JEAN-YVES L.

TRONCO

Let’s Check
Activity1. Let us try to check your understanding on the Different Organization types of
Facility Management.
1. What is In-house FM service? Give an Example
− In-house FM Department is an approach where an organization maintains its dedicated team
and employees to provide facility management services, handling tasks such as maintenance
and cleaning internally. However, when specialized services, like lift and escalator
maintenance, require specific expertise not available in-house, they outsource these services
through simple service contracts. This approach is commonly found in public sectors and
educational organizations, combining in-house capabilities for general services with
outsourcing for specialized tasks when necessary.
Consider a company that maintains an in-house cleaning staff responsible for routine
maintenance tasks, including cleaning air conditioning systems. They handle the day-to-day
upkeep of these systems. However, when a major issue or breakdown occurs with the company's
air conditioning systems, which requires specialized expertise and immediate attention, the
company turns to a Facility Management Company that specializes in HVAC system repairs.
This external service provider possesses the necessary knowledge and equipment to address
complex issues efficiently, ensuring the company's air conditioning systems are restored to
optimal functionality.

2. What is Out-Tasked Service Contracts? Give an Example

− Out-Tasked Service Contracts is an FM approach involves an organization that doesn't maintain
an in-house facility management service provider for direct labor but instead employs an in-
house team of facility management professionals responsible for procuring and overseeing a
series of outsourced contracts to deliver facility management services. Additionally, the
organization maintains a smaller in-house non-management staff, such as maintenance
technicians, specializing in high-risk operations or the maintenance of critical Mechanical &
Electrical (M&E) infrastructure. In essence, while the company doesn't have a comprehensive
in-house labor force for facility management, it utilizes in-house professionals to manage and
coordinate outsourced services, with a smaller dedicated team for specialized roles like M&E
plant maintenance.
For example, a small hotel wherein they don't have their own full-time cleaning, security, or
maintenance staff. Instead, they have a couple of employees who are facility management
professionals. These employees coordinate with outside companies for cleaning services,
security personnel, and maintenance work. However, the hotel does have a few in-house
maintenance technicians who handle important repairs like fixing the elevator or air
conditioning systems. So, while they rely on external help for most tasks, they have a small
team in-house to take care of crucial maintenance needs.

3. What Outsourced Managing Agent? Give an Example

− Outsourced Managing Agent FM Contract," the client company outsources most or all facility
management services through contracts with various service providers. To ensure smooth
operations, they hire an FM company as a managing agent to oversee these contracts. The
contracts themselves are directly between the client company and the FM service providers.
The client company is responsible for finding these FM service providers, creating contracts
with them, and handling the procurement side of things. The hired FM company, acting as a
managing agent, takes charge of monitoring and ensuring the outsourced services meet the
required standards. A centralized call center, managed by a third party, the FM company, or the
 client company, serves as the main point of contact for any service requests or issues, helping
to coordinate and track performance data. It's important to note that even though FM services
are outsourced, the client company should maintain in-house knowledge (referred to as the
Intelligent Client Function) to understand how to procure and oversee these services effectively.
To simplify, it means the client company doesn't have its own in-house FM professionals or
service providers. Instead, they rely on their knowledge to find FM service providers, create
contracts, and hire an FM company to manage these providers. They use a central call center
for service requests and ensure they understand the process even though they outsource most
FM services.
A company named Inara Corp outsources various facility services such as cleaning, security,
and HVAC maintenance through direct contracts with service providers. To ensure smooth
operations, they hire an FM company named Synergis to act as a managing agent, overseeing
these contracts' performance. Inara Corp maintains an in-house knowledge base to manage the
procurement and oversee outsourced services while setting up a centralized call center,
managed by Synergis, as a point of contact for facility-related requests and concerns. This
approach enables Inara Corp to efficiently manage facility services without employing in-house
FM professionals or service providers.

4. What Outsourced Managing Contract? Give an Example

− Outsourced Managing Contractor FM Contract has somehow the same structure with the
Outsourced Managing Agent FM Contract but takes a step further. Here, a client company hires
an FM supplier to provide comprehensive facility management services. Unlike the Managing
Agent approach, where multiple contracts exist, only one contract is established between the
client company and the FM supplier. The unique aspect is that the FM supplier employs a mixed
approach to service delivery, utilizing both their in-house resources and subcontracted services.
They build their own supply chain and take on the responsibility of managing the risks
associated with service delivery. In essence, while it resembles the Managing Agent model, the
key distinction is the consolidation into a single contract, with the FM supplier assuming a more
substantial role in delivering services, combining their internal capabilities with specialized
sub-contracts as needed.
XYZ Inc decides they want to outsource all their facility management services, such as
cleaning, maintenance, and security, to make things more efficient. Instead of handling multiple
contracts, they hire an FM supplier called "FacilityCare." With FacilityCare, XYZ Inc signs just
one contract, simplifying the process. FacilityCare doesn't do everything in-house; they use
their own team for some tasks like cleaning, but they also subcontract specialized services like
HVAC repairs when needed. FacilityCare manages all the services efficiently, making sure
everything runs smoothly. This way, XYZ Inc benefits from comprehensive facility
management without the complexity of dealing with multiple contracts and service providers.

