- Outsourcing non-core duties could trim 25% of property-related costs from expenses sheet, a JLL report argues
- Half of the facility management market is handled by outsourced operators
- The sector is growing by 6% annually
A report by JLL has found that outsourcing non-core duties could trim 25% of property-related costs from the expenses sheet.
The new breed of property manager, called facility management partners, could also support greater business initiatives such as sustainability.
JLL expects this global market to be worth US$1.9 (AU$2.7) trillion by 2024.
Presently, half of this market is handled by operators that outsource tasks. Savings are typically found in energy consumption, workforce administration, property maintenance, training and supply chain management.
Nick Moore, JLL’s Head of Sales, Work Dynamics – Australasia, said outsourcing is a valuable strategy for businesses that are keen to focus on their core activities.
“Once a comprehensive facility management partnership is in place, it will significantly reduce the effort, and cost spent running your property portfolio, whilst also accelerating your sustainability and compliance objectives,” Mr Moore said.
“There have been enormous advances in this area, with automation, wireless sensors, machine learning and artificial intelligence helping to keep building systems running smoothly. A business might not have this technology expertise in house, but a leading service provider certainly will.
Nick Moore, JLL
“Leveraging a facilities management company’s supply chain network can help reduce your third party spend through leveraging their size and scale Additionally, sustainability is an equally important area – the best providers know the latest practice and regulations and can craft a comprehensive program to reduce a building’s carbon footprint and help businesses achieve their net-zero objectives.”
Mr Moore added that outsourcing makes good sense amid ongoing labour shortages in Australia, with businesses struggling to find the right talent in-house.
“For individuals who do have facility management expertise, specialist service providers are becoming an employer of choice,” he said.
“Globally, this sector is growing by 6 per cent a year.
“In-house employees will naturally be concerned about future job security. The reality is that a reputable partner will be eager to hire your facilities staff and retain their valuable institutional knowledge.
“In fact, employees who transition to your service provider firm will likely discover opportunities for career advancement and further learning.”
In its Facility Management Outsourcing report, JLL has recommended five steps a business should take when considering a facility management partnership.
- Clarify your goals. “What do you hope to achieve? You may wish to spend less time and energy on facilities, be concerned about deferred maintenance or want new ways to improve efficiency.”
- Collaborate with your stakeholders to identify needs and issues. “Your stakeholders might include the CEO, the executive leadership team, director of facilities and their teams.”
- Explore options for achieving goals. “This could mean a tweak of current in-house practice or the outsourcing of several operations. For example, to tackle deferred maintenance, you could retain a building assessment and asset management service for data-driven capital planning and maintenance.”
- Design a transparent commercial construct. “Unlike traditional procurement contracts, facility management providers often use outcomes-based contracts that focus on key performance indicators rather than on predefined tasks. In performance-based contracts, the partner’s fees typically are reduced if goals aren’t met, while shared savings and bonuses are provided for exceeding targets.”
- Communicate clearly to ensure a smooth transition. “Your team will want assurance that the facilities staff they know and trust will still be on hand, that services will be easy to access and that the service provider is reputable and committed to transitioning employees.”
