Procurement - who holds the power?"

FM L EADERS FORUM : D I SCUS S ION PAP ER

PROCUREMENT – who holds the power?

FMleadersforum

Procurement: Who holds the power? | 1

Contents

Introduction ................................................................................................................................. 2

Executive summary ...................................................................................................................... 3

The panel ..................................................................................................................................... 5

The discussion .............................................................................................................................. 6

Do procurement teams understand FM? ................................................................................ 6

What does the focus on cost savings mean for FM procurement? ....................................... 8

What is the importance of relationships in procurement? ................................................. 11

What are the issues involved in managing longer-term contracts? ................................... 14

Can the public and private sectors learn from each other? ............................................... 16

How are the current conditions in procurement affecting people? .................................. 18

Conclusion ................................................................................................................................ 20

What next? ................................................................................................................................ 22

About the panel ........................................................................................................................ 24

Glossary ..................................................................................................................................... 27

Publisher

Published by the British Institute of Facilities Management

© BIFM February 2013

If you have any questions, please email [email protected]

Disclaimer

The discussion contained within this document reflects the views of those in attendance at the FM leaders forum event and do not necessarily reflect the views of the British Institute of Facilities Management.

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Procurement: Who holds the power? FM LEADERS DISCUSSION FORUM

Introduction

Gareth Tancred, CEO, BIFM

Buying power and where it lies within the facilities management sector was the starting point for the second FM Leaders’ Forum. The issues around the way FM services are currently procured were explored in a lively and entertaining discussion that threw up many thought-provoking opinions and points of view.

In what is an increasingly tough operating climate, FM suppliers are constantly finding that procurement teams want to renegotiate contracts to find savings whilst retaining the same level of service. Some within the industry are concerned that decisions made on price are beginning to affect quality, influencing the way that facilities management performance is viewed and eroding the perceived value of FM to business.

Everyone wants more for less. However, the desire for short-term reductions in price is being pursued with no regard for the long-term reduction in value. Facilities management professionals, like their colleagues in other built environment professions, are enduring a frustrating time right now. In order to provide value for money they must consider the long-term impact and not just the short-term gains favoured by those responsible for procurement. The solution to this dilemma is not obvious, but one answer might be a

better understanding of each other’s requirements. A more open dialogue between customer and supplier will reduce tensions, encourage transparency and build trust – enabling shared value to be engineered throughout the life of a contract. It might be a clichéd argument nowadays, but better cross-departmental working, collaboration, trust and transparency delivers better results for everyone.

A good procurement process is good for business – it drives improved service and value, and encourages less waste. But procurement is about the correct balance of power. Get the balance wrong, everyone loses – and the people who are affected most are the end users and employees at the sharp end of unrealistic service delivery agreements.

To achieve the right balance we must, as an industry, consider how to educate the sector as a whole and support our people better.


Executive summary

Nobody ever said that procurement in facilities management was going to be easy. One of the main problems complicating the process is the difference in outlook and culture that tends to exist between the various suppliers, partners and customer organisations involved. Ignorance of FM and lack of transparency can lead to abuse of the process by unscrupulous operators. All of which means that there is no one-size-fits-all solution.

There is often mutual suspicion between FM service providers on one side and procurement professionals on the other. Mistrust begins when the various parties involved are not open with each other about their objectives. This is why transparency, trust and partnership are central to a successful procurement process, and will form the bedrock of a sustainable, value-driven contract. The purchasing process must be aligned with the corporate objectives of all parties.

But how is this to be achieved? Some would argue for a clearer, more structured process, using standardised benchmarking to enable the customer to judge the best value offer. However, in practice the decision to work with one team or buy business-critical services from another is heavily influenced by the characters involved in the sales negotiations. The personal touch can be invaluable in building trust and enhancing transparency. But is it right for such important decisions to depend on the personalities of those involved at that particular time?

What everyone needs is a consistent approach, and lessons can be learned from the best procurement processes – if we could only agree on best practice. Some feel that aspects of the public sector model, such as ‘competitive dialogue’ and full disclosure, can work well for the private sector too. Others believe the detail and timescales involved in public procurement

are costly and wasteful, and advocate the freer process championed by the private sector. The ideal solution probably lies somewhere in between; a robust structure, as opposed to a rigid template, might be something that the FM industry can develop alongside a representative group of clients, ensuring better value for all.

One area that certainly needs defining is how bids and tenders are weighted. An effective structure should encourage customers and their procurement teams to demonstrate early on exactly how they intend to assess bids – it is, after all, much easier for suppliers to provide a properly costed, workable proposal if the parameters have been clearly defined and a tight brief agreed.

Indeed, getting the basics right is essential to the long-term success of the relationship. The contract might well be fixed for three or five years, which means flexibility must be built in from the start. As in every relationship, each side needs room to grow, develop and mature, and the more open the relationship between supplier and customer, the better the result for everyone. Many would argue that the procurement process needs to provide for the eventual termination of the contract. After all, who is to say that the service provider will still be the right FM partner five years down the line? Just as a prenuptial agreement ensures the orderly termination of a marriage, an FM contract


should provide for an amicable and efficient transition to a new supplier.

