Improving both performance and cost effectiveness of facilities management strategies is the goal for many retailers, but honing the right solution remains mired in challenges. Mark Faithfull reports

In-house? Single-service providers? Outsourcing completely, with total facilities management? When it comes to facilities management, it’ s a case of so many questions, so little time to fix the heating, police security or clean the carpets.

Richard Singleton, formerly with Boots and now operations director at SGP Property & Facilities Management, says simply that “all ways can be good ways”, depending on the retailer, its legacy estate and its trading fortunes. “The approach from retailers tends to mirror their in-house expertise. It is easier to outsource if you have small in-house expertise but in some ways things can become more entangled if the incumbent in-house team is very strong,” he says.

Singleton believes that data is at the heart of making an informed decision and stresses that a retailer needs to ensure it has an accurate picture of its estate, the age and condition of its stores, trading priorities and lease tenure. Based on that information, facilities management strategies may vary by store type, geography and importance. “Differentiating the approach is key,” he says. “Once you get that in place, the system can evolve to meet the retail requirements.”

An evolved strategy

Facilities Services Group managing director George Lilley concurs and says that the solution - rather than a one-size-fits-all approach - is vital: “Maintenance budgets for retailers are coming under considerable pressure due to the current economic position. This is leading to the introduction of more intelligent job prioritisation and bundling of low priority jobs,” he says. “Leverage is also being gained by the awarding of contracts on a national rather than regional scale, together with the combination of reactive fabric and compliance services.”

Paul Gatland, UK sales director for US-based capital asset management specialist VFA, adds that retailers need to consider the complete asset value of the elements of their estate and like Singleton he cites data management as the building block for an effective and informed strategy. “Retail estates are often hugely diverse, from a West End flagship to a small town store and getting a handle on how to value and prioritise the issues is vital,” he says. “For example, outages in lift and escalator operations can have a measurable impact on sales. So if a lift has a 10-year design life, and it is nine-and-a-half years old, do you want to schedule replacement when you choose or risk it going wrong in the middle of the Christmas Sales?”

Singleton’s view is that even with an evolved strategy, weighing up the pros and cons of a facilities management approach remains tricky. “On the one hand total facilities management is highly efficient, with suppliers tending to run lean and efficient operations, on the other an in-house team is more likely to consider longer-term issues - for example looking after air handling units that might have a design life of 15 years - which may be beyond the duration of a total facilities management contract.”

Lilley adds that despite the understandable desire for a black-and-white solution “there is not really one simple answer, it is genuinely down to the needs of clients”. Instead he says: “It is very difficult to find operations managers that have the versatility or desire to manage both hard services such as M&E and soft services such as cleaning. However, it really does depend on the scale of the client’s needs. I first read of serious discontent about total facilities management in 2000, yet the model is still here and growing, so it must work for a lot of procurement people.”

Team effort

The issues are shared by retailers and landlords alike, and last month Capital Shopping Centres - which owns the Trafford Centre, Metro Centre and Lakeside among others - struck out with something new and initiated a Facilities Alliance across its portfolio, structured on an incentivised risk-and-reward basis. The alliance combines Capital Shopping Centres’ operational team, soft service supplier Europa Support Services and hard service provider Inviron across its estate.

“Before the formation of the Facilities Alliance we operated individual contracts for technical services and soft services,” says Trevor Pereira, commercial director at Capital Shopping Centres. “These were fixed price, set annually. While we have achieved good standards with our service providers, there was very little incentive for innovation and improvement. This silo mentality also led to problems of co-ordination.”

Capital Shopping Centres now hopes to combine the parties’ skills, with co-operation strengthened through measurement systems, shared contractual risks and rewards, and the use of common systems such as a single asset and facilities management system, common email systems and management information reporting tools.

The contracts take effect from April 1 and Pereira admits that the key for any such initiative is to “choose great suppliers and be clear about your objectives”. He says Capital Shopping Centres ran a thorough, transparent and detailed procurement process to choose partners and over a period of 12 months evaluated companies on more than 92 criteria.

Jeremy Waud, managing director of Incentive FM, which shortlisted potential bidders, describes the alliance as a virtual company. “The bond is similar to that of a total facilities management contract and the idea is that the partners act, feel and behave together in their objectives,” he explains. “The biggest problem with total facilities management is always a suspicion among clients about the depth and quality of offer, especially when soft services companies step into the hard services space. I personally think total facilities management is a perfectly good model but I do think it’s a fair concern.”

A new factor in the facilities management equation is energy management. To date rarely included within the facilities management contract, rising costs have seen more energy-conscious replacement programmes and tighter control and monitoring of energy management and building management systems come within the facilities management provider’s remit. “Energy management systems might be great when they are installed but by the time they have been fiddled about with by various people, six months down the line they are often not working as they should,” warns Singleton.

Capital Shopping Centres has spent much of the past 12 months trying to distil the best elements from this diverse set of parameters and approaches into its own hybrid system, but Pereira stresses that the client cannot simply create a model and then wash its hands of responsibility: “The quality of the client’s own operational management is vital to its success. It is important to recognise that working in this kind of relationship requires an active and intelligent client,” he says. “If you are looking to purely shift responsibility from your organisation, this will not be the right model for you.”

The right facilities management strategy

In-house

An employed team as part of the retail or shopping centre staff.

This system is decreasing in popularity but in-house teams often oversee implementation

Pros Control, quality monitoring, accountability

Cons Cost, inflexibility

Single source

Facilities management services are broken into their core disciplines with a supplier for each element

Pros Cherry-pick expertise on discipline, not reliant on a single supplier

Cons Multiple supplier arrangements, potential lack of co-operation/communication between suppliers

Total facilities management

Full outsourcing of all administration and services contracts to a single provider

Pros Single-supplier accountability, divests functions to third party, co-operation between services

Cons Loss of control, representation by third party, only as strong as weakest service link

Facilities Management glossary

Soft services

Cleaning, management services, security, etc

Hard services

Maintenance and technical services repairs and management