Procurement and FM have never been easy bedfellows. While the former aims to ensure maximum value for money, the other is judged largely on ensuring the seamless provision of critical workplace services. With such different goals, perhaps tension is inevitable, particularly in such austere times.
The downturn, though, has seen the balance of power shift, with procurement now playing a much more prominent role in the contracting of services that a few years ago may have been left to their FM counterparts.
“Without a doubt, there’s been a substantial change in the way FM is procured now compared to three years ago,” says Alan Kemp, a partner at EC Harris, which occupies a rare position as both a consultancy and supplier of FM services.
“The powerbase has shifted from the people who really understand what their customers require to procurement divisions. A wall has been created between the procurement side and the FM sponsors on the client side.”
Martin Pickard is founding principal of consultancy firm FM Guru. He says the relationship between procurement and FM has been strained for a long time, blaming procurement for often failing to adapt a procedural approach — which works well with purchasing products — to the sourcing of services.
“FMs generally tend to feel that they know the market and the service relationships they’re looking for. They get frustrated with a procurement approach that has specific specifications so they can do an ‘apples-by-apples’ comparison and drive the price down as low as possible,” he says. “I’ve seen this way back 20 or 30 years ago in my own career as a practising FM and I still see it today.”
The use of electronic auctions, where participants are encouraged to submit bids for projects online, is a particular source of frustration, says Iain Murray, former group strategy director at Europa Support Services and deputy chair at Global FM.
“I don’t know any FM business that is entirely comfortable with e-auctions because it’s essentially a manic pricing exercise where the lowest price wins. There’s no real opportunity to focus on the value-adds, which almost all businesses would do if they were face-to-face, or if they were given an opportunity to put in a more robust document,” he says. “Some e-auctions do valid exercises, but there are still examples of very commoditised procurement.”
The shift in power between procurement and FM is also felt in outsourced relationships, where in-house FM teams have gradually dwindled over time. Simon Ball, business development manager at Interserve, says his initial relationships now tend to be more with procurement and a competitive price is the main prerequisite to any successful bid. “It’s very competitive out there. There are more and more large FM players bidding for the bigger jobs and the focus is on cost every time,” he says. “That would certainly get you to the point at which you can talk face-to-face and that’s where the value aspect comes in and you can focus on how you would do things differently and how you can support them in their objectives. But you only get in there on the price.”
There are occasions, too, when the tensions between end-users or in-house FM teams and procurement can spill over into such outsourced relationships. Paul Sambrook, group commercial director at Servest, says in retail in particular there’s a risk of providers being stuck in the middle, caught between demands to lower costs on the one hand and maintain service levels on the other. “It’s fine for procurement to challenge us to be more cost-effective, but the person who is looking after the high street store still wants the same standard of service. Whether we can do that depends on the environment and how the service is structured,” he says.
Procurement, though, undoubtedly has its place, particularly in the current economic climate. The onus perhaps is on FM to make more of an effort to work with procurement. Philip Holmes is director of Principality Property Solutions, part of Principality Building Society Group, and former head of group procurement and facilities at the organisation.
“It’s really easy to think that procurement is just about screwing the price down and taking a short-term view,” he says. “But it’s also very nave these days to think that is the case. Nine times out of 10, the relationship between procurement and FM has worked well, as it does with IT, marketing or professional services. It’s much the same conversation — procurement is knocking on the door saying it can add value, do things differently and help you get more for less, saving time and helping you concentrate on your specialism.”
Pickard, too, believes procurement receives a raw deal. “I’ve been with clients recently who have said they don’t want this project going anywhere near procurement, which is really unhealthy,” he says. “My counter to it is that where there are good procurement people and FMs are prepared to work with them, it can work really well. That’s where FM recognises that procurement has the skills and competencies that they can bring to bear on a project and where procurement people recognise that the procurement of FM services is different and that the FMs do know a bit about it.”
Much of the confrontation between the two functions can stem from who owns the process, with in-house FM teams resentful of the growing influence of procurement and outsourced providers wary of having non-preferred suppliers forced on to them.
Procurement generally mistrusts FM’s ability to deliver projects on time and budget, says John Bowen, chairman of the BIFM’s procurement special interest group. “I don’t have a problem with FM leading projects up to a moderate value, but certainly my recent experience is that the projects will slip,” he says. “The only ones that I have seen delivered to time have been led by procurement pushing to get deadlines met. For higher-value projects, I would always look to have someone outside of procurement and FM project-manage to ensure that there is an adequate separation of powers.”
Bowen argues there needs to be a clear division of responsibilities to prevent a personality-driven power struggle developing within organisations. “Having clearly defined roles and responsibilities that lead to clear outcomes is a given that should allow the project to succeed, even if the personalities don’t gel,” he says.
For others, though, the onus is on more effective communication. Pickard recalls one company he worked at where FM persuaded the head of procurement to allocate one member of his team to deal with all property and FM-related matters. “We gave them a seat in the middle of our team and invited them to our team meetings,” he says. “There was a recognition that they were just another professional in the team. FM is about integrating multiple disciplines so, in the same way as an FM respects the input of a head chef or senior engineer, so they need to respect the professional skills and expertise brought to the table by procurement professionals.”
Early involvement of procurement in any project is vital if the two functions are to work well together, says Holmes. “Facilities people need to engage with procurement much sooner,” he says. “When we’re setting our budgets for next year our procurement team will come in and talk to all cost-centre owners about what their plans are. That works well in my organisation, but I don’t know to what extent it happens elsewhere.”
Stephen Ashcroft, though, a procurement consultant at Brian Farrington, is keen to point out that any such early involvement must be meaningful. “We’ve been put in a difficult position where it’s already been decided who the preferred bidder is,” he says. “If you can point out that there’s soft market testing to be undertaken, so identifying who the leading providers are, then there’s something about being involved early. But if it’s just sitting in a meeting discussing the issue, what’s the purpose?”
A further issue is the fact that procurement often tends to disappear as soon as the contract is signed, suggests Sambrook at Servest. “Procurement would benefit from properly experiencing the user perspective — so their own internal customer — in terms of whether what they have bought for their people actually works and whether getting the best price delivers the best value and flexibility to manage what’s required at the coal face,” he says.
For its part, FM needs to do more to outline requirements to colleagues in procurement in language that they will be able to understand, says Holmes. “I would expect a marketer to know more about marketing than a corresponding procurement person and I’d expect a facilities manager to know more about FM,” he says. “We don’t necessarily need to understand the technical jargon. I still sit in on conversations where people say it’s far too technical. Quite often the procurement reaction to that is for the hackles to come up, which they shouldn’t do because it’s about understanding what the client actually wants and needs.”
The ongoing difficult economic climate means FM and procurement have little choice but to work together. FM, in particular, needs to remember that its main remit is to fulfil the needs of the organisation it serves, says Pickard. “If the economy changes what an organisation needs from FM then we need to review the service we’re providing,” he says. “A few years ago, the organisation needed us to drive up quality; now it needs to reduce overheads. The idea we can be bombproof and carry on regardless is quite wrong.”
