Engine for Change

15 September 2007

Forming a national organisation for Rolls-Royce’s facilities operation within the leadership of one team and with the authority, accountability, motivation, vision and skills has driven through radical change over the past 10 years

IN 1997 ROLLS-ROYCE, the world-leading provider of power systems consolidated their various facilities groups within their UK aerospace divisions and formed one national organisation. This new organisation, aptly titled FSM (Facilities and Services Management), was given a very clear mandate and focus by the Rolls-Royce board to reduce costs whilst maintaining service delivery across Rolls-Royce’s 1.1 million sq m of aerospace facilities.

The estate contained the usual mix found in the manufacturing industry, of machining workshops, foundries, office’s, stores, laboratories, and test beds. These facilities were located at seven main sites across the UK; East Kilbride and Hillington (now Inchinnan) Scotland, Sunderland and Barnoldswick in the North Derby and Ansty in the centre and the most southerly site, Bristol.

It has been a challenging and relentless journey for the facilities team at Rolls-Royce over the 10 years since FSM was formed but the team has been incredibly successful in achieving the mandate set by the board and the evolving strategies continue to deliver significant benefits to the business. A program of outsourcing and supply chain rationalisation over the period has delivered year on year savings totalling more than £260m whilst improving service quality and customer satisfaction from 65 to 86 per cent.

Central to the success of FSM are the carefully selected strategic supplier partners who are responsible for delivering the range of facility services into the estate: Elyo - utilities and energy management operations; QinetiQ - calibration services; Oce - document services and MITIE - the bulk of the operation as a bundled service, including M&E maintenance, cleaning, security, catering, grounds maintenance, help desk, postal services, pest control, stores management, building fabric, small works and waste management. It was the MITIE/FSM partnership that was recognised by the judges in the 2005 PFM Awards when it was awarded the Partners in Multi Service Award.

There has been a tremendous change over the ten years since FSM was formed. A consistently evolving FM strategy has been deployed to satisfy the changing needs of the Rolls-Royce business and also to align with the maturing thoughts of the FSM management team responsible for optimising facilities at Rolls-Royce. In 1997 a significant in-house facilities team of over 700 people existed supported by more than 1,000 service contracts nationally. Today the four Strategic Partners support a small Rolls-Royce facilities team of less than 70.

The commercial and operational arrangements have also evolved – moving from site and service based, fixed price service providers, through to the current arrangements of multiple (bundled) service lines and specialised national contracts. These are delivered by strategic service partners on an open book risk and reward basis. The characteristics of these agreements include;

● Output based specification that encourages the partners to innovate
● Flexibility of introducing or withdrawing areas, sites, service lines or scope through a simple mechanism of change control without the need to renegotiate
● Open book accounting that engenders trust
● Incentivised cost+ that places the risk with Rolls-Royce but ensures the suppliers are motivated to manage within budgets whilst maintaining service quality
● Sharing of savings through better than budget performance whilst delivering KPI’s
● Year on year cost reduction commitments
● Services performed by strategic partners’ own people (more than 90 per cent self delivered) The benefits include;
● Supplier rationalisation
● Optimised commercial terms from leveraging consolidated spend
● Internally agreed, consistent and appropriate service levels for each service line
● Cost reduction through reduction in both supplier and Rolls-Royce management systems; taking advantage of synergies at point of delivery across the service lines; greater visibility and control of costs; correct alignment of risk in the buyer/supplier relationship and economies of scale

Whilst the contract structure provides the vehicle for the delivery of FSM’s mission of delivering ‘Trouble free low cost work places’, the operation requires some very important additional components to ensure its success.

Information and data is essential for the effective delivery of facilities in an operation the size and complexity of Rolls-Royce. To ensure that all work, both reactive and planned is captured and service delivery is measured across all sites and service lines in a consistent way, each of the partners use networked computerised management information systems to log work requests and capture information in real time. This data is used not only for the measuring of the key performance indicators but also for workflow management, cost control, asset management, productivity analysis and capacity planning. These systems and the information held within them are the hub of the operations side of facilities at Rolls-Royce and allow the operations team to react quickly in support of the business. FSM and its partners have learnt a great deal about the business and the changing needs of the operation through rigorous monitoring and analysis of this data.

