4 FM quick reads on outsourcing
1. Setting Service Standards with Outsourced Service Providers
Setting the stage for a viable working relationship with a service provider where they will be held accountable for outcomes involves creating standards and using them to evaluate performance. By identifying the method used for measuring performance in the request for proposal, prospective bidders understand exactly how they will be evaluated from the beginning.
A key step in building a relationship is establishing standards for performance at the time the RFP is sent out. Knowing what standards to use is a two-part process. The first part deals with the amount of flexibility facility executives are willing to build into their request for proposals. The requests should seek performance-based scopes of work that do not specify how the work is to be accomplished, but rather what the expectation is for the end result.
The second part of the answer depends on facility managers being able to convince others that performance-based contracting makes sense. Because these performance-based contracts are less prescriptive, they are harder to evaluate. Each bidder may propose a different process than the others for accomplishing the work in the contract.
During the selection process, the facility manager should be willing to talk about the risks and rewards associated with each of the different approaches to service and help others involved in the selection process understand the most effective evaluation criteria.
2. Build Trust with Outsourced Service Providers
Getting the full value out of an outsourcing partnership involves more than simply shifting the risk and responsibility to someone else at the lowest possible cost. You have to actively manage the relationship. While outsourcing is often a way to reduce headcount, you should continue to use progressive performance management approaches similar to the ones you use with valuable employees.
There will always be problems, and sometimes the service provider will make mistakes. It's important to give the service provider a chance to fix the mistake and make sure it doesn't happen again. How they recover is almost more important than being perfect in the first place. Blaming and punishing the service provider won't foster a strong working relationship and may cause them to hide things or stop communicating about important issues.
When you deal with issues, consider what you would have done when you were managing the service yourself, probably with fewer constraints, and manage the provider accordingly. Flexibility is probably what enabled you to manage successfully. It's the same flexibility your service provider needs to be successful with a working partnership.
Of course, for this to happen there should be trust in the service provider and vice versa. Establish this early through regular and open communication. Both sides should be open and honest; even a hint of mistrust can poison the dynamic.
If possible, co-locate their key staff with yours to foster a more integrated working relationship and ensure that your issues, goals and problems are communicated. Include the service provider in meetings so they hear information directly and can use their experience to help you with issues.
3. Water Treatment Demand Planning and Ongoing Attention
Today's tip comes from James Piper, contributing editor for Building Operating Management: Water treatment programs require careful planning and ongoing attention if they are to provide the benefits that they are capable of providing.
Experienced facility managers realize the importance of water treatment programs for HVAC systems. Although water treatment programs are unglamorous, they help ensure that HVAC systems operate at peak efficiency by keeping heat transfer surfaces clean and free of scale. They also help to maximize the life of the equipment and enhance safety, protecting both staff and equipment.
Water treatment might seem to be nothing more than adding chemicals to water. But in reality effective water treatment must be part of a program.
For example, water treatment efforts will require installation of specialized equipment, generally including chemical feeders, monitoring sensors and sampling ports. Once this equipment has been installed, it should be monitored. Water samples must be taken and analyzed, typically weekly, to determine the contaminants that are present in the water and their concentrations. And adjustments will have to be made in the program to match changing water conditions.
Facilities have the option of implementing the program in-house or contracting all or part of the program out to firms that specialize in water treatment. If in-house personnel are used, it is essential that they be fully trained in all of the procedures involved in the water treatment program, including the safe handling of chemicals used in the program. If the program is contracted out, it is important that a qualified contractor be selected, one that is experienced in working with systems similar to the ones in the facility. Regardless of the method of implementation, the staff responsible for water treatment should be monitored and supported by the facility manager to ensure that proper procedures are being followed.
4. Outsourcing to DIY
Outsourcing is seen as a way to cut costs, but it's not necessarily such a binary situation. With the economy continuing to lag, squeezing more bang out of your operations buck might point to rethinking outsourcing contracts and the resources available through in-house staff.
As much as any employee hates to hear it, the name of the game in a down economy is getting the most out of what - and who - you have. This means carefully examining all outsourcing contracts to see if they can be scaled back and the work completed by in-house staff on overtime. Some normally outsourced tasks that could be brought back in include painting and cleaning.
Hourly staff appreciates the opportunity to earn more as well, but this strategy is only a short-term solution. If overtime almost becomes mandatory to keep up with all the work that needs to be done, the benefit of flexibility and savings goes away. And staff may start to balk at the long hours.
Be Your Own GC One example of leveraging staff for work that is usually contracted out is doing construction projects in house. Obviously not the big stuff, but if you're going to renovate a floor, for example, and your construction budget is suddenly cut, using your own staff, along with established relationships with other trade workers, is a possibility. Basically, you become your own general contractor.
While the idea of taking on a construction project at the same time they're expected to be doing their regular jobs may initially cause some dissension in the ranks, it could be a strategy to help keep jobs in the long run. That's because at the end of the day, it could save the company lots of money. And the more you use your own team, and illustrate their skills and value, the better chance they will be around at the end of the financial crisis. A big downside, however, is that the project will probably take a bit longer than the traditional method.