The procurement process also needs to make space for each side to question and challenge the other. Key questions for a supplier might include the way they intend to manage relationships with other providers and supply chain partners, or exactly how they can deliver a cheaper price without compromising quality and value. Customers may need to be challenged on their understanding of FM, their cultural values and their expectations. One point that emerged strongly from the discussion was that procurement should not end with the signing of the contract – just as a marriage needs to be worked at, so the ongoing professional relationship must be managed to ensure that knowledge is transferred and shared, and that the partnership does not degenerate into apathy and alienation as key staff come and go. The fallout of not doing this

affects all of the stakeholders, especially the lives of the people caught in the middle of the relationship – the staff. The procurement process must acknowledge it has a duty of care to the individuals on both sides delivering the services specified in the contract, and to third-party suppliers.

In summary, collaboration, trust and transparency are central to procurement success. And that means good communication – being open and sharing the right information. It also means educating each other – too often clients are poorly informed about their actual requirements, and what facilities management can do for them. FM has an opportunity to drive procurement forward and deliver a better process that benefits everyone – but this must be done alongside the ongoing mission to educate UK business plc about the benefits of facilities management.

The discussion highlighted: Procurement of FM is a complicated process. There is a need to understand how changes to contracts impact at an operational

level. There is a need to define terms of reference for the roles of procurement and FM

teams, and how they can support each other. The importance of cultural fit between suppliers and clients cannot be

underestimated. There should be regular reviews and staff delivering the contracts need to be

adequately briefed. Elements of the framework used within the public sector could be useful, such as

customer benchmarking, but would have to be flexible. There needs to be clarity regarding how bids and tenders are weighted from the

outset. Length of contract is an important consideration that can affect delivery quality

however flexibility needs to be built into longer-term contracts to ensure the continuing health of the relationship over time.

Termination clauses are an important component in the relationship and should be built into the contract from the outset.

Transparency and trust are essential to a good procurement process. This not only needs to be within the relationship but also incorporated into the contract.

There is a continued need to highlight the business benefits of FM to help demonstrate value.


The panel

Leaders from across the facilities management sector and beyond are invited to take part in the FM Leaders Forums. This forum’s participants included:

PARTICIPANT JOB TITLE ORGANISATION

Gareth Tancred CEO BIFM (facilitating)

John Bowen Managing director Gulfhaven Business Solutions

Ashleigh Brown Head of FM consultancy Dovetail FM Recruitment

Elaine Farrar Director CREAS, UBS

Mark Griffiths Contract director ETDE FM Limited

Lucy Jeynes Managing director Larch Consulting Ltd

Roger King Director projects & programmes Telereal Trillium

Demitri Maldonado Client development director Vinci Facilities

Leigh Mapledoram Programme area manager WRAP

Clare Ollerenshaw Project manager WRAP

Mike Packham Partner Bernard Williams Associates

Nicola Paice Senior consultant Appleyards

David Quinn Strategic sourcing manager Barclays Bank plc

Martin Read Managing editor FM World

Wayne Tanner Head of vendor management & procurement

UBS

Mark Turvey Associate director Accenture Workplaces Operations

Also present:

Andrew Brown Freelance PR, editor and writer Frank and Brown

For further information about the participants, their experience and expertise please refer to pages 24-26.


Procurement: Who holds the power?

The discussion

Do procurement teams understand FM?

Gareth Tancred: I think we can all agree that facilities management (FM) is a complex procurement issue. How far do you think that procurement teams and professionals understand FM, and what does this mean for the FM procurement process?

Wayne Tanner I don’t think that procurement professionals can really claim to add as much value as they could unless they understand the facilities management world specifically. When I’m looking at recruiting new members of staff I definitely favour those that have had operational roles in the past so that they can empathise with the challenges of delivering whatever sector of facility management they would be responsible for sourcing going forwards. I think it provides a degree of pedigree rather than purely having come through a CIPS route, where you have the technical ability to source without the empathy, the understanding of the challenges of the facilities world in which we operate. And indeed, the subtleties that differentiate the suppliers in the facility management world and what their value proposition actually is. For me the devil is in the detail and it’s often that subtle expertise and knowledge that brings the difference to the enriched sourcing decisions.

Ashleigh Brown Sitting in front of procurement people who have not the faintest idea of what an FM does all day is frustrating – it’s extremely difficult to try and justify using a specialist recruitment service. High street agencies can go in at

any money to win the business, but they won’t necessarily have the knowledge and experience of an FM specialist who would charge slightly more for their services but would deliver quality candidates who really understand the role and the industry. The reasons why people leave their jobs have been changing over the last few years from ‘I want to leave because there’s nowhere else for me to go in this company’, to ‘I want to leave because my personal values are being completely obliterated in my attempt to deliver this badly procured contract’ – often contracts are procured by people who have got no understanding of the real cost of running a building or running a service.

Often contracts are procured by people who have got no understanding of the real cost of running a building or running a service.


Mark Turvey One of the core issues is that within client organisations few people recognise the value of FM until it goes wrong. So it doesn’t sit high on people’s radar of what is key to the business until the building floods or something doesn’t work. If you’re reasonably successful at running your internal FM organisation, then you’re pretty much left to get on and deal with the issues. It’s up to people like myself to raise FM’s profile within the organisation and show the value we add, and actually demonstrating that value is sometimes difficult.

Ashleigh Brown Most big companies do not understand the value that facilities management can actually add to their organisation. One thing that shocked me rigid when the recession hit was how many companies laid off their FM teams or made their facilities managers redundant, and were left with a building and services that were not being managed with only the MD’s PA etc to look after whatever came up.


