The current emphasis on budget-reduction and cost-cutting means the public sector is facing enormous pressure to reduce overheads and work more efficiently. This is affecting the FM sector more than most, both in its own efficiency drives and in ensuring organisations remain able to function effectively in the aftermath of wider decisions
The most notable development has been the sheer scale of the downsizing that has swept through the sector. The Chartered Institute of Personnel and Development recently increased its forecast for the number of positions that would go between 2010-11 and 2015-16 from 410,000 to 610,000, while the Office for National Statistics revealed some 110,000 workers lost their jobs in the second quarter of this year alone. Initial estimates were around 20,000 for the whole year.
“If you were to simply translate that into office space and say that each person occupies 10 square metres, you can very quickly see the impact that headcount could have on FM,” says Amir Baharmou, partner and head of service, public sector, at EC Harris. “It’s a shrinking estate and therefore a shrinking service delivery for the FM sector.”
As well as presenting FM with considerably fewer people to manage, this has also highlighted the opportunities that exist in terms of rationalising an organisation’s property portfolio. Hammersmith and Fulham Council recently announced plans to raise up to £14 million by selling off eight buildings, while City College in Birmingham has also taken advantage of this opportunity.
“We’ve become more mindful of any spare capacity that we’ve got within the estate,” says Phil Forrest, director of property. “A few years ago, perhaps, this didn’t matter too much. But the impact of the past 12 months has meant that we’ve had to look very carefully at our building portfolio. We sold one of our buildings to raise some capital and have leased out anothertwo at as close to commercial rent as we could achieve.”
Sub-letting space within existing buildings has obvious implications for FM, not least in the practicalities of moving staff around and, in some cases, incorporating new teams that have previously existed outside of the wider environment something that can often cause resentment.
“You get that denial factor,” says Roger Amos, head of property and HR shared services at the London borough of Ealing. “There’s almost a process to go through: they deliberately leave their boxes unpacked and don’t treat the environment particularly well. Ultimately that reflects badly on the FM team, but the cleaners can’t keep the desks clean if they’re cluttered up.”
Setting the standards
The impact of the Localism Bill with its emphasis on external providers playing a greater role in the running of services that have traditionally been provided by the state could further convolute the relationship between FM and service providers.
Martin Pickard, founding principal of FM Guru consultancy, believes the new BS11000 collaboration standard could provide a framework for such relationships to be handled efficiently, if both parties are committed to working collaboratively.
“All partnerships require more than one partner,” he says. “That word collaboration is being used a lot in the public sector at the moment, whether it’s with the supply chain or shared services with a number of different bodies. They’re entering into collaborative relationships, but the question is whether they will be successful. One way to do that will be to follow the guidelines in the standard.”
“The beauty of it is that it gives you a framework to hang it on,” he adds. “It says that both parties have done the risk analysis in the same way and have a clear idea of how to generate innovation and value out of the relationship.”
FM can also be left to pick up the pieces from other property initiatives primarily designed to save money, he adds, such as buildings previously used for council purposes during the day being opened for other activities out of hours and the “big society”, which could see voluntary groups getting more involved in occupying and operating premises.
“Things like trying to keep libraries open and run them voluntarily will have a big impact on both us as the corporate client team and our service partners,” says Amos. “If you start to give people more freedom it could mean that they want to shop around when the organisation has already signed up to a contract. It’s the easiest thing in the world for people to come in and say they could provide services cheaper, but we’re not sure whether they’re delivering all those services or whether the service levels are comparable.”
In many cases, however, public sector organisations will be left with assets they cannot sell, or even lease out. This calls for a different approach, says Trevor Warne, head of property at Access, a joint venture between Glasgow City Council and Serco, which has been acting in a consultative capacity to the council around its property portfolio. “Our focus is now to look at the assets and make sure they’re not deteriorating because if you start neglecting them for five or 10 years in a dead property market, all of a sudden you’ve just got a liability sitting there,” he says. Money that would normally be spent on reactive maintenance should instead be diverted to planned repairs, he suggests, ensuring the buildings remain fit for purpose.
