Hi there,
So over the past few weeks we’ve taken a comprehensive look at the advantages and disadvantages of in-house service delivery versus outsourcing in general.
But if you do decide to outsource your facilities management services, you’ve got various different options to consider when it comes to how you outsource those services.
We gave a brief overview of these options at the start of this series. Now we’re going to revisit those options and take a look at some of the advantages and disadvantages of each.
Remember that there is no ‘one-size-fits-all’ approach when it comes to outsourcing. For some organisations, outsourcing is a no-brainer. For others, it makes more sense to keep things in-house.
The same applies to choosing an outsourcing delivery method. For some, outsourcing individual services will be more effective. For others, it makes more sense to outsource the entire FM service to one contractor. The best option will depend on your organisation and its individual circumstances.
Before we start, I just wanted to say a big thank you to Tracy. Tracy, who received last week’s e-mail about the disadvantages of outsourcing but hadn’t seen the previous e-mail about the advantages, messaged us with a passionate defence of outsourcing from a service provider’s point of view.
And all of her points were absolutely spot-on.
This highlights the whole point of this series – that outsourcing is neither the right nor the wrong option for every organisation. There is a case to be made either way, and it’s up to you as the facilities manager to weigh up the pros and cons, compare these options with your company goals and values and use these comparisons to make the best decision for your organisation.
And for those of you who work for a service provider, it can be helpful to consider things from the perspective of your clients, in order to make sure you minimise the impact of any disadvantages that they may be concerned about.
So without further ado, let’s take a closer look at the different outsourcing delivery models and some of the advantages and disadvantages of each.
The advantages and disadvantages of specific FM outsourced delivery models
There are a myriad of ways that you can structure an outsourcing programme, but generally speaking your outsourced FM services will fall into one of the following categories. Remember that the more general advantages and disadvantages of outsourcing that we’ve already covered will also apply to each of these options.
Single service outsourcing
This is where we outsource each of our services on an individual basis. For example, we may have one company who look after our cleaning service, one taking care of fabric maintenance, one providing catering services and so on.
Advantages
- It is easier to maintain control over single service contracts as the service provider is responsible for just one service.
- The single service provider is usually an expert in his/her field and so you are procuring a level of expertise that may not be available elsewhere
Disadvantages
- If you outsource several services to a range of different service providers you have a multitude of contracts to manage, a similar number of invoices to process and the cost benefits may be limited.
Bundled services
A bundled service contract usually ‘bundles’ three or four similar services together to be provided by one contractor. For instance, you may have one contractor looking after all of your soft services (e.g. cleaning, catering, security, front-of-house etc.) and one looking after all of your hard services (e.g. building and fabric maintenance, CCTV, lift maintenance etc.)
Advantages
- This tends to be a cheaper option than single service contracts as the provider can use the same staff to undertake the various services. At the very least, there will likely only be one account manager to pay for!
- Bundling services can also bring cost savings through economies of scale.
Disadvantages
- As the client, you cannot always be certain that the contractor you are using is directly providing all the services within the bundle. Quite often they will subcontract those services for which they have limited expertise and you, as the client, lose even more control.
Total/Integrated Facilities Management (TFM/IFM)
Total Facilities Management, or Integrated Facilities Management as it has become more commonly known, involved outsourcing all of your FM services to a single contractor.
Advantages
- Using a TFM company means that you will only have one contract and one point of contact
- Management of the contract should be much easier.
- You may also have a fixed price and so planning your budget should be easier
Disadvantages
- You are totally dependent on one company for all your support services and should anything happen to this company you have all your eggs in one basket.
- Similar to bundled services, you cannot guarantee that the TFM company you have employed will actually provide all of the services. In fact, it is more than likely that they will subcontract many of the services to third party companies with whom you have no involvement. You may not, therefore, be able to monitor aspects that you feel important – the sustainability policies of the third party companies for example.
PFI and PF2
Private Finance Initiatives (PFI) and their younger siblings, Private Finance 2 (PF2) are exclusive to the public sector and are becoming increasingly rare as the government abolished the use of PFI as a means to fund public sector construction projects in 2018.
Therefore you won’t need to consider PFI as an option when making the decision to outsource. However we thought it would be useful to include a couple of the pros and cons in case you are working on a legacy contract. The last PFI contract will expire in 2050, so there’s some time to go yet!
Advantages
- Provide much needed funds for organisations within the public sector and enable them to acquire state of the art buildings and services that they would not be able to afford using public sector monies only
Disadvantages
- PFI comes at a price, particularly the PFI solution and it is interesting to note that several hospital trusts and schools have bought out their PFI contracts in an attempt to bring costs back under control.
That’s all folks!
That’s all we’ve got space for when it comes to the pros and cons of the different outsourcing models. It also brings us to the end of this series on Facilities Management outsourcing.
Next week we’ll be moving onto a new topic. We’ve got a few options in mind, but we’d love to hear from you about anything you’d like to know more about, so don’t be shy – simply reply to this e-mail with your ideas.
Similarly, if you’re like Tracy and you have something to add to what we’ve covered here, please get in touch and we’ll be sure to share your thoughts with everyone else. We can all learn as much from each other as we can from a training provider like us, so we’re keen to get your input.
For now, have a great week!
Chris and the Xenon Team
P.S. If you haven’t already studied or started studying for an IWFM qualification, which will cover topics like this in depth and fully assess your understanding, you may want to have a look at our guide to the IWFM Qualifications which will give you a full breakdown of how they work and what’s involved in the different levels. You can download it here.
P.P.S. If you’re already considering taking a qualification but don’t know which level to go for, a good starting point is our One-Minute-Leveller tool, which will ask you a few questions and give you a recommendation based on the result. You can access it here.