocking value from the most unlikely sources.

Beneath its complexity, FM procurement is remarkably straightforward. Like any other area of spend the value it creates for the customer is dictated by how good the deals are and how well you manage the supplier base. For procurement professionals, such as Procure4, this is familiar ground: running a strong procurement process for any of the key FM services will deliver value.

And although FM is an area where procurement has not traditionally played a strong role, it can yield an excellent return on investment for the

We

office

Design

buying organisation. Techniques which have become the norm for other areas of spend, such as online tendering, e-auctioning and de-coupling the component parts of the supply chain, all have a role to play in securing best value from FM. However, Procure4 believes considering them individually often puts an unhealthy focus on price. And there’s the sting in the tail. FM is a broad church of services and most buyers are unlikely to have the detailed knowledge required to secure the best service at the best price in every case. This leaves suppliers with a significant advantage in negotiating deals and managing performance.

To overcome this, procurement needs to do more than just be about commercial expertise. It has to be a catalyst for challenge and change. It needs to draw the technical and operational expertise from within the organisation closely together. Rather than just

squeezing supplier margins, the joint team can then use a range of levers, such as value engineering, specification review and bundling, to create additional value and to build strong supplier relationships which will sustain performance in the long term.

As a catalyst for challenge and change, Procure4 regularly delivers savings of up to 40 per cent in FM, unlocking value in unlikely ways.

There is serious untapped value there for the forwardthinking CEO. 01789 471 197 info@procure4.com

Rainbow Office Design www.rainbowdesign.co.uk - 020 8881 1234

Business Reporter · March 2012

an independent report from lyonsdown, distributed with the sunday telegraph

Industry view

15

All bases covered Total facility management draws together every service a company needs to run its buildings into a single package, cutting costs and boosting performance, says Craig Shepheard What is TFM?

Total Facility Management (TFM) combines everything clients need to run their buildings, from hard services – mechanical/electrical (M&E) maintenance, water treatment, heating and air-conditioning – to soft services – cleaning, catering, post room, reception and security.

What are the benefits?

The primary advantages are cost and operational and performance efficiencies. Clients have a single point of contact for all their facilities needs, one consolidated invoice each month or quarter and can see typical cost savings of 15-28 per cent over multiple single-service contracts.

Any downsides?

Some clients worry that TFM means “all your eggs in one basket”, making it difficult to change

contractor for one element of the service if they aren’t happy with it. Others question whether TFM suppliers are equally specialised across all services provided. With the right suppliers and flexible contracts, these concerns can be eliminated.

How do you choose the best TFM supplier?

To identify the best contractor for each client, we need to know their primary drivers and priorities. For some it is cost-saving; for others it’s the freedom to concentrate on their core business knowing experts are managing their facilities. Companies running data centres will prioritise strong IT and technical capability from their TFM contractor. Healthcare and educational organisations will major on rapidresponse fault-fixing. For media and hospitality clients, superior front-of-house services such as

reception and catering are paramount.

Why use an independent consultant?

As independents, we’re not tied to any contractor or service arrangement. We can give objective views and unbiased advice. Working across all sectors and with the industry experts, we keep up with operational and business trends, innovation in technology and products and the evolving needs of all clients, making sure we bring them the highest quality services and suppliers.

What else is new in TFM?

One client is using a collaboration approach, combining a TFM contract with multiple singlesource suppliers who form a collaboration team and present themselves to the client as a TFM supplier. In this best of both worlds, the M&E contractor controls one site and the security

contractor manages another, giving the client confidence and certainty with flexibility and control.

Craig Shepheard is managing director of FM Expert Ltd www.fmexpert.com

Quicker, leaner, greener

Keeping your company spotless

In tough economic times, a multi-service approach can cut costs and boost efficiency, whether your organisation is public or private sector

A supplier whose experience covers the full gamut of hygiene functions can be invaluable in saving a business time and money – and protecting its reputation

When Servest Multi Service Group, the UK’s leading facilities services provider, began working with Leicestershire County Council in the 1990s, it provided cleaning services alone.

