Benefits of Outsourcing Facilities Management

Every few years, new management trends emerge and sweep the nation. Sometimes, they are directly related to management style (empowerment) or appearance (professional casual). Other times, they are related to growth and market expansion (mergers and acquisition). However, as we enter a new millennium 

and the economy continues to expand, new phrases have entered the vocabulary of Corporate America. The term "layoff" was replaced with the euphemism "downsized," which was in turn replaced with the friendlier "rightsized."

"Do More with Less" has been the corporate battle cry of the past decade, and in no place is this better evidenced than with facilities management departments. Facilities managers across the nation have found themselves challenged with increased workload and additional responsibilities with decreased staff levels. Computerized facilities management software has helped to ease the strain with data storage and retrieval; yet, many companies lack the information or personnel to input the data. Facilities managers struggle with archaic or even non-existent drawings while their internal customers await information that could have a significant impact on the strategic position of the company or institution.

As a result, many facilities managers have turned to outsourcing to combat the decreasing internal staff levels.

Traditionally, the market has been dominated by a few large national and multinational facilities management organizations. However, a number of regional mid-sized firms have expanded their offerings to meet their clients’ needs. New companies have been created. While there are still not an overabundance of specialized facilities management consultants, there is a much greater opportunity for facilities management departments to outsource services than was previously available.

Before determining which activities to outsource, facilities managers should divide their departmental activities into four categories, allowing the FM team to identify which functions offer the best long-term value and lowest cost options. These include:

Peripheral Functions, which provide no competitive advantage and are not essential to the core business. These functions are easily outsourced and produce minimal risk. Examples of Peripheral Functions include reprographics and janitorial.

Support Functions, which are essential, but not a core business activity. A failure to provide Support Functions could provide serious damage to the business. In this case, a manager’s time and resources could be better spent on activities fundamental to the business, recruiting this expertise externally. An example of a Support Function is facility security.

Strategic Functions, which provide an actual or potential source of competitive advantage. One reason for outsourcing Strategic Functions is to achieve better value for strategic thinking and capabilities. Engineering and space planning are examples of Strategic Functions.

Core Functions, which are the primary activity of the business, should not be outsourced.

The next step is to compare benefits and costs associated with outsourcing. In doing so, you may want to consider reasons for outsourcing non-core functions, as compiled by the Outsourcing Institute:

  • Improves Company Focus
  • Gains Access to World-Class Capabilities
  • Accelerates Re-Engineering Benefits
  • Shares Risk
  • Frees Resources for Other Purposes
  • Makes Capital Funds Available
  • Leads to Cash Infusion
  • Offers Opportunity to Sell Equipment, Facilities, and Vehicles
  • Reduces and Controls Operating Costs
  • Offers Resources not Available Internally

Few firms considering outsourcing are prepared to jump into it head first. A more appropriate approach is to gradually outsource, frequently evaluating the cost of services versus the benefit received. Breaking the FM responsibilities into four functions allows you to isolate the various tasks performed by the facilities management department. Further, it uncovers needs not currently being filled as well as opportunities to better serve your clients, which are frequently other departments, group managers, and executive staff.

After you have identified those tasks that can and should be outsourced, you must next determine a low-risk contracting approach that is acceptable to both you and the purchasing department. Perhaps the best approach is an Open End or Indefinite Delivery contract for facilities management services. A typical contract may be structured with a maximum fee per period (e.g., one year), but the freedom to utilize your consultant on an as-needed basis without having to go through the purchasing department for each and every task.

This approach allows your facilities management consultant to complement your existing department, acting as an extension of your organization. These outsourced professionals can then be utilized on an as-needed basis; once the task is completed, the resources are absorbed back into the outsourced firm and used only as required. What this means to you is that you can have an ancillary staff of facilities managers, CAD operators, plant engineers, professional engineers, and interior designers readily available to support your operations, but you don’t pay for them unless you use them.

Nutec is currently providing on-site facilities management services to several internationally-recognized companies. In evaluating our relationships, the following intangibles of utilizing our team were noted:

  • The firm is a resource to identify problems and suggest solutions
  • The firm brings a broad knowledge base
  • The firm promotes innovation
  • The firm promotes more efficient asset utilization
  • The firm allows client to focus on core competency
  • The firm provides access to resources not available internally
  • The firm allows a stable relationship with one firm who knows the total corporate culture
  • The firm helps to bridge the communication gap between various client departments
  • The firm utilizes a Solutions Approach "looking at the forest, not just the trees"
  • The firm allows utilization of current technology
  • The firm provides resource-level staffing to the Facilities Department, accommodating the peaks and valleys in departmental workload

This is low-risk approach that does actually allow you to "do more with less."