Facilities Management Redesign

Appendix B

Facilities Management Redesign

Draft Commissioning Plan

Version 2.0


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Document Set

: Commissioning Plan

Title : Facilities Management Redesign

File Name : FM Outline Commissioning Plan

Synopsis : This document sets out the justification for undertaking the redesign of the delivery of Facilities Management based on the estimated cost and benefits provided.

Current Issue: Status : Draft

Version

Number

: 2.0

Issue Date :

Author :

Approver : Signed :

Copied to :

Changes History:

Issue No.

Date Author Principal Changes


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Table of Contents

1 INTRODUCTION ........................................................................................... 4

1.1 PURPOSE OF THIS DOCUMENT .................................................................... 4 1.2 SCOPE ..................................................................................................... 4

1.3 CHALLENGES ............................................................................................ 7

2 SUMMARY ..................................................................................................... 8

3 BENEFITS EXPECTED .................................................................................... 8

4 OPTIONS ...................................................................................................... 9

5 COSTS AND TIMESCALES ............................................................................ 10

6 BENEFITS REALISATION ............................................................................ 11

7 RISKS ......................................................................................................... 11

8 DEPENDENCIES .......................................................................................... 12

APPENDIX A. OTHER LOCAL AQUTHORITY DELIVERY MODELS ......................... 13

APPENDIX B. CURRENT ORGANISATION STRUCTURE OF FM ............................ 15

APPENDIX C. TIMELINE .................................................................................. 156

APPENDIX D. PROPOSED MANAGEMENT STRUCTURE ..................................... 157


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1 Introduction

1.1 Purpose of Document

The purpose of this document is to provide the justification for undertaking a

redesign of Facilities Management and associated services based on the options appraisal and the anticipated financial and service improvement benefits to be

gained.

1.2 Scope

Current Service There is no simple, single definition of the role of FM as it varies across

organisations according to their specific needs and culture. At WSCC the FM Team have adopted an essentially pragmatic working definition which can be summarised as ‘ensuring a working environment in its buildings portfolio

which enables the council (and its partners) to deliver effective and responsive services’. This can be amplified further in terms of a hierarchy of priorities to:-

Ensure statutory compliance

Ensure buildings are clean, safe & secure

Promote a welcoming & comfortable space for staff, clients & visitors

Promote a positive image of the council through the interaction of people with the council’s buildings

The FM Team place a specific priority in their work for services with vulnerable clients; both adults and children, as in these service areas the

interaction of people with the physical space and associated services is important. As FM is an integrative discipline involving many disparate

activities there is no simple measure of performance. The FM Team view the critical success factors for their service as:-

Minimising risks to WSCC from breaches of statutory compliance – as these are a potential liability to the council both in terms of cost and

reputation

Providing a ‘comfortable’ environment for staff, clients and users – measured both formally and informally through building user feedback.

The current service delivery model for FM could be described as ‘a mixed economy with a strong informed client role with use of external contracts where

these represent value for money’. The emphasis of the FM Team is on policy, specification, management and monitoring; but with light touch monitoring

supplemented by building users’ feedback on service quality and incipient issues. An area based approach has been adopted with 5 areas. In each area a

comprehensive, integrated service is provided through a dedicated Lead Building Surveyor, Engineer & Facilities Manager. These roles are pivotal in the service

providing the expertise and capacity across the broad range of FM activities and strong ‘on-the-ground’ customer focus through to building users to understand service needs, quality, and responsiveness and to help to identify any emerging

issues. The area teams make use of the council’s office hubs in the respective


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areas as well as working flexibility. The Area Facilities Managers (AFMs) undertake a multiplicity of roles and there is also an intention for them to act in

a capacity to resolve problems and undertake small, immediate work jobs as appropriate.

