FM Providers Have Changed, It’s Time for RFPs to Change As Well

This week's article comes to us courtesy of Ron Segura, President of Segura Associates.  Ron's expertise in helping clients evaluate and improve their FM services is well known in the industry.  As you read his article think about your own RFP process and the expectations you have of your service providers.  Are the two in alignment?

Ron Segura

Once upon a time a janitorial company was a janitorial company. Firms in those days didn’t think to venture into integrated pest management or landscaping services. But today it’s a different story, and comprehensive facility management (FM) is the name of today’s game.

Clients now expect FM contractors to bundle services such as landscaping, integrated pest management, sustainability, HVAC services, general repair work, and more.

A cleaning company that does not want to grow continues offering a narrow scope of services. But FM service providers with an eye toward the future uncover ways to provide multiple services either in-house or through strategic alliances with other service providers.  By partnering with a pest management company or an HVAC firm, FM contractors can offer multiple services and pass on cost savings and efficiencies to their customers.

While FM contractors are providing more services than ever before, RFPs from clients have yet to catch up. Often RFPs include specs cut and pasted from RFPs the client found on the Internet. Sometimes these specifications include outdated information or processes that are cost prohibitive to provide. These poorly thought out RFPs box the contractor in, making it difficult or even impossible to provide the services the customer really wants.

"Too many well-intended managers are pressed for time and put together RFP's based on what they believe to be a ‘universal’ standard -- the cut and paste approach,” says Richard M. Fineo, MCR, director of development at DTZ-a UGL Company.

He continues, “Often times an old bid, or even a neighbor/colleagues bid, will appear to save the responsible party time in the preparation of the RFP and seem sufficient. The problem with this is that the specifications, which should drive the costing become an ‘approximation’ of what is called for -- a sort of ‘wink and nod’ at what is really needed.”

There’s little continuity when RFPs are put together this way. There may even be contradictions within the specifications themselves. For instance, the RFP might specify monthly stripping and waxing, but the industry doesn’t strip and wax anymore, it strips and finishes (or coats) the floors. This is also no longer done on a monthly basis because it’s not cost effective and there’s no need to with today’s more effective products. Those issuing the RFP falsely believe that in order for floors to look good, they need to be stripped and refinished each month, but what they really require is a solid floor maintenance program.

If FM contractors try to adhere to these RFPs, their cost estimates may be higher than the client wants. Or they may cut corners to come in at a lower price, and then the client isn’t getting the services they really need.

“If there was EVER a good time to bring in a consultant, it is during the critical RFP preparation stage,” Fineo adds. “Adherence to the RFP will become the strongest evaluation tool, and if it does not truly reflect the needs, wants and expectations of the person issuing the RFP, and ultimately the award of service, then the entire process is flawed.”

There clearly is a need to change the entire RFP process and to reduce the window of time needed to move through to the end where a bid is awarded.

A few years ago Stanford University revamped its RFP process with extremely positive results.

The first step of their process was to pre-qualify service providers to narrow the field of qualified bidders to a list of ten. This list should include companies with solid reputations and weed out those with less than stellar ones. Once these companies have been identified, the bidding agency should send out correspondence stating their intent to go out to bid for these services and request FM contractors to supply company information or marketing materials that demonstrate their interest in the work and their capability of carrying it out.

Those FM providers that respond are then afforded an opportunity to give a half-hour presentation on predetermined topics. Stanford allowed potential bidders to talk on four things: sustainability and their company involvement in this initiative; communication processes in place; technologies and products used in the performance of duties; and the transition process used to set up new accounts.

These presentations are evaluated by an RFP team, which might include a representative from the facility management department, the site manager who directly receives complaints or concerns from occupants, a quality control person, an outside service provider, and possibly a contract administrator or financial representative.

After the presentations, the RFP team scores the results and narrows the field of potential bidders to three, with the incumbent as a fourth. Many times the scoring methods used in this process utilize complex matrixes that dilute the evaluation until it becomes labor intensive and mechanical and decisions are based solely on price. Stanford kept the process simple and scored presenters from one to five on their green program, transition plan, training program and communications process.

It is then and only then that these firms would have an opportunity to bid on the RFP. The advantage is that instead of having 10 companies submitting bids, there are only three and these companies are prequalified to do the work.

Before providing the narrowed field of FM providers with an RFP, the RFP team will have reviewed its specifications and adjusted them as needed. The specifications will provide adequate information on building statistics and cleaning frequencies and reflect whether or not there will be a need for green or sustainable services. Stanford’s team combed through its existing specifications and found their current provider was not addressing some areas. These areas had been an issue on an ongoing basis and a cause for complaints. They adjusted their RFP to address these issues to better reflect the services Stanford required.