Gradually more services were added, and two years ago Servest was awarded a £2.1m contract to provide cleaning, pest control, waste management, maintenance and security to more than 350 sites, including schools, libraries and fire stations.

Using one company to provide all FM services is a now well-established trend with many organisations recognising the cost and timesaving benefits of having a single point of contact.

Since Servest took on the contract, the council has continued to meet its efficiency targets.

“We have already made considerable savings under the multi-service approach, including administrative and management savings,” says Graham Read, the council’s corporate facilities manager. “We have better buying power so we benefit from economies of scale, and work is completed more quickly and more efficiently. As there is less duplication of activities we are also operating in a more sustainable way, which is important to us as an environmentally-responsible council. All of this has been achieved without a reduction in service standards.”

Servest Group chief executive officer Rob

Legge believes that more organisations will turn to multi-service provision to take advantage of the cost and time-saving benefits.

“An integrated service provision can reduce clients’ costs and improve their standards, efficiency and profitability,” he says. “Businesses can either have the hassle of managing several providers or have one innovative solution that meets their everyw need. It’s an easy choice.

Our clients get a dedicated team and one point of contact, leaving them to concentrate on their core business. The Servest motto is ‘Expect more’ because we’re obsessed with doing what we say we’re going to do and surpassing our customers’ expectations. That’s how we keep and grow our customers.”

Servest provides cleaning, catering, security, maintenance, pest control, waste management, interior and exterior landscaping, washroom services, and specialist services to businesses in the retail, leisure, public, commercial, transport, visitor attractions and logistics sectors. Clients include Tesco, Primark, the Natural History Museum, DHL, the Science Museum and the University of Cambridge. www.servest.co.uk Twitter @servest_uk

An integrated approach to facilities management saves time and money

A c l e a n w o r ki n g environment isn’t just more pleasant. In many sectors – food and pharmaceutical to name just two – it is a prerequisite for safe, legal production.

Companies which fail to maintain hygiene standards risk allowing unsafe or substandard products to leave their premises with potential threats to public safety and significant commercial and reputational ramifications.

The management of cleaning is therefore absolutely vital.

The traditional perception is that in-house cleaning offers greater control over process and costs, alongside enhanced flexibility. But establishing an effective regime entails significant time investment and multiple decisions – chemical selection, managing corrosion risks, supplier management, and meeting safety requirements.

It also includes training staff and monitoring through i n spec t ion s a nd audit s.

Meanwhile, cleaning systems

and methods must be kept up-to-date.

Ongoing quality management is timeconsuming, too. Half an hour each day spent reviewing reports and audits equates to around three weeks annually.

The difference in cost between in-house services and outsourcing can be tricky to calculate. It is difficult to cost inhouse time realistically, making like-for-like comparison of costs awkward.

If, for example, the in-house team’s working hours alter to

accommodate production changes, they will undoubtedly be compensated financially.

However, a specia list contractor can often take on the job ‘as is’, recruiting staff without necessarily passing on additional staff costs. The contractor may also be able to access extra staff more easily for specialist or occasional jobs.

Internal staff’s ‘closeness’ to their working environment means problems may not be noticed straight away. Over time, some areas look tired, while stains and discolouration can develop; these can become ‘wallpaper’, making external audits invaluable in catching them before they become problematic.

A nationally-based contract cleaner will see similar problems on many sites, recommending proven solutions to specific issues. Their experience covers not just chemical selection and use but training, staff management, documentation and auditing, and ensuring current standards are met.

Indeed, a supplier whose experience covers the whole hygiene function is invaluable in correcting ongoing issues and avoiding problems in the first place, while saving management time, ensuring production is safe and legal and, ultimately, protecting reputation.

Steve Bailey is managing director of Hygiene Group 0121 451 3211 www.hygiene.co.uk