Sourcing Strategy

The decision to outsource

Facilities services can be delivered in-house, contracted, or a mixture. The decision should rest on evidence rather than fashion:

• Criticality — how damaging is a failure, and how quickly must it be resolved?
• Specialism — does the work require skills or certification that cannot sensibly be held in-house?
• Volume — is there enough work to keep a directly employed person productive?
• Flexibility — how variable is demand?
• Cost — comparing fully loaded internal cost, including management, recruitment, training, cover and equipment, against the contracted price plus the cost of managing the contract.
• Control — how much direct control does the organisation need over method and priority?
• Risk transfer — what genuinely transfers, and what does not. Statutory duties do not transfer.

Packaging the services

• Single service contracts — one per discipline. Specialist expertise, competitive tension, and the most interfaces to coordinate.
• Bundled — related services from one supplier: hard services together, or soft services together. Fewer interfaces, some loss of specialism.
• Total facilities management — everything from one supplier. One accountable party, simple to administer, substantial dependence, and difficult and disruptive to exit.
• Managing agent — a third party manages a supply chain on your behalf, adding a management layer and its cost.
• Multi-site or regional packaging — leverage from scale, and the risk of appointing a supplier whose coverage in one region is weak.

Larger bundles reduce management effort and reduce your ability to replace a poorly performing element without disturbing everything. Smaller packages increase competition and require more client resource. Match the choice to the client capability that actually exists, not the capability described in an organisation chart.

Market engagement

Before writing a specification, understand what the market offers: who the credible suppliers are, how they structure their services, what is standard and what attracts a premium, and what pricing looks like. Engage suppliers in a way that gives none an advantage, and do not allow one potential bidder to write your specification — it will describe their offering.

Timing

Start the process far earlier than seems necessary. A meaningful facilities procurement — specification, market engagement, tender, evaluation, award and mobilisation — takes many months, and mobilisation of a complex contract takes longer still. Contracts that run out before a replacement is ready result in extensions on the incumbent’s terms at the worst possible negotiating position, which is one of the most common and most expensive failures in the field.