Concept of Facility Management

Building Management

and

Concept of Facility Management

The Answers

for

Weekly Question

15JAN 2001

by

Hitoshi Kumagai

Concept of Facility Management

Questions:

Hitoshi Kumagai

Week1

1.Definitions of facility management

a.Barrett

An integrated approach to maintaining, improving and adapting the building of an organization in order to create an environment that strongly support the primary objectives of that organisation[1].

b.Park

The structure of building plant and contents to enhance the creation of the end product[2].

c.IFMA

Facility management is the practice of coordinating the physical workplace with the people and work of the organization. It integrates the principles of business administration, architecture and the behavioural and engineering sciences[3].

d.BIFM

Facilities Management is the integration of multi-disciplinary activities within the built environment and the management of their impact upon people and the workplace[4].

e.JFMA

Facility Management is one of administration and management activities of every kinds of organisations, which manages every kind of facilities of the organisations[5].

f.CERCO

The task management of a wide range of technical and support services within a single comprehensive contract[6].

g.Johnson Control IFM

Our Facility Management Services integrate all the functions necessary to support the daily operations of facilities from landscaping to high tech operations and maintenance[7].

h.Comparing the definition

1)All definition show FM is a management activity that coordinate various kinds of functions.

2)The definitions of ‘facilities’ differ a little; such as, building, plant (Barrett, Park), workplace (BIFM, IFMA), technical and support services, daily operations (CERCO, Johnson Control), not specified (JFMA).

3)The definitions of Barrett and Park distinguish the core business (the end project) and FM, and FM surpports the core business. The ones of Cerco and Johnson Controls are defined as a services which probide to their customers. The ones of three Association (IFMA, BIFM, JFMA) focus on the FM itself rather than relations with core business, it is assumed that these associations have to promote FM concept to Business world.

2. “Core Business”

Jobs or functions of an organisation that related directly to its objective or aim; e.g. the case of study 1 of Barrett is “Producing specialist technical equipment, [Barrett, p8]” Bluewater’s core business is retailing & entertainment.

3. The way of Landis division to gain the results

Landis division gained the results firstly analysing and setting the goal of improvement, secondly design the change for improvement, and finally implementing them into the organization. Details are follows.

a.Analysis and setting the goal of improvement.

They researched and analysed into organization, process and technology by benchmarking. The research bring 15 proposal for improvement.

b.design the change for improvement

They designed some change to achieve the goal of improvement

c.Change organisation / human resources

Firstly, they centralised the work assignment to allocate human resources, material and inventory efficiently Then, to motivate the employee, they empower to group leader, introduced performance-based service delivery system, and the injury prevention system

d.Re-identifying the Costs

They re-identify the cost through identifying all works of maintenance department and accounting for those works.

e.Implement

They implemented the changes and made them sustainable through follows,

(1)Full time onsite program manager who has experience and come from Siemens.

(2)Training for manager / supervisor

(3)Expanding the maintenance technology

(4)Introducing the evaluation system of Customer satisfaction(CQI)

4. The situation of Concordia University according to Barrett

The situation of the university is ‘1.3.5 Localised sites model [Barrett, p17],’ because

1)Two sites in or near Montreal

2)Combination of in-house personnel and consultants.

5. The functions performed by FM in Bluewater

1)Security (Guest safety hosts)

2)Housekeeper / cleaners (Environmental service hosts)

3)Concierge / car park hosts

4)Music / lighting ‘mood’ management

5)Help desk

6)Looking after food court

7)Maintenance of M&E

8)Employing and training those staff

6. What is Johnson controls offering[8]

a.Facility Management Services

Integrate all the functions necessary to support; the daily operations of facilities from landscaping to high tech operations and maintenance. Integrating facility or installation management services with a single point of contact, best practice implementation from facilities worldwide,

1)energy management

2)tracking and measurement of facility performance factors

3)accounting consolidation

4)the technical expertise.

b.Strategic Facility Consulting

Developing customized solutions (of FM) for our clients.

c.Workplace Consulting and Design Services

1)Space Planning

2)Occupancy Planning

3)Project Management

4)Move Management

d.Facility Performance Measurement / Benchmarking

1)benchmark clients’ facilities

2)make performance enhancing recommendations

e.Facility Technology Integration

developing comprehensive solutions that link all applied real estate and facility portfolio technology systems together in an integrated system

f.Total mission support:

total mission support capabilities to government and civilian agency installations and military bases.

(1)on-site project management

(2)integrated facility management

(3)facility/base operations support. From installation wide management to range operations

g.High tech Operation and maintenance

1)(Providing) customized support the unique facility requirements of clients. E.g.

(1)data centre management for financial institutions

(2)clean room management for technology

(3)Government

(4)pharmaceutical clients

2)this services include

(1)Predictive Maintenance

(2)Computerized Maintenance Management Systems

(3)Energy Management

h.Energy Management strategy and Implementation

providing expert utility

1)bill auditing

2)tariff auditing

3)energy negotiating with utilities to reduce the total cost of power

i.Project Management

power and task management skills to coordinate multiple contractors and vendors , ensuring timely, cost effective project implementation.