What does the focus on cost savings mean for FM procurement?

Gareth Tancred: During the course of the recession, FM suppliers have found that procurement teams are pushing harder for cost savings. Has that affected service delivery and performance? Are there changes in the way that procurement decisions are being made? Who holds the power in procurement at the moment?

David Quinn I think it’s more a case of organisations pushing cost savings and they are challenging internal departments such as corporate services, marketing, or technology, saying we spend this huge amount of money and we can’t go on spending like that, what are we going to do about it? And, procurement has a role to play in that, but in my view it’s not about procurement saying right, where are we going to save money? It’s about working with internal organisations who probably have their own cost pressures, who are being challenged on a daily basis to say how they are going to reduce what they spent last year. My view is that procurement is there to help those internal organisations, not just FM, to deliver against some very challenging targets.

Lucy Jeynes Procurement is having its moment in the sunshine. Procurement are our friends. They have been at the back while we in FM have been focused more on service and less on cost, but for procurement it’s been a bit like it has for us in FM, trying to demonstrate where they add value, and how they support and assist rather than detract from the process. Procurement can add a lot of value to the FM team, because it’s about helping the FM team to understand that although the deal has been procured, that isn’t the end of getting a good deal out of it. It’s looking at all the things that perhaps we’re not so

good at in FM – particularly the contractual side, where there might be scope creep, for instance.

Mike Packham I think it depends on the organisation. I work in a number of procurement departments, and where procurement fits within these organisations varies. In one American company I’m working for at the moment, the FM guys are scared to have a meeting with their service provider unless they have the procurement department there to hold their hand. To me that’s gone too far. I think there is a role for procurement, but we need to define the terms of reference for both procurement and FM and make sure that the two mesh appropriately, given the organisational requirements.

We need to define the terms of reference for both procurement and FM and make sure that the two mesh appropriately, given the organisational requirements.


Mark Turvey The power must reside with me, in that I hold the budget and therefore the decisions that we make around procurement. Having said that, in my organisation the legal team wield quite a lot of the power. I can make all the decisions I like around the supplier and being able to do what we want at the right price, but then it comes down to terms and conditions.

Martin Read Surely the power is in the hands of someone who fully understands what it is they’re doing. Isn’t that a fundamental problem with a lot of FM projects? We’re agreed that FM is a particularly complex procurement issue, and we’ve talked about how so many procurement people don’t understand FM. So surely the power should be with those who can explain the scope and the totality of the project. Frequently it becomes a mishmash of procurement pushing the issue when a contract term is coming to an end; there’s nothing like enough input from FM into saying this is how things should be. Someone needs to jump in and say OK, we’re going to start an FM project, these are the parameters, this is how it affects how our image as a company is perceived, this is what we need to do, this is how we should measure it – and then package all of that up.

David Quinn From a Barclays’ perspective it’s very much a partnership, working with key internal clients like FM services or technology. I’ve worked for other organisations where procurement has had more of a mandate, as in nothing gets spent unless procurement are involved, and I think that drives a certain type of behaviour within that procurement organisation. They expect that internal client organisations have to come to them and gain their agreement. I’m much more on the side of working with internal client

organisations to establish trust and credibility. It works best where the power is a joint responsibility, and when you get an internal client organisation working well with the procurement organisation that’s a powerful union when you’re dealing with suppliers. If you’re fully joined up it’s very difficult for suppliers to start picking that apart and trying to play games between the internal client organisation and the procurement organisation.

Elaine Farrar I think there is a fine line between operational facilities management and procurement, and where it works best is where there is that true partnership and where we actually listen to each other, and help each other get the best out of any tender exercise we might undertake. My previous experience before coming to UBS was of a very strong, domineering procurement presence which was not necessarily helpful to the operational team, who were left with contracts to manage that were difficult or too complex. I don’t think we get into that complexity within our current contracts at UBS, I think there’s a balance; they are operational-led contracts, but the procurement team are always there for us if we need them.

I certainly see a shift of power from what used to be traditionally procured by the FM professionals within an organisation towards the procurement side.


Demitri Maldonado I spend my life on the outside of procurement processes, very much involved in the business development side of things, and I certainly see a shift of power from what used to be traditionally procured by the FM professionals within an organisation towards the procurement side. I wonder whether that is the result of pressures on companies to make further cost savings, so senior management have said: procurement, you have been successful in procuring product, why not put your hand to procuring services, and then it goes to that commodity side of things. In an ideal world you would have a balanced group of procurement professionals with the right FM input, but the reality is that it sometimes comes down to the strength of the characters in a particular group. You might have a particularly dominant procurement person or a domineering FM person, and they tend to be the influencer overall, irrespective of whether procurement or FM are leading the process. So it comes down to being able to read those particular individuals.

Martin Read Surely now, during this time of low economic growth, is exactly the time to be looking at structuring FM deals in a better, more durable way instead of simply relying on the strength of individual characters? I can’t see how it can be sensible for the long-term image of the sector if all the successful FM deals boil down to the work of a few individual characters with the experience or whatever to make a particular deal work. Isn’t now exactly the right time to be looking at how FM procurement deals are structured?

How can it be sensible for the long-term image of the sector if all the successful FM deals boil down to the work of a few individual characters?


