FM Faculty Briefing No.8 - A Property & FM surveyor conversation

14 April 2008

Lucy Jeynes asks Alan White and Mike Cant of the RICS FM Faculty as they reflect on property, facilities management and the state of the FM sector in 2008, whether it has delivered the innovation it promised

Michael Cant: “2008 feels much like 1988. It appears the FM ‘Supply Chain’ has not moved on at the pace we expected. There are those suppliers in our sector who state they are much more strategic in the way that they operate and in the way they support and advise their clients - but I am not convinced this is the case.”

Alan White: “I agree. On the supply side there appears to be a feeling of tiredness – and perhaps many are fed up with being screwed down for an extra penny or two off their cleaning costs, or whatever it might be. Some more enlightened clients - rather than suppliers - come up with innovative ideas. Relatively little has emerged from the supply side in recent years. To encourage innovation usually translates into ‘cost less’.”

MC: “If innovation is driven from the client-side, supply side seems to be settling into a sort of benign steady state. It’s more about sector rationalisation as one company buys another than seeing fundamental improvement or real change in service or offer. On the demand side there is more desire to do things differently, but it’s usually from a non-FM sector perspective.

AW: “Integration in technology to facilitate more flexible working as well as better use of management information to support decision making is clearly bringing some change in the way space is used. But it’s a bit hit and miss in reality. Space (property) needs servicing. If there is no property asset, no FM is required! Too many people talk about FM in terms of what it costs rather than what it delivers. I think it is unfortunate that FMs do not fully embrace the infrastructure bit of IT. Perhaps some FMs are responsible for, say, cabling or wiring rather than necessarily what is plugged in at the end of the cables. It does seem to me that one strategic aspiration perhaps should be the FMs to take on board the responsibility for IT infrastructure.”

MC: “I am just wondering whether the market is about to get into that quantum shift where FM structure and performance will follow demand - rather than supply -priorities. Changes in the economy will increase pressure down the supply chain. In this case the standard FM business models - such as managing agent or managing contractor and deep supply chains – will have to be unbundled. They just don’t add up in an emerging FM market.

AW: “The supply side already say that they are unable to provide other than a bare minimum (security, cleaning or even general facilities services) because there is insufficient money in it for them.

MC: “The amount of space they have to manage is therefore going to have to be much smaller – and FM will need to be much smarter. This means we reach a point where ‘property asset’ drives FM – and not the other way around! The property agenda driving the facilities agenda is one we faced in the 1980’s, but at the time the two sectors tended to operate quite independently. Perhaps now we can genuinely see space as the driver, with property and FM integrated at all levels within the corporate environment?

AW: “Possibly, although I still come across many occupiers or occupying businesses who really don’t take very much notice of property either. It may well be that looking at this the other way around - that facilities suppliers ought to be making much more of ‘we can save you a fortune, and we can really improve your productivity by providing better quality services in the smaller space that you are now occupying’.

MC: “That would mean that what we would have to influence and drive from the corporate rather than the FM side. The responsibility at the corporate level for reengineering the FM function will have to emerge via the property function. FM would be positioned down-stream from the property lead to make this work.

AW: “Yes, it is and it may well be that this is what the industry has been waiting for which is why fundamental change isn’t happening in FM. At the RICS there is already an acknowledgement of this emerging through the integration of the Commercial Property, FM and Consultancy Faculty Management Boards. Property, facilities and advisory expertise in one pot at the appropriate strategic level!

MC: “What really appears to differentiate this from our 1988 experience is that the physical asset (property) will need to sit firmly at the centre of business infrastructure, with management and technical expertise (FM and management consultancy) feeding into and out of ‘property portfolio management’ in order to provide a seamless corporate function. It does mean that FM would have to take a more property/asset based approach from now on. It also leads to FM practice taking a more ‘property-centric’ perspective. The rationale for this is that facilities infrastructure covers such a large percentage of the cost base of all enterprises and we can’t let it float off into the distance because it is so deeply aligned to the property asset itself.”

AW: “In addition, at least one other issue has a bearing on the transition. The property/ surveying sector has not been particularly interested in FMbecause it does not generate equivalent returns. Managing service charges and landlord and tenant is one thing, managing FM contractors is quite another.

MC: “Portfolio or property asset management (including service charge) has always attracted more profit margin than via FM. My view is that if property and FM doesn’t come together, then it won’t be possible to innovate and achieve the step change the FM sector needs. As a profession we must highlight the relative importance and link between business (space) efficiency, as against the FM supply chain. The issue of professionalising FM then emerges as a central plank because without sector governance and sound protocols it can’t progress. It took over a hundred years to develop valuation into more science than art. You can see how this has changed out of all recognition. The RICS Valuation Standards (the Red Book) is embedded in the business and economic model, and was a critical link in professionalising Chartered Surveying not just nationally but globally.”

AW: “I agree that this is what is needed, and we should aim to support this approach across all members of the FM community. A disciplined regime within property management/FM, along the lines of the RICS Red Book and Guidance and Advisory/ Best Practice papers provided by the RICS is important. The RICS Purple Book for Facilities Management is long overdue, and will go some way to pulling some of the threads together for the sector over future years.

● Alan White is Chairman, and Michael Cant is Vice-Chairman of the RICS FM Faculty. Lucy Jeynes is MD of Larch Consuting. Agree or disagree? Email your thoughts on this debate to pfm@imlgroup.co.uk