Property and Facilities

Management City of Sydney

Local Government & Public Sector

Building Maintenance & Facility

Management Conference - 2017

Sherif Awadalla1

Agenda

1. The City Of Sydney

2. Outsourcing Evolution

3. The New Model

4. Partnership Principles

5. Alignment of Incentives

6. Benefits

7. Setup for Success

8. Summary Benefits

9. Questions

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The City Of Sydney

Complex portfolio:

• 256 properties

• Circa 400,000 sqm of built space

• Value of circa $2.2b

• Annual Revenue Budget: $66m

Leases:

Footway/Laneway - 510

Commercial - 488

AGP and Creative Spaces – 107

Other community – 198

Other - 106

Mix of assets including unique heritage requirements and significant exposure

to the public.

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Service Infancy

oResource intensive as all trade staff and management

structure internal to the organisation

Sherif Awadalla

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In-house services model

Internal delivery

of facility and

Property

management

Services

Client

Organisation

oGood understanding of the requirements and needs of the

organisation

Sherif Awadalla

o Full control of service delivery

Sherif Awadalla

oRidged delivery, largely dependant on available expertise

Sherif Awadalla

oClient organisation bares 100% of the service delivery risk

Sherif Awadalla

Client

OrganisationoReduced internal trade staffing

Sherif Awadalla

First Outsourcing Progression

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Direct Engagement of Trades and Services

Pro

perty

Ma

na

ge

me

nt

Facility

Ma

na

ge

me

nt

Tra

de s

upp

liers

o Larger contract management staffing structure

Sherif Awadalla

oReduced labour costs and access to a greater labour force

Sherif Awadalla

oModel tends to focus on operation and tactical delivery with

limited long term strategic focus

Sherif Awadalla

oClient organisation bares the majority of the service delivery

risk

Sherif Awadalla

Client

OrganisationoAll the advantages of an outsourced integrated services

model

Sherif Awadalla

Third Outsourcing Progression

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Guaranteed maximum Price

Integrated

Service Provider

Pro

perty

Ma

na

ge

me

nt

Facility

Ma

na

ge

me

nt

oClient organisation loses visibility of service delivery

outcomes and asset performance and condition IP

Sherif Awadalla

oModel can result in underservicing as the service provider

can be financially incentivised to underservice.

Sherif Awadalla

Client

OrganisationoAll the advantages of an outsourced integrated services

model

Sherif Awadalla

Fourth Outsourcing Progression

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Managing Agent Model

Integrated

Service Provider

Pro

perty

Ma

na

ge

me

nt

Facility

Ma

na

ge

me

nt

oDecoupled the trade spend from the management spend

resulting in no financial incentives over or under service.

Sherif Awadalla

oModel tends to lean more towards a reactive service as the

service provider does not own financial outcomes

Sherif Awadalla

oClient organisation loses visibility of service delivery

outcomes and asset performance and condition IP.

Sherif Awadalla

Which Model Are You Running With?

In-house

services

model

Internal

Trade Staff

Client

Organisation

Direct Trade

Model

Individual

Trades

engagement

Client

Organisation

Integrated

Cost Plus

Model

Individual

Trades

engagement

Client

Organisation

Guaranteed

Maximum

Price

Individual

Trades

engagement

Client

Organisation

Managing

Agent

Individual

Trades

engagement

Client

Organisation

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How Did We Do? Can We Improve?

In-house

services

model

Internal

Trade Staff

Client

Organisation

Direct Trade

Model

Individual

Trades

engagement

Client

Organisation

Integrated

Cost Plus

Model

Individual

Trades

engagement

Client

Organisation

Guaranteed

Maximum

Price

Individual

Trades

engagement

Client

Organisation

Hybrid Self

Delivery

Model

Individual

Trades

engagement

Client

Organisation

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The Journey

Internal and external

stakeholder engagement

293 questions collated

and reviewed

Approach developed for new

property services contract

new contracts

Consultants engaged to

develop

Model Developed and

communicated

Procurement approach

developed and agreed

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Sherif Awadalla

City Of Sydney Model

• No visibility of data

with integrity

questionable

• Limited financial

risk on the supplier

• No asset

monitoring and

management

• Outcome based

contract

• No energy

performance

• Reactive model

with limited risk

Current

Contract

Construct

Facilities Management

Contract

Property Management

Contract

Asset Compliance

Contract

Sustainability & Utilities

Contract12 of 20

• Separate contracts to attract best

of breed service provider

• Increased ownership and

accountability

• Increased visibility of data

through MIS

• Alignment of incentives

• Increased focus on asset life

cycle management

• Strong focus on WHS and

compliance with City’s policies

and procedures

• Outcome based KPIs

underpinned by quantitative

measures

• Increased focus on vacancy

rates, rental income and tenant

satisfaction.