What is the importance of relationships in procurement?

Gareth Tancred: I’d like to explore relationships and how clients and suppliers can support each other, particularly during difficult times. Can suppliers and clients really trust each other? Can there be complete transparency on a procurement project?

Lucy Jeynes A lot of the contract management guidance projects that I’ve been working on that have been procured by FM have been poorly procured, and then poorly managed in respect of the commercials. That’s because the focus has been on managing to deliver the service, and a good service to clients is not the only variable in the value equation by any means.

It’s common to see good commercial arrangements that haven’t been followed through: innovation groups that never meet, incentives that have never been pushed for, penalties that have never been invoked, all sorts of KPIs that have been missed. It’s slack and sloppy and it’s not

achieving value, and that is because there is this power struggle between procurement and FM. Procurement are told at the end of the tender process: you can get lost for another three years now, when actually there’s this whole discipline of commercial contract management that is not the same as service delivery management. This is something we in FM could learn a bit more about and be better at – it’s one area where our procurement colleagues can teach us a lot about how to get the best value out of the contracts we place.

Ashleigh Brown One of the best experiences I have had was working with a company where we actually formed a true partnership. I would go and see the head of HR every couple of months and we’d talk about where the company was going and what sort of expansion plans they had and what kinds of new projects they had in the pipeline. Whenever they needed somebody we could ensure there was a talent pool that they could just pick up from. I believe I took the relationship to the next level with constant, really open communication and complete transparency from both sides. Obviously it’s completely confidential from our end as my client is sharing very important information, but that trust built up slowly and it’s worked out to be one of the best relationships I’ve ever had, because I always know what’s happening with them

It’s common to see good commercial arrangements that haven’t been followed through: innovation groups that never meet, incentives that have never been pushed for, penalties that have never been invoked, all sorts of KPIs that have been missed.


and it’s so much easier to service that client and to be completely responsive when they need something. A true partnership and a true relationship is the best way forward in any procured service.

Mike Packham When we go through the tender process, one of our selection criteria is feel-good factor. We spend time going out and visiting the guys, we meet the people who are going to be running the thing, the account managers and so on, and we go through quite a long process. Clients say it takes far too long, but for the longer-term benefit of the contract I think it works well because you get the mentality built into the relationship right from the start – that the client doesn’t only want the best bidder now, he wants the best bidder over the three or five years. Lots of clients are looking for commitment to making savings over the period of the contract, and that comes out of cultural fit, both sides understanding each other. For the more enlightened clients, rather than the ones that are more cost driven, you do have the opportunity for the FMs and procurement to work together and create longer-lasting relationships.

Mark Griffiths That’s the crucial thing, the importance of procurement working with FM, because if it works well they can advise on how to incorporate flexibility into the contract, write clauses for that kind of approach which helps everybody understand the thrust of the direction of the contract.

David Quinn A lot of dialogue so far has been around procurement working with FM organisations, tendering, going out to the market, negotiating deals. But if we’re putting three-year, four-year, five-year deals in place, there needs to be an ongoing relationship and management of

that supplier to make sure we’re getting all the benefit that was agreed as part of the original deal, and we’re identifying opportunities to release more benefit. I think the right type of procurement organisation has a good role to play in that – they need to stay close to the FM services organisation and not just walk away as soon as the deal is done, because that way danger lies.

Wayne Tanner I’m seeing on the suppliers’ side two really interesting and to be encouraged trends. The first is that sophisticated suppliers are investing in good-quality client relationship managers who are targeting specific clients with whom they are discussing on a six-monthly basis what the company is up to, how they can progress, and what the service proposition is. For me, that has so often led to a contract with that supplier because they’re in it for the long game, it isn’t just about receiving an invitation to tender and bidding, there has been much more investment in time from their point of view. I also like it when as part of the relationship, either through a tender process or a performance-related review, the supplier pushes back and says you can’t have it all your own way; this is what it said in the contract, this is what we agreed, this

The procurement organisation needs to stay close to the FM services organisation and not just walk away as soon as the deal is done, because that way danger lies.


is how you’ve made it difficult for us to deliver. I think so often there’s a degree of subservience from the supplier chain to its client, the customer is king and therefore always right, but that’s such an old-fashioned notion – particularly when we’re dealing with commercial tension that we’ve never really had to experience in the past.

So often there’s a degree of subservience from the supplier chain to its client, the customer is king and therefore always right, but that’s such an old-fashioned notion.


What are the issues involved in managing longer-term contracts?

Gareth Tancred: How does time affect the client-supplier relationship? Is there an optimum period for an FM service contract?

Lucy Jeynes Three years with a three-year renewing clause seems to suit everybody.

David Quinn We typically go for the largeish service contracts where it would be a minimum of three years. Where it makes sense to do it we push it up to the four or five year mark, because if it’s a major service and you’re bringing in a new supplier they need time to get themselves in and fully understand the lay of the land. You’re talking six to nine months for them to get fully up to speed, then they can start to deliver truly in year two. If it’s a three-year contract their attention starts to focus on the contract coming to an end and that instills certain types of behaviour, so it’s about moving towards longer-term contracts supported by a mechanism that allows the contract to be managed properly throughout. You are continually releasing value through the term and you can demonstrate that the contract is working, so as the end date starts to approach there’s an opportunity to extend your existing supplier rather than religiously going out to the market again, because there’s a cost to continually going out to market.

