Outsourcing of Facilities Management - Coursework Example

Outsourcing of Facilities Management ID number: Introduction The role of facility managers as identified by IFMA that is International Facility Management Association is to analyze and identify the core business of an enterprise so as to enhance productivity, reduce the overall cost, generate more of revenue from the business operations, and build a strong brand image in the industry. There has been shifting trend in the industry which has enforced the facility managers to take into consideration all the important measures that would help in adding value to facilities management through technology, improved efficiencies and even strategic directions. The main factor that drives facility management outsourcing is to reduce cost and improve upon the level of quality. There have been many firms that provide such features to bigger organizations or corporate. The major focus of outsourcing facility management is to provide the best quality service at the least cost possible. This research study deals with the changing trends of the hospitality industry that has led into outsourcing of facilities. The study even deals with the opportunities and challenges that any organization can face due to such an initiative. This research would yield a clear picture to all the facility managers in particular as to what are the factors that would enforce them to outsource such facilities and what are the different issues that need to be taken into consideration while outsourcing facilities. The success of an organization in hospitality industry rests upon the services they provide and at the same time they also needs to control their cost factor so as to maximize their returns which has resulted into some new trends of outsourcing facilities management way back in the year 2007 in order to be at pace with the scenario of global economic recession. Background Global context is taken into consideration while performing analysis of the outsourcing factor of facilities management as recession had greatly affected the trends of outsourcing to a great extent. The trends majorly include a lot of pressure from tenants on property managers for rent and such pressure is then transferred into various service providers, more use of gain sharing pricing and performance based through which the service quality level on the basis of contracting pricing. The other trends that resulted into changes were the excessive pressure on the cash flows of the clients that results into more of bargaining with suppliers resulting into price concessions. This has even resulted into a large amount of contracts that leads to risks. The energy management and sustainability issues are the major factors of consideration that is becoming more important so as to lower down the costs and even make a comfortable experience for all the occupants. The evaluation and identification of KPIs are gaining more of importance on the insistence of owners. The companies operating in the hospitality industry majorly aims at gaining flexibility for shorter period of time that is enabled through shorter contracts and even restructure themselves in the future context due to any changes in the market scenario (Agarwal, 2012). There are many hotels in the industry such as COMO hotels and resorts, Marriot group of hotels, Radisson hotels, etc., has been outsourcing its facility management so as to provide the best of services possible to its occupants. The major opportunities of outsourcing is that it gives a chance to the organization to obtain the best of facilities, there is even a price advantage that can be obtained as there are large number of firms that provides such facilities, and outsourcing of facilities even helps in reducing the operating cost and gain a competitive advantage in the highly competitive hospitality industry. ADP an American company began outsourcing its facility management and planned to retain only six people in house. Earlier in the same organization there was approximately 200 staff who worked at decentralized positions in the buildings of ADP where the facilities were all managed independently. ADP did not possess the required tools which could handle their operations as it was not their expertise and this gave rise to the company to look out for such a company from where such facility operations can be easily managed. This has enabled the company to improve on its facility management, increase its accessibility to more of intelligence and that too at a much larger scale, and facilitating consolidated purchase options for the company. The outsourcing of facility management has enabled the company to cut down on staffs and has even reduced its expenses that are associated with facilities management by a percentage of 7% which was not so in the earlier years. The outsourcing initiative by such hotels has made the facility management come under a very tight control and has even incorporated better metric standards for the staff in these organizations and has even facilitated purchase of sophisticated tools (Stapenhust, 2009). The three main challenges that such hotels or resorts or even corporate have to face due to outsourcing are the buyers are the ones who specifies the entire process of the work place, it is more of relationship that relates to ‘what is in there for me in the deal lately’, and main factor that drives the selection of contractor is price. Along with the opportunities this are some of the challenges that creates problems for the enterprises that gets involved into outsourcing of facilities management. The performance expectation of such outsourced facilities for the