Managing property

Increase efficiency, achieve energy reduction targets, use less space, comply with statutory requirements, reduce costs, and improve standards – this is the facilities management agenda facing public sector organisations. This pales into almost insignificance against the public service delivery agenda. But mention savings and all too often facilities services are the first port of call. This can be the silver lining for facilities management in that it does feature on senior decision makers agenda, if only at budget setting time.
The facilities or property director invariably has the unenviable annual objective of meeting the budget target and reacting to crises. Rather than matching a serviced estate to the strategic requirements of delivering a public service. The result is a generation of battle-weary estates and facilities directors, whose expertise is in operational day-to-day management of an institutionalised, unionised and superannuated workforce. The senior operational management recognise the need for change. Yet implementation is frustrated by corporate bureaucracy and a risk avoidance culture based on consensus decision making. As a generalisation the middle management is disenfranchised and motivation and morale low.
Despite this the profile of managing the assets that form the public sector estate has never been higher. In the current economic climate this focus will only increase. The demand is for realising savings, and achieving them now. But to release savings numerous barriers need to be overcome. These include the complexity of the estate and clarity of ownership; the level of ambition and the delivery capability within public sector organisations; clarity of scope and remit of facilities and asset management; and the need to transform working practices and processes.

Savings on facilities
In central government alone the total asset base in 2003 was valued at £220 billion and costs some £6bn per year to maintain and service. The last six years has seen significant change with relocation of departments to the regions; improved utilisation of space and increasingly transformed working practices. The result is progress towards annual running cost savings of £1.25bn a year. At the same time improved working environments, enhanced access to technology and reduced energy consumption have been delivered. A key change is identifying how to work smarter using less space, which is contributing achieving a 2.4 million sq m reduction by 2013.
Progress has undoubtedly benefited from outsourcing and partnering with the private sector. Today over 70 per cent of the central government annual facilities management spend is outsourced. This has been achieved through a combination of traditional tenders, framework agreements and Public Private Partnership arrangements.
Support service outsourcing is an often used phrase, yet remains a mystery to many. At its simplest it is procurement of a single service, for example cleaning. At the other end of the spectrum it’s the outsourcing of elements of operational service delivery. This can be thought of as a continuum with facilities management being seen as a subset of wider support services.
The decision as to what to procure is crucial to realising benefits. Moving across the continuum the scale ranges from lowest cost for a service, to realising enhanced value from the asset base across its whole life. It’s no surprise that the management requirement increases from supervisory skills and culminates in strategic management skills; and the technology investment increases from commodity computer aided facilities management systems (CAFM) to bespoke business intelligence systems. These specialist systems give real time management information, including cost of occupancy that allows real time management interventions.

Outsourced services
The depth and quality of management required to manage outsourced services depends on whether the scope of outsourcing includes strategic management as well as operational management responsibility. Inclusion of strategic management of assets and property, to maintain an estate that is aligned with the ever changing business need, is associated with Total Facilities Management (TFM) or Integrated Facilities Management.
If strategic management responsibility is being retained in-house the decision is the degree to which outsourced services are aggregated into bundles or procured as individual services. Bundling offers the opportunity to create synergies between services and to drive efficiency and deliver reduced cost. All too often bundles of disparate services are created limiting the benefit to contracting with a single entity. Bundles themselves can be grouped into services that focus on compliance, in terms of ensuring that facilities are safe, warm and dry; or on hotel services including catering and cleaning; or front of house with reception and switchboard. At the simplest level single service procurements generally provide commodity services with the benefit being to drive cost improvements on a single budget line.
Despite central government departments making progress there is more to be done. Other areas of the public sector have not made the level of progress seen in central government. Facilities management outsourcing in local authorities and health is at less than 50 per cent compared with over 90 per cent in some areas of central government. Expectations of funding pressures dictate potential savings must be realised, and new areas for saving identified. Traditional facilities management outsourcing may be part of the answer, but is unlikely to unlock the levels of saving required to maintain or improve the standard of service delivery demanded by the public. The days of year on year three per cent efficiency savings are no longer sufficient. Ways must be found of maintaining or improving service quality at a significantly lower cost base.
This is not a pipedream. Outsourcing is founded on using specialist expertise to increase efficiency and make more effective use of resources and assets. For companies providing outsourced services it is their core business. They invest in their people, in the development of enabling technologies and are constantly developing services to increase productivity and efficiency – in short they provide access to industry best practice and innovation – creating the opportunity to do more with less.

Ensuring compliance
Ensuring statutory compliance is paramount, but is not a given. In complex multi-property estates the challenges are large. Up to date databases containing asset registers and histories are essential – yet all too often are none existent. And once the assets are known, how are they best maintained? Should planned maintenance be on a calendar basis, regardless of usage, or alternatively be based on criticality of the asset and its use. Is it necessary to have resident engineers or could engineers be part of a mobile team. If mobile do they need to be dedicated to a single organisation? Deployment of mobile engineers using dynamic scheduling significantly reduces travel time and increases productivity. Similar decisions that affect the quality and cost of service exist for each of the facilities management services. And it is these questions that need to be identified when specifying an outsourcing procurement and resolved during the selection process.
Further benefits can be realised by addressing the assets required to deliver an organisations core business. Assets include property, fleet and IT infrastructure, which when managed collectively are referred to as Strategic Asset Management. Property asset management focuses on the property element of strategic asset management and it encompasses two interacting components. An operational component encompasses the ongoing management of property assets over the short to medium term time horizon (three to five years) within an allocated budgetary framework. The strategic component focuses on the medium to longer term (10 years and beyond) involving decisions on investment in property assets to meet end-user needs and service delivery requirements.
As part of longer term planning workplace management offers the opportunity to create improved working environments in less space, by matching space to the needs of the occupants. It is an integral part of matching the facilities and property needs to the business need and aligned working practices. Application of workplace management in private sector organisations has created significant space savings. Benefits include reduced facilities management and maintenance costs, reduced rent and rates and lower energy consumption contributing to achieving saving energy targets.

Core competencies
The application of the core competencies required for efficient facilities management delivery are transferable. Benefits can also be delivered across a range of public service operations where there is the opportunity to increase productivity and efficiency. The effective management of mobile workforces does not differ significantly between maintenance engineers and the multitude of mobile public service delivery personnel. At the end of the day it is about getting the right person to the right place with as little time spent travelling as possible. The private sector is already supporting delivery of a wide range of public service delivery. Yet this is only a small fraction of the total.
Outsourcing services brings the benefit that the private sector generally takes the risk of achieving savings. This creates incentives for breaking through the inertia often associated with public sector change programmes.
Undoubtedly better quality services being promised by politicians and demanded by the public can be delivered at a lower cost through a combination of public sector and private sector expertise. The opportunity is there. It now needs the strategic vision and leadership to grasp the opportunity and turn it into reality.

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