Wayne Tanner There comes a point when it is in the best interests of both parties to finish on a high. With an outsourced relationship there comes a point when you’ve just got to part because a new broom sweeps clean, you need a change. Often by the time you recognise the need

for change it can be too late because you’re in a situation of apathy with the relationship. For me that period is about seven to eight years max. I’ve inherited lots of contracts at UBS where we’ve got to that stage and I find there’s no going back, because nothing is going to fundamentally change. Talk is cheap, commitments are cheap, people are not delivering, and it’s simply a case of terminate and tender.

Mark Griffiths Do you genuinely get the change, though? Does that change of culture happen going through the process?

Wayne Tanner One of two things generally happens. You demonstrate to the current incumbent that it isn’t just a case of them taking the contract for granted, so by formally going to market they have to sharpen their pencil. The differentiator between companies can be very thin and may not warrant the risk of change, but you’ve refreshed the relationship and

With an outsourced relationship there comes a point when you’ve just got to part, because a new broom sweeps clean – you need a change.


you’re moved the contract on to a new phase. However, I have to say in my experience the incumbent squanders the opportunity; if the relationship was already in apathy mode, the tender is not going to change it. Often there’s a disconnect between what you get from senior management employed to deal with the corrective measures that are needed, and the fact that the same staff are still delivering the service day to day. We get no end of commitment from the COO or CEO because they recognise the risk of losing the contract, but the reality is nothing changes at the point of service delivery. You really do just need a change. And it’s in both parties’ interests, because in the financial services sector we are fascinated by which service providers are working with who; we get to know about who has a good versus a poor relationship with a service provider, and it can put you off.

Mark Turvey It comes back to relationships and individuals. If you have the right client service manager within the supplier organisation working with the educated client, then it works. When that relationship breaks down and the apathy sets in, then you need to change that relationship and start anew with some fresh eyes and fresh belief, fresh ideas and fresh energy, because that’s generally the

problem. The energy levels needed to continuously innovate and solve problems eventually wear people down.

David Quinn When you’re starting a new relationship and a new contract, one of the things people don’t want to talk about is how you’re going to exit from it. There should be an exit clause, in fact a document that ensures everyone understands their obligations, what they need to do and what the organisation needs to do, when it is time to exit. You need to start thinking about that before you actually sign the contract in the first place to make sure you get that absolutely right.

John Bowen That’s right. The exit strategy is part of the tender exercise, and everyone must know at that point how to terminate it and how you’ll divorce.

The exit strategy is part of the tender exercise, and everyone must know at that point how to terminate it and how you’ll divorce.


Can the public and private sectors learn from each other?

Gareth Tancred: I’d like to compare how procurement works in the public sector and the private sector. What are the real differences? Does one sector have anything to learn from the other?

Nicola Paice Competitive dialogue as part of the process is something that the private sector has taken from the public sector. It gives you the opportunity to get the right supplier with the best offer. Of course some public sector procurement processes have to be advertised in the OJEU which gives most people an opportunity to tender for that particular contract. If there isn’t much time you can use a restricted procedure, which knocks out the little supplier down the road who’s not appropriate, but does mean you can’t go into competitive dialogue. The other point about public processes is that you do have to show all your evaluation criteria, so you’re not getting blind tenders – you’re not having to waste time reading through stuff you don’t need. Although public processes are much maligned, actually there are some good lessons that can be learned from a private point of view.

Demitri Maldonado I see it as a trend, more and more competitive dialogue is being borrowed from the public sector, and from my point of view it’s fantastic because you know who you’re dealing with, you don’t leave any stones unturned, and you really get behind what it is you’re all trying to achieve. We don’t always have the tools and the toolbox to do a particular piece of work so we have to be as open and honest as possible, and the end result for the company is they get the right supplier that can provide the right service. FM is complex, you have to get to grips with large organisations where there are cultures upon cultures, and competitive dialogue is a great vehicle to be able to do that. It also allows us, a service provider, to make the right bid/no bid decision, so it works both ways.

Lucy Jeynes I think the public procurement directives have added a lot of value because they give a structure that everyone can understand, they give a rigour to the process. They encourage disclosure of what the client is actually looking for, there’s a lot of flexibility around the different processes, and I don’t think they deserve the bad reputation they’ve got. If you’re running the competitive dialogue procedure and you’re starting off with a cultural fit dialogue before the commercial dialogue, it’s a really good way to find people. I like the rigour of the restricted procedure,

Although public processes are much maligned, there are some good lessons that can be learned from a private point of view.


everyone knows what they’re supposed to do, and of course what we don’t like to say in FM is that before we had that rigour the public sector were not that great at opening up their books – they had Buggins’ turn, the same people stayed in place for a really long time, and they would shortlist their suppliers through golf, freemasonry, the Spearmint Rhino... It was difficult to get in and a lot of organisations were excluded. Now they have to put out prior information notices, advertise their requirements, and there’s a structure to applying as well, so everyone has a chance of getting their foot in the door.

John Bowen I accept the disclosure side of things and I’ve always been a fan of being open about what we’re trying to buy, and yes, there is a structure, but I think the public procurement regulations waste so much money from the public purse it appalls me. The process takes far too long, it wastes time, and I don’t think it gives the right deals, it certainly precludes the client from putting together the sorts of deals that they could achieve if they were in the private sector. I don’t like them, I would like to see them radically revised or better still thrown out, because if we just operated on a decent procurement basis then we could do so much better for the public sector and spend our tax money a lot more wisely.


