Facilities Management Outsourcing In The Uk Construction Essay

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Managing non-core business services enables an organisation to function at its most efficient and effective level. Implicit in this management role are the issues of customer satisfaction and best value. The focus for these issues is facilities management, which has traditionally been seen as the poor relation of the main real estate and construction disciplines. The significance of facilities management is now recognised. Facilities management can be applies on both public and private sector. The types of organisations addressed might therefore range from colleges to entertainment companies, from manufacturing to airport operators. The structure, management and accommodation of these organisations will vary widely; it is necessary for each organisation to consider the relevance to itself, its sector and its country of each of the points raised (Atkin, Brian & Brooks, Adrian. 2009).

An organization for providing the support essential for its core business operations relies on a mix of services and functions. The task of facilities management is to ensure the availability of this support at the right time and in the right form or even for the right cost. FM takes all the control of the things which comes under it and allowing the organizations to concentrate on the main area to excel in the future and to improve their efficiency. Practically it is not easy to define the specific areas of FM. (Action FM. 2010)

In the USA the term is used as "Facility Management" (IFMA, 2009) and in the UK it is used as "Facilities Management" (BIFM, 2009).

There are number of definitions of facilities management. Two international bodies of facilities management professionals define it as:-

FM does not deal with single discipline, it covers multiple areas and develop a link among the people, process, technology and place to ensure the proper functionality. (International facilities management association, 2009). FM develops a sense of integration among the organizations and its different areas for maintaining and improving the efficiency or effectivness of all the activities of the organization. (British institute of facility management, 2009). 

Facility management concerns people and places. People are generally the single biggest cost centre for any business or organisation and its single biggest asset. Having good people means there is capacity, potential, creativity, responsiveness, continuity and a liklihood of success. Keeping people happy and enabling them to be productive in their daily activities is not only critical in gaining and retaining a strong workforce, but also in delivering overall business prosperity and growth. Built facilities are typically the places where people work. Facilities are another major cost centre, in many cases the second largest expenditure category regardless of whether space is owned or leased. While it is important that facilities are well designed, efficiently managed and used to their best advantage, it is more important that they support core business goals by enabling people to be at their most productive, improvements in worker productivity can lead to financial gains that out weigh facility operating costs such as energy, cleaning, maintenance and the like (Best, R et al., 2003).

Outsourcing FM means to hand over some operations of the organizations which is expert in those areas which helps a lot in increasing the shareholders value and helps in reducing ost and increasing efficiencies. (HRO Today, 2003)

Outsourcing helps in reducing cost, enhancing quality, bringing motivation, flexibility and availability of skills that is way out-sourcing may work to the core business advantage for the organization. It helps in increasing the overall performance and work environment of the organization (Bernard Williams Associates, 1999).

Facilities management is a sub-section of the support service market. Main Service under facility management are mentioned in the following diagram:-Mainly it includes following services (KPMG, 2007):

1.2 Background

The term facilities management was introduced in 1975 (Maas and Pleunis, 2001) and grew in the United States throughout the 1980s and it reaches worldwide in the 1990s. In Europe, facilities management was first established in the United Kingdom and the Netherlands and it was based on the lessons erudited in the United States (Hassanien and Losekoot, 2002).

According to Scott (1971) the term 'Facility Management' originated in the late 1960's in the USA to describe the then growing practice of banks outsourcing responsibility for processing of credit card transactions to specialist providers. The oldest record yet traced describes FM as follows:

"The credit-card opens a new set of problems requiring intelligent communication between credit card processing centres on a nation-wide basis. With this requirement comes a need for large terminal networks to allow merchants to obtain immediate credit information and also to record and process all information pertinent to a sale".

In reference to the facilities management, the term 'accommodation management' or 'accommodation studies' (commonly known as 'lodging management' in the USA) in the framework of hospitality management education is easily and clearly confined in two or three core areas including front office, housekeeping and failing in importance except, mainly, in some North American hotel Schools, subject falls under the heading of 'hotel engineering'. In the UK, the traditional approach to accommodation management education give emphasis to a soft technical and scientific base, except [until the advent of the computer) in front office management. Thus, housekeeping and hotel engineering, chemical treatment of various materials and fabrics, and operation of ventilation and heating systems, Thirdly years ago in UK one could not pursue a qualification in hospitality management without touching on all these subjects, now it is much less likely. Experts are welcome in the industry, whether they are architects, auditors, interior designers or lawyers (Brotherton, B. & Wood. R., 2001).

1.3 Outsourcing & Facilities Management

Outsourcing has been used in facilities management from long; many property owners have hired food-services companies or janitorial for years. Since the mid-1990s, most of the businesses man has tried to outsource almost every function they could. It includes landscaping, energy management, construction, pest control and more (Kelly, 2004).