The downsizing of property portfolios, though, is also helping to accelerate a trend towards new ways of working, including a greater move towards flexible working and hotdesking. “People may only spend half their day at their desk and the other half they’re out doing bits and pieces, and their colleagues do the same,” says Warne. “We worked out that through a bit of workstyle planning and being more flexible and agile, we could squeeze out 500,000 square feet of property that doesn’t need to be serviced from an FM point of view.”
Such a move, though, requires specialist skills that could test FM professionals, suggests Baharmou at EC Harris. “Making that change is a whole psychological journey people have to go through,” he says. “It’s not just about the space planning and the fit-out; it’s actually the change management and that’s a very specialist skill.”
Divide and conquer
FM functions are also having to countenance change in the public sector, with shared services coming firmly on to the agenda. Three London boroughs Kensington, Chelsea and Westminster have already joined forces in a number of areas, including FM, as part of a wider initiative they hope will save £35 million a year. This is something EC Harris has helped with, says Baharmou he estimates the move will generate FM savings of between 10 and 12 per cent a year and other boroughs have also expressed interest in such arrangements.
Education: The other side of the fence
While most of the public sector copes with budget cuts and reductions in portfolios, the introduction of higher tuition fees meaning students now account for 70 per cent of a university’s income is having a different impact on the higher education sector.
“The fact they’re paying for the education is actually good for the sector,” says Nick O’Donnell, director of facilities at Kings College London. “I’m not suffering from a declining building stock or an under-investment in FM. If anything, I’m fortunate to be in a place where the customer is finally parting with real money to pay for real people.”
Greater competition within the sector and the impact of private sector partnerships means the more established universities are now expected to provide better accommodation and workplace facilities than may have been the case in the past, he adds.
“In the future we will see more efficient use of space, with a greater focus on retention of energy and greener buildings,” he says.
Not everyone is convinced, however. “While they’re all getting on well together and the politicians all support it, that’s fine,” says Amos. “But where it could become more of a problem is if one of the boroughs has less of an appetite in five years’ time or wants to take the contract in a slightly different direction and the other two don’t wish to.”
A wider move towards shared services, though, seems inevitable and not just in local government. Forrest at City College says this has been on the agenda for some time, but is now being looked at more seriously. “We have looked at it before but just in terms of asking other providers who they use for x, y and z and, if we use the same, whether we could have some economies of scale,” he says. “But it’s been very loose, and to my mind, that will change.” This will require new skills, he says, in terms of how to make such arrangements work in practice.
The gloves are off
Inevitably, the current landscape is putting pressure on FM budgets too, and this is having a knock-on effect on outsourced providers. “Where public sector bodies have perhaps been benevolent clients, they have realised that they need to become tougher, in the same way as some commercial organisations have,” says Lucy Jeynes, managing director at Larch Consulting. “They’re renegotiating contracts, exercising break clauses and being more demanding of suppliers.”
This is something Kath Fontana, operations director at Interserve, which works with various councils including Croydon and Ealing, has noticed. “It’s been a very tricky period and it’s new ground for everybody,” she says. “Clients are reducing our discretionary income and they also want to renegotiate the core contract. We’re having to be very creative in terms of solutions.”
Other public sector organisations are looking to reduce their overall FM spend through total facilities management, where all business-related support functions are bundled together and outsourced to external providers. There is a big move towards this in central government, says Baharmou at EC Harris, with many departments thinking they can deliver savings of as much as 30 per cent.
He, though, is not convinced. “I don’t know where that figure has come from but that’s generally what people seem to think,” he says. “There’s no doubt that if you move away from, some of the more traditional models of delivery you will make savings, especially in this market. But total FM isn’t always the right model for every organisation. I know of several central government contracts that have been unsuccessful because there was no proper intelligence there.” This trend could also effectively freeze smaller providers out of the market altogether, he says.
Interserve, meanwhile, is keeping a close eye on the possible regionalisation of FM services by the government’s property unit, says Fontana. “That’s going to be an interesting development over the next few years,” she says.
The current upheaval in the public sector is far from over. But while it’s likely to present a few more headaches than in the past, it also offers the chance for FM to prove its strategic worth to the business and for individuals to further their own career.
“This is a period where public sector facilities managers are really going to come into their own,” says Jeynes. “They’ve long had this feeling that they’re second tier or not as good and I don’t believe that’s the case. Often, they’re smarter and more agile than people in the commercial sector. In some areas, the public sector is now seen as a more attractive employer.”