How are the current conditions in procurement affecting people?

Gareth Tancred: We’ve talked about the impact of the recession on FM procurement, but what has been the effect on people – the employees who actually deliver the service?

Ashleigh Brown As I said earlier, a few years ago people were leaving jobs because there was nowhere else for them to go in that organisation. Now I’m having conversations with people who are leaving jobs because their personal value systems are being challenged in order to deliver contracts which are undeliverable for the most part, and it’s causing huge amounts of personal struggle. We’re in a recession and people need their jobs, but then do they continue to tell lies to their client about how much time they’re spending on a contract where they’re supposed to be a full-time employed facilities account manager, but they’re actually managing four or five different accounts where they are also employed full-time? Every single day they feel they’re compromising their own personal values, and it’s very tough for some of them to deliver on contracts that have been purely cost driven. A lot of the people who have put these contracts together have not conceptualised or understood exactly what’s involved in the running of that building or the running of that contract, and how much time is required, and some of the conversations I’ve been having with people leaving companies have been really disturbing for me as a recruiter as, knowing what I know, how could I in good conscience put anyone else in that role? Three or four years ago it wouldn’t have crossed my mind that I was going to have any issues with companies behaving badly, as it were.

Gareth Tancred What about the impact of cost pressures?

Lucy Jeynes It’s something I don’t think we’re very good at talking about. We all sit around tables like this and we’re right at the top of that Maslow’s triangle, discussing the niceties of it over coffee in a bank and it’s all great, but what we’re actually relying on is a lot of people at the bottom of the wage scale wondering if they can get up to the London living wage, or just have one job instead of having to take another job as well. We say to them ‘make your customers feel special, but understand that we don’t think you’re special’. They are struggling to get two coins to rub together to look after their families in a recession, while we do not focus on helping them get to a place where they can deliver the kind of service that would really add some value and

I’m having conversations with people who are leaving jobs because their personal value systems are being challenged in order to deliver contracts which are undeliverable.


make some difference. If you don’t get people up to the living wage, it means they are going to have two jobs, they’re going to do your job then rush out the door to go and do their other job, or they’re going to arrive knackered because they’ve already done a shift driving a minicab or acting as a security guard, and they are not in the zone we need them to be in to demonstrate that FM is really adding value to the organisation.

Ashleigh Brown If you look at your three-year or seven-year contracts or whatever, how many changes of staff have you had on those contracts, and never picked up the contract document when a new person has walked in the door and said let’s go through what we are meant to deliver. I can’t tell you how many times I’ve recruited somebody into a role, and said to them a couple of weeks into their recruitment, how’s it going, do you know

what the deliverables are, has someone gone through it with you, and they have no idea of the scope of the contract, or what is in it or what’s supposed to be delivered. Then a year down the line the client who’s getting the service is calling me saying we’re ready to go back to the market because the service is rubbish, but it’s because after two or three changes of staff nobody knew what it was meant to be – they’ve not gone back to the basics. It would also be fantastic if the personal development of the teams delivering services onto sites was considered at procurement stage, and at least one line included in the RFI as a standard request to check what service providers are doing to ensure the development of their on-site teams, as this, ultimately, will lead to better service delivery as well, and make it easier to find great people for these types of roles.


Conclusion

Procurement in facilities management is a complex issue and this discussion was focused on the balance of power across the different relationships involved in the procurement process.

What was apparent throughout this debate was the importance of relationship management; transparency and trust were agreed to be the key corner stones to building effective working relationships as part of the procurement process. The most effective relationships were not about power struggles but shared responsibilities and understanding.

The procurement process for many in-house FM teams means the involvement of the procurement department and the discussion highlighted a range experiences from good to bad. That said, procurement teams and processes should not be seen as a threat to FM. Their knowledge and support can provide real value, particularly around aspects of contractual negotiation and specialist clauses. However, fundamentally the expertise to evaluate and select the best supplier of FM services resides firmly with the FM team.

There is a lot to be said for a strong and supportive relationship between FM and procurement teams, difficulties were found to arise when the business itself doesn’t fully understand FM and as such exerts pressure around the only indicators they know and understand, rather than the full suite of metrics that FM could offer the business. We cannot assume that just because organisations – be they in the public or private sector – engage in a procurement process with the FM industry that they wholly understand or appreciate what FM is really all about. Until this issue is

resolved then the issue of power will more often than not be an issue of conflict.

The balance of power in the relationship between the client and supplier, at both the procurement stage and the effects on the ongoing contract management, was also looked at.

Discussions highlighted that successful procurement tends to have clear processes, transparent evaluation criteria and a framework which is understood and shared by buyers and suppliers. A trend was highlighted with the private sector increasingly implementing elements of the public sector’s competitive dialogue process. This transparency was felt to aid the process for both the buyer and the supplier in making informed decisions about purchase and indeed whether to bid for the contract.

