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Peak value service contracts, as shown by the experience of Delphi Automotive Systems, focus on processes and outcomes providing a rigorous method of selecting a facility management service provider. Service contracts, after all, are lifeblood for facility operations. In- or outsourced, consolidated or dispersed, every model for facility operations relies on service contracts for special skills and technologies, for responding to acute conditions, and for value-added supplies and services. Nobody goes it alone.
Managing those service contracts is a core facility management competency entailing planning, procurement, mobilization, and oversight. Unfortunately, service contracts are usually approached as activities, not processes. Activities deliver conventional work by typical means — buyers buy and sellers sell. By contrast, processes flow. Processes control inputs and variables, mitigate risks, dispel assumptions, and drive continuous improvement, delivering peak value in operational reliability, asset life, customer satisfaction, and savings.
When a service contract is based simply on cutting costs, the savings arithmetic pushes cut-backs that omit the cost of unintended consequences. By contrast, the peak value approach seeks to reduce waste in all its forms, allots resources for operational gains, reconciles conditions of use or occupancy, enhances customer benefits, and reinvests in training and technology. The emphasis is on the total cost of occupancy, including lower facilities expense.
In 2011, Delphi Automotive Systems employed peak value service contract management. The company's experience helps to show the varied and detailed steps of this process. Delphi went to market with three peak value objectives:
To focus on Delphi's core business by creating a partnership with its facility management service provider.
To provide safe, functional, clean, and attractive work environments.
To deliver "world-class" services at competitive cost.
These are familiar ideals, but Delphi's facilities and procurement team applied them to craft principles and standards for governing the partnership they hoped to forge. For nearly a full year, the procurement process itself became the focus of process design to establish clear and valid principles, scope, and standards.
Defining the basic scope of services for six non-manufacturing facilities and four manufacturing plants totalling 3.2 million square feet entailed more than developing a menu of activities. (See "Scope of Services" sidebar.) The team profiled the current state of the facilities' assets, systems, condition, staffing, and costs. This baseline provided a factual platform for open communication with prospective service providers and the core of the eventual request for proposals.
"Satisfy internal customer requirements" is a very open-ended standard. Specifications for "safe, functional, clean, and attractive" are frequently a wish list that too often lacks accurate information about current spending, asset conditions, conditions of work, and resource allocations. But in the peak value procurement process, Delphi provided facility management service contractors with its best available data on assets, labor, and costs to set meaningful reference points for all locations and operations. During procurement, Delphi enabled the candidates to address issues and opportunities for practical improvements. "Streamlined services," "decreased schedules," "efficient administration," and "optimized costs" are broad aspirations. Delphi provided a factual foundation to foster proposals for measureable gains.
Delphi's emphasis on factual grounding also provided a baseline for all stakeholders and set the vocabulary for continuous improvement. "This is where we are and here are the ways we intend to improve" is a far different message than "We hope to make things better." Peak value service contracting requires process control, data-driven work, and continuous improvement from the outset.
Delphi's Scope of Services
Rigorous Approach To Outsourcing Can Pay Off In Facility Management Choice
How Delphi Selected A Facility Management Service Provider
Delphi, Facility Management Provider Focus On Savings Opportunities