Rolls-Royce operates within a very competitive market and as such requires its suppliers in all areas to consistently bring added value through process improvements and innovation. FSM and the four strategic partners work together to ensure that the facilities operation is consistently being challenged and improved. Continuous improvements feature on the agenda for each monthly review to ensure the focus is maintained. In 2004, FSM engaged with the innovation company, ?Whatif! to help with training the partnerships in the techniques and skills of creative thinking. This has been used to great effect in engendering a creative culture and providing hundreds of improvement ideas generated from across the total facilities population of over 1200 people.

Each of the partners also takes ownership of a number of S.M.A.R.T strategic objectives. These objectives are agreed between FSM and the partners each year and are designed to develop and improve operational delivery of the service lines.

One of the key elements of the FSM outsourcing model is self-delivery. Services delivered by the suppliers own people. There are four principle reasons for this thinking;
● The obvious mitigation of paying margin on margin.
● The control of fewer sub-contractors and induction of ever changing people to site becomes less onerous and costly.
● The ability to breakdown service line silos and establish locally based FM service teams where people with the appropriate skills and competencies can carry out a range of FM tasks.
● And, finally but most significantly, having staff employed directly by our strategic partners helps to ensure that they are focussed and understanding of our objectives and what FSM collectively are trying to achieve.

Motivated and engaged people are the most important component to the successful delivery of facilities at Rolls-Royce. The skills and knowledge these people have, the values and behaviours they adopt and display and the relationships they build are essential. Much focus is placed on ensuring these components are maintained across the partnerships. Regular toolbox talks are held locally to aid communications. Site and national operations meetings take place monthly to monitor performance. Shared offices and facilities where FSM and partners all reside along with a universal FM uniform helps to engender a common purpose across the teams and improves communication.

In January of each year, the partners’ leadership team of some 100 people from across the UK meet for two days at a remote hotel in Gloucester. This time is spent reviewing the wider Rolls-Royce business issues, reflecting on the previous years FM performance and establishing the current year’s objectives and challenges. Throughout the two days, guest speakers from both the partner companies and celebrities from the world of commerce, sport and exploration, provide insight, inspiration and motivational talks. Breakout sessions and dedicated zones are used to work with the teams on new ideas and evolving technologies. The key messages from the conference are subsequently communicated to the wider partnership teams by the leadership at local events across the UK. These partnership conferences and subsequent local communications have proven to be immensely valuable in focussing everyone around the common objectives and direction, whilst developing relationships across and within the five companies.

The strategic partners have all evolved, and developed with contract extensions and scope expansion evident as the partners have demonstrated the will to work with FSM in optimising facilities at Rolls-Royce. A significant building program of replacing life expired facilities and the refurbishment of old buildings in the UK, is due for completion in 2008. The program will see a reduction of 20 per cent of occupied space in the UK, which presents a very real challenge to the facilities partnership in managing the transition, rightsizing the operation in relation to the reduction in space, whilst delivering the required services into the new modern factories.

The UK FSM team, whilst continuing to develop the UK operation, is also focussed on evaluating the potential and added value of global FM within Rolls-Royce. The UK FSM team have been instrumental in helping replicate much of the UK model in some of the Rolls-Royce sites abroad. National bundled services contracts have recently been negotiated in North America and Germany and by the year-end, a common FM information system (Maximo) will be available across Rolls-Royce UK, North America, Canada and Europe. The operation will be supported by one multi-lingual help-desk operated from Derby in the UK. An exciting time ahead!

The catalyst for much of this transformation over the past 10 years revolved around a few key decisions, the most influential being the formation in 1997 of a National organisation that placed Rolls-Royce facilities operation within the leadership of one team who had the authority, accountability, motivation, vision and skills to drive through the required change. Also key were the selection of the four strategic partners who had the capacity, competency and determination to work with FSM to realise the vision and goals within a true culture of partnership. Everyone involved is very proud of what has been achieved but no one can afford to stand still and reflect for long. The one constant within FM at Rolls-Royce is change.