The RFP typically asks bidders to examine the facilities and quote pricing. It should include enough information to enable
providers to prepare realistic bids. This includes information about individual sites, work order histories, existing staffing
levels, IT infrastructure to meet reporting needs, and a detailed specific scope of work and specific service levels. The
RFP also should ask for references, typically from three companies in the same or similar industries with similar real estate
Smaller Firms, Bigger Benefits
Understand Baseline Facility Management Costs
Without a baseline, there is no way to assess the benefits of outsourcing. Companies that cannot set an accurate baseline
should find a way to benchmark their costs before seeking service proposals. This gives service providers a target for their
bids and creates a foundation to ensure apples-to-apples comparisons.
One way to set a benchmark is to use cost-per-square-foot average figures for industry sectors from organizations such as
Building Owners and Managers Association (BOMA) and the International Facility Management Association (IFMA). Another way
is to ask a facility management service provider to create a benchmark based on its experience with companies of similar size,
in similar industries, with similar facility portfolios. Facilities management companies operate millions of square feet of
space and can produce benchmarks against which to compare service levels for virtually any task, in any facility, and any
One common mistake in setting a baseline is to overlook the soft costs of in-house facility management, such as:
- Human resources costs related to facility management employees
- Information technology and software costs for supporting those employees
- Costs for issuing purchase orders, paying bills, and managing facility budgets
- Legal expenses for drafting and administering vendor contracts
After outsourcing, these costs disappear, and the support staff time can be directed elsewhere.
Pinpoint Opportunities to Reduce Costs
Baseline data help identify areas where outsourcing can have the biggest impact. Janitorial service and landscaping often
provide major cost reduction opportunities, as service providers are highly efficient in those areas. In addition, suppliers
usually can streamline call center operations, identify energy savings opportunities, and improve overall equipment maintenance,
thus driving down the cost of major repairs
Total Results Are the True Payoff
Outsourcing is a long-term proposition, and to deliver the maximum long-term benefits, a service provider may need to invest
resources up front. This is why we warn you that, in the short term, costs may actually rise. It also is one reason why a
company should not select an FM partner on the basis of price alone.
One key to successful outsourcing is a transition period, which includes a variety of activities that have up-front costs
but yield reductions later. A major company with multiple locations may have thousands of vendors under contract. A substantial
reduction in the vendor base ultimately yields better service, lower contract administration costs, and greater pricing leverage
— but the consolidation process takes time and staff commitment
In the long run, better equipment maintenance and a more proactive maintenance culture may save millions of dollars in greater
maintenance efficiency, lower repair costs, and reduced downtime. But in the near term, technology improvements like computerized
maintenance management systems, an FM partner may take a significant investment.
Another reason to avoid choosing an FM partner by just price is that service levels for some functions may actually need to
be raised from the baseline to deliver the desired results. For example, in mission-critical facilities such as laboratories
the primary objective is not to save money but to eliminate downtime and hold environmental conditions within specifications.
The solution may include better maintenance of supporting infrastructure. That costs more initially but pays huge dividends
in the long run.
Ensure Executive-level Sponsorship
Without up-front endorsement from top management, outsourcing usually fails. Plans for outsourcing should be led by a steering
committee that includes a corporate-level sponsor and representatives from all key functional areas: human resources, finance,
accounting, procurement, facilities management, and others as necessary.