Outsourcing is not a new term, it has a long history and it has evolved considerably over time. Initially it was only used during recessions by firms for achieving the high gains over productivity, outsourcing is now a key part of wider organizational change programs and it has become strategic activity. Outsourcing helps organization to focus on its core activity, whether that is to sell electrical equipment or to educate children. When a strategic partnership is formed between client and contractor that is called the most successful outsourcing (Business Service Association, 2008).

The outsourcing has getting the attention of the masses in the case of supervision and monitoring. It will work better if the relationship among the related parties is good. Its success depends on the relationships among the parties involved that include the client, service provider, users and customers. Their relationships are on two natures of platform, the social and contractual relationships. The requirement and expectations of the client, users and customers comes under the contractual relationships; designing and documenting of the service provider's obligations in respect of service specifications and limits of liability also comes under the contractual form of relationship, it also includes reporting and inspection procedures, equipment provisions, provisions of changes and compensation to be provided to the service provider, enforcement mechanisms and protections for the client, including performance control; provision for amending the contract; specific context, depending on the service involved and the desires of the client (Baba, Abdul, 2005).

Outsourcing is very helpful and advantageous for various business environments such as it helps in reducing cost, increasing quality, motivation, flexibility and availability of skills (Bernard Williams Associates (1999).

1.4 Current position and Roles of FM

According to MTW research report presently the total FM market is worth just under 90 billion pounds based on sales figures of the industry. The provision of the security services such as CCTV monitoring, access control, security screening etc, has increasing trend in the present years and this trend will be continued in the future even with high degree (MTW research, 2010).

Alexander (1996) and Hamilton (2004) provide the following roles of facilities management:

Creating a facilities policy that expresses corporate values.

Giving the authority to the facilities business unit to improve service quality.

Developing facilities to meet business objectives.

Recognizing the value that facilities add to the business.

Essentially strategic and business directed, with focus on what the organization requires in the future.

Maximizing value and gaining competitive advantage.

Control and sustainability of computerized integrated management systems; in order to achieve more informed decision-making from the vast amount of facilities data to be recorded.

Management of outsourcing and partnership agreements.

Environmental control.

Energy management.

Identifying customer needs and how to satisfy them.

There are two main branches of facilities management strategies, in-house sourcing and out sourcing. Mostly outsourcing has adopted by the organization to concentrate on their core business process. They will gain from this, as facilities management is the core business of some specialized service providers, vendors or contractors. The service providers have the necessary resources and ability to deliver quality works/ services. The outsourcing process comprises of three stages namely pre-transition, transition and operational stages. The operational stage comprises implementation, service start-up, project close, review and on-going service development (Reeves, 2001).

1.5 Future prospectus of FM

FM has been studied by the various practitioners in its early times not only in terms of definition but also as to whether it represented a profession, discipline or simply a concept. The emergence of organised professional bodies such as the BIFM has done much to address these concerns. It has established training and education programmes, which has given a major insight into the scope as perceived by the professional (BIFM, 2009).

FM has become an industry and it is growing day by day. its growth as a key service industry has been extremely quick and there have been a number of key reports analysing its size and composition (AMA Research, 2009). The rapidly changing work environment all over the world has also affected FM market and the global market conditions bring significant changes in the facilities management industry. During economic boom, the facilities are not properly adopted which in the end results in the poor performance especially the workmanship quality and the occupancy. In addition, the facilities faced extreme decline and depreciation, leading to serious damages in terms of its physical state and functionality (Kamarazaly, 2007).

For analysing the scope of the FM there is another way as by looking at the recipients of the service. The initial momentum for the growth of FM was in the past, and within this context FM is responsible to preserve the value of the company assets and to provide such an environment which helps in increasing profits through delivering optimum use from a built asset as a factor of production. As the improved built asset management improved the overall working environment which helps a lot in achieving higher productivity level, lowering malingering and improved motivation. As a result of these improvements there should be a better customer interface, with the attendant marketing remuneration (Chanter & Swallow, 2007).

2. Problem statement

According to Tull & Hawkins (1990) defining the problem statement is the most important element of any research process. The research will be of more worth if its core or main problem is properly defined.

The study is exploratory (Cooper & Schindler, 2006: 143) and aim is to find the facilities management outsourcing growth in the past and compare with the data collected during the research to conclude what is the growth pattern of facilities management outsourcing, also identifying the factors those encourage firms and organisations to outsource their facilities management department.

The present research is planned with following objectives:

To study the current progress of facilities management outsourcing in the UK through literature search and using other tools such as survey and interview.

To find the key factors, companies consider outsourcing their FM department.

To identify the future scope of facilities management outsourcing in the UK in view of the current progress.

3. Research question

Outsourcing is not a new phenomenon in UK. Vast number of companies are offering services related to facilities management. However, more specifically in the facility management outsourcing services and its growth, the UK FM market is needs to be researched.

A good research question defines the focus of a research project. It helps readers to know the specific subject matter which are going to be addressed. It can set boundaries to help in figuring out how to proceed in the research and defines which data in needed to collect and which methods will be used to access and analyse the documents (Hung, P. & Popp, A., 2009).

