In or Out?
Decisions on whether and how to outsource maintenance work get tougher as new issues complicate the age-old debate
Outsourcing has never been such a high-wire act. Certainly, maintenance and engineering managers for years have had to balance their mission to protect and improve the condition of an aging stock of buildings with upper management’s directives to cut costs wherever possible.
“There is terrific pressure — and there has been for a long time — to contain costs,” says Rich Hertlein, manager of engineering and maintenance at Bethesda North Hospital in Cincinnati. “When upper management needs to control costs, the first thing they look at is staffing. The natural outgrowth of all of this is outsourcing.”
But while the central issues within facilities related to outsourcing might have remained the same, the contributing factors have changed dramatically. Technology of all types has made buildings far more complex to operate and maintain, and the pool of job candidates with needed technical skills seems to get shallower by the day. Beyond that, many facilities continue to add space but often add little or no staff to handle additional maintenance and operations needs.
In essence, managers balancing on the high wire of outsourcing today find that the wire is longer and higher than ever before.
To Outsource or Not?
For years, maintenance and engineering departments have successfully used the strategy — and its more tactical companion, outtasking — to handle tasks that are too complex, too large or too pressing for in-house staff.
While in-house, front-line technicians understandably take a dim view of outsourcing and outtasking, managers have viewed them as viable options in helping them maintain and repair buildings and their infrastructures as efficiently and cost-effectively as possible.
The first step in the process — and perhaps the most crucial — is identifying the duties or tasks that an outside contractor could provide more cost-effectively, quickly or easily. James Burnson, director of physical plant engineering for the State of Washington, offers these questions to help make a decision clearer for those in the public sector:
- Is the function inherently governmental? If not, then …
- Does a competitive market exist? If so, then …
- Can it be done less expensively by state employees? If not, then …
- Develop a state, service or public works contract.
Though the process might be more complex within government organizations because of requirements for public bids, the thought process is likely to be much the same for all managers: assess in-house capabilities, identify outside sources for select tasks and develop a scope of work.
In many organizations, both the physical and financial considerations surrounding outsourcing have changed, sometimes dramatically. For example, Duke University Medical Center has expanded from 11 buildings to 91 buildings in the last decade but has added no engineering or maintenance staff to compensate for the growth, says Don Rust, the medical center’s assistant director of engineering and operations.
As a result, his department has outsourced a number of functions previously handled in-house, including routine service on the medical center’s 40 emergency generators and on automatic doors throughout its facilities. Rust says he found a contractor to provide service on the doors for $250-300 per leaf per year.
“I can’t even provide (in-house) training for that price for a year,” he says.
The department also has outsourced much of its painting work in recent years, reducing its in-house painting staff from 25 down to four and handling additional work through contractors.
At Bethesda North Hospital, expansion also is increasing the workload for the engineering and maintenance department. The department already is responsible for about 1.1 million square feet of hospital and medical office space, Hertlein says. And a $30 million hospital expansion now under way will nearly double the size of the hospital. The department’s staff includes 20 mechanics.
“We have qualified people who can do almost anything, but we only have so many of them,” he says, adding that he identifies targets for outtasking as “anything requiring a skill that isn’t practical for us to have on site.”
In that category, many managers include — at least initially — maintenance and operations tasks related to technologically advanced products and equipment that have become pervasive in facilities over the last decade. Though microprocessor-based technology has enabled greater control of some aspects of facilities and helped control key areas such as energy costs, this technology also has upped the ante for maintenance. Because of these systems’ highly technological nature — and a lack of properly skilled technicians to service them — managers more often must outsource their installation and initial operation.
For example, Duke University Medical Center, like many organizations, outsources its elevator inspection and maintenance.
“We always had our own people doing it, but the technology changed,” Rust says.
Facilities installing new building automation systems and those integrating fire and life safety systems, for example, more often than not contract with system developers to provide the initial system startup and operation.
“Because of the technology, there is a strong tendency to outsource this stuff at first,” Burnson says. “Later, we’ll bring in new staff and train up to meet the needs.”
Managers also face increasing scrutiny over maintenance and engineering tasks that carry an element of risk to facilities and their occupants, including asbestos removal, mold detection, refrigerant management, and indoor air quality management. Because these higher-risk duties can have health implications, the public, the government and facilities’ upper management are watching managers’ handling of them more closely in order to protect health and safety.
For that reason, Hertlein says, his department contracts out such tasks as IAQ monitoring and testing.
“Especially in the last few years, that whole issue has been pretty well defined as something we’re not going to do in house,” he says.
Working with Contractors
Once managers decide which tasks to outsource, they must find the right contractor to provide the service. Often, the decision comes down to obvious factors, such as cost, reliability, proactiveness and flexibility.
But locating qualified candidates and investigating their experience can be a true test of a manager’s perseverance. To shorten the search, managers often talk with peers for recommendations, or they look to contractors they have worked with before. For example, Hertlein says if a contractor has done good work on an expansion project for the hospital, he will consider that contractor for similar work later.
“If they get their foot in the door and they do a good job, typically we might call them for work in the future,” he says.
Rust puts it another way.
“They have to gain our confidence before they can work for us again,” he says. Still, managers must take steps to make sure the fit with the contractor is right.
“It’s not unheard of for me to drive to another city to inspect something, whether it’s a product or a service,” Rust says. “I want to talk to the engineers and the maintenance people about the product. And I don’t want the salesman standing there when I do it. Until you’re willing to do things like that, you’re going to be spending a lot of wasted time.”
In other cases — less often, certainly — contractors get outsourced work from maintenance and engineering departments by being proactive. Hertlein cites an example of contractor who approached him about providing parking-lot relamping services to the hospital.
The benefits of the arrangement to the department and the organization were numerous: The contractor can do replacements on a per-lamp basis, if needed, providing flexibility. Hertlein can quickly address security concerns about dark areas of parking lots if a lamp burns out, enhancing customer service. And his department doesn’t have to rent a lift and commit workers to relamping each time, saving money.
While these situations certainly can benefit maintenance departments, they are the exception.
“Generally, we don’t do it,” Hertlein says. “The stakes are too high.”
Whatever the outsourcing arrangement, managers stress the central issue is being able to agree on the scope of any outsourced project before work begins and monitoring progress to maintain control throughout the project.
“It’s when you give up control of a project that makes it much more difficult to get the results you want,” Burnson says. “If we cross all the T’s and dot all the I’s, things generally don’t get sideways on us.”