5. What is Total Facility Management? Give an Example

− A Total Facility Management (TFM) Contract represents an advancement in facility
management beyond the managing contractor option. In this approach, an FM supplier
leverages not only their in-house resources but also strategic partnerships, joint ventures, and
subsidiary companies to provide nearly all, if not all, facility management services. It
essentially creates a one-stop-shop for facility management services, aiming to offer clients a
comprehensive solution. The distinctive aspect is that in TFM, the supplier strives to provide
every possible facility service directly through their own resources or established partnerships,
eliminating the need to outsource to other FM companies. This results in a more streamlined
and cohesive approach to delivering facility services compared to the fragmented nature of
outsourcing seen in other models like the Outsourced Managing Contractor. Many FM
companies aspire to offer TFM solutions to clients seeking an all-encompassing facility
management service.
A large corporate campus owned by Company ABC wants a hassle-free approach to managing
all their facility needs. So, they enter into a TFM contract with "FacilityMaster," an FM supplier.
Instead of dealing with multiple service providers, Company ABC relies on FacilityMaster for
everything - from janitorial services and building maintenance to security and even cafeteria
operations. FacilityMaster not only uses their own skilled staff but also has partnerships with
experts in various fields like HVAC, landscaping, and catering. This way, Company ABC
enjoys a one-stop solution for all their facility management needs, and FacilityMaster takes
care of everything, ensuring a seamless and well-rounded facility management service.
Let’s Analyze
Activity 1.
1. Discuss the Advantages and Disadvantages of an Outsourced Managing Contract
type of FM Service?
− One significant advantage of opting for an Outsourced Managing Contractor FM service is the
streamlined responsibility it offers. With just one contract between the client and the FM
supplier, administrative complexities are reduced, making it more efficient to manage facility
services. The FM supplier, often specializing in facility management, brings valuable expertise
to the table. This expertise can translate into improved service quality, increased efficiency, and
better overall facility management.
Furthermore, the FM supplier typically develops a robust supply chain, which can lead to cost
savings for the client. They can leverage their scale to negotiate favorable terms with
subcontractors and suppliers, potentially reducing operational expenses. Additionally, by taking
on the coordination of services and subcontractors, the FM supplier absorbs a significant
portion of the risk associated with service delivery. This allows the client to focus more on their
core business, knowing that facility management is in capable hands.
On the downside, clients may have less direct control over individual service providers since
the FM supplier manages these relationships. This can lead to concerns about service quality,
responsiveness, and the ability to quickly address issues. Additionally, there is a risk that the
FM supplier may prioritize their own interests, such as profit margins or maintaining
subcontractor relationships, over the client's specific needs. This potential conflict of interest
requires careful monitoring and management.
Moreover, while there is only one contract with the FM supplier, managing the performance
and compliance of various subcontractors can be complex. This complexity can necessitate
additional oversight and monitoring efforts on the part of the client, potentially consuming time
and resources. Additionally, the cost of the FM supplier's services must be carefully managed
to ensure that the client is receiving value for their investment. Finally, the client's flexibility
may be limited, especially when quick changes or adjustments to facility services are needed,
as the contract may require time-consuming renegotiations with the FM supplier and
subcontractors.
In conclusion, the Outsourced Managing Contractor FM service offers streamlined
responsibility, specialized expertise, and cost-saving opportunities, but it comes with challenges
related to control, potential conflicts of interest, contract complexity, cost management, and
flexibility. Clients should carefully evaluate their specific needs and objectives to determine if
this facility management approach aligns with their goals.

2. Discuss the Advantages and Disadvantages of a Joint Venture type of FM Service?

− Joint Venture FM Services offer several noteworthy advantages. Firstly, they enable
organizations to pool their expertise and resources, fostering collaboration and knowledge
sharing. This synergy can lead to enhanced service quality and innovation in facility
management as partners combine their unique skills and experiences. Secondly, cost sharing is
a key benefit. Facility management can be financially burdensome, but through joint ventures,
participating organizations can distribute these costs among themselves, resulting in significant
cost savings and risk mitigation. Additionally, when operating in international or regional
contexts, partnering with local organizations can be advantageous. Local partners bring
valuable insights into market-specific regulations, cultural nuances, and market entry strategies,
facilitating successful facility management endeavors.
 However, Joint Venture FM Services also come with challenges. The involvement of multiple
stakeholders often leads to complex decision-making processes. Disagreements among partners
may emerge, potentially slowing down decisions and impeding the effective implementation of
facility management strategies. Shared control over facility management decisions can also
present difficulties, as partners may have divergent priorities and operational preferences,
leading to conflicts. Resource allocation within the joint venture can be intricate, as it requires
aligning differing partner expectations and needs. Lastly, managing exit strategies can be
complex, especially when one partner seeks to exit the joint venture. Establishing clear exit
plans and navigating asset and responsibility redistribution can be challenging and potentially
contentious.

3. Discuss the Advantages and Disadvantages of a TFM type of FM Service

− Total Facility Management (TFM) Services offer their own set of advantages. TFM provides
clients with a holistic facility management solution, acting as a one-stop-shop for all their
facility service needs. Clients benefit from a comprehensive array of services delivered by a
single provider, simplifying service coordination and management. TFM providers often
establish efficient supply chains, capitalizing on economies of scale to secure favorable terms
with suppliers and subcontractors. This can result in cost savings for clients, making TFM an
attractive financial option. Furthermore, clients have a single point of contact for all facility-
related matters, streamlining communication and issue resolution. This centralized approach
enhances overall operational efficiency.
Nevertheless, TFM Services also present some challenges. Clients may experience reduced
control over individual service providers, as the TFM provider manages these relationships.
This can raise concerns about service quality, responsiveness, and the ability to promptly
address issues. Additionally, there is the potential for conflicts of interest. TFM providers may
prioritize their interests, such as profit margins or maintaining subcontractor relationships, over
the client's specific needs. This potential conflict of interest necessitates vigilant monitoring
and management. Lastly, the client's flexibility may be limited, particularly when quick changes
or adjustments to facility services are needed. Renegotiating contracts with the TFM provider
and subcontractors can be time-consuming, potentially hindering the client's agility in
responding to evolving facility management requirements.