However the ongoing management of the contract between client and supplier was an area of concern for many and one that needs acknowledging as being as important as the procurement decision point. A cultural fit needs to exist between buyers and suppliers; and one that is developed and supported throughout the contract. One of the catalysts discussed for relationship success was the length of the contract. There tends to be a fear from buyers that if a contract period is too long then supplier apathy will set in; however this could be dealt with through ensuring clarity around exit clauses and obligations are built into the procurement process. Three year contracts were found, for some services, to affect the quality of delivery as in the first year of service often key learnings are made, given the opportunity they are able to adapt and make changes


to their service offerings, however shorter contracts focus tends to switch to the renewal date.

Because getting procurement right is all about the correct balance of power, then far more people can be affected than just those responsible for the immediate contract negotiations. We must, as an industry, be mindful of that responsibility; any best practice guidelines or framework for procurement developed as a result of this debate must consider the balance between the cost of operations and the welfare of people fulfilling the contract.

Because getting procurement right is all about the correct balance of power; if the balance is wrong, then far more people are affected than just those responsible for the immediate contract negotiations.


What next?

If it is true that many clients and their procurement teams still do not know enough about exactly how facilities management can add value to their respective operations, then one core target for BIFM and the industry is to educate the marketplace about FM.

To overcome this, as an industry we must engage in general awareness-raising, right across the marketplace, to make certain that decision-makers and client organisations are educated and informed about the value of FM and the impact it can make on a business or public sector body. This might entail a thorough review of the manner in which FM and the business service sector communicates, as we must ensure that FM has the correct messages and the means and method to inform the stakeholders within the UK built environment about its total offering and strategic value to the broader economy.

Although improving communications with the rest of the business is the first step towards this, it was thought that successful procurement often has clear processes, transparent evaluation criteria and a framework which is understood and shared by buyers and suppliers.

To that end, BIFM should consider developing stronger connections with industry partners and make better use of existing resources and frameworks within organisations such as the BSI and CIPS. As

an industry we should be advising these bodies of our own requirements for procuring FM services. We are the experts in this field and who else is better placed to offer this expertise?

One way that BIFM can continue to enhance the procurement experience in the short term, is to broaden the discussion and develop the debate about how to improve the process, reaching beyond members of its special interest group and engage with other influential decision-makers and opinion formers.

One immediate solution that BIFM could consider is providing better support for FMs with procurement through its CPD programme, not only advising on procurement itself, but on developing relationships with the rest of the business and communicating the impact of procurement decisions, as well as exploring other ways to support people.

The panel suggested that the procurement debate could be moved forward, and best practice highlighted, through case studies of exemplar procurement exercises. Identifying examples of good practice might help to expose the impact of poor procurement practice, particularly upon people within FM and the wider built environment.


Future considerations:

> BIFM to continue its general awareness-raising regarding FM, focusing on clarifying the strategic value of FM and the impact it can have on an organisation. BIFM needs to ensure that FMs have the correct messages and tools to inform others within their organisation.

> Look to further develop work with industry partners and make better use of existing resources (working specifically with the BSI and CIPS).

> Look at broadening the procurement discussion beyond its own special interest groups and into the wider industry, aiming to:

> Provide advice for FMs on procurement processes

> Support FMs in communicating the impact of procurement decisions to other areas of the business

> Identify ways in which people can be supported

> To develop case studies of procurement exercises.

> Where appropriate BIFM should address these issues through its own CPD programme.

> BIFM to educate and encourage all organisations within the FM supply chain to consider the balance between the cost of operations and the welfare of people – i.e. take note of the corporate responsibilities inherent within the procurement process and consider the impact when an agreement fails or a contract breaks down.


About the panel

John Bowen, Managing director, Gulfhaven Business Solutions

After a corporate career that encompassed IT, supply chain, logistics and facilities management, John attempted to semi-retire, but is now busier than ever. He works as a business consultant and mentor, is a speaker at various business events, writes for a number of magazines and tutors young professionals. John has been a member of the BIFM Procurement Special Interest Group since its foundation in 2006.

Ashleigh Brown, Head of FM consultancy, Dovetail FM Recruitment

Ashleigh qualified as a teacher, but has worked in recruitment, headhunting and search and selection since 2006. In 2012 she took over the leadership of the FM division at Dovetail, having originally joined Dovetail as FM account manager for several of its large global accounts. Ashleigh is passionate about FM and the people working in this sector.

Elaine Farrar, Director, CREAS, UBS

Elaine has worked in facilities management roles for over 30 years. She is a director within Corporate Services, part of Corporate Real Estate and Administrative Services (CREAS) at UBS based in London, a role she has held since June 2007. She is part of the project team contributing to the design and development of the new HQ building at 5 Broadgate in London.

Mark Griffiths, Contract director, ETDE FM

Mark is regional director for ETDE FM (part of the Bouygue Group) and leads a wide-ranging portfolio of projects in both the private and public sectors. Mark trained as a mechanical craftsman, but has since acquired extensive experience at a senior level in the management of both hard and total FM contracts and service delivery, especially in the PFI/PPP market.

Lucy Jeynes, Managing director, Larch Consulting

Lucy is one of the founding directors of Larch Consulting, an independent practice specialising in FM and infrastructure services. She has over 20 years’ experience in advising on all aspects of service strategy and delivery. She has been voted by her peers as a Pioneer of FM and one of the 20 Most Influential Women in FM, and is a former Midlands Businesswoman of the Year. She is a founding committee member of Women in FM.