7. The function of FM in the IJselland building

a.Strategic space planning, including real estate, to meet the needs of the school’s education plan.

b.Maintenance of building, M&E.

c.Re-newal to meet user needs

d.Managing cafeteria, photocopy, vending machine and other services.

8. Core business & FM functions, in Fuji Xerox.

a.Core business

1)Manufacturing and sales of office machine.

2)IT consulting businsess

b.FM functions

1)Strategic space planning, including real estate.

1. investment evaluation

1. risk identifying / contengency plan

2)Construction management (factory)

3)Maintenance buiding, M&E (factory)

4)Rearrangement of office space and services

Week2

1. ”Strategic management” in general

Barrett writes ‘strategies,’ which facility group should know, are “What it is trying to achieve; what sort of shape the department is currently in and what external force pose threats or provide key opportunities to the department in the long term. [Barrett p59]. In this term, ‘strategic management’ means a planning which shows the way of achievement of corporate goals. Usually, ‘strategic plans’ mean mid or long term plan that include predictions of future market, and prioritising of investments and how to achieve them. In Fuji Xerox, “Corporate strategic planning department” makes 2-year plan. But, recently, it is difficult to predict the future, especially IT market. Therefore, some companies make only 18 months planning. For example, HP have 18 months strategic plan that include three plans, ‘Better’, ‘Base’ and ‘Worse’. They also define some ‘trigger’ which indicate the status of business environment; e.g. market share of them, currency rate, or the others. If some ‘trigger’ show good figures, then they move their plan from ‘base’ to ‘better’. If some triggers show bad, then they move to worse. They revise 18 months plan every six month.

2. Bench marking?

Recently, company often use ‘benchmarking’ to define their improvement goal when they make strategic plan. Before benchmarking era, they used to define the goal from their own status. However, if their own status is much lower than competitors, the improvement plan might be not competitive in their market. Therefore, they have to research the best practice. They research in not only competitor but also other industries. For instance, In the case of Concordia University, to define organisational, process and technology needs, Siemens made a ‘benchmark study’ of the university’s facilities [yellow book p8].

Benchmarking was done first by Xerox corporation in late 80’s. Most typical benchmarking example is that Xerox research delivery system of LL Bean (a catalogue retailer). And South West Airline in USA research Indy car race’s pit work for their re-setting of their plane in airports.

3.Business unit

‘Business unit’ is a department of a organisation. The difference from another style of departments is that ‘unit’ are more empowered and independent, unit can make plan and decided themselves. All functions in a unit have same aim or goal, but have minimum ones. In the case of DuPont, to survive from the competitive markets, they reorganised into 20 ‘strategic business units.’ They create revenue and profit [yellow book p35]. Recently, those kinds of business units do not have ‘non-core functions,’ which is not directly related the unit’s activities. ‘Non-core functions’ are served by another internal ‘service unit’, which does not make actual profit, or outside contractor, such as Johnson Control IFM or others.

4. Dupont services centre is more than Facility management.

Dupont services centre provides most of non-core activities to the strategic units, such as accounting & finance, procurement, business consulting, engineering & maintenance. Wider range of support functions are serviced than facility management [yellow book p35].

5. Why the service centre not a profit centre?

Synder, vice president of ‘Business services for the global services Business, said “Any savings we would realize, we were going to pass on to the business units themselves.[yellow book, p37]” Profit centre has to make profit, and the attitude to make profit sometimes make the cost-reduction unclear for customer. Therefore, they chose service centre to feedback all their cost-reduction to strategic business units.

6. Some change due to environmental developments.

The business environment has been changed. The range of competition become global and the markets are changing rapidly including the shape of each market. 200-year-old DuPont also has to change. The company reorganized themselves. First they simplified their organization into 3 key groups; Strategic Business Unit: core businesses is of the company, The corporate core: strategic planning for the whole company, and demand-driven services including global services Business (GSB). The aim of this reorganisation was to keep the organisation simple and flexible, in addition. By separating support services, strategic business unit can reduce fixed cost, the units can substitute the services if they do not satisfy the services. On the aspect of GSB, they are no more internal services, they need competitiveness in the real market. Recently, this kind of reorganisation has often happen. Sometimes, the facility manager has been dismissed and companies outsource to outside company.

7. Apply issues for an industry and the facilities you are acquainted with

a.Fuji Xerox re-organise general-affair and human resource function into two new department, one is corporate planning of both, and the other is service centre of both functions. Now, the service centre is trying to redefine their services menu. However, it is not easy to redefine each job from existing functions. These have been too complicated to divide into small jobs.

b.Omron, Japanese electronics products manufacturer, re-organised the all non-core function, including FM, and established a service centre.

c.Mobil Oil Japan shifted almost all employees of FM to other core-business except 2 people, and outsourced their FM function to Johnson Control IFM.

8. What is a SLA Could you use a SLA between business units?

SLA, “Service Level Agreement” is an agreement between client and contractor which provides certain services. The agreement defines what kinds of services are provided, what quality should they are, how much does it costs, or others.