RFPs must be specific. If there are sustainability concerns, for example, the specification should list the goals the agency wishes to reach. Do they want to be LEED certified? Do they hope to use greener chemicals and cleaning processes? Is recycling important? How much do they hope to divert from the waste stream? Is saving water or energy a goal?

"Any good RFP also allows for input on the part of the bidder, an opportunity for the responsible bidder to go beyond the RFP and advise as to new methodologies and efficiencies that could potentially save money and improve performance,” adds Fineo. “This is an opportunity for free advice. Why wouldn’t you ask for it? It can be an indicator of whether or not your RFP respondent will become a true 'partner' or just a contracted service provider.”

And herein is another advantage of working with fewer bidders in the RFP process. There is an opportunity to work with them more closely to ask for advice and pick the brains of these experts. A good service provider will seize this opportunity to point out concerns within the specs, such as the need to strip and wax floors monthly.

Ask tough questions of those applying for the job, adds Fineo. "I welcome RFPs that include questions about recent losses. What have YOU (the vendor) lost recently, what was the reason and what did you learn from the experience?” he says. “I've landed more than a few contracts by being able to articulate the lesson, albeit painful, of an account that ended with a cancellation and how our approach in the future would include the lesson learned.”

Price is important but not the only thing, Fineo stresses. "Very often the responses to an RFP will be reduced to a matrix of the financial piece -- and little else,” says Fineo. “If the one and only goal of the company providing the bid is saving money, an unfortunate position to be sure, this should be made clear from the onset. If instead, the bids are honestly going to be evaluated for value that includes experience, innovation, sustainability, and of course financial value, etc., you can see the special importance attached to an RFP that reflects these desires and concerns.”

If companies truly desire FM contractors to bundle services, their RFPs need to reflect that. Developing a bidding process similar to the one used by Stanford can help companies get the services they desire at a price they can afford.

Ron Segura –President of Segura & Associates is a Consultant who assists its client’s in analyzing outsourced and In House cleaning programs, and assisting in the development and leadership of the RFP Process.

Website: rsegura@seguraassociates.com

E-mail: www.seguraassociates.com

The Shift from Service Provider to Integrated Alliance Partner

As end users become more sophisticated in their operations they understand through experience the real advantages of optimizing product delivery processes.  It is natural that they should want to extend those advantages to key services, both provided and received.  Supply Chain Management (SCM) is often thought of as a manufacturing discipline, which it indeed is.  Today, however, SCM principles are being adapted to the services side of business as well, with rewards and dividends to both sides of the provider / end user relationship.

For many this is a fundamental change requiring acquisition of new skills, knowledge, and mind sets.  These folks must learn to walk first, but getting up to “business speed” cannot take too long.  Others have the requisite skills and knowledge but need to extend them to new areas of their business.  In both cases, overcoming ingrained cultures running counter to the initiative is paramount and something that should be thoughtfully done.

Across industries and market sectors companies are looking for service providers who want to partner with them at new levels.  Whether the end product is machinery, financial services, a new building, or operational in nature; optimizing the delivery process is now a holistic agenda that encompasses all required resources.

What Is Driving Business Integration?

For starters, better educated and more demanding customers.  As organizations improve internal management systems and mechanisms they develop new intelligence about themselves, their competition, customers and yes, service providers.  Business intelligence is a greater differentiator now than ever before.  Process improvement, Six Sigma, metrics programs and other initiatives of their ilk are changing the way we understand and organize our work.  As that intelligence matures it begins to ask new questions, test new ideas, and probe for new advantages.  Extending that intelligence beyond the boundaries of your own organization by challenging business partners to match it in their domains and align their processes with yours is a natural next step.

Competitive intensity has increased in recent years, partially the result of economic stress.   Focused by the need to survive some companies have pared away non-core businesses, reduced or expanded offerings, or taken advantage of opportunities to expand and grow.  Behind all of these strategies is a single imperative – succeed when others do not.  The oft-quoted exhortation to “Never let a good crisis go to waste” has been taken to heart. These activities amount to a reshaping of business, each incidence an opportunity to streamline processes.  Many companies have gone after these opportunities with zeal and more often than not they challenge their business partners to match them stride for stride.

