I think you raise a very interesting question regarding the validity of the assessment criteria that client organisations state will be used to evaluate priced submissions in respect of all types of competitive tenders – both service provision and consultancy commissions.

In my opinion, there appears to be a general acceptance within client organisations that the weighting dedicated to the price received from bidders ’should’ be kept at a respectably low level to demonstrate that the client is looking for ‘best value’ rather than lowest price and that they have a desire to obtain the best service for the required works. It appears almost as though the cost element of any tender assessment should be considered a little embarrassing or even a bit taboo – almost as though its a ‘dirty’ subject that they’d really rather avoid discussing at all?!

In reality though, there is always a higher emphasis on cost than the client, or their published assessment criteria, would suggest. Regardless of the assessment criteria, or indeed the best intentions of the client, there will come a time where despite the qualitative element of a tender submission being 100% perfect, if the price does not fall within a certain threshold, the submission is rejected in favour of a ‘cheaper’ option. We have seen this from both sides of the coin – as advisor to a client organisation and as a bidder for consultancy services.

The difficulty is that in setting weighted assessment criteria, you need to be mindful of the possibility that you may receive an excellent tender the price of which is simply too high for the client organisation to stomach – where this is the case, the risk is that the weightings may still result in the expensive option coming out on top of a tender assessment……..then what happens?!

As a client, do you change the assessment criteria to achieve the required objectives (a little ‘dodgy’ perhaps) or do you have the courage of your convictions and believe in the assessment criteria that were set prior to the tender returns being received and recommend the most expensive option to the Board?!

Not an easy one but does highlight the need to be very certain of the assessment criteria and weighting being adopted prior to tender opening!

Roger, you’re absolutely right – clients have to be clear about what their objectives are, and they also have to be realistic; however, clarity and realism are often in short supply, the result being that all parties involved face inevitable difficulty which in many cases is never overcome. The case study I highlighted is a good example of that (an example that you’re familiar with, I know) and it’s one where the original outsource was effectively determined by cost with little heed being paid to “fit”. The results were disastrous.

I think that the problem often arises not because the client is being deliberately misleading but because there’s been insufficient engagement with the business as a whole. Consequently, objectives aren’t thought through and the cost/quality debate falls by the wayside. The point I was really trying to make was not that cost shouldn’t be the most important driver (it’s perfectly valid that it might be); but more that the potential consequences of being cost-driven need to be identified and accepted.

Refreshing to see that the media coverage of the “Credit Crunch” in FM related publications has caught your attention.

From the “Coal Face” as it were, recruitment is in the first cost cutting excercises that clients are targetting. The number of vacancies on Hold/Cancelled or a full Recruitment Freeze is adding up daily.

Whilst there are contractual agreements to be adhered to in FM contracts, these are being looked at with Cost Saving coming into the equation.

It is going to be a long road out of this recession and I would go as far as saying 2009 is a write off in terms of real profit and a stand still at best to stay in business taking into account reduced fees and margins.

Regards

Shhhhhh… you know we’re not meant to acknowledge the recession, Graham – the FM industry’s going to have a great year, haven’t you heard?

Seriously, though, this is precisely the kind of reality check I was hinting at in my post. Thanks for the honesty.

Unjustified talking up certainly isn’t helpful; but neither is unjustified talking down.

“Businesses across the service sector have reduced investment and spend …. resulting in a spate of job losses across the FM sector.” For me, a statement like that immediately raises a series of questions.

First, is the CBI really taking FM sufficiently seriously to single it out in its report? Sadly, no. There is no mention of FM in the CBI press release. Our industry falls into ‘office & personnel services’, which itself is just one part of a sector that spans everything from accountants and lawyers to hotel operators and travel companies.

Second, can we at least assume that FM providers had a significant input into the research? Probably not. Only 195 firms responded and therefore represent the entire broad sector. The CBI assures us the ‘a few’ FM companies are included, however.

Third, what does the CBI understand by FM? We’re back to ‘office & personnel services’ on this one. No names, or even hints about the sort of companies participating, are forthcoming.

Fourth, does this survey tell me anything I can rely on about my own industry? Well, no. It’s good on the service sector as a whole and confirms my general negativity about the state the UK is in; but as far as FM goes, it’s more context than a targeted report.

A part of the underlying problem, of course, is definition. More specific market reports recently have highlighted tight conditions for cleaning (as you note) and HVAC . But I’m with Martin Pickard on this one: I am uncomfortable using the blanket term FM to cover the whole sprawling facilities sector. And I will probably be expressing the same reservations in a year or two when someone starts to make broad market statements based on the new, but quite limited, SIC code the government has provided for us. These are days for avoiding media hype but also for being as accurate as we can.