The council has adopted a ‘Corporate Landlord Model’ with centralised budgets for premises related expenditure managed through the FM Team. The FM service

applies generally to all council buildings but in some specific instances there are differing arrangements for schools because of their degree of autonomy. The Fire

Service retains a small FM capacity and some of their building management arrangements are not within the scope of the WSCC FM Team.

The broad ‘direction of travel’ for the FM service is to move towards common standards for major areas of activities which schools can ‘op-in to’.

There is no single definition of FM and no specific model of its scope and activities. FM activities are based on historic ways of doing things,

organisational culture and pragmatic experience of what works well. FM does tend to have a primarily operational focus there is also an important

strategic element to it as FM needs to be consistent to, and supportive of, wider council objectives.

Strategic Operational

FM Strategy &

Support

Hard FM Soft FM Additional FM

Support

Member & Senior

Officer Liaison Condition Surveys Cleaning Space Planning

Policy Development

Building Maintenance

Security Move Management

Statutory Compliance

Governance

M & E Services Waste Disposal

& Recycling

Office Furniture

Contract & Performance

Management

Statutory Compliance

Delivery

Reception Porters

FM Information

Project

Management

Caretaking Events

FM ‘Help Desk’ Carbon Management

Utilities Management

FM Training

PA & Admin Support

Minor Improvements

Catering

Property Review Health & Safety

Suitability Assessments

Grounds Maintenance

Budgets Current budgeted cost of the Service and Staffing Levels for 2013 / 14

Current FTE’s 80 + 2 apprentices


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Cost of internal staff (salaries) £2.0m as of 2015 (Currently £2.4m)

Hard FM – maintenance £2.64m Soft FM £2.25m

Hard FM –Capital £3.2m Soft FM – Capital £170k

Total Cost of the Service £10.26m

(excluding any internal overheads) Note: the above does not include spend conducted by schools e.g. school meals

service

Note: the anticipated cost savings will be derived from the revenue element of budgets (less retained staff costs). The revenue costs (less retained staff) are currently circa £6.3m.

Service Level Agreement Income

The service currently receives £813k (+£700k from catering services which will reduce following the new outsourced Special Schools Catering contract) per

annum as income from Service Level Agreement (SLA) income from schools. This is diminishing (c £1.2m 2012/13) due to the number of schools that have made their own arrangements or have become academies and changes to the

services that are offered. It is anticipated that the SLA income will continue to fall over future years that may result in the need for further staff reductions to

reflect demand.

Scope of the project This project has been looking at the way in which facilities management services

are provided to the properties of the council with a view to provide recommendations to redesign the current delivery model to generate savings and service improvements. The review has also looked at how other local

authorities provide these services (see appendix A)

The services under review included maintenance and repair (Hard FM) and building support services such as cleaning and catering (Soft FM). The redesign project may include subject to further stakeholder engagement:

FM Helpdesk Catering and Vending

Grounds Maintenance (hard and soft landscape) Logistics e.g. portering, Waste collection and recycling

Cleaning (including “non office” antique) Pest Control

Security Building Reactive and planned maintenance M&E Reactive and planned maintenance (inc backup power systems)

Minor works Internal & External decorating

Locksmiths


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Signage Lifts & Hoists

PAT testing Car Park management

Alarms Door entry systems Statuary Testing and sampling

Option – Move Management Option - Furniture Management

Option – Transport (pool cars and management of fleet vehicles) Option - Document archiving and storage

Capital works and Building Professional Services have not been included in the review as the market to provide Hard and Soft FM along with Capital Works and

Professional Services is immature with very limited providers able to offer all of these services.

Future state

It is anticipated that the redesign will result in a budget circa £500k for the retained team. See Appendix D for proposed staff structure.

1.3 Challenges

The current mix of in house and multiple contractors leads to a fragmented

approach that does not lend itself to ensuring the maximum economies of scale are being achieved.