above mentioned enterprises falls under two specific categories one is that such facilities enables the organization to provide better services to their customers and the second is that it helps in reducing a lot of costs factor for an organization. The most important that should always been the most important factor to be focused on by the facility managers of such enterprises is not to consider the contractors as a mere commodity they can be used and then discarded. There should be more of healthy relationships between the two as it would provide a clear path for the contractors on what are the benefits for the company and the quality of the services that are being rendered. Content of Research Results The major issue that is of more importance to the facility managers are not the cost but rather the expected results that are an outcome for such outsourcing initiative that are taken up hospitality industry. The service providers of such facilities are usually those who possess the required expertise in that particular field. The main task of the facility managers is to clearly set the result which is to be delivered by such outsourced service provider so that such an initiative can bring value for the organization as a whole and make the relationship of such outsourcing more meaningful and worthwhile. This kind of relationship needs analysis and identification of what is more important to the facility managers is it to reduce the overall cost of the system or to increase the overall capacity. The outsourced contract of service alone can be effective to create value for the enterprise but it depends on defining the expected outcomes (Alwaer & Croome, 2010). The president of Marriott Hotels had clearly stated in a press release that buying the time, labor hours, tasks, systems, processes of the contractor do not provide such large value to an organization if they are not able to deliver the external or internal advantage for the company of the facility manager. The benefits that such outsourcing facilities deliver can be tied to the money element but it can also encompass some added value such as doors towards new business and even marketing opportunities. The facility managers need to clearly state both the good and bad outcomes that such outsourcing can deliver towards the organization. As such facilities that are outsourced by some service providers has provided many hotels and enterprises in the hospitality sector with growth opportunities and at the same time they even had to handle a lot of challenges that are posed by such an initiative of outsourcing. The outsourcing arrangement essentially deals with a lot of complex issue such as management sponsorship, issues of personnel, and the question of strategic fit. The most critical factors of outsourcing facilities management are relationship management, communication, executive sponsorship, strategic alignment and fit, and alignment towards incentives in relationship. The relationship management deals with a lot of issues in which the contract manager who is on the client side set forth the necessary tone of the relationship, takes measures for contract management, and work completion. Their responsibilities even comprise of defining the right behaviors and attitudes that should be possessed by their client team so as to ensure high degree of civility towards the service provider and even solving their area of concern. The main focus of the client side is to measure the outcomes then to be concerned about the tasks that are executed. A provider’s effectiveness is measured in terms of his or her proactiveness through implementing preventative and routine maintenance and even escalating much of the issues before they are directed towards client’s customers. These initiatives facilitate regularity in communication that avoids effort duplication and also enhances customer satisfaction (Elmualim, 2009). Communication is also another critical factor of outsourcing relationship where an ongoing attention and communication is very much essential in facilities management. The facilities that are being outsourced from a service provider affect the employees of the client on a regular basis and even encompass many potential failure points. These basically include parking problems, issues with restrooms, and even when the lobbies are unclean or the offices and even rooms are too hot or too cold. The service levels are very tightly bound for the outsourcer and even for the external providers. Once such facilities are outsourced it creates a lot of expectations on the consumer end as they want to receive the same kind of facilities that they had encountered in their last visit. The relationship management focuses on communicating as well setting expectations. In the outsourcing mechanism there is a great need that initiative is taken by the management in sponsorship. The main concern of this contract of client side is to handle the expectations of the executive level effectively. The communication level must be strong of contract manager so as to communicate to their executive team that in order to obtain benefits there would be a lot of complaints from the staff side and even there would be lowered levels of service quality. There have been various projects that were undertaken by many hotels which did not move forward and resulted into many such losses of potential savings, which would not have been the scenario if strong initiative or sponsorship were taken by the executives of the organization. The success of the deal of facility management depends on the strategic alignment between the service provider and client. The strategic fit also depends on the size