The aim of this research is to study the background of the FMO, its progress and in view of that its growth pattern in the UK. Following questions are being set to achieve this objective:

What is the current scenario of facilities management in the UK?

What are the key factors those organisations consider to outsource their facilities management department?

Does facilities management outsourcing has its place on the board in the future?

4. Research methodology

The research is targeted at the leading facility management companies of LSE. The targeted people were FM executives, managers and professionals. Primary data has been used to collect the data and the opinions and views were recorded through the questioner for the analyzing the research statement. Interviews were also conducted for this purpose.

To achieve the objectives of the research, the research has been conducted only on one side of the FM market and that is the supply side of the market, which includes FM market players, and competitors. The survey was done by the help of questionnaires and face to face interviews were also held.

5 interviews were conducted with FM professionals

One questionnaire was designed, in conjunction with other management team members at the FM Company by whom the author is currently employed, in the form of informal interviews.

Chapter three outlines the detailed research methodology used in this research.

The survey was carried out on the top 10 FTSE listed companies within the UK.

Demographics

Experience in the FM industry

Current business and future trends

Overview of FM services

Mode of entry into FM market

Chapter three outlines the detailed research methodology used in this research.

5. Limitation of the study

The study is limited to the progress of the facilities management outsourcing in the UK, it's a comparatively new field and previous research is limited. Limited time was available to complete the project. Some interviews were conducted through phone because of limited time and limited financial resources available. There is limited research available on the topic so it is an opportunity to explore the area and provide a ground to future researchers.

6. Research strategy

Flowcharts are used to create visual maps of a process. They can help identify processes that need improvement in general, as well as specific steps to improve within the process, or "hot spots" (Fanuele et. al., 1998:23).

Research strategy is briefly explained in the following flowchart:

No

Yes

No

Yes

Analyse data, compile and submit draft dissertation

Respond to supervisor's comments and submit final dissertation

Literature Review, Interviews, Surveys & Exibition

Prepare proposal for presentation and approval

Modify research problem in the light of insights gained from the literature. Pose questions, set objective, formulate methodology

Review relevant material and identify gaps to be filled

Obtain supervisor's approval of the topic

Identify research area

Is approval

given?

Start

Is approval

given?

7. Time & Action Plan

Gant charts are more commonly used in project management, they can also help to plan, coordinate, and track specific tasks in the research project by providing a graphical illustration of your timetable and the key tasks involved in it (Bryman & Bell, 2008).

Gant Chart is being used to maintain the work progress, tasks are being set to complete in 12 1/2 months. Literature Survey has been completed in 1 month that provided grounds to define the dissertation topic and to complete the proposal. In section 6, flowcharts shows the pattern of work. After approval of the proposal, literature review took 4 months to be complated, along with literature review, interviews and survey process was started in October 2009 and took 5 1/2 months to get completed. During the process of interviews & surveys data analysis was started and took 3 1/2 months. Report was complied in 1st half of March 2010 and draft dissertation was submitted in 2nd half of March. In the 1st half of April correction/amendments were made in the light of supervisor's comments and final dissertation was submitted.

Activity

Duration (Months)

Apr

09

May

09

Jun

09

Jul

09

Aug

09

Sep

09

Oct

09

Nov

09

Dec

09

Jan

10

Feb

10

Mar

10

Apr

10

Literature Survey

1

Wait for proposal approval and concentration on exams. No work on dissertation in the month of Jun 09.

Dissertation topic

1/2

Research Proposal,

Presentation and Submission

1

Literature Review

4

Interviews /Surveys

5 1/2

Data Analysis

3 1/2

Report Compilation

1

Presentation of draft dissertation

1/2

Correction &final submission

1/2

8. Research design

Research design consists of the following chapters:-

Chapter Two: Literature review

This chapter provides available current literature, which is used in this study to help with the qualitative analysis of the collected data. This chapter also gives an in depth look at the literature review, in order to gain insight into the relevancy of the material to the problem statement and applied research methodology to be used.

Chapter Three: Research design and methodology

The research design or methodology is the plan and structure of the investigation to obtain answers to objectives says Cooper and Emory (1995:130). In this chapter the author researches the design and method to be discussed, which includes the aim and objectives of the study, the criteria requirements and the authors' data gathering methods, data analysis and conclusions. The role of the research is to provide a method for obtaining those answers by inquiringly studying the facts, within parameters of the

scientific method concludes Leedy (1989).

Chapter Four: Research Results, Analysis and Findings

This chapter is dedicated to the research results of the collected quantitative and qualitative data. This chapter also includes the presentation and interpretation of the results in different forms such as tables and graphic explanations.

Chapter Five: Conclusions and recommendations

The final chapter is focused on conclusions reached. Suggestions and recommendations are given to businesses interested in using the findings.

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