Horses for courses: FM Insights from Elliott Chase
Choice is a wonderful thing. Maybe not so much in the 57-varieties American-inspired overload that quickly becomes baffling. But more in the sense of having a few clear options, one of which should lead to satisfaction.
That’s almost the case with facilities management. Fundamentally, there’s a solid range of options. But that doesn’t stop FM also at times seeming like a prime example of a too-confusing marketplace: dozens of service lines, countless potential suppliers for each, half a dozen basic models, but each supplier with its own take on the best solution (not to mention buyers who may not be totally sure what they actually want and need in every case)…. This is just one characteristic that leads us to a favourite description of the industry: ‘an interesting place to be’.
Lately the challenge for client-side organisations in choosing the right service solution has featured on our news pages in various ways. This is a great illustration of the fact that, when it comes to service provision, the answer is out there. Facilities management can cope. As a consumer, you just have to know what you want.
Following the Labour Party’s pledge to bring outsourced services back in-house, decisions around outsourcing as a route to service delivery in the public sector have had an extra bit of ring to them.
We have reported recently on a number of local authorities and healthcare operators taking services in-house – for example, Peterborough, University Hospitals Plymouth NHS Trust, Haringey in London and Norwich. These are interesting cases, where the justification generally tends to be ‘we want more flexibility and more control’ – a perfectly reasonable case for action which, like any decision about outsourcing (or any other major policy area), just needs to be backed up with research, thought and planning. As interesting as these cases are, though, we do not see a market trend here.
Still, the Norwich decision is intriguing because it links to service provider Norse. Norse is, of course, a public sector company in one true sense: it is owned by Norfolk County Council. Its clientele is public sector organisations; and it has pretty nearly cornered the market on joint venture service companies, a solution that local government tends to find comfortable as it is not quite outsourcing per se but instead an enterprising approach that not only promises greater efficiencies but frequently also the prospect of a new source of income – all of which didn’t stop Norwich from wanting greater flexibility and more control.
Norse’s success, despite the odd loss, is consistent with the argument made last year by the think-tank New Local Government Network. Local authorities are increasingly exploring new, innovative forms of partnerships such as trading companies and joint ventures, according to an NLGN report – which argued that the picture in this market is more mixed than the simplistic ‘outsourcing versus in-house’ debate.
Norse is, incidentally, the largest local authority trading company in the country. But it is not the only spin-out focused on facilities services: for example, there is also Suffolk’s Vertas and Cornwall’s Corserv, both in successful pursuit of ‘external’ contracts.
Labour’s anti-outsourcing position has drawn some support, certainly. There are a number of ongoing industrial disputes, notably again in the public sector though not exclusively so, where unions see the ultimate resolution lying in a return to in-house service provision. The GMB union, for one, is quick to default to the blanket position that “outsourcing doesn’t work”. But the kill-it policy seems unlikely to be a success for a number of reasons. For one, another think-tank has shown that outsourcing does work. A recent report from the Institute for Government found that local council outsourcing in a number of service areas does deliver significant savings and benefits. What is really needed, both think-tanks agree, are better management, recording and r eporting to ensure contracts are operating effectively and outcomes are being measured and shared.
The point is, there is a manageable menu on offer within the facilities sector: from in-house service delivery, through the basics of single, bundled and integrated models, to Mitie’s ‘payment by results’ deal with Lloyds Bank and the ‘vested’ contracts that ISS is pioneering with some clients on the continent – and with joint ventures somewhere in the middle.
That’s the great thing about the FM sector: there is something for everyone.
The industry does nevertheless need to keep evolving: corporate and individual needs, expectations and aspirations don’t stand still…especially these days. The move towards a broader, more informed, more holistic FM – and the benefits that would flow from that – form the theme for our next Workplace Futures conference. Programme information and booking options are here. Join us for what will be another great, and timely, event
Managing Editor, i-FM