Taken from CPO Celtic Manor Event, October 9th 2018
Adam Clayfield, Group Commercial Director - Cloudfm
FM is 30 years behind most industries in its use of technology and process.
Most companies claim their compliance is + 90%. But an attended compliance visit does not equal compliance.
All too often
Consequently the real compliance levels are more like 30-40%.
“FM drives the basics of the business – you can’t be resilient without effective FM.”
Dave Murphy, Finance Director, Pizza Express
Governance of remedial and compliance activity is often inadequate.
This Due Diligence is a legal requirement and remains the responsibility of the property owner to put in place controls.
“Facilities management underpins the effectiveness of both staff and the customer experience. You can’t deliver an excellent service if you don’t have excellent facilities to do it in.”
Susannah Howard, STP Programme Director, Suffolk and North East Essex NHS
Compliance certificates are not accessible, organised or subject to verification.
Recent audits on 4 major organisations including public sector showed no organisation with compliance above 40%.
This is due to:
We have not come across a single organisation that has conducted a meaningful internal audit.
“Users of outsourced services need to be able to trust that the information they are given is correct. That trust depends on an appropriate system for auditing and managing information.”
Gary Dart, Group Finance Director, BPP
The FM industry has no standards on SLAs, like First Fix.
Often you will get quoted First Time Fix is c. 90% but this excludes crucial service issues.
So First Time Fix often doesn’t count the failures you want it to.
“Actually having someone who gets the job done is crucially important.”
Simon Walker, Property Director, TUI
Each critical failure creates an operational cost.
Traditional FM programmes do nothing to reduce these costs, because:
Poor systems and the lack of partnership in FM promotes poverty of data.
“Good facilities management has a direct impact on our frontline.”
Matt Finch, Head of Asset Management, Eco World London
Most maintenance models allow invoicing throughout the process.
This means jobs can be marked as complete even though:
The advent of TFM models has made this even worse with prevarication, delay and lack of clarity. There is often no visibility of attended but incomplete tasks and Black and Yellow Tape is the outcome.
“If you don’t stay on top of it, you can have capital outlay where you least expect it.”
Steve Hancock, Director of Estates and Facilities, Bannatyne Group
A qualified engineer should command £35-£40k +Vehicle, Pension, Employers NI, Fuel, Training & Holidays.
The Total cost of keeping a Skilled Engineer on the road is therefore c. £65k.
Their total available time is c. 44 weeks x 40 hours = 1760 – this equals £36.93, at 100% utilisation.
65% utilisation is realistic in reactive – this is £61.55 an hour.
So often rates are agreed at unrealistic levels, which is counter-productive:
The answer is not lower rates, but more efficient management.
“As an industry, the root of our ability to meet client demands safely and economically is people – a huge part of what we’re selling is actually people.”
Adam Williams, Group Procurement Director, Capita
The actual cost you pay is a function of 2 areas:
Labour – based on rates and times
Materials – the equipment and materials used
Without these controls, there is no way to ensure costs are appropriate.
“Contemporary procurement is highly focussed on driving out cost. However, there is often little consideration of the risks that this can pose to the arrangement as a whole.”
Adrian Ringrose, former CEO, Interserve
In addition to your standard fees you are being charged for:
Often these costs are used to bolster unrealistic rate cards.
“It’s important to understand what you’re spending money on and why – only then can you look at FM as a business case, not a cost centre.”
Chris Drew, CFO, KFC UK&I
It’s not a simple answer, but in essence there will be a unique code for the premises which the engineer will need to scan before they enter using their device which is linked to everything. So we know who they are, the competency, their clients etc. It picks up the details of the job and what it entails.
Then when they have finished the jobs, they will take pictures on the device to prove it, they will go through RAMs and processes, they will have to have the job signed off by a manager and then scan out to show when they left the premises. And underlining that is a rate card.
We do employ our own engineers, but they only do planned maintenance. We have no say in the game about reactives, but our model is that we are incentivised to drive down reactive maintenance by more diligence.
The issue has been that the market has tended to go down two routes; I have £10 million worth of spend for example, therefore, do I want certainty or diligence. I go certainty, I go down the TFM route, but most likely everyone has been burnt by a cap spend model where the risk gets passed on to the provider, but the provider finds out six months in that £10 million isn’t enough, so they delay and defer.
The other model is to do it with a rate card model, but then it is uncapped spend and you are constantly trying to stop stuff happening. Our model sits in between; if you are going to create 30,000 reactive charges in a year, you will have 30,000 reactive charges.
What you want to do is make sure they are the lowest cost possible. And on your planned side, if you know you will have this much planned spend, make sure it is done properly and diligently and your reactives should reduce.
To read more on this topic, Cloud FM's own report is avaiable here.
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