Roger King, Director projects & programmes, Telereal Trillium

Telereal Trillium is one of the UK’s largest property companies, with over 8,000 properties nationwide and customers ranging from private companies to local authorities and central government departments. Roger is currently working across the company’s central government portfolios to align property and facilities data with building information modelling (BIM).


Demitri Maldonado, Client development director, Vinci Facilities

Demitri is a business development professional who has worked in the property and facilities management sector in the US and UK for the past 24 years. He currently works for Vinci Facilities, a facilities services company that provides total and integrated FM including fabric repair and maintenance, mechanical and electrical engineering, and soft services.

Leigh Mapledoram, Programme area manager, WRAP

Clare Ollerenshaw, Project manager, WRAP

WRAP (Waste and Resources Action Programme) is an independent not-for-profit company set up to promote recycling in the UK. In October 2012 it launched an initiative, the Innovation Challenge, to help companies in the FM sector make better use of assets and materials by piloting new approaches to management.

Mike Packham, Partner, Bernard Williams Associates

Mike is a chartered FM surveyor with over 30 years’ experience in the property/construction industry. Having trained as a quantity surveyor, he subsequently obtained a Master’s degree in property development/project management, and now works in facilities management consultancy. He is qualified to advise clients at every stage of the building lifecycle.

Nicola Paice, Senior consultant, Appleyards

Nicola’s years of FM experience includes working on the STEPS contract for Aqumen, which was then the FM arm of Mowlem. This involved the transfer of the Inland Revenue, Customs and Valuation Office Agency into the private sector under a PFI contract. Nicola now consults on FM contracts and provides technical advice for PFI contracts, which includes operational monitoring of PFI contracts.

David Quinn, Strategic sourcing manager, Barclays Bank

David has been a strategic sourcing manager with Barclays Bank since December 2010. His responsibilities include engineering, catering, cleaning, security and front of house services. David is currently working on the sourcing workstream for Barclays’ ‘Project Unity’, a global programme aiming to transform the delivery of FM services across the bank’s 5,500 properties.

Martin Read, Managing editor, FM World

Martin is managing editor of FM World magazine, the news, advice and analysis resource of BIFM. Martin has experience as an editor, writer and publishing project manager in the B2B, client publishing and membership organisation sectors. His previous titles have been in the logistics, public transport and group travel sectors.


Gareth Tancred, CEO, BIFM

Gareth is a qualified accountant who has been the CEO of BIFM since February 2012. Prior to this appointment he served as COO of BIFM, overseeing the running of the institute, deputising for the CEO and overseeing changes to the constitution to professionalise the BIFM. He has over 12 years’ experience at board level, ranging from SMEs to large UK, European and international organisations.

Wayne Tanner, Head of vendor management & procurement, UBS

Wayne has worked for over 25 years in the real estate and facility management sector and has been responsible for FM operational service delivery, implementing outsourcing strategies and supplier management across all sectors of the industry. In the past three years he has led the global sourcing of FM requirements for UBS in the supply and demand management function.

Mark Turvey, Associate director, Accenture Workplaces Operations

Mark is responsible for the delivery of workplace services to 16 offices across UKI, working with a team of 300 Accenture/outsourced staff within the functional area. Strategic aspects of the role incorporate developing the outsourcing strategy for service delivery, cost modelling and benchmarking efficiency of service delivery to identify operational excellence and savings opportunities.


Glossary

BSI

British Standards Institution

CIPS

Chartered Institute of Purchasing & Supply

Competitive dialogue

A procedure in which a purchaser conducts a dialogue with prospective suppliers with the aim of identifying those capable of meeting its requirements, who will then be invited to tender

CPD

Continuing professional development

Framework (agreement)

A general term for agreements with selected suppliers. This sets out terms and conditions under which specific purchases can be made throughout the term of the agreement

Full disclosure

Public procurement rules in the European Union require that public contracting authorities must publish all tender evaluation criteria and weighting in advance

OJEU

Official Journal of the European Union, the publication in which all high-value public sector contracts in the EU must be advertised

Restricted procedure

Usually applies to high-value public sector contracts. Strict pre-qualification criteria are set for the contract, and only those suppliers meeting the criteria will be invited to tender

RFI

Request for information. An alternative term for PQQ (pre-qualification questionnaire), a set of questions designed to help buyers select the most suitable bidders to be invited to tender

About FM Leaders Forums

The FM Leaders Forum is a medium through which BIFM

gathers together leading minds and practitioners from the

facilities management sector and beyond to debate

different subjects and topics to inform the membership,

the FM sector and the BIFM.

Those involved in each forum depends on the subject area

being addressed, leaders from across the sector and where

appropriate from outside the sector will be invited to take

part in the discussion forum.

About BIFM

The British Institute of Facilities Management (BIFM) is the

professional body for facilities management (FM) in the UK.

Founded in 1993, the Institute represents and promotes

the interest of members and the wider FM community.

The Institute delivers a range of services and benefits,

including information, qualifications, continuing

professional development, training and networking for

over 12,500 individual and corporate members.

Our strategy is to increase participation and collaboration,

promote professional standards, support career

development and build an effective relationship with

stakeholders including government.

British Institute of

Facilities Management

Number One Building

The Causeway

Bishop’s Stortford

Hertfordshire CM23 2ER

T: 0845 058 1356

E: [email protected]

www.bifm.org.uk

Procurement - who holds the power?"

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