The race to the bottom has been a common theme in facilities management procurement for some time, and with so much competition in the market there will always be a contractor willing to do it for less, but as we’ve recently seen with Carillion, it is not sustainable.
Most property and procurement professionals know there is a smarter way to procure but don’t have the data that they need to do so. In a recent paper by RICS on ‘Big Data’, 37% of respondents were in the pre-adoption stage of implementing big data management while 35% are in the early adoption stage. The research highlights just how few companies are collecting or using the potential data they have available.
In our experience, very few clients have any data of value, with most assets lists out of date and lacking quality information. Having the correct data on your assets and contracts allows for specific smart procurement which creates much better value in the long run.
We generally find that:
- FM’s don’t know how or don’t have time to manage big data and extract value from it
- CAFM systems tend not to be used to their full capacity, and in turn, the data is not there to make more informed decisions
- FM’s are not making the most of the asset lifecycles due to lack of information
- There is very little visibility of real-time spend as contract delivery is reviewed monthly or quarterly, often through contractor self-reporting
With advances in technology, managing assets and contractors has never been as efficient. Costs can be benchmarked across different contracts and countries to get a real cost of FM delivery, allowing you to highlight areas of concern.
Through benchmarking, you can see where you are paying over the market rate, and it allows you to explore the reasons in real-time as soon as a trend is identified. The same goes for where you are potentially paying lower than the market rate, trend analysis can highlight that under-spend is potentially putting your assets, compliance and general maintenance at risk.
By using real-time business intelligence and benchmarking, we can procure or work with procurement departments to use the most accurate asset and performance data to benchmark current market costs.
The benefits to successful procurement are massive, you know before going to market what the prices are to deliver the work through already benchmarked data. You use that data to assess the submissions and help inform your decision making picking the best contractor for the job.
The other main benefit is using the data to split tenders into regional/national specialists, moving away from TFM to gain even better value. SME’s and regional contractors can’t compete nationally and often struggle to compete with the established main contractors. Our solution supports SME’s and simplifies tendering by using benchmarked information that is true and valid.
We aim to remove the often-blind pricing process, using out of data cost schedules and poor asset information. Instead, we offer real-time asset, contract and performance information, benchmarked against other contracts on a national and international level.
In the case of Carillion, had benchmarked data been used by the numerous public and private sector organisations it would have become apparent a lot sooner that their pricing and delivery was unsustainable and may have led to Carillion winning less work and stopped them becoming a “giant and unsustainable corporate time bomb”.
This blog follows the recent article published by FMJ titled ‘Life After Carillion’ – https://www.fmj.co.uk/life-after-carillion/
Link to the RICS Paper titled ‘Big Data: A new revolution in the facilities management sector’ – http://www.rics.org/uk/knowledge/research/research-reports/big-data-a-new-revolution-in-the-uk-facilities-management-sector/
Link to Parliamentary Inquiry into the Carillion collapse – https://www.parliament.uk/business/committees/committees-a-z/commons-select/work-and-pensions-committee/news-parliament-2017/carillion-report-published-17-19/