The latest Facilities Management Market Survey commissioned by Interserve and undertaken by Sheffield Hallam University in conjunction with i-FM, has revealed a shift from a pure cost and service level focus to a stronger emphasis on successful buyer-partner relationships, with 90% of respondents requesting new ideas to be offered by their suppliers during the preparation and management of outsourced contracts.
At the same time, there is a discrepancy between what buyers want in terms of contract innovation and how this is being measured. 68% of those engaged in innovation link it to their strategic objectives and 86% rank it as important (the second highest ranking) when evaluating tenders or bids, but only 24% actually list it as a requirement in their contracts.
The study, now in its third year, surveyed 227 private and public sector buyers and providers from across the UK and found that the objectives for outsourcing remain similar to 2012, with financial savings (72%), access to better technical expertise (64%), transfer of risk (59%), access to best practice (56.5%) and reduction of in-house staff (56%) all scoring highly.
However, while results from 2012 show that reducing costs was more important than quality, this year’s report predicts that value for money will come from a greater emphasis on innovation, service quality and customer satisfaction.
The report also rates longer-term contracts (more than three years) as more preferable in the majority (91%) of cases in helping organisations achieve their objectives. Communication (76%) and working together as a team (76%) were ranked as the top areas for joint buyer and supplier improvement.
Commenting on the findings, Bruce Melizan, Executive Director at Interserve said: “Previous surveys concluded that the industry has been focused on taking out cost, but this year there has been a subtle shift towards finding ways of delivering services differently. Although some customers are still unwilling to rank issues like innovation at the top of their priority list when outsourcing, it is increasingly seen as a vital part of service delivery.
“The other significant trend in this year’s research is the value placed on building longer term contracts. In 91% of cases these are seen to provide more benefits than shorter term contracts in building relationships.
“At Interserve, we believe the right approach is about structuring a partnership based on the client’s strategic outcomes rather than focusing on the quicker and easier cost-cutting measures.
“Overall the industry needs to work closer with its clients to develop beneficial relationships that deliver added value, enable the right improvements to be made and contribute to the long-term success of the client’s business.”
The survey also revealed that:
16% increase in those outsourcing over 76% of their estate since 2012. In-house and single service are the most popular form of delivery but 14% more organisations now outsource to one provider.
Long-term contracts are most effective at building relationships (91%) with short term contracts considered most effective in only one instance – enabling organisations to exit contracts.
Cleaning, maintenance and security services are outsourced in nearly 70% of cases.
94% of people believe cost is most important factor in tender evaluation, whilst 52% think organisations will improve productivity and efficiency of services to a greater extent in the future.
Over the next five years, demand for total facilities management and integrated services is expected to increase, with single service delivery decreasing and bundled services remaining at the same level.
There continues to be mixed attitudes towards sustainability. There is a strong indication that it will become more important in the next five years, although much like innovation, it is rated as low relevance in terms of outsourcing objectives.
The key findings from this research are available in a report called ‘Time for change in facilities management’ which can be downloaded here.