SLA is important to assess the servicers performance and get client’s satisfaction, because it makes client aware what kinds of services are provided. Otherwise, The services can be difficult to be perceived by client, as Barrett said quoting Grontoos (1984) “the assessment of facilities services is likely to revolve around the client’s perception of service received compared with the client’s expectation service [9]”

SLA can be or should be used between an business unit and service centre, because internal customers tend to expect much more than what the centre can provide. In fact GSB of DuPont signs SLA with the business unit [yellow book, p37]. In Schiphol Group (the company of Schiphol Airport), facility service department make SLA with each business unit.

Week3

1. Life Cycle Costing

Park said, “Life cycle costing is all about pre-planning to anticipate replacement, apply it at the point most beneficial to the organisation and ensure that there are no consequential financial shocks.[10]” If a organisation does not consider life cycle costs, maintenance or repairing tend to be later than beneficial point, because of rather short term aspect of management. For example, A training centre building had to be demolished only twenty years old, because there was not life cycle planning and effective maintenance and repair had not been done.

Life cycle cost consists of initial investment and operating cost of a building. At the planning and designing a facility, it us important to consider how the life cycle cost can be minimise. At operating a facility it is important when maintenance or replacement of equipment are done before some problems have been occurred. Recently, Fuji Xerox requires the architect to estimate life cycle maintenance plan and cost at the design phase.

2. Sustainable Operation, Life Cycle costing

‘Sustainable’ means to consider environmental problem. The lack of consideration of this cause future environment of earth worse. Fcibse said “meeting the needs of present generations without compromising the ability of future generations to meet their own.[Yellow book, p17]”

Both sustainable operation and life cycle costing think about future operation of FM, but Sustainable operation focuses on impact on environment. However, environmental problem has become a core-business matter, recently. So, it becomes more important such as financial issues. In addition, sustainable facility management can be a cost-effective. So, it is important for facility manager that they should consider life cycle cost and sustainable operation.

Week4

Choose 1,2, and 3, and 5

1. The difference between outsourcing and contracting out

a.Barrett emphasis the difference between outsourcing and contract-out as follows[11],

Outsourcing: contract-outs certain function that previously been carried out in-house and transfers to that supplier asset, including people and management responsibility.

Contract-out: employs a separate organization (the supplier), under a contract, to perform a function, which could, alternatively, have been performed by in-house staff.

b.In Japan, one of the most popular definition of the difference of outsourcing and contract-out is the “Hanada-model” as follows,

Planning
the functions / YES / Consulting / Outsourcing
NO / Temporaly
employment / Contract-out
NO / YES
Opeating the functions
Hanada-model, by M. Hanada, proffesor, Keio Univ. Japan
(translated by H. Kumagai, )

c.As above, personally, I cannot define the difference, but I think ‘outsourcing’ include the context of BPR; e.g. Barrett means that ‘outsourcing’ is a way of business process, and Hanada means that it a way of introducing high level process strategically. I believe ‘outsourcer’ should plan the functions which should be world-class services.

2. Compare top 10 reasons and the advantage and disadvantage

The top 10 reason can be disadvantage in other aspect; for instance,

a.clients wants to reduce costs by outsourcing but, sometime they have to spent much more because the contractor is a private company and the objective is make profit. If clients lack the ability of evaluating the price, the clients might lose more money by outsourcing.

b.Outsourcing gives clients a opportunity to received ‘world-class capabilities’ on the other hand, it expose clients the risk of selecting poor supplier.

Those means that the importance for clients is how evaluate the performance and price of outsourcing.

3. Example of outsourcing or contracting out of facility services in Japan

a.Usually, maintenance and cleaning of building are contracted out. Most of supplier of these kinds of works are subsidiaries of some building owning company.

b.It has been still difficult changing business process in the context of Barrett definition. The reason why is most of Japanese companies still have ‘life-time employment’ policy, and consequently, it is difficult to dismiss employees or transfer them to another company. Most of companies stay just make subsidiaries and dispatched employee to them. Usually employees has still belongs to parents companies.

c.There is one example that a company outsources whole FM function. the company is Mobil oil Japan. The company dispatched most of staff of FM services to core-business except two people, and it outsources all services to Johnson Control IFM. It seems difficult to adopt Westernised ways into Japanese culture and Japanese language. This difficulty and above policy of Japanese company cause of Johnson Control’s business difficult. As of this June, the company has still only one client in Japan.

5. Compare the list of services of mine in week 1

Archer offers only mail and copy services. The range is only a small operational level in facility management of Fuji Xerox, as mentioned in question 8 of week 1. On the aspect, what kinds of function should be outsourced is a controversial point. Usually, contracting out in strategic level are called consulting. However, there is a contractor that make a strategic real estate plan and manage the project after the plan is approved. The case can be called “outsourcing” of strategic level. In many case, this kind of function is managed in house of organisations. I cannot say which is better so far. However, if the contractor is really trustworthy, outsourcing of strategic level can be the most ideal formation as a facility management profession.