OMG I’m turning into a grumpy old man!

I’m not sure about the “grumpy old man” bit, Elliott, but that aside I wouldn’t argue with what you say. I think that my post was prompted as much by the very vague and misleading comments I’ve read that emanated from the FM industry (by which I mean the “real” FM industry) as it was by the pieces I quoted and which you rightfully critique.

What worries me more than anything is that those who genuinely believe that they’re buffered from what lies ahead will fail to take the action necessary to counteract and pre-empt it. In that sense, my own comments were, in effect, a call to arms!

I’m with you on this one – it’s time that we in FM took a more innovative approach, rather than simply restating what we already know. Once the FM team can fully integrate into the client’s operation, life will be easier all round – to do that, FM teams need exceptional management and people skills, rather than simply relying on their technical ability.

We need to support FMs in developing these skills, rather than bashing them for being ‘reactive’.

Mmmm, food for thought methinks!

Best regards
Liz

Hi Liz, and yes – management and people skills are absolutely crucial to the FM function… after all, it’s a MANAGEMENT discipline and a PEOPLE business, as we like to keep telling everyone who’ll listen.

That said, my pop was really at the property sector, who seem only now to be waking up to the reality of what FM can offer. Oh, and then telling us what that reality is!

Of course no industry is truly recession-proof (except maybe economics consultancy); and I don’t suppose it really matters whether we have yet met the proper definition of recession – it’s an easy catch-all term for the time being, and makes a handy way to refer to what is called in more polite society the current ‘downturn’.

Here is something interesting that I stumbled across the other day, with regard to your point about the industry reacting to the situation. For some in FM – no doubt hoping it is recession-proof – there are new opportunities potentially on offer. For example, MITIE has posted on its website (but not otherwise distributed so far as I am aware) a press release entitled ‘Downturns can be healthy’ [http://tinyurl.com/5dfakb]. Apart from some tortured English (eg, muddling ‘less’ with ‘fewer’ – sorry, it’s my job to spot these thing), this makes quite a reasonable argument for why outsourcing is a good thing and companies should do more of it – especially now. Of course such a thing would be good for MITIE. But if we believe in (outsourced) FM, perhaps we all have to support that argument and make it at every opportunity….but carefully, so as not to seem desperate or opportunistic.

A bit of fun is always welcome, Elliott, and thanks for the comment.

Anyway, I’m glad you mentioned economics consultancy specifically. I’d hate anyone to get the wrong idea about FM consultants

Just to throw my hat into the ring………

The resilience of the FM industry in times of recession is surely linked to the resilience of the clients that the FM industry serves.

Unfortunately, at a time when clients should be working closer than ever with their FM consultants and service providers there is a worrying tendency for them to simply look to immediately minimise expenditure without a longer term view of how this may impact on future FM costs.

Clearly, there are sectors that will be relatively (or even completely) unaffected by recession – particularly in the public sector. Those FM consultancies and service providers who work in the public sector will be unlikely to suffer the same downturn as those who provide services to commercial client organisations as the public sector cannot simply stop running schools and hospitals (lets hope not anyway!!).

Perhaps PFI, BSF (etc) is the place to be for the next few years?

Cheers,

Rog

Thanks for that, Rog – some good points and worthy of a quote or two in my imminent post on the subject.

Tony

FM World chose to run the headline “FM is recession proof” which in actual fact is not what I said, and if you read the article I said that I thought that the industry could weather the storm better than others, there were areas that would be at risk and that margins will be squeezed, however I was optimistic.

However the comment gave the writer an opportunity to link to his website (actually, all gratuitous links have now been removed).

Regards Iain Murray, BIFM Chair

I was anticipating a response, Iain, but thanks for keeping it clean! Regardless of individual stance, I think this is worthy of debate and my next post will provide a forum for further discussion.

Tony

First of all good luck with the blog – I hope you get some useful participation which leads to some thought provoking comments…

Can I kick an idea off – is FM recession proof?? Recently read an article from the newly appointed BIFM Chair Iain Murray stating that FM was indeed recession proof!

Personally, I think that this is a bold statement and probably too general if not rather naive. Certainly the service providers generally weather downturns better than most other sectors – but that is not to say that those in the sector will not be affected – and will have to work harder for less rewards.

David Emanuel – MD i-FM.net

Thanks very much, David, and I think your question’s an interesting one… perhaps a good subject for a forthcoming post.

Tony