InterserveSustainable Facilities Management Procurement

Jon Crump

Procurement Director

•Brief Background

•Our Sustainability Strategy

•Sustainable Procurement

•Measurement

•Barriers

•Solutions

•Summary

Welcome to Interserve…….

Interserve is a FTSE 250 company with revenue of £1.9 billion.

We employ 50,000 people worldwide

— We are a services, maintenance and building group operating in the public and private sectors in the UK and internationally. We offer advice, design, construction and facilities management services for society's infrastructure and provide a range of plant and equipment in specialist fields.

Background

Business Implications

Global Concerns

Balance

Future generationsSustainability

Recent Sustainability Awards

• Sustainability in Real Estate Award, CoreNet Global UK Awards

• A gold award by the Green500 carbon mentoring programme for the progress made through energy-saving initiatives at University College London Hospital (part of the Mayor of London’s campaign to reduce carbon emissions in the city).

• As part of the KMI+ joint venture, the Environmental Project award for the Hodder Service Reservoir in the Construction News Quality Awards.

• A Green Apple award (construction of an onsite water borehole at Cumberland Infirmary, Carlisle)

• The Most Sustainable Project at the Global Water Intelligence Awards 2009 for the Beckton desalination plant.

2010 Awards

• Major Commendation in the BCE Environmental Leadership Awards 2010

• 2010 CIPS Supply Management Awards - Finalist

• 2010 – Flexible Framework audited to Level 5

Sustainability – Don’t Recycle!

• Plethora of sustainability statements, policies, comments etc mainly recycling and regurgitating what has gone before.

• Fundamental questions for property professionals managing or maintaining the built environment:

But how do we deliver?....How do we do?....Who can tell me?

Interserve Sustainability Policy Statement

A Different Approach

Why should procurement do anything different?

Sustainability – cultural change.

Securing the Future

Procuring the Future Costing the Future

Local Government Response

Flexible Framework “Quick Wins” minimum specifications

Action Sustainability – Sourcing Sustainable Solutions events

Strategic Supply Chain Group External presentations and articles, British Standard in Sustainable Procurement

“Sustainable procurement is not an abstract, idealistic goal, but a practical and achievable objective for government”

- Costing the Future, June 2008

“We would welcome a good, deep, bloody recession for 12 to 18 months. We need one if we are going to see off some of this environmental bullshit”

- Michael O’Leary, CEO, Ryanair

ECONOMYGrowth

EfficiencyCompetitiveness

ENVIRONMENTEmissions

EnergyWaste

ResourcesLand

SOCIETYHealth

EqualityCommunity

SUSTAINABLE

PROCUREMENT

Flexible Framework

Engaging our Supply Chain - How?

• Consolidation — control & ability to shape the market— but balanced (Large corporates and SMEs)

• Tender documents, reviews, agreement clauses

• “Interserve Sustainable Business”

– supplier seminar engaged with plc exec.

• Engender the same culture

• Encourage cross trading within the supply chain

• Share new products with the market.

• Encourage suppliers to brag!

• Recognise excellence

Case Study - SMEs & Recognition of Excellence

Supplier Feedback on You!

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HOW IMPORTANT DO YOU CONSIDER SUSTAINABILITY IS TO INTERSERVE?

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HAS YOUR WORKING WITH INTERSERVE IMPROVED YOUR AWARENESS OF SUSTAINABILITY?

Supplier Sustainability Assessment Model

1. Do you have an equal opportunities policy? Yes2.Do you have Investors in People accreditation? No3.Do you invest in training and development programmes for your employees? Yes4.Provide details of any local community initiatives you have in place? No5.Do you consider that your employees all earn a "Living Wage" Yes6.Do you require your supply chain to confirm agreement to ethical employment policies? No7. Are you included in any Ethical Indices? (e.g. FTSE4good, Dow Jones Sustainability Index or (other)) No8. Do you have a written grievance policy that is communicated to all employees? Yes9. Do all of your employees have at least one day off in every 7 days? Yes10. Do you have a written Health and Safety Policy widely published within your organisation? Yes

***Please attach any relevant further details or examples of any and all of the above***

1. Do you invest in any ecological or bio-diversity projects to counter the effects of your operation or otherwise? No2. Please attach the details of any measures have you taken to minimise effects of your business or products on land usage and biodiversity?

