The Real Estate & Facilities Asset Management Value Chain Finding the optimum balance between life-cycle costs of facility ownership, asset reliability, operational costs and business productivity should be the goal of a truly effective Asset Management program. The value chain approach illustrated in this paper shows that while many Real Estate and Facilities organizations have improved elements of the value chain, they have not yet optimized the opportunities that can be discovered when looking more broadly across the entire value chain.
Going Global: The Changing FM Market As industries consolidate across national barriers and corporate organizations become more international; the greater availability of information and skills to and in different parts of the world has necessitated the evolution of the modern facilities management (FM) organization. The increased reach and responsibilities of these organizations has not been unaccompanied; in response to these changing needs, FM suppliers have likewise developed and attained new levels of sophistication. These new realities have been marked by two trends that are likely to persist: first the rise of large and complex global outsourcing deals; and second, the emergence of India and China as workplace hubs.
Green Strategies for FM Organizations The recent inception of General Electric’s Ecomagination program signaled a fundamental shift in the “green” movement towards sustainable building, design and maintenance. More than anything it was representative of a corporate willingness towards embracing this movement, and indicative of a receptivity on the part of bellwether firms like GE and Toyota to leading the way in instituting “green” initiatives. Toyota is a company that has steadily positioned its brand to be aligned with Green. It is a good example of a how a “green” approach to business can permeate a company’s approach to real estate and facilities management (RE&FM).
Integrated Process Approach For Building FM Outsourcing Partnerships This article is the first in a series of articles to help companies address key issues in facilities management outsourcing:
> Will outsourcing create value for the enterprise?> What is the best way to structure an effective outsourcing process?> How to build performance accountability and create incentives for continuous improvement?> How to structure an organization to empower the supplier for success and manage the post-outsourcing performance?
Key Trends in Pricing Integrated FM Contracts Pricing an integrated facilities management (IFM) contract is one of five key elements required to structure a deal. The facilities management industry itself has been historically inconsistent in pricing, and not much is documented in terms of how to optimally price these services. Given the lack of transparency in pricing, this article will attempt to illuminate trends and limitations of conventional structures for pricing facilities services. We will then describe what elements of an optimal pricing structure need to be put in place to create an efficient pricing solution for outsourcing. An optimal pricing structure, in our view, is one that creates performance accountability through longer-term incentives for performance improvement that are aligned with the success of the customer.
Outsourcing in A Manufacturing Environment: Edging Closer To The Production Line Outsourcing integrated facilities management (IFM) is a complicated and challenging process for many reasons – longer term contract, specialized contract provisions, transfer of people, assets, knowledge to the supplier, and changes in operational control and transfer of risk – just to mention a few. Increasingly, companies are testing and implementing outsourcing strategies for non-core production activities. However, the complexity of outsourcing and the importance of managing risk are underscored as companies move to apply outsourcing as part of their manufacturing operating model.
Outsourcing across the Enterprise – Implications for Next Generation Deals Outsourcing integrated facilities management is a complex, challenging process and most companies without prior experience are not well prepared for it. This is because many underestimate the complexity of outsourcing an integrated set of facilities services. This article will focus on how to ensure success of outsourcing efforts by framing the decision, building alignment, and taking an integrated process approach to performance-based outsourcing deals. After explaining how the issues within the outsourcing process can be managed effectively, the article will then transition to framing what future generations of deals are likely to look like.
Supplier Governance – Organizational and Process Competencies Supplier Governance is vital to outsourcing success, whether it is a global, regional or local outsourcing effort. Yet as a management discipline it remains a topic that is not understood well, is poorly articulated in what little has been written about it, and in most companies practiced in a largely ad-hoc way. Management literature on this topic, where it does exist, reduces governance to simplistic ideas around relationship management and communications without framing the broader aspects of governance in a comprehensive and holistic fashion.
Technology in the FM Space: Expanding the Realm of Possibility Innovations in technology have increased dramatically in the latter half of the twentieth century, enabling improvements in productivity and efficiency. In the FM space, this has translated to greater facility of end-user interaction with the built environment and associated support services. Increased productivity, improved reliability and a wider range of possibilities have made technological advances critical in the provision and differentiation of FM services. Several important trends mark the direction that this innovation is taking: that of the mobile workplace as well as changing notions of space, and the increased popularity and viability of green building and sustainable design.
FM Leadership Challenge shaping value-focused FM Organizations
The primary leadership challenge for Facilities Management (FM) is to develop an adaptive FM organization that provides valued workplace services to enable/support the core business strategy and to internally position the FM organization as an effective business partner.
To meet this leadership challenge, FM leaders need to take a disciplined and systematic approach to enhancing organizational capability with an unwavering focus on value to the enterprise. This paramount objective however, is easier said than done. But we do know this - those who do take a disciplined, far-sighted view of developing FM capability to better meet changing business strategy succeed in ways others cannot match.
This paper draws upon our observations and lessons learned from working with over 75 FM departments across different industries in public and private sectors performing to a variety of different missions and levels. Our benchmarking, best practices, and consulting experience on FM strategic initiatives allowed us to broadly define 3 stages of capability development that characterize evolution of FM organizations. Our view is that distinctive FM competencies in each of the three stages determine two important outcomes: 1) how strongly the FM organization is internally positioned within the enterprise and 2) the level of value FM aspires to is capable of delivering to the enterprise.
Pricing and Risk Allocation for Mission Critical Transactions When selecting third parties to perform business critical services, a number of pricing and risk allocation issues are frequently encountered. In handling these, well-crafted contracts provide an indispensable road map for service providers and customers to follow throughout their relationship. As such, when each party clearly understands it rights and obligations under an agreement, the potential for issue is significantly reduced.
