Facilities management insourcing: above-average risk, above-average complexity?

By June 6, 2019 October 9th, 2019 Facilities Management, Procurement

Sometimes, it happens through choice, as the result of a conscious board-level decision and sometimes it doesn’t – a facilities management service provider may have collapsed and businesses must rapidly plan to insource a previously outsourced facilities management provision.

Either way, the decision to insource your facilities management can launch your business on a complex project, affecting all parts of your operation including staff.

For example if your business’s catering, security, or maintenance service ceases to function properly, it is going to be quickly noticed putting your business at risk. If a Facilities Management operator ceases to trade then the staff have a legal right to transfer to the client organisation provided the service continues, so companies could overnight inherit a team of cleaners and all the challenges and distractions of delivering such a service.

In the meantime, your ability to operate—to serve customers and look after stakeholders could be impaired.

Skilled expertise is essential if sub-optimal outcomes are to be avoided. Below are some of the main factors that we would take into account to help clients achieve a successful insourcing solution.

1: Ensure you have high-calibre project management

Be under no illusions: particularly when insourcing a facilities management provision voluntarily, perhaps on cost grounds. Facilities management service providers won’t automatically grant you an extension if your business’s plans and preparations for insourcing are running late.

Why? Because they will have already looked at redeploying key people who may not be eligible to TUPE transfer, and their own suppliers, and will be unwilling to either expose them to uncertainty or re-negotiate term extensions with people and suppliers.

The problem, of course, is that insourcing a facilities management provision isn’t a project with which most businesses will have had much experience.

Some companies have outsourced for more than 20 years so first-generation outsourcing is but a distant memory. There’s a lot to consider if business continuity is not to be compromised, and the proper legalities correctly observed. Remember: even if your existing staff—those who are already in place, doing the work—are retained, they will be switching employers, and will be entitled to certain legal protections, under TUPE legislation.

Insourcing a facilities management provision isn’t something to learn about ‘on the job’. Skilled expertise, backed by high-quality project management, is essential.

2: Complex requirements must be met

Many businesses fail to understand exactly what an insourcing project entails.

A common failing, for instance, is to focus excessively on the TUPE requirements that must be observed when employees transition from one employer to another. These are obviously important, but TUPE’s impact on the timeline is the legal requirement to provide key data on the employees at no less than 30 days before the transfer and within an overall insourcing project timetable that typically stretches over six to nine months.

More fundamental issues such as the overall business case, establishing an appropriate supply chain of resources and subcontractors, developing the IT systems that will be required, and making payroll and human resources preparations for those employees who will be transitioning to the insourced facilities management organisation also need to be high on the list to ensure the full benefits of an insourced facilities management model are to realised.

3: Understand the failure points

Risk is another critical dimension of a facilities management insourcing project. Principally, although not exclusively—these revolve around two of the most important facets of the project: people-related issues, and procurement-related issues (both of which will be the subject of future blogs).

People-related issues are perhaps the simplest to understand. At a stroke, a business can experience a significant increase in headcount and potentially, an increase in headcount of a very different nature from the existing employee base. A professional services organisation, for instance, might for the first time find itself managing cleaners, caterers, security personnel, technicians and tradespeople.

Clearly, systems and procedures will have to be in place for any management and supervision issues that may arise;

 

  • How are training and discipline matters to be handled?
  • How is staff cover in case of sickness and holiday to be organised?
  • Who is going to be responsible for securing appropriate supplies and equipment—workwear, personal safety equipment or required cleaning consumables for example?

Procurement, too, is a risk

In theory, insourcing facilities management can result in cost savings, and a boost to the bottom line. But don’t forget that the organisation to which facilities management was previously outsourced will not only have longstanding supply chains and relationships with suppliers, but also possess in-depth knowledge—built up over many years—as to how to manage and negotiate with the specialist suppliers within its supply chains.

Put another way, if a business can’t match those supply chains, and manage them with equal skill, then a facilities management insourcing project can result in a facilities management cost that is higher than before, not lower than before and no guarantee of improved service.

In conclusion – let sleeping dogs lie?

Very easily, a business can come to imagine that insourcing its facilities management provision is too complicated and risky to carry out. Better by far, goes the logic, to let sleeping dogs lie, and continue with the existing outsourced provider.

Naturally enough, the existing provider won’t rush forward to rebut this conclusion, and is doubtless very happy for businesses to make this mistake.

For that’s what it could be: a mistake. Insourcing a facilities management provision if executed correctly doesn’t have to be too complicated or risky to carry out. A business might want advice, and help, but the eventual gains can make the exercise very well worthwhile.

Marcus Hill is Head of Facilities Management Consulting at Retearn. He is a seasoned Insourcing and Outsourcing Facilities Management expert and Fellow of the Chartered Institute of Building and a member of the Institute of Workplace and Facilities Management (formally known as BIFM).

We have experience and expertise to help clients with insourcing facilities management be it a full insource or a partial insource to reflect your business needs. To find out more visit https://retearn.co.uk/facilities-management/or contact Marcus on the number below or via LinkedIn.

Thoughts? Questions? Need more help? We’d love to hear from you at hello@retearn.co.uk or

Call us on +44 (0) 7795 236664

Marcus Hill

Head of Facilities Management Consulting