Value Driven Partnership ModelAddressing Portfolio Complexity

Delivery

Direct

engagement of

trades service

provider delivers

best value for the

City

Portfolio

Complex and

unique portfolio

requiring

divergent service

approach

Options

Collaborative and

transparent

extension

mechanism

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Alignment of Incentives & TransparencyEnabling Genuine Partnership

MIS

Transparent

Information

system enabling

partnership in

governance

Model

Disaggregated

model requiring

commercial and

operational

collaboration

Payment

Payment for

Services made on

completion of

trade works or

management tasks

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Improved Capability, Transparency & Ownership Delivering Value

• Best of breed suppliers for each service PM/FM

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• Improved risk profile through inclusion of trade preventative

maintenance plans with associated KPIs.

• Improved transactional visibility through a transparent integrated MIS.

• Separate engagement of asset condition audits and compliance

certification.

• Improve supplier ownership through a direct FM delivery model and

performance incentives in the PM contract.

• We have also enhanced the City’s in-house capability, systems and

processes to support the contract model.

Current Aggregated Service Model

Tenancy and lease, rent

collection, property

accounting, outgoings,

licenses

Annual fire safety

statement,

Condition survey audits,

compliance and

maintenance audits

asset management,

maintenance of fixed

plant and equipment,

general building,

cleaning, pest,

landscape, minor works

procurement,

consumption monitoring

and reporting, utility

billing management,

ESD advice

Supplier owned and managed MIS provided as a service to the city through a web portal

• Aggregated service provision

Integrated property Services contract

Structure split by Property portfolio type (Commercial, Public Domain and Community)

Structure primarily focused on Customer Relationship Management with limited emphasis on Contract Management and contract governance

Limited technical capability (No FM resources)

No imbedded WHS resources

City of Sydney

City of Sydney Aggregated

Statistical

Governance

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Property MGT Facility MGT WHS & Compliance Utility Management

• Pass-through cost to the city of trade services

• Outcome based KPIs with limited to no risk transfer

Reconfigured to Support the New Model

Tenancy and lease

management, rent collection,

property accounting,

outgoings, licenses

Measures

Vacancy rate, rental income,

debtors and arrears,

property accounting, tenant

satisfaction, property

financial performance

Term 4 years + 2x2x2

Annual fire safety statement,

Condition survey audits,

compliance audits

Measures

Building certification,

compliance, independent

FM performance reports.

Term 3 years

Transition, asset

management, maintenance of

fixed plant and equipment,

general building, cleaning,

pest, landscape, minor works

Measures

WHS, compliance,

information mgt, maintenance

levels, service delivery

timeliness, reporting, quality

control

Term 4 years +

procurement, consumption

monitoring and reporting,

utility billing management,

ESD advice

Measures

Utility consumption targets,

utility payment

management, consumption

reduction innovations.

Term 3 years

Contract Management & Data Analysis

Performance measurement and monitoring, contract escalations and issue resolution, contract variations, contract payment and abatements

MIS

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Property MGT Facility MGT Asset Compliance Utility MGT

Facility Management and Compliance Environment & Utility MGTProperty Management

Stakeholder mgmt., public art management,

tenant liaison, P&L, supplier governance,

SPOC for commercial portfolio tenants,

council business as a landlord & tenant

Facilities Management & WHS, safety and

compliance, supplier governance, FM

budgets, , SPOC for community portfolio

tenants, capital works input, minor works

oversight, council business

Environmental & Utility

Management, utility

Procurement, Compliance

and Reporting

Portfolio ManagementDraft Property Delivery Model

Facilities

Management

Financial & Property

Management

Sustainability

& Public Art

Safety & Compliance

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Investment

Portfolio

Office, Retail,

Stratum,

Industrial, Triple

net

Financially driven

to maximise

financial yield

Community

Portfolio

Public &

Community

Facilities, Town

halls, Footways

& Kiosks

Administratively

driven to

maximise tenant

satisfaction

Known operational, risk, compliance and budget outcomes

Disaggregated Self Delivery

Sherif AwadallaClient

Organisation

oAll the advantages of an outsourced integrated services

model

BO

B S

elf

Deliv

ery

FM

Specialist

Support

City of Sydney Model

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BO

B S

elf

Deliv

ery

PM

oReduced contract management resources

oAlignment of financial and operational incentives

oReduction of management fees

o Increased in-house specialist resources to ensure that the

council is an informed client

oComplete visibility of asset and service performance.

Questions

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