***Please attach any relevant further details or examples of any and all of the above***

1. Please confirm as a percentage of turnover the annual amount re-invested into your business in terms of training, development and innovation. 10 %2. Please confirm that you have all the necessary licenses and accreditations to justify you inclusion as a competent supplier. Yes3. Please confirm that you are compliant with all legislation relating to financial reporting, money laundering and anti-competitive trading. Yes4. Please confirm that you have a long term business strategy aimed at continuous trading and minimising business risk. Yes5. Do you have a written quality procedures in place for your business? Yes

***Please attach any relevant further details or examples of any and all of the above***

1.Do you actively and demonstrably investigate and implement measures to reduce packaging waste associated with your products No2. Do you have measured objectives associated with waste production? NoIf “Yes”, please provide detail of waste targets and actual performance for the last annual period and the targets for the current year.3. Please provide any details of notable recycling schemes your own business operates.

4. Are any of your products or solutions specifically aimed at reducing waste? NoIf "Yes" please provided details of these products and worked examples of the actual measured effects.

Supplier Sustainability Assessment Model

A Supplier Ltd

1. Company Policies 6 6 6 6 6 6

6 6 6 6 6 6

3. RENEWABLES Analysis

1 1 1 1 1 1 0 0 0 0 0 0

6 6 6 6 6 6 7 7 7 7 7 7

3 3 3 3 3 3 2 2 2 2 2 2

4 4 4 4 4 4 4 4 4 4 4 4

6 6 6 6 6 6 0 0 0 0 0 0

2. Sustainability Certification

Comments

Product AssessmentsCOMMODITY/PRODUCT/SERVICE/WORKS NOTES

REVIEWER/BUYER

Social - Strong, Healthy and Just Society

Does the product/service require training to use? Y/N No 1If yes is training provided or provided via appropriate literature? Y/N No 0Does the product/service include measures to mitigate H&S risk? Y/N Yes 1If no is there any H&S risk associated with the products or solution? Y/N/N/a N/a 1Is the product provided from a local branch/company? Y/N Yes 1

Are the products or services unavoidably needed? Y/N Yes 0Have life cycle costs been considered? Y/N Yes 2Is this product or service the most efficient solution (minimal waste, minimal use of water, energy etc)? Y/N Yes 1Does the product/service actively minimise frequent maintenance/delivery visits? Y/N Yes 1If you choose an alternative supply will an SME or local supplier be very significantly affected? Y/N No 0

Is the product free from: - Heavy Metals; pesticides; nitrates; Phthalates; Volatile Organic Components; NOX, SOX, Particulates; Dioxins; Brominated Flame Retardents. Y/N No -4What happens to the product at the end of it's life - Recycled? Reusable? Refillable? Recycle 1Does the product or solution have minimal impact on the environment during use/application? Y/N Yes 1 Reuse Yes Yes Does the product or solution save energy, water, reduce emissions etc as a consequence of its use/application? Y/N Yes 1 Recycle No NoAre there mandatory requirements for sustainability credentials/accreditation to be met when selecting the product? Y/N Yes 1 Refill N/aIf yes does the product/solution comply with the requirements? Y/N/N/a Yes 0 WasteTOTAL SUSTAINABLE PROCUREMENT ASSESSMENT 8

8 0 8 8 8 8 8 8 8 8

0 0 8 8 8 8 8 8 8 8SUSTAINABLE PROCUREMENT INDICATOR

- Promoting personal well being, equal opportunity & social cohesion, engaging work force & communities

Water Based, i.e Diamond Range, Ecosure Range

Economic - Sustainable Economy - Maintaining a sound business, sustainable supply chains

Environmental - Protect and Improve Environment - Prevent pollution, reduce environmental footprint, seek

Supplier Process Risk Mapping

Supplier Process Risk Mapping

Supplier:

No.

