A guide to smarter procurement

August 06, 2018 by Jo Sutherland, associate director of Magenta Associates and communications director of the IFMA UK Chapter
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A guide to smarter procurement

The Carillion collapse has been a wake-up call for the built environment sector. The profit warnings issued since from other big players in the industry have fuelled the conversation concerning ethics, transparency and how organisations can play a role in paving the way towards a more social, financial and environmentally sustainable future.

There seems to be industry-wide intent to build trust, not just between the supply chain and client side but also with a general public that so often sees facilities management and construction firms named and shamed in the press. It isn’t a question of ethics, as such – hopefully nobody’s going to disagree that the procurement of services should be as fair and as ethical as possible – but the real question is how? And what does ‘ethical’ actually look like?

Angela Love, director of the workplace design, relocation and fit-out firm Active, thinks ethical FM relies on a realistic and sustainable approach: “For too long cost has been the only driver at the expense of both quality and service, with FM providers squeezed on cost to the point of not being able to deliver. Procurement has a business obligation to find the best value solution, of course, but it also has a moral obligation to ensure it is sustainable.”

For Antony Law, managing director of Churchill London and vice president of the IFMA UK Chapter, ethical FM procurement is about equal opportunity, specifically the ability for FM providers of all sizes to tender for a contract that suits their business. “This hasn’t always been the case,” he said, “which has made it incredibly difficult for certain organisations to get a fair look in, ultimately leading to a loss of trust in the outsourcing industry’s practices.”

Back in 2017, the International Facility Management Association (IFMA), the largest and longest-standing FM association in the world, joined forces with the Royal Institution of Chartered Surveyors (RICS), the professional body for qualifications and standards in land, property, infrastructure and construction, to develop, professionalise and transform the US$1 trillion global facility management industry. An example of this in practice is last month’s launch of the first RICS Procurement Professional Statement. Outsourcing is a powerful tool, but like any tool it needs to be used with care. To that tune, the Statement offers a global set of guidelines that will enable suppliers and clients to work together collaboratively to develop a consistent, ethical, transparent way of procuring FM across the world.

To mark the Statement’s arrival, the IFMA UK Chapter and RICS hosted an event that offered delegates a snapshot summary of the key takeaways. Derrick Tate, director at PwC and co-author of the Statement, shared the secrets gleaned from his 20-year career in FM procurement. “I’m trying to raise standards in FM,” he said. “In procurement. In delivery. I want organisations to buy better. To deliver better. To be better.”

Tate’s top tips:

  • When you start your procurement process, you’re selling your opportunity to the market. It’s important to fully understand the market your opportunity sits in, and to research your prospective bidders.
  • When it comes to mapping out your requirements, it’s critical to get up-to-date information and data. If data isn’t up to date, don’t pretend it is – discuss it.
  • Soft market testing is helpful, too - sense check what you’re planning to do before you do it, and get the market’s views. You’re much more likely to get serious bidders if you’ve engaged properly with the market.
  • Understand your procurement strategy in its entirety. Part of this should involve setting out clear logical processes, and be sure to consider the risks – pre-empt the eventualities and the questions you might be asked along the way.
  • Be precise in specifying exactly what you require, avoid ambiguous language (“in a timely manner”, “to a high standard” tells bidders absolutely nothing), and say what you really mean, because it’ll make evaluation easier when it comes to contract management.
  • KPIs shouldn’t be seen as a way of punishing suppliers. They’re a tool, a lever, a way to incentivise. Make sure everyone understands them and be clear how the contract is going to be measured. If you don’t know how to measure it, don’t attach a KPI to it.
  • Finally, stick to your process. If something changes, sure, amend accordingly – but communicate and engage the market if you do so.

Drilling the message home, Tate reminded delegates – if you don’t procure properly in the first place, you are going to fight an uphill battle for the remainder of the contract.

And there have been plenty of examples of unfruitful working relationships in the built environment sector. Various factors can cause a relationship to sour, of course, but a thorough procurement blueprint can definitely help to create value for both parties when it comes to building on that all-important foundation.  

“Value comes with trust and acknowledgement of both parties needs at the earliest stages of a relationship,” argues IFMA’s Law. Promulgating a similar tune, Active’s Love believes communication is vital: “you need to get close to each other to build a relationship based on mutual gain.”

Procurement in the built environment sector is going to vary in shapes and sizes. There is no one-size-fits-all model. However, there are some basics to get right when it comes to planning, conducting and evaluating the procurement process. The RICS Professional Statement is the best place to go for such guidance and you can download it for free here – http://www.rics.org/uk/knowledge/professional-guidance/professional-statements/procurement-of-facility-management/

 

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