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Tim Beardsmore, Calbarrie’s Commercial Director, offers a specialist service provider view to Facilities Management Journal on the procurement process for FM contracts and what can be done to challenge commoditisation. 

The market for Facilities Management (FM) services continues to develop and the expectations on FM service providers to satisfy all stakeholders becomes increasingly demanding. In an environment under pressure to reduce cost whilst maintaining service levels across complex integrated services collaboration and innovation is key.

FMs have a good understanding of their clients’ needs and the necessity to find the best value package possible. This means the best service and price proposition not the lowest price which often comes at a cost to service.

There are industry trends for outsourcing and self-delivery. The latter, also referred to as ‘bundling’, is often seen as a way of recouping margin erosion but takes investment to offer a long-term solution. Self-delivering multiple services or bundling, whilst in theory seems a realistic solution, can create its own problems. Recruitment, training and technology for instance can be expensive and involves long-term commitment and the requirement for secure contracts. As a result, outsourcing is becoming a more common feature amongst FMs that involves transferring risk to service providers while commoditisation of core services threatens margins.

Through market segmentation specialist providers are at the leading edge; applying best practice in product/service development and distribution. Investing in their specific service through technology and people to differentiate the service from those seeking to use technology to provide low margin, low quality services. Few integrated companies can provide these capabilities in-house at the same level.

Aimed at building long-term relationships and working towards committed values, specialist providers can differentiate themselves, reduce cost and increase efficiency and effectiveness  that can out-perform a company, whether FM or not, that is trying to deliver multiple services. Investment concentrated on single services brings benefit to the services offered. Through experienced, well-trained specialist (and loyal) engineers, and investment in technology designed to meet customer expectations, greater saving can be offered to the end client whilst still maintaining service levels.

FMs should be asking service providers to demonstrate how their core values mirror those of the FM and what added-value they can bring. A service provider differentiates itself through quality and delivery of its service, combined with its ability to share the client’s responsibilities. Sustainable long-term contracts are based on partnership, creative problem-solving and excellence of technical delivery.

Our task is to understand and respond to the challenges faced by our FM partners. By developing services in ways that enhance the FM’s perception of significant and sustainable value forward-thinking service providers can improve market competitiveness while challenging the commoditisation of FM.

Read the full article in the May 2017 edition of Facilities Management Journal.