Completed by:

Risk Notes ActionsDescriptionProcess

Sustainability Assessment Tools

Interserve FM Ltd Cost Centre:

Defra Contract

Sustainable procurement considerations (please complete) (Red) (Yellow) (Green) (Tick box)

Social Is the product easy to use & minimises H&S risks?

Economic Requirement reassessed: * Rethink the need *Reuse exsiting

* Best value? (Life span, efficient operation, base cost)

Environmental Minimal environmental impact (energy efficient, pollution free, end of life)

Date:

Works Order No.

Contact: Contact: Purchase Order No.

Tel: Tel:

Fax: Fax:

Variation No. Authorising Signature Position

Material Requisition Form Requisition No:-----

Print

Required delivery date :

Supplier's Address: Delivery Address:

WAP No. Overhead

Other tools

• Detailed Commodity Risk Assessments

• Supply Chain Mapping –

• Staff development— Training— Personal targets

Challenges

FACILITIES MANAGEMENT

Challenges

• FMs currently challenged with retrofitting property

Is what is sustainable today a barrier for tomorrow?

• Capital costs

• Consequences of change

• Today’s priority?? (energy becomes water)

• Making informed decisions

• Balancing best solutions

• Communication

• Measurement!— LCAs, Life cycle costs.

“Innovation, Innovation, Innovation”

Communicating procurement innovation Interserve Sustainable Products Guide

Procurement Case Studies

fice Supplies – Tender & Supplier Development

tudy Detail

erve had many suppliers for office supplies e little control over products purchased.

hree main existing suppliers who had been nder and to ensure minimum disruption and

portunity to existing suppliers a competitive nese reverse e-auction and finally supplier

process was held.

t effective tenderer, Lyreco, was also the m a sustainability aspect. This had already

trated in providing services.

of Lyreco as the compulsory sole supplier of d office supplies has allowed for consolidated

ation to drive the compilation and review of owledge of the products characteristics and

o’s own suppliers.

ed comfort in their own sustainability nd developed into a true partnership

where we are equally measured on the of our ordering process through average

and electronic ordering processes.

ce environmental product information is not e in their catalogue but also against our

range of products.

continually strives to improve their credentials in an open way with us.

easures and analysis have been introduced to

elationship include carbon measurement of our vity.

Benefits • Management development of one supplier facilitating

cost savings development of improved procedures and core range

• Measurement of logistics/carbon impact of Interserve orders and benchmarked improvements targeted

o Improvement from £97.21 AOV to £135 AOV o Carbon reduction of

• Environmental credentials of products clearly indicated in catalogue.

• Bespoke Interserve core range agreed and environmental characteristics identified.

• Exceptionally high FTIF delivery rates 99.26% (2Q2009) reducing need to travel back to site to complete orders.

• Electronic ordering encourage including on line catalogues. Usage measured.

• Continual review of core range – 33 more environmental products added 2Q2009

• Enhanced cartridge recycling – 28 additional boxes (1&2Q2009)

• Huge investment in reduced packaging waste through use of bespoke box making machine. This reduced packaging by 24% in two years.

• Secondary packaging 100% recycled • Continual engagement within sustainable

procurement programme leading to core range enhanced environmental

avel Management – Change in Culture

To Distance (miles)

Rail CO2 (kg)

