Ensuring a successful outsourcing of services
There are a number of reasons why it may make sense to outsource your property maintenance and facilities management operations. These reasons include increasing your focus on core business processes; getting a level of technical expertise that would be difficult to develop in-house; enhancing productivity and job satisfaction of your colleagues and improving the responsiveness of your suppliers. You can read about this in our companion blog piece ‘Should you outsource your property maintenance services?’.
Here, we will go through the how side of things to give you a guide on the steps involved in outsourcing property maintenance and facilities management.
Before engaging suppliers
Look at the numbers.
The primary reason that companies look to outsource their property maintenance services is that they are spending a disproportionate amount on solving their property maintenance issues. This could be because they have a wide range of specialist requirements (such as with care home or medical practices) or a low volume of maintenance but where the costs of failure (or downtime) are high - for example, with short-term property managers or hotels. As a result, this is the logical place to start when looking at the current situation.
Try to get answers to the following questions:
- How much am I spending on maintenance overall?
- What are my average job costs?
- How is this split across the different sites?
- What are the most common reasons for reactive maintenance?
- How much of my maintenance budget is planned versus reactive?
- What are the highest spending assets and service lines?
This will give you a good idea of the current situation. Make sure that you add in overheads such as software and support costs (such as call handling), the all-in cost of any in-house technicians, transport and equipment, the salaries or time of managers etc.. These should then be added to the above numbers to get a true cost for keeping maintenance in house.
And measure the performance
Although cost is obviously a critical factor in deciding to outsource, it cannot be looked at in isolation. We would suggest you then look a little bit deeper and determine the value for money of your current solution.
Questions that you should ask yourself on this subject include:
- What is the average time to site attendance for my suppliers?
- How long does the average job take?
- Are the rates and quotes I am getting competitive?
- What is the first time fix rate?
- How long does it take to close jobs down?
- Are my sites staying compliant?
All of the above can then be used to add further context to evaluating the status quo. It may of course be that you have hired an industry heavyweight facilities manager who brings with him a comprehensive supply chain with negotiated rates. That is great and congratulations - no doubt this information is something you are capturing as a matter of course.
Also bear in mind what the benefits might be of improving performance across the metrics above. Would these lead to increased customer satisfaction or higher spend? Are you losing net revenue as a result of poor performance or overspend? The impacts will vary from one client to another.
Gather the relevant information
Suppliers will be quicker to respond - and your prices will be more competitive - if you can provide information regarding your assets, historic maintenance, compliance schedule and such. Undertaking works such as an asset validation survey may indeed form part of your outsourcing of maintenance but without this sort of work being done up front, you will not get much in the way of cost control from potential suppliers.
In a perfect world this will all be information that can be easily extracted from your CAFM system but we understand that very often it is stored in varying formats across different machines and in different places. This might even be prompting your exploration of maintenance outsourcing.
Decide on the services required
Once you have the information above you are well placed to decide on what services you will need your maintenance partner to deliver. Here are some of the ways in which you can engage with contractors:
- Do you need helpdesk services to take calls from occupiers, tenants, site managers or other parties?
- Do you want software supplied by the contractor?
- Are there certain reports or information requirements for the contractors?
- Are you starting from scratch or is there information that needs to be imported?
- Do you need preparatory work or services such as general risk assessments, asset registers and the like?
- Do you have a maintenance strategy or schedule for your assets or will this be down to the contractor to provide?
Trust us, providing this information upfront makes it much easier for you to get the necessary information and pricing from your chosen suppliers. It also means that you will not have surprises later on in the process. Honesty is the best policy in any successful relationship!
Choosing your supplier(s)
Suppliers understand that you will want to get prices from, and speak to, a number of different options. This is completely understandable given that this is likely a big decision and one with which you should be comfortable and confident. With the information above provided, you can focus on the fit of the supplier rather than spending a lot of time on discovery.
When choosing your supplier, here are some of the things that you may want to consider:
- Are you looking for them to deliver everything in house or operate an integrator model (where they use an external supply chain)? Clearly Homyze believes that the integrator model is the right one, ensuring you get the service and performance across your maintenance requirements but we understand there are still some for whom this is a non-starter.
- Does there need to be a particular strength or service line? For example, Homyze works a lot in the care home and medical services sector and as such compliance should be an area of experience for suppliers in this space.
- Do you want them to triage calls or just accept work orders? Avoiding the need for expensive call outs is obviously an important way of saving money for our clients. Many of them have built procedures to do just this and if the initial triage or diagnosis is done in-house, that is no problem for us.
- How is information to be collected and provided? Do you have particular metrics or KPIs against which performance will be measured and how often would you like this provided?
- Do they need to also manage any in-house (your) technicians or third party suppliers? For example, Homyze has some clients where a service line remains with another provider. Rather than require different processes for different types of work - after all this is about streamlining maintenance operations - Homyze can manage these suppliers as well.
- What are the escalation procedures and thresholds? There will of course be jobs or issues that may take some time or cost to fix. Who is able to provide approval for these and can the supplier accommodate? Putting together a list of who to contact in what circumstances is extremely important.
With these questions answered, you can then send out RFPs (requests for proposal) to the suppliers identified. Whilst waiting for these, you can decide on the criteria for evaluation.
Evaluating the responses
Once you have received the tender returns from your suppliers, you can score them on the dimensions outlined above. Hopefully you will have a number with whom you would potentially like to work and we would suggest that a screening interview or site meeting be undertaken. A few points to note when evaluating tender responses:
- The sticker price is often not the price you pay. Homyze has been in plenty of situations where the client had little information to provide when sending out RFPs. As such, they were often evaluating based on a schedule of rates (i.e. how much they would pay for different services or service lines). This is not a figure that you can evaluate in isolation. At the very least, ask about the average job length when looking at hourly rates and ask whether travel time is included.
- Ask to see their systems. Maintenance is an operationally intensive business. Workflows, order routing, logistics: these are all critical to client satisfaction. You simply cannot run a successful maintenance business without robust systems and operating procedures. Chances are this will also be where you obtain your information and can see the performance of suppliers so get a walkthrough before you commit.
- Don’t ask about cost savings in the initial call or meeting. Even in situations where the RFP has been comprehensive and past information is available, savings are made once the sites are understood and your own processes are incorporated. There may be reasons why you have chosen a particular maintenance schedule or workflow process - these just cannot be understood from a RFP. Having said that, your maintenance partner should be viewed as a client representative - Homyze is looking to save you money and streamline your operations. That is how we view success so unless we do these, we are not delivering.
- It should feel right. Outsourcing maintenance is a big step and should lead to operating efficiency improvements. It should also be the beginning of a long term partnership and as such, you want to be confident you have chosen the right supplier. Different clients will look for different things, and there will be times during the relationship where faith is tested but you are each important to the other and so you should start with a positive mindset.
Hopefully there is something in there that helps you in preparing for, and choosing a partner for, outsourced maintenance.
This is something about which Homyze is passionate, so if you would like to discuss any aspect of property maintenance or facilities management, please get in touch.