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Facilities Management Update

FM Newsletter July 2012

The Current State of FM: Is TFM the rightstrategy?Despite the fragile state of the British economy, theFacilities Management (FM) category remains resilient.This is due to a combination of the category’s longterm contractual nature and FM market suppliersmaintaining good credit ratings.

These are the findings of a recent report by MTWResearch, which examined the current state of the UKFM market. The study also found that despite thesector’s resilience, difficult market conditions areaffecting smaller single service suppliers. On the otherhand, suppliers offering Total Facilities Management(TFM) solutions are increasing their market share.

The report shows that value within the FM industry isdriven through longer term strategic partnerships thatcontinue to deliver thorough phased approaches overthe contract lifecycle. In this context, TFM providesclients with reduced margins across multiple servicestreams. TFM is particularly important in terms ofmanaging the demand and level of services. These arethe areas which 4C has focused on over the past yearin order to successfully deliver savings.

For these reasons suppliers are continuing to growtheir portfolio of services, to deliver a broader andmore innovative offer. However, this diversificationmust be carefully managed to ensure it meets theclients’ requirements. Sustainability is a critical factorwithin supply chain and if not evaluated effectivelycould lead to disintegrating relationships on bothsides.

The report concludes that economies of scale, in termsof procurement and operations, will becomeincreasingly sought after, leading to an upsurge inacquisitional activity. In the same vein there will be anincrease in cross-border integration and marketdevelopment as FM providers look to capitalise oninternational economies of scale.

Outsourcing FM services – Focus on savingsA recent survey conducted by FM World found that,for the majority of companies (83 per cent of 130), thedecision to outsource FM services is driven by financialsavings. 64 per cent cited improving service levels.Other reasons for included obtaining better technicalexpertise, transferring risk and focusing on theorganisation’s core business.

Release cash Reduce cost Manage risk Improve ROI

T: +44 (0)20 7605 1600 E: info@4cassociates.com W: www.4cassociates.com

A survey carried out amongst 4C clients revealedsimilar results.

Worryingly, the FM World survey found that only 67per cent of respondents said the savings targets wereachieved. The reasons provided for ‘failing’, includedunrealistic expectations on the client side and inflatedsaving claims by the outsourced provider to win thecontract.

4C Associates’ FM Lead, Chris Herbert, believes thishigh rate of failure can be easily rectified.

“FM is a diverse category and commonly involvesmultiple stakeholders with varied focuses. The key isto maintain honest and on-going communication withclients and stakeholders at all times and ensure thattargets are challenging yet realistic. Claiming that youcan deliver unrealistic savings only serves to destroytrust and will backfire in the long run.”

4C Associates has the insight, technology andexperience to drive rapid profit improvement.We offer specialist consulting, technology andmanaged services to transform your costs. Weapply industry and functional expertise to deliverexceptional benefits.

Our team works with leading organisations across arange of cost categories including Direct Materials,Services, Marketing, IT, HR, Logistics, SupplyChain, Property and FM. We apply deep practicalknowledge, combined with process and changeskills, to deliver reduced costs and increased profits.

To discuss how we can transform your costs pleasecontact us at:

Tel: 0207 605 1600Web: www.4cassociates.comEmail: Petra.urhofer@4cassociates.com

Of the major costtransformationprojectsundertaken by 4Cin the past year,60% have a FMprocurementstrategycharacterised bypurchasing on anindividual servicestream basis,whereas 40% havea TFM strategy.

Asked whether theexisting strategywas the preferredfuture FM strategyonly one of 4C’scosttransformationteams reported anobvious appetitefor change.

In this case the client favored a stepped approachinvolving bundling services in the first instance beforepotentially moving to a TFM strategy. However, theconsensus amongst 4C cost transformation teams wasthat TFM is in the minds of all clients as a strategy butthat a high level of organisational maturity andinternal co-ordination is required to implement itsuccessfully.

TFM: Appetite for changeAs part of a recent internal survey, 4C gatheredinformation on the FM strategy approaches of recentFM clients.

“FM is one of the most visible functions within abusiness – every employee expects a clean workspace –and has major implications on productivity andmorale. So while cost savings may get the headlines,seemingly secondary objectives such as serviceenhancement, innovation and risk management areincredibly important and certainly a major focus of ourwork”.