The quality of available data can have an impact on optimising service delivery and strategic planning. There could also be a risk associated with being able to

demonstrate statutory compliance. The quality of data can also impact on the contract costs if accurate data is not available as contractors will build in

additional costs to mitigate any perceived risks. With all but one of the options explored, current end dates of contracts may be a

challenge as this could result in some services transferring as and when the current contracts come to an end. In more resent procurements this has been

planned for with the addition of no-fault termination clauses or no guaranteed uptake / expenditure.

As with any change within an organisation it brings with it uncertainty and apprehension from members of staff and as such early consultation and buy in

may be a critical success factor in taking up any of the options moving forward. Linked to this is the possible loss of key staff as they choose to leave rather than transfer. Redundancy liabilities could also be a risk.

Under a new operating model support to schools and other non-council budget

holders will be treated as a sales opportunity by the service provider as the council provides its core function under the intention to be a commissioning council. This could have a political dynamic if the perception is that the council is

not providing suitable support to services that are independent budget holders but are integral to the totality of services provided by the council e.g. education.


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Future proofing the solution will be a challenge as the contract will be deemed to

be long term in order to allow the service provider to invest in the delivery of the service. The current unknowns are the future size and scope of assets, this will

include ownership, landlord responsibilities etc. The contract will reflect these unknowns in order to take into account the impact of change.

It is important the council has the appropriate skills to manage the preferred option as the delivery of the service will have a direct impact on the council and

its customers. There is a disconnect between the property review process undertaken by the

Capital & Infrastructure Team which identifies whether buildings should be retained or released by the council and activities undertaken by the FM Team.

This may mean that there is risk of maintenance or improvement spend being misdirected on buildings likely to be no longer required by the council

The number of schools that buy back services (for example cleaning contract management) is reducing as more schools opted to carry out these functions

themselves or purchase from elsewhere. The effect this may have on the service would be an underutilisation of staff as demand reduces.

2 Summary

The have been improvements in the delivery of the service (for example the

establishment local hubs), however, the scope for further improvement may be limited without effecting service delivery. Furthermore the current mix of in

house and multiple contractors leads to a fragmented approach that does not lend itself to ensuring the maximum economies of scale are being achieved.

The procurement of a single service provider across all hard and soft facilities management activities is deemed to be the best option to take the service

forward that will achieve cost savings and service improvements.

3 Benefits Expected

Savings - It is anticipated that the implementation of the preferred option will

result in annual savings circa 10% – 15%. The level of savings may be dependent on the expiry date of existing contracts and the time required

procuring and implementing the new operating model. Link to Corporate Vision (Support Economy and Efficient Council) – The new

operating model and supporting contract will be structured in such a way as to allow the council to have influence and insight into the selection of the supply

chain required to deliver the service. In addition, the operating model will facilitate the improved utilisation of staff via for example the use of work

planning ITS systems. With the selection of a service provider that will be in the top tier within the FM

sector, we will be able to access to specialist knowledge and training for our staff


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(TUPE’d and retained) and have access to latest industry innovation that will improve efficiency and reduce costs.

We will also be able to have access to investment in service delivery processes /

systems working in collaboration with the service provider. This could result in savings and efficiencies and / or income generation and profit share

Operationally we will have a clear definition of responsibilities for each building between landlord and tenant to ensure that the work carried out is the liability of

the council. This will also include improved management of repairs under warrantee / defect liability period.

By removing the day to day operational issues to a service provider the retained management will be able to focus on improved strategic planning and ensuring

statutory compliance The current operating model has very few measures of performance and the

information collated does not always lead to continuous improvement. The new operating model will have a suit of measures that will facilitate continuous

improvement and provide Management Information for example servicing programme adherence and statutory compliance.

4 Options

Option Pros Conns

1 As is Nil cost to implement. Current service standards accepted by end users.

No big impact on staff (any changes will be dept by dept)

Restricted opportunities for savings,3rd party investment, service

improvements and income generation

2 In Source Could be seen as reducing the risk of continuity of

service

Does not fit with council objective of being

commissioner. Cost of service could be higher.