Customers seek to minimize the number of business relationships they must manage.  Their goal is to lower the amount of management friction that is applied to the business of doing business.  As a result, strategic business alliances often form in which multiple businesses collaborate in competition against other alliances.  It’s not just your company competing for business anymore, it is your alliance competing against other alliances.  That means each alliance partner has a vested interest in each partner’s business performance; and it motivates alliance partners to plan, act, measure, and communicate in similar fashion.  You cannot do that when your processes, standards, and tools are different.

Fulfillment of customer requirements has always been the primary business purpose - it has not always been the primary business activity. Although SCM began as a manufacturing discipline, business in general is moving from a production-based model to a fulfillment-based model, improving business speed and alignment.  The foundational principle at work here is that of connectivity, creating networks of entities that share business intelligence and act together in synchronized fashion.  As this model moves further down the chain efficiencies and advantages are increased to the advantage of all in the network.  Inherent in this model is the recognition that individual firms depend upon resources controlled by others in the network.

Integration Tools

Deployment of secure and integrated information technologies across the customer – provider alliance enterprise enables process synchronization and speeds the flow of information.  In classic terms, such seamless operating protocols make pulling resources vs. pushing them possible, thereby avoiding stranded investments for inventory, space, and management systems at each level of the alliance.

Common measurements and language are critical elements.  Each partner in the alliance may elect to retain measurements they feel are uniquely important to them but which are not relevant to other partners; all partners, however, should adopt common measurements and language for tracking and reporting enterprise activity.  If, for example, the customer’s five most important Key Performance Indicators (KPI’s) are expressed as cost per end unit or cost per revenue unit, then the alliance partners providing support services to the customer should provide measures of their business that feed into the customer’s metrics in similar fashion and language.

The human part of the equation requires specific attention.  The degree of transparency required can be a challenge.  Sharing business intelligence and allowing visibility and integration of key processes may be a new dynamic for some.  Employing managers who have a collaboration orientation, are comfortable working with a range of technology systems, and who understand process design should be a priority for any firm engaged in an alliance business model.  Linking compensation to alliance performance strengthens the leverage towards implementation of cross-enterprise best practices.

Information is the Currency of Integration

Integrating and managing the supply chain seeks to assure that the right part shows up at the right place, at the right time.  The goal of services integration is to speed information to the point of need exactly when needed, thereby enabling the deployment of services in the most efficient manner.  The opportunity to integrate services to the level discussed here is enabled primarily by technology and information systems.  Information becomes knowledge, and knowledge becomes wisdom.  Wisdom, when acted upon correctly and speedily, becomes advantage.

Condition-based service management systems proliferate today.  I get an email from the car dealership with an appointment date and time when it is time for an oil change in my vehicle; not based on distance driven or elapsed time but on the actual condition of the oil and operating conditions of the engine, and on the day of the week and time of day I prefer based on the history of previous visits.  Sensors communicate automatically when set parameters are reached, triggering a process that results in my pulling into a service bay.  In building management an exact parallel occurs when an outsourced HVAC maintenance provider is dispatched to service a unit by automated sensors linked to intelligent building systems.  This model can be applied at multiple levels, even to stocking paper for copiers.  The fact that cloud computing largely eliminates the cost of deploying these technologies is speeding their adoption.  Service vendors lower inventories, redeploy capacity, and reduce costs.  Customers have greater visibility, can forecast more accurately, and have more control over cash flow.

The philosophies behind service chain integration are not new: Deep integration of business processes by alliance members who are invested in each other’s success, who are intensely customer-centric, who trust each other and accept accountability, who are driven by a desire to achieve process excellence, and who share business intelligence willingly.  When merged into a cohesive operating system each becomes a force multiplier for the others, improving service quality, cost and efficiency.  

Are Productivity and Email Mutually Exclusive?

I recently worked a major development project and found that the 600+ emails a day were completely paralyzing me, and I knew I wasn't alone.  I announced that I was implementing a new policy of "Planned Neglect."  Essentially, I said "I will look at emails first thing in the morning and in the evening, no more than thirty minutes each.  If you have a crisis that I absolutely must participate in then come see me or call me.  You know where I am and you have my numbers.  Use them."

As a result I discovered that,

• My ability to focus concentration on the most important matters and tasks increased dramatically
• My productivity and value contribution soared
• The quality of personal interactions improved
• People respected and even cheered my stance, and
• I enjoyed the project and life a whole lot more

This was not me running away and hiding from the world.  I did not limit my accessibility to the team, in fact I improved it.  Lesson learned?  Some day email will go the way of the Dodo Bird.  Until then it needs to be managed, as does any other good tool that turns into a time killer.

Your productivity and value quotient are the most important assets you contribute - protect them.