The RICS Procurement of facility management, professional statement, UK first edition, covers what factors need to be considered through a procurement process; from planning to contract management and re-procurement. It was launched in London at an inaugural IFMA UK Chapter breakfast networking event in London SW1.
Key elements of a successful procurement process, the document says, are:
– an understanding of what the client requires;
– detailed information about the property portfolio and the facility services;
– an affordability target of what the client wishes to spend on the services, with defined quality levels; and
– a realistic timetable for undertaking the process.
Bidding costs are high for suppliers, the document points out, and, in a highly competitive market, clients can maximise interest in their procurement processes by demonstrably following good practice. The document suggests that bidders value the opportunity to participate in soft market testing ‘and typically view it as an opportunity to promote their business as well as assessing their likelihood of winning’. Most private-sector buyers invite a small number of bidders to tender having made a pre-selection from the market. Also recommended is a risk register.
For the actual procurement, service specifications can be one of three types: input, output and outcome. An input specification is where an input is specified, such as:
– The Service Provider shall provide two static manned guards at the main entrance during normal opening hours to check the staff ID passes.
An example of the same requirement specified as an output could be stated as:
– The Service Provider shall ensure that no persons without valid staff ID passes can enter the facility beyond the main entrance during normal working hours.
And an example of the same requirement specified as an outcome specification could be stated as:
– The Service Provider shall ensure that the facility is kept safe and secure.
The document points to a drawback with a input approach; ‘it does not allow bidders to use innovation, so the scope to deliver savings or make innovations is limited. In this example, the only way to reduce costs is to pay the staff less, reduce overheads or to accept lower margins, with the consequential loss of service quality that may arise from less motivated staff’. If you specify in terms of an output, ‘bidders can propose solutions to meet the required output using different inputs. In this example, bidders may propose just one manned guard, or a technological solution such as a barrier, with a card access reader’.
If the requirement is specified as an outcome, bidders have more freedom as to how to meet the requirement; ‘but also take on a higher level of risk. In FM, outputs can be difficult to define and measure’.
A hybrid approach may be required, where the specification is largely output-based but includes some key inputs and outcome measures, such as:
The Service Provider shall ensure that no persons without valid staff ID passes can enter the facility beyond the main entrance during normal working hours and that all staff are greeted by a manned guard as they enter the building.
When bidders submit a proposal to you they will need to provide you with a price. You need to consider how you want services to be priced. Each service element should have a pricing type allocated. Typical pricing types are: fixed, variable, guaranteed maximum, cost plus, and pass through. The document details each. The statement points out that the costs of TUPE can be a major consideration in pricing and full and accurate TUPE data should be provided to bidders.
RICS (the Royal Institution of Chartered Surveyors) says the document was worked on with IMFA (the Texas-based International Facility Management Association), and the wider industry. RICS adds that it will be looking to make this a global professional statement.
All RICS regulated professionals (mandatory from October 1) will follow this guidance, but adoption of the framework would be competitively beneficial for all property professionals involved in the procurement of FM services, including those acting for landlords and occupiers, FM suppliers procuring services from sub-contractors and investors and public and private occupiers.
Kath Fontana, Managing Director, ISS Technical Services and RICS Senior Vice President Elect, was among speakers at the launch morning. She said: “RICS are the first organisation to produce a statement like this for their professionals. Effective and ethical procurement is a fundamental foundation for facilities management excellence, and recent market events show that this is more needed than ever. This new statement provides clients and suppliers with the platform to manage risk and opportunity consistently and professionally. Ultimately this will enable all to focus on delivering great service, compliance, transparency and value for money.”
The statement was developed to address the worst case scenarios in the FM procurement market, which can be engaged in a race to the bottom. The sector is, according to the chartered surveyors’ body, splitting into those engaged in ethical practices and leading on sustainability and those that are not. RICS says that the FM sector also has the opportunity to solve issues in other areas of the built environment and improve sustainability – for example through earlier involvement in the construction and design process – so positively impacting building design, sustainability, and project outcomes. The new statement can only increase the sectors ability to deliver on time and on budget, says RICS.
Download the 32-page document, written by Derrick Tate of PwC Real Estate, at http://www.rics.org/uk/knowledge/professional-guidance/professional-statements/procurement-of-facility-management/.
See also the recent RICS Strategic Facility Management Conference, where speakers included Chris Keneally, Group CEO of services contractor Cordant Group; Ian Townsend, Group Director of Facilities Management at Capita Corporate Real Estate; and Danny Lemon, General Manager of The Shard in London.