Restricted opportunities for savings,3rd party

investment, service improvements and income generation

3 Hard and Soft *TFM geographic

split

Allows for benchmarking between service providers.

Reduces the risk of continuity of service as one service provider could

operate in another’s area.

Reduces savings opportunities.

Increases contract management costs Possible duplication of

effort Possible multiple ITS back

office systems to interface with


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4 Hard and Soft

TFM

Maximum savings,

efficiencies and income opportunities. Mature market.

Reduced contract management costs.

Reliant on one service

provider

5 Joint Venture The likelihood of staff numbers reducing is limited.

Could rely on finding other public sector work to be sustainable.

Reduced savings opportunities Management costs

increased

6 TFM + Capital and

Professional Services

Link between capital and

maintenance improved - should result in a reduction in the cost of ownership of

assets

Immature Market.

Time to implement may reduce short term savings opportunities.

Cost to implement (may need external consultants)

7 Staff Mutual Retained expertise and site knowledge. Current

service standards accepted by end user. Staff may feel that they

are more involved in the decision making process

Restricted opportunities for savings,3rd party

investment, service improvements and income generation, cost to

implement remains with the council ( e.g. restructure), risks retained

in part by the council

*TFM – Total Facilities Management

The preferred option is to procure a Hard and Soft TFM service provider

as this option will give the greatest overall benefits to the council.

5 Costs and Timescales

Officers time (Procurement, Legal, HR, Project Management and FM) -The cost of

implementation and the on-going management of the service should be limited to officers’ time. It is not anticipated that any investment will be required to

facilitate the change in the FM operating model.

Redundancy Costs – Redundancy costs may need to be factored into the cost of this project, however it is felt that these costs are likely to arise no matter what option is taken forward with regards the FM service, however the preferred

option would seek to ensure that the risk of redundancy payments are passed to the provider and to deliver savings net of the cost of any redundancies.

NEC and contract management training for retained staff – A training programme may be required to support and up-skill the retained team to best

enable them to manage a large single service provider rather than multiple smaller contractors and spot purchases.


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Appendix C highlights the anticipated timelines to procure and implement the new FM operating model

6 Benefits Realisation

During the project initiation process and throughout the procurement process data will be collected and verified that will establish clear baselines on the

current cost and levels of service. The baselines will be established for all service elements both retained and outsourced.

The contract implementation process will include due diligence of the baseline data in collaboration with the service provider. The outcome of the process will

be the agreement of the baselines. The measures used will include:

Demand Capability

Capacity Quality Cost

Customer Satisfaction

The outturn information will be used to facilitate continuous improvement. The improvements will be collated into a benefits realisation tracker that will be able to report on:

Cashable savings / income received, Non Cashable savings / Service improvements

Cost avoidance

7 Risks

TUPE / Redundancy and pension liabilities – As with any potential outsource the biggest risk is usually linked to the transfer of staff and any redundancies. This

can be mitigated with lessons learnt from other resent outsource projects, including the understanding of the issues within the evaluation of potential

bidders and early engagement at preferred bidder stage to ensure communication and consultation are seamless

Statutory Compliance – the risk associated with statutory compliance has reduced recently with the adoption of an asset database however suitable audits

by technical staff will be required to ensure servicing programmes are agreed and adhered to.

Possible cross over with other contracts e.g. SSO – There are possible areas of crossover with other contracts. Care will be needed during the redesign of the

operating model to ensure no duplication of effort, that all elements of the services are covered and that the links to other contracts are clearly understood

by all. Perceived loss of control and reactiveness – The current service can be very

reactive to requests (e.g. members), this has a hidden cost with regards planned


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utilisation verses reactive work. The new operating model should be able to be flexible to meet the demands of the customers but in the knowledge that in

some cases this may have an impact on efficiency and therefore costs.

