Review Existing Outsourcing Service Contracts to Ensure Success

By Stormy Friday  
OTHER PARTS OF THIS ARTICLEPt. 1: This PagePt. 2: Developing a Pro-Active Relationship with Outsourced Service Providers

If your outsourcing arrangement ain't broke, should you worry about fixing it? There are plenty of long-standing outsourcing relationships that seem to be perfectly adequate, at least on the surface. But a closer look may tell a different story.

Facility managers often negotiate long-term contracts with service providers to achieve significant cost savings derived from a longer-term relationship. When the contract is well established and the service has been delivered for a while, both parties become comfortable with the relationship. At first blush a comfortable relationship seems to make sense, but an easy-going contractual relationship sometimes makes it harder to raise issues and concerns for fear of undermining the relationship. Facility managers tend to avoid conversations about even minor difficulties, which sometimes fester until they become monumental problems.

In a similar circumstance, facility managers inherit service provider contracts from their predecessors. These contracts might be languishing either from neglect or because the previous manager simply did not want to rock the boat. Constructing a stronger, more mutually beneficial relationship could be a priority for a new manager, but the process of it isn't easy to strike the right chord with a service provider without causing major service disruption or tarnishing the relationship.

In some ways, existing facility management service contracts are like personal relationships. Sometimes as personal relationships move beyond the first dates, the couple becomes complacent. The pair continues along a path assuming that everything is working when, in fact, the relationship might be suffering or even could be in danger of falling apart. A facility management service provider relationship is not so different when it comes to care and attention.

While books on personal relationships abound, it's not easy to find guidance on how to maximize current facility management outsourcing arrangements or how to rescue a troubled relationship with a service provider. That's too bad. Facility managers should periodically review existing contracts to determine if the original objectives for outsourcing are being met, if the scope of work meets the facility management organization's needs and if the relationship is still intact. Successful management of existing service contracts calls for facility managers to analyze contracts, whether or not they initiated the relationship or inherited it. Service contracts need to be reviewed in three different areas: conceptual, technical and human relations.

Starting Point

On a regular basis a facility manager needs to step back from the mechanics of service contracts to take stock of the organization's big picture with respect to outsourcing. First the manager should review the facility management organization's core functions. Core facility management functions vary depending on the corporate or parent culture. For instance, in some corporate environments, custodial services are considered a core facility management function, while in other corporations they are not.

Similarly, some facility management organizations provide maintenance services with internal staff, as they are considered by the parent company to be intrinsic core services, while other organizations outsource these services. Because the perception of facility management core services changes as the corporate business expands, shrinks or changes direction, facility managers need to stay abreast of the business climate in order to adjust the rationale governing the sourcing arrangements.

Once core services have been identified, facility managers should review how well the current outsource contracts support the overall sourcing strategy. Some contracts may not be as relevant as they once were and may have to be modified to fine-tune the services delivered. Other contracts may need to be expanded to meet additional requirements or changes in internal staffing. Key considerations include:

  • Flexibility for service delivery: Does the current contract allow greater flexibility in delivering services to facility management customers?
  • Internal priorities: Does the current contract allow facility management to focus on priorities, rather than using a "scatter" approach to service provision?
  • Staffing complement and expertise: Does the current contract provide the facility department with the ability to expand or reduce staff as necessary and provide expertise that does not exist among internal staff?
  • Management skills and greater control: Does the current contract support new management skills and provide greater control over service delivery?
  • Operational efficiency and financial benefits: Has the current contract delivered operational efficiencies and resulted in financial benefits to facility management and the company?
  • Accountability and cost consciousness: Is the current contractor accountable for service performance? Is the contractor making every effort to be cost-conscious in service delivery?
  • Benchmarking: Is the current contractor providing industry benchmark information on a regular basis to compare the facility management organization with industry service standards?
  • Strategic planning: Has the current contract allowed the facility department additional time to devote to strategic planning and does the contractor provide valuable input into the strategic planning process?

Continue Reading: With Outsourcing Agreements, Don't Leave Well Enough Alone

Review Existing Outsourcing Service Contracts to Ensure Success

Developing a Pro-Active Relationship with Outsourced Service Providers

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  posted on 2/28/2011   Article Use Policy

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