The challenge of managing multiple contractors and the lure of economies of scale are driving many towards consolidating more of their FM contracts with fewer and fewer suppliers. But what are the strengths and weaknesses of single service, bundled and Total Facilities Management approaches?
Right now 69% of the market outsources more than half of their facilities services. And only 6% of facilities services choose to deliver them entirely in-house. Although the trend to embrace TFM has slowed in recent years, for companies of a certain size, the appeal of outsourcing all the risk and complexity of multi-site FM management is strong. At the last count around 12% of all FM contracts were based on a TFM model.
But which outsourcing model is right for you? What are their pros and cons?
Single service vs bundled vs TFM
In the single service model companies look to appoint and manage a range of specialist FM service providers to work with them. In this ‘best of breed approach,’ the company outsources to known suppliers and directly handles procurement, contracts and day to day relationship management.
In the bundled scenario, companies are looking to rationalise their suppliers by bundling together three or four similar services to be dealt with by one contractor. There might be a few types of services bundled (typically split between hard and soft FM services) and dealt with by different suppliers.
In the Total Facilities Management model a company places all the responsibility and the risks associated with FM service provision into the hands of one company.
Outsourcing to a single operator means companies can cut internal FM teams and reap the benefits of economies of scale. Freed from the burden of everyday FM management, they can work with their TFM supplier on the ‘big picture’, focusing on data analysis, broader cost saving initiatives and other strategic objectives. That's the theory, anyway.
The Pros and Cons of a Single Service Approach
In house FM teams retain complete control over multiple contractor relationships:
- A ‘best of breed approach’ means companies can build one to one relationships with contractors
- They can develop deeper relationships with these partners to drive better prices and performance.
- Direct relationships with different service suppliers mean FMs can address problems in specific service areas in more targeted ways
- Control over all your contractor relationships should give you complete visibility of spending and allow you to determine overall delivery strategy
- The burden of managing day to day tasks can take internal FM focus away from their ‘big picture strategic objectives’ - and the scale of the task can overwhelm resources
- Managing contractors across multiple sites and regions can be a major logistical challenge
- Many in house FM managers don’t have the digital tools to manage multiple contractors effectively.
- Without access to real time data to track and benchmark contractor performance it can be impossible to see who is offering the best value, where problems might lie and plan optimisation activities
The Pros and Cons of Bundled Services
Bundles of related services are outsourced to specialist providers,
- Risk is spread - you don’t have all your ‘eggs in one basket’
- When you procure multiple services from a single provider, you can lower the individual cost of each service
- Companies can achieve economies of scale, while maintaining more oversight and control.
- This approach allows you to pick and choose which services you want to bundle and which you want to retain or give to other suppliers
- Your contractors may be sub-subcontracting - and you may not be aware of it
- Contractors may insist on using their own work request portals and reporting systems
- You may have to log on to more than one system to track progress or access data
The Pros and Cons of a TFM approach
All your FM services are outsourced to one contractor
- A TFM ‘one stop shop’ can take the headache of running multiple procurement processes away from you
- Dealing with a single point of FM contact improves focus and efficiency
- Economies of scale mean TFM providers can offer the most competitive rates.
- They can offer a comprehensive range of ‘soft’ and ‘hard’ FM services and often impressive coverage that appeals to large multi-site businesses with property spread across the country.
With a highly resourced TFM supplier, companies might expect better access to data platforms to report on KPIs and technology that smaller suppliers won’t be able to offer
- TFM procurement deals are complex, multi year and large scale; once you’ve committed to them they are hard to terminate
- This can lead to a complacency on the part of the contractor when it comes to delivering quality
- FM providers have often grown their offering through takeover, acquisition and subcontracting. So, they may not be as connected or as ‘joined up’ as you might think
- The desire of the single umbrella company to offer such a large spread of services, even in areas where they’ve not traditionally had expertise means quality can be patchy.
- You may see stark differences in quality between the provision of different services and between regions where different subcontractors are used.
- ble on demand.
Taking back control?
In the past a typical journey for many businesses has been to move from Single Service to bundled services to a TFM scenario. Although in the wake of the collapse of Carillion, the faith in large scale outsourcing has been shaken. If you can potentially lose access to your entire FM services overnight, then is that a risk you should really be prepared to take?
The challenge of managing individual relationships with multiple suppliers is one that many businesses simply haven’t wanted to embrace. And the challenge of doing this in a large multi-site company with premises spread across the country can add to the pressure.
That said, while TFM and other supplier consolidation solutions can offer compelling cost saving opportunities, they often require sacrificing control over relationships and data that can stand in the way of long term service improvement and optimisation.
Is there an alternative?
But modern CAFM systems are giving companies and Facility Managers the opportunity to bring multiple supplier relationships under much closer control, through single software solutions.
The new FM platforms that are emerging are automating and integrating processes and systems to bring previously fragmented data together in one place at the touch of a button. They have powerful communication and data analysis tools that make managing and benchmarking multiple suppliers more intuitive and straightforward.
And where once companies might have felt they had no choice but to sign up for contracts with super-size suppliers, there is now an alternative.