Current Skills of FM team (manage 1 large contractor rather than lots of smaller contractors) – The move from multiple small contracts and spot purchases to a single supplier will be a massive cultural change for the retained FM team. As

discussed above, this can be mitigated by suitable training and support. This will also be mitigated by the reduction in complexity due to fewer lines of control and

governance Link to Asset Reduction programme – The size and shape of the WSCC estate is

likely to be in a state of flux especially for the next few years. The contract will therefore have the provision for additions and deletions from the asset register

and a clear cost model that will determine the effect on the contract price Externalisation of expertise – Although there will be a retained team to manage

the service provider at an operational level there could be a perception of loss of expertise. Ownership of data, co-location, collaborative working will all assist

with mitigating any perceived risk

Perceived Impact on local SME’s – At this stage we cannot predetermine the delivery model of any future service provider. The delivery model tends to be a mix of directly employed staff and specialist sub-contractors. The impact on

SME’s can be reduced by including within the contract the same ethos as WSCC with regards the selection and use of local SME’s.

8 Dependencies

Typical dependencies of a project such as this will include:

Current Outsource (SSO) e.g. Helpdesk and Health & Safety On-going projects and programmes e.g. Asset Reduction programme

Current contracts for the supply of FM services – end dates, extension provision and termination clauses.

Capital programme and planning – linked to the total cost of ownership of an asset, standardisation of key building elements and repair under defect liability period / warrantee.


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Appendix A. Other Local Authorities Deliver Models

Kent County Council Reason for change:-

Statutory compliance – Current management and information seen as a risk to the Authority

Asset Register - gaps in information, long term planning is an opportunity

to improve Fragmented approach to letting of contracts and contract management

Strategy 3 regions Central, East and West.

Different contractor for each area allowing mitigation of risk, continuity of service etc.

Approx. £20m per annum total

First Kent (bed in) then allow others e.g. Boroughs and Districts to join the contract should they wish to do so

PQQ – contractors indicate preferred region in descending order, max of 12 contractors taken forward to the tender stage – 4 bidding for each area

Excludes Capital and professional services Scope very open to add additional areas at a later date Lump sum + Schedule of Rates for unknowns

Competitive Dialogue as little internal experience of TFM – seen as a learning opportunity and ability to innovate

Bespoke contract (similar to NEC TSC) via external legal advice 10%-20% anticipated savings but acknowledge that if a single provider

was selected for the whole county savings would be nearer to 20%

Medway Council

Options considered: Outsource, Traditional FM, Traditional FM plus wider

scope of services e.g. archiving , Joint Venture (JV) JV selected as seen to offer the best fit of savings / income generation

that will protect the employment of current staff The intention is that income will be generated via education and health

partners that will supplement the increased utilisation of current staff

Norse (ex Norfolk CC) was selected as the partner provider to the JV who have currently 27 JV’s with local authorities in the UK

JV has a “pick list” of selectable items Option for SE7 to use this arrangement but it would appear that no EU

procurement was undertaken to select the JV partner.

Savings estimate of 5% year one, 10% year two. Mix of directly employed and SME’s (60/40) Intensive internal visits including finance to establish data room

Note: can add whatever you want to JV via a variation order as seen as public to public – Teckal case,

Not constrained by EU regs therefore greater freedom to include political objectives e.g. local employment e.g. 3 apprentices year 1, then up to 10

80% ownership Norse 20% Medway but profit from income split 50/50 Hampshire County Council


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Market consultation

A limited market consultation has been carried out, should this commissioning plan be accepted a more detailed market consultation process will be undertaken

as part of the commissioning cycle. The market consultation sort to understand the typical scope of services that

would be included in a Total Facilities Management contract. The results have been reflected in the draft scope of services as at 1.2 above. In addition the

market consultation confirms the limited number of companies in the market of able to offer a combined TFM and Construction and Professional Services offer.


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Appendix B FM Team Structure Chart


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Appendix C – Procurement Timeline (draft)


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Appendix D Proposed Future internal Structure

Facilities Management Redesign

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