of an organization, for instance, if a company in the hospitality industry offers an A quality standard facilities then it would not be a very good match for those providers that offers low quality and low cost services that are applicable for small business units (Rondeau, Brown & Lapides, 2012). The alignment of incentives of the relationship between the client and the service provider also needs to be appropriate so as to set an upfront attention. Such situations may always be avoided that results into more of conflict between the two parties and finger pointing issues which may disrupt the entire contract that could pose serious problems to an organization. The best and approved measure of setting such accountability between the two parties is to agree upon some set key and performance indicators that would ensure proper functioning of the outsourced facilities. There lies a need to establish strong relationships and team work between the client and the service provider so that the outsourced facilities meet the requirements of the company and in return the company can satisfy the expectations of their customers. The technological alignment between the client and service provider is less critical factor as facilities management is an issue that is considered by majority of the companies as an issue outside the core business of an organization. The large service providers of facilities management have a high level of flexibility in terms of IT capabilities so as to meet the requirements of the clients in areas such as security, etc. Such contracts of outsourcing facilities management requires well structured clauses and provisions that comprise of termination rights, work scope, pricing provisions, and well formulated incentives so as to enable both the parties to work together. As per the research the major drivers of outsourcing facilities management is an initiative that is undertaken mostly in the hospitality industry to offer their guests the best of facilities that is possible and that too at a reduced cost. The other major driver is that such facilities are only outsourced by companies when they do not possess the required expertise that is needed so as to deliver value to their customers. The changes in the economic conditions, increased competition, more focus towards the core business and increase in the expectation level of the customers made such changes in facilities management occur and more specifically in the hospitality industry. The major focus of all the companies in the hospitality industry was to sustain in the competitive market and so then turned up outsourcing such facilities that saved time, cost and even delivered the required value to the customers (Wood, 2009). This research topic on facilities management encompasses all the essential elements such as challenges, opportunities, issues and the procedures through which are being outsourced by some real world companies in the industry and even outlines the pros and cons that such outsourcing initiative has that needs to be taken into consideration by a company. In relation to the hospitality industry facilities management is a very vital element and this topic states the reason in what circumstances outsourcing is considered by a company and what are the benefits that such an action has towards the company. As a tourism manager in the future years it would help me to discover the areas that need particular attention while maintaining such outsourcing contracts and even help to set a clear plan towards what are the results would be of such outsourcing and how effective it would be in the future time period. Conclusion There lies a wide array of challenges that are encountered in outsourcing of facilities management. Unlike the other services that are handled by a company in hospitality industry facilities management is not taken into consideration unless there is some major issue. The main factor that is highlighted in this research study is that outsourcing of facilities management requires more of communication and collaboration between the two parties that undertakes such outsourcing function. The success of the contract that is formed due to such outsourcing depends on the support of organization to offer attractive incentives and even restructure more of meaningful incentives. This research study is very essential for future tourism managers as it would help them to understand the requirements of such outsourcing facilities and the mechanisms that needs to be incorporated in the system so as to deliver the requires outcomes of such outsourcing and even enhance the value being delivered to the customers which is a very important issue of consideration in the hospitality industry. References Agarwal, P. (2012). Facilities Management Outsourcing. Retrieved from: http://www.isg-one.com/knowledgecenter/whitepapers/private/papers/White_paper_-_Facilities-Management-Outsourcing.pdf [Accessed on 18th May 2014] Alwaer, H., & Croome, D. J. (2010). “Key performance indicators (KPIs) and priority setting in using the multi-attribute approach for assessing sustainable intelligent buildings.” Building and Environment. Vol. 45, pp. 799-807. Elmualim, A. (2009). Application of computer-aided facilities management (CAFM) for intelligent buildings operation. Vol. 27, pp. 421-428. Rondeau, E., Brown, R., & Lapides, P. (2012). Facility Management. New Jersey: John Wiley & Sons. Stapenhust, T. (2009). The Benchmarking Book. Oxford Butterworth-Heinemann. Wood, B. (2009). “Innovative building maintenance.” Conference Proceedings of The Queensland University of Technology Research Week International Conference. Brisbane: Australia. Read More