Total FM is not solution for everything

Aside from outsourcing, one topic that consistently attracts comment and criticism, and which draws out proponents and opponents in good measure, is Total FM. Reaction – both positive and negative – is hardly surprising since Total FM is largely synonymous with outsourcing and that is not popular with everyone.

It would be wrong to suggest there is a clear divergence of views between owners and service providers, with the latter in favour and the former against. That would be like saying all owners have the same needs and all providers offer the same services. No two organisations are the same, whether on the demand or supply side of FM. Moreover, one owner’s definition of total will be different to another’s.

Supply and demand

Outsourcing should not, of course, automatically imply Total FM as the sole or preferred procurement option and contractual arrangement. There are others that fit the outsourcing model – for example managing contractor and managed budget. Under a Total FM arrangement, the responsibility and, therefore, the risks associated with providing services and for managing the facilities are placed in the hands of a single provider. The challenge is to match defined needs with evaluated options, where the operative words are ‘defined’ and ‘evaluated’. Two common reasons why service contracts fall short are failure to identify the correct requirements and to understand how different arrangements work. The central issue, as always, is that the choice of procurement option should not dictate; instead, it must be based on a thorough assessment of owner and end-user needs to arrive at a specification of the services required. The question is then: “what is the best way to deliver those services?”

Reducing risk

Total FM has been promoted over the years as the one-stop shop for FM – the epitome of integrated service provision – one tender competition to conduct, one contract to sign and one behind to kick if performance dips. Management, supervision and administration costs are gone, so owners really can focus on their core business. The standing of Total FM is further elevated because risk shifts from the owner to the provider. If only it were that simple. Overlooking responsibility for managing the arrangement is just the first oversight. Others might include performance measurement and payment, as well as managing change. The management of contractors is different from the supervision of directly employed personnel and rightly should not demand the same level of resources. Nonetheless, some personnel will have to be retained where the owner has opted for Total FM involving the transfer of employment. The Total FM contractor may be better able to offer a more complete and competitive solution to an organisation’s needs than in the case of the managing contractor, managed budget or managing agent model. Relationships built up over years between the contractor and subcontractors may mean that efficient working relationships are established from the outset. Total FM can provide a sound solution, but only if the owner is prepared to spend time in identifying the right basis for the arrangement and then in selecting the right contractor. Striving for the best possible service in each case can become like the search for the Holy Grail, only to end up with a poisoned chalice. Settling for something less than optimal might be more realistic and less distracting. FM services represent support for the owner’s core business: they are not a business arrangement in their own right.

Expectations and reality

In practice, things may not go as expected. Reasons include the contractor’s relationship with subcontractors, who might be undertaking almost all the work. During the contract, the contractor may decide to change subcontractors. These decisions are not always made to improve performance and may arise because the contractor is seeking to increase margins through use of a cheaper subcontractor. As with any change, newly appointed subcontractors will undergo a learning process, thereby exposing the owner to risk. The procedure for assigning or subcontracting should give owners the right to prior approval. The Total FM contractor cannot be good at everything and therefore expect to satisfy all-comers equally. Owners will source from whoever offers the best deal and that might mean foregoing the convenience (and other attractions) of the one-stop shop in favour of individual or bundled services at the lowest practicable cost. Economics are, of course, just part of the picture. Owners might contemplate Total FM because they do not have the competence or wish to manage services themselves. Since Total FM also shifts some risks on to the supplier, it might prove advantageous when times are tough economically. With individual contracts as an alternative, there is the attraction of being able to handpick the best service providers, but then someone must manage the interfaces between them. The dream team is a myth and, as we see all too often in sports, the winning side is generally the one that plays as a team. Of course, the Total FM contractor could make a poor job of managing different skills and competences, but responsibility does not fall in the owner’s lap unless the contractor fails. The contractor has to sort it out – that is covered by the premium paid for the convenience of the one-stop shop.

In summary...

At the end of the day, Total FM is a label that covers a particular type of arrangement - single-point responsibility - and one that has been inappropriately applied by many owners. If Total FM has been chosen for the wrong reasons it is not the fault of the contractor; alternatively, it does not make sense to argue that “Total FM works perfectly well under the right circumstances”: that is true of just about anything. For many owners, Total FM has not lived up to its promise, because expectations were unrealistic in the first place. The idea of a one-stop shop to suit every owner's needs is a tall order and one that faces stiff competition from other forms of procurement.

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