LONDON TERMINALS 105 10.17BIRMINGHAM INTERNATIONAL STATION 105 10.17ZONE R12* ZONESLONDON TERMINALS 119.87 11.61SANDWELL & DUDLEY 119.87 11.61ZONE R12* ZONESLONDON TERMINALS 232.63 22.54DARLINGTON STATION 232.63 22.54ZONE U1* LONDNLONDON TERMINALS 91.72 8.89WARWICK PARKWAY 91.72 8.89ZONE R12* ZONESLONDON TERMINALS 105 10.17BIRMINGHAM INTERNATIONAL STATION 105 10.17ZONE R12* ZONES 1.31 0.13STAFFORD 284.86 27.6LONDON TERMINALS 183.44 17.77

tudy Detail

d various means to arrange travel and hotel ultifaceted approach meant that there was

ng of buying power and little control of

opportunity analysis by procurement and

mmodity area was identified as an area of n and process improvement.

mpetitive tender and e-auction the process

th supplier presentations primarily focused livery and sustainability both in reporting panies own focus.

nd existing supplier and SME partnered with

rd Travel) to provided a competitive ffer but with the balance obvious dedication,

vice delivery and strong sustainability profile rate commitments and targets and ability to

he basis of carbon management.

ards and budgets for hotels was agreed in key h distance from the hotel to the major cations a key determining factor.

s including approved bookers, authorisers

c booking were rolled out across the business ce monitored.

change in the way we plan, book and pay for

tel stays was rolled out reasonably smoothly ts in previous practises. In turn this

delivered savings in cost and powerful eveal the complete and actual pattern of our

and the carbon associated which allowed w and review of our travel policies and the

logy to reduce the need.

Benefits • Greatly improved control over need to travel and

need for hotel stays. • Significant cost improvements and reporting • Complete picture of travel and hotel use across the

business and by business unit • On site ticket machines reducing need to post tickets

and less tickets required than would be issued at station.

• Detailed management information including carbon footprint of travel on a monthly basis.

• Contractual SLAs and KPIs • Commitment with regard to sustainability including

carbon measurement of hotels stays • Aligned with companies with measured commitments

to improving their own sustainability impacts. • Continued engagement of local SMEs. • Considerable process and paper savings due to

consolidated bill back invoicing rather than thousands of expense claims.

Case Study - Washroom In A Box

E co3

Total Urinals across estate 33

E stimate of current situation After E co3 Savings per year % Savings

Volume of Water per urinal flush litres 4.5 4.5

Frequency of F lushing per day 124 2

Annual Water Use per urinal litres 203,670 3,285 200,385 98.39%

Average Cost of Water per m3 2.19£ 2.19£

Cost of water per urinal per annum 446.04£ 7.19£ 438.84£ 98.39%

Number of Maintenance Visits per annum

Average cost to unblock 100.00£ 100.00£

Cost chemical treatment per urinal per annum -£ 0.00£

Total Annual Costs

Total Water Usage (Litres) 6,721,110 108,405 6,612,705 98.39%

Total Water Cost 14,719.23£ 237.41£ £14,481.82 98.39%

Total Urinal Maintenance Costs -£ 0.00£ £0.00 #DIV/0!

Total Cost of E co3 N/A £2,145.00

Total Annual Cost £14,719.23 £2,382.41 £12,336.82 83.81%

Co2 E mmissions Kg 2,715 44 2,672 98.39%

Co2 E mmissions Tonne 2.72 0.044 2.67 98.39%

Note:

Cost per urinal per week* £1.25

*number of weeks between replacement 2

Cost per Month £178.75

Flushwiser• Based on an average saving of two litres

per flush, with the average use of three flushes per person per day, across 240 office days per annum, this equates to 6 litres per day, or 1,440 litres per person per annum (= 1.44 cubic metres pa).

• The average water/sewerage charge in the UK is £2.31 per cubic metre of water.

For example:

• The PHS Group plc head office has 500 staff and 13 WCs

• Water expenditure saved is £8,316 over five years

• Water saved is 720,000 litres per annum, or 3.6 million litres over five years – that’s over 55,000 washing machine cycles over five years!

Summary

• This is not going away (BS8093, Scope 3 reporting)

• Supplier are at different stages

• Measurement is really difficult

• We can make positive impacts

• Sustainability and cost reduction often go hand in hand

• Experiences in maintaining estates provide sustainability lessons for the design/construction stage