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 Sometimes these specifications include outdated information or processes that are cost prohibitive to provide.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.  

Crowdsourcing FM Soltions

Some will tell you that crowdsourcing is one of the main drivers in the race to the future of business.  In crowdsourcing work traditionally performed by one individual (usually an employee) is outsourced to many people in an open call.  Those responding to the call may compete for the work or be part of a virtual collaboration team.  Open competition enables a close talent match to the specific task or project and generates ideas from multiple perspectives that would not otherwise be available. 

As you might suspect, there are a number of online venues to bring those with need and those with talent together.  Innocentive, CrowdSource, YourEncore and Elance are examples of sites where you can connect with talented people all over the globe who are waiting to help you solve everything from graphic design projects to hard science and engineering problems.

All well and good, but how does this help FM?

Crowdsourcing is not just about finding talent to work on your projects.  It is also about capturing information and intelligence in more efficient ways that allow deployment of resources to solutions rather than data collection.

The Los Angeles Unified School District (LAUSD) is the second largest school district in the U.S. with over 700,000 students on 730 campuses and a budget of over $7 billion USD.  In other words, it’s big and it’s complex.  In 2011 LAUSD deployed a smart phone app to staff and students which allows any of them to immediately submit work orders complete with GIS data, photographs, and text information.   In other words, the district is crowdsourcing its inspection and work order data entry system.  Every staff member, parent and student brain and eyes are now remote sensors feeding real time data to the system – a much more efficient methodology than relying on a call center.  Now, resources that went into locating and reporting problems can be applied to fixing them.

LAUSD’s partner in this effort?  IBM’s Maximo.  Think IBM is investing in this effort for the benefit of one client?  I don’t.  Maximo is one of the industry giants and I suspect we will be seeing and hearing more about this technology shift.

Crowdsourcing benefits can be significant.  Reducing the cost of labor, increasing the alignment of need and talent, lower labor costs, improved cycle time, a distributed workforce that can respond on a targeted basis on a global scale are reasons to consider crowdsourcing.  That said, it does require a different mindset with a focus on “tasks” as opposed to “jobs.”

A modified version pre-qualifies talent and establishes a pool of competitors who compete for each assignment.  This option provides a higher degree of control and therefore confidence, and is typically adopted for more complex tasks. 

Quality typically matches and often betters that provided by dedicated resources in both open and closed variations of the model.  This is not necessarily because the talent is better, but crowdsourced workers are not multi-tasking or burdened by administrative requirements.  Also, crowdsourced assignments typically have tight specifications and the buyer has a customer mentality – “get it right before getting paid.”

Crowdsourcing as an FM strategy.  In some ways we’ve been doing it since the beginning, but not like this.  Use it to gather condition and work order data, or source talent to solve specific problems.  It is another tool in the kit, another option, and another opportunity.

Facility Management's (FM) Role in Sustaining Recovery

Investment capital will become more available as global economies emerge from extended malaise .  Competition for that capital will be intense.  Important and challenging business and social issues are present everywhere we turn.  A growing and aging world population, demographic and power shifts, healthcare costs and capacities, geopolitