Archive for category Best Practice
As an independent consultant (and previously both a client and a service provider) active in the FM sector for may years, I’ve been lucky enough to develop something of a niche position with regard to outsourcing and tender management. Much of my work has spanned EMEA as well as tending to be at the larger end of the scale, and as a consequence I’ve become a little sceptical when I listen to others suggesting what can and cant be achieved in these (admittedly complex) areas of practice.
With that in mind, I thought it might be useful to explore a few of the issues that tend to cause concern, and to offer some guidance that will serve to maximise the chances of success for anyone embarking on a cross-border tender exercise.
Effective communication is probably the most underestimated component of tender management, particularly with regard to projects that span a multitude of international borders. It’s therefore vitally important to establish an effective communications matrix at the outset, and to ensure that both central and local requirements are addressed. There are three primary areas that need to be considered:
In any client organisation, there will be a specific process for decision-making, and that will usually entail seeking periodic sign-off from a panel/board of senior managers. Identifying that group, and ensuring that there are clear lines of communication both individually and collectively, will save a lot of headaches as the project progresses through its various phases. Agreement as to the number and type of decision gateways and other process requirements also impacts on the programme, so this needs to be clearly established from the outset.
As one spans international borders, there can be issues (be they cultural or operational) that cause concern to local management teams and – if unaddressed – can have an adverse impact on the level of cooperation and “buy-in” achieved. I favour an approach where a specific point of contact is appointed in each country, with that contact then becoming the in-country representative for all things project related. Aside from demonstrating respect and concern for their views and perceived requirements, it also makes certain parts of the process (for example, data collection and site visits) far more manageable than they would otherwise be.
Any large-scale project will inevitably impact stakeholders and managers who are not directly involved in the process itself. Whilst governance issues may have been addressed, it’s therefore also important to understand the nature and extent of the wider stakeholder group and to ensure that they’re aware of the nature, scale and objectives of the exercise. This applies not just at the outset, but also as key milestones are achieved and well before any new solution is due to be implemented.
Programme and Logistics
Allowing enough time for the integrity of the tender process to be maintained is fundamentally important. Whilst it’s always possible to “squeeze” certain process activities if absolutely necessary, lack of time will put pressure on both client and bidder teams and can result in errors being made, requirements being misinterpreted and excessive risk being costed into the bids. Key elements to consider are:
This can be the most painful part of any tender process, and in my experience the quality, extent and accessibility of data is overestimated in almost every project. With a multi-geography tender each data set has to be replicated in every country, and whilst this is a difficult and time-consuming process it’s also one that is inevitable. Understanding when and for what purpose data is required means that some of the work can be deferred and carried out when the tender is underway; for example, there will be requirements for the business case, the tender pack, pricing analysis and mobilisation, so some of the data is actually needed in final form many months down the line. It also pays to be pragmatic about what’s actually available; the classic 80/20 rule can be applied here.
Scale and location of portfolio
This has a fundamental impact on the time that needs to be allowed for (in particular) familiarisation, site visits and pricing, and effectively means that the timing for the development of bid submissions needs to be longer than might be considered normal for a single-geography tender process. I’m generally quite happy to set aside a couple of months within the overall tender programme in order to allow solutions to be properly developed, and to give bidders an opportunity to remove as much risk as possible from their pricing methodology.
Recognition of key geographies
Whilst a portfolio might span any number of countries, it’s often the case that the bulk of space, expenditure and key/critical locations exist within a far smaller geography. Recognising this is important, because it can lead to a far more manageable approach in terms of site visits, pricing and mobilisation. It also allows for critical areas of risk to be addressed in a more effective way, and this alone tends to provide a level of comfort to senior stakeholders that can preclude unnecessary obstacles arising with regard to sign-off and approvals.
No room for dogma
Many clients I meet have a predetermined idea as to the type of delivery model they favour, i.e. either self delivered through a “prime contractor” or a more traditional managing agent approach utilising a third party supply chain; however, when I ask them why I rarely get an answer that justifies a dogmatic stance in this respect. I believe that it’s far more important to think in terms of the deliverables and the outputs than on the delivery model itself, because if service requirements are properly specified it should then follow that one can focus on best value without worrying unnecessarily about issues that shouldn’t impact objectives being achieved.
It then follows that – at the initial RFI stage – one can include suppliers from both the FM and property sectors; suppliers with perceived specialism in either hard or soft services; and suppliers who tend to favour both self-delivery and a third party supply chain. The benefit of this is that, when bids are received, there should be a variety of solutions and models that each present a different option and a different approach to value engineering. Very often, the solution that seems to offer the best fit is not the one that might have been predetermined at the outset through a more blinkered approach to supply chain strategy.
Aside from the key issues above, there are a number of more general points that, if taken into account, can make the process of cross-border tendering more manageable and more likely to deliver the required results.
Whilst much focus will be on the tender process itself, ensure that you allow enough time to properly address the initial business case and the activity required to support and develop it. This includes the data collection element, might incorporate the RFI and certainly requires early and effective communication/socialisation.
Don’t be afraid to engage fully with the various bidding organisations; on the contrary, I believe such engagement should be encouraged and maximised as there’s no better way to understand an organisations culture, approach and values than to get o know its people. This can be in the form of bidder briefings, site visits, Q&A sessions etc.
Large-scale tenders are always resource-hungry, and cross-border projects tend to be even more so. Client side resources can rarely afford to devote as much time as necessary to the development and management of the process so it’s usually the case that external specialism is required in a consultative/advisory role. Whoever might be engaged in this capacity, they should demonstrate not only a bulletproof process but also the knowledge and experience necessary in order to manage the issues and obstacles that will always arise.
And that, of course, is where I come in…
I’m delighted to have been featured in the September issue of the Facilities Management Journal, having contributed the the regular FM Insider column in my usual inimitable style! Why not make a coffee, sit down for a minute or two and read it here?
Large-scale outsourcing seems to strike fear into the hearts of both client organisations and fellow consultants alike. This can be for a number of reasons, many of which I’ll touch upon in a presentation to BIFM’s International Special Interest Group taking place in mid-September. The talk will focus on the challenges and pitfalls associated with cross-border tendering and – using case study evidence – will demonstrate the tremendous benefits that are achievable when a robust and professional approach is adopted.
The title of the Presentation is “Being European: Can FM Provide a Joined-Up Model” and although tickets for this event are now sold out I’d be happy to discuss the issues relating to such projects with anybody that has an interest in the subject. Certainly, if you’re on the client side and are thinking about a similar initiative, please don’t hesitate to get in touch using the form that you can find on the Contact page of this blog and I’d be delighted to talk through the issues with you.
Another project was successfully concluded last month, and as is often the case at such times it gave way to a degree of introspection. In fact, with two substantial pieces of work occurring back to back, this is the first time for some eighteen months or so that I’ve actually been able to stop and consider the high (and very occasional low) points, and the learning to come out of each.
Both projects presented what might appear to be logistical difficulties. The first was a total FM outsource encompassing nearly 100 sites and some 15 countries within Europe; the second – again, a total FM outsource – comprised some 2,200 sites, all in the UK but subject to a programme at least 30% shorter than would have been ideal. In each case, the client was initially uncertain as to whether the objectives that were set at the outset were realistic, but ultimately those objectives were exceeded by some margin. Despite the differences (and the two organisations were like chalk and cheese in every respect), successful delivery was based upon a few consistent principles.
However, another thing that was common to both both of these examples was the quality of the relationship between client and adviser, because when we really have the client’s trust, and when we’re really empowered to work as a member of the internal management team, the process becomes so much easier and so much more rewarding – for all parties.
In fact, the last eighteen months have probably been the most rewarding of my career, at no time more so than when the bid leader of a very impressive (but in this case unsuccessful) supply chain organisation told me that she’d never enjoyed participating in a tender process as much as the one that had just come to an end. Indeed, every project is to some extent about building relationships, and it’s the thing I love most about what I do.
Here’s to new challenges, then, and new relationships. And to another 18 months like the last.
I see that yet more research on workplace changes has now been published, this time in the form of Johnson Controls’ Collaboration 2020 report. JCI based their findings upon the responses of some 1,700 people in 7 countries (respondents were from the US, UK, Germany, Australia, India, Canada and China) – not a bad number, and one that should be able to provide a pretty clear indication as to whether expectations are continuing to change as technology becomes increasingly available.
The findings indicate that team working, and the use of collaborative technologies, is on the rise (no surprise there, I guess). At the same time, the demand for traditional meeting spaces is likely to drop, with a decrease of 13% in respect of likely demand for such facilities in 2020 compared to today. Even the ubiquitous desk phone seems set for obsolescence in the not too distant future. Key findings of the survey included:
• Web conference – 19% reported high use currently, with 57% anticipating higher use in 2020
• Two-dimensional video conferencing – 18% to 51%
• Team spaces with incorporated collaborative technologies – 20% to 52%
• Dedicated collaboration room – 18% to 36%
• Instant messaging – 33% to 54%
• Traditional meeting room – 40% to 27%
• Desk phone – 50% to 33%
• Three-dimensional video conferencing – 44% of office workers anticipate high use in 2020.
This all seems like pretty conclusive stuff, but I was struck by one of the quotes from the report that was included within BIFM’s summary in FM World Daily:
“Failure to invest in collaborative technologies and updated workspaces will hamper productivity. This has an impact on people designing new workspaces or retrofitting existing ones today.”
To my mind, this highlights a deficiency of the report, in that it took its samples from a very limited geographic footprint; in particular, very little from mainland Europe and nothing at all from the central European belt or east thereof.
I’ve had a fair amount of experience in dealing with both FM outsourcing and office redesign/fit out across Europe, for some of the world’s largest corporates. What I’ve tended to find, though, are two things that hamper the harnessing of efficiencies through intelligent design and sensible utilisation of technology:
1) “Local” management operates with a large degree of autonomy, and is usually adamant that it will “re-engineer” central process and approach to suit.
2) Central REFM functions are unable to insist on a common approach and methodology across geographic boundaries, as to a large extent their role is advisory (less so in terms of acquisition/disposal, admittedly, but certainly in terms of the issues under discussion).
The inevitable consequence is that objectives get diluted, and that – particularly in central and eastern Europe where views tend to be a little more traditional than here in the UK – opportunities to embrace new ways of working are lost. What starts out as an admirable intention to drive the organisation into a new age becomes a whole lot less than that.
I’d be interested to hear the experience of others who have worked across Europe, and have encountered similar difficulties. It’s an interesting and challenging issue, but until the large multi-nationals determine to address it I suspect the consequences are inevitable.
It’s a while since I’ve posted on here (I’m nothing if not a master of understatement), not through any deliberate intent on my part but more as the consequence of being particularly busy over the last few months. Generally, I’ve been content to keep abreast of what’s going on within the industry and to discuss developments through the more “traditional” networking channels; occasionally, though, something hits my desk – or the screen of my Mac – which makes me sit up and take slightly more notice; or, indeed, put the figurative pen to paper. One such occasion arose when I read the i-FM report by Elliot Chase published on 23rd September and entitled “Recession drives procurement change”.
The subject was addressed at the latest BIFM Fellows’ Forum, hosted at Deloitte’s City of London HQ, and the main thrust as reported was that the recession has necessitated a shift in the approach to procurement . Attendees heard procurement specialists Martin Laws and Guy Palmer explain the results of both recent research and client experience, which confirmed (unsurprisingly) that cost control was a top priority, and that it would remain so in the foreseeable future. Then came the interesting bit (because, let’s face it, the issue around cost control is not exactly news), and I quote from the article itself…
Deloitte… is seeing a clear move towards increased interaction between buyers and suppliers in order to get the best results from a contract appointment. Increasingly tender decisions… are being made on the basis of cost, plus assessment of capability and fit… a maturing of the decision-making process in that it offers a better balance of previous approaches, specifically the technical-led and the procurement-led.
The pressures of recession… have resulted in more questions being asked, both internally and externally, as the procurement process develops. In many cases, this has had the benefit of working against short-termism, in which cost is the only real decision criterion – though there are still plenty of examples of that approach around, too.
Now, I posted an article on this blog about a year ago in which I expressed astonishment at the gulf that apparently existed between the property and FM sectors, and at the audacity of the former to tell the latter how to suck eggs. Once again, I’ve been left feeling similarly bewildered and bemused at how little understanding there seems to be in the wider world of the most basic of concepts that are the cornerstone of FM. This time, concepts relating to the procurement of FM services.
When I re-launched Edifice at the beginning of 2006, I reckoned that I had a reasonable pipeline based upon clear target clients and some quite decent market knowledge. However, the first company I went to see was one that had invited my previous employer to tender (for a hard services outsource); I’d led the bid but – although we’d been unsuccessful as a consequence of cost – I knew that the fit with the successful tenderer just wasn’t right, and that what had ultimately been procured was impossible to deliver within the accepted cost constraints. Sure enough, the new contract had proven to be a complete disaster and I proceeded to work with that client for over a year to provide a solution that met not just the budget constraints but also the organisation’s requirements in terms of culture, philosophy and customer focus.
To demonstrate this even further, the processes and systems that have been developed within Edifice to steer clients through the critical path of an outsourcing project effectively isolate cost as just one of a number of factors that should influence any sensible decision-making process. In other words, the question is “Right – given that cost comparison is going to be addressed as a discrete part of the evaluation process, what do you really feel about these suppliers? Can you work with the people you’ve seen, and have you actually seen the right people? Do their policies on sustainability, CSR and ethical procurement mirror yours? When they say they recognise the importance of training and development, do they put their money where their mouths are? Do they actually harness technology to demonstrably drive efficiency, or just spend money on systems that then has to be recovered from you, the client? And – critically – what do the clients say after working with them for x number of years? (The list could easily have gone on, but presumably the point has been made.)
Some of these questions are client-specific, but there are always a host of key areas that need to be addressed, and once done, the result is a framework within which “fit” can be accurately gauged. If the cost evaluation then suggests a similar solution, all well and good; if it doesn’t, then at least the client organisation will have the basis for rational and informed debate. In other words, if a decision is going to be made on cost, than understand the consequences of that decision before making it.
The procurement of facilities services can have a massive impact on an organisation’s performance, not just for the term of any contract let but for the additional time it takes to correct a mistake. And getting it wrong can also change the perception of a facilities team, or a procurement department, in the eyes of the end user (or, perhaps, the board). The danger, as I’ve been known to mention before, is in the “commoditising” of FM and it’s a danger that we must all be ever watchful against.
I’ve written before about the “credit-crunch come recession” (have a read of Recession and the P-Word if you haven’t already done so). Whilst I know I’m not alone in doing so, I do sometimes wonder if I am alone in publicly acknowledging the effect that this economic downturn is having (or is likely to have) on our industry. The reason I say that as that (at least until this week) pretty much all I’ve seen in the media is a series of press releases from service providers talking up the market. Advising us that, actually, a global recession is uniquely good for the FM industry.
Strangely, this week seems to be one for telling it like it is. Firstly, i-FM reports that the cleaning sector is feeling the pinch; recent growth figures have hit 14% per annum but this is expected to slow to 2% for the current year and just 7% over the next 5 years. This tells us nothing of the effect on margin, of course, but we all know that higher turnover doesn’t necessarily mean that profits aren’t eroded.
Then there’s FM World, which also seems to be reflecting the true state of the market now. On the subject of projects and capital spend, we find that “Interior Services Group has reported that many of its corporate clients have delayed or cancelled projects due to start in quarter four of 2008 or next year.” No surprise there, and I doubt that it isn’t a picture reflected in many, if not all, of that sector’s order books. More worryingly perhaps, a report earlier in the week shed some light on what’s really happening so far as a response to the present economic climate is concerned: “Businesses across the service sector have reduced investment and spend in their buildings and predict that this will decline even further over the coming months resulting in a spate of job losses across the FM sector. That was the gloomy message from the CBI’s quarterly Service Sector Survey…”
“In the three months to November, firms reported steep falls in business volumes and profitability, as well as plans to scale back employment and investment. Firms selling services to businesses saw the volume and value of their business, profitability and numbers employed fall at record rates – the steepest declines since the survey began in 1998. Companies are also cutting investment plans sharply as worries about future demand intensified.”
Now there’s nothing wrong with being seen to adopt a positive stance in the face of adversity, but that’s not the same as making bullish noises for bullish noises’ sake. The FM sector, like all other sectors, is being hit hard and the position is unlikely to change as we head into a New Year that might well see a number of established players do well to last the course.
To my mind, I do believe that opportunity exists out there, but I would add a large dose of realism to what I’ve seen written by others. For client organisations, it’s time to go back to basics with a review of FM strategy, a reconsideration of business need both in terms of services and service levels, and – out of that – an appraisal of supply options. From my own experience, this process usually becomes part of a “contract life-cycle” but there’s no reason why special circumstances shouldn’t result in a different approach and a different timetable. For service providers, it’s absolutely imperative not only to be proactive, but also to be innovative. Doing nothing will simply result in margins being eroded or – worse still – contracts being lost as clients align themselves with those organisations demonstrating a commitment to delivering better value. That’s “better value”, not “lower cost”, and the two things are not necessarily the same (although I accept, of course, that they often go hand in hand).
One thing I don’t see for 2009, however, is a year of business as usual. Those who pretend that it will be are likely to be the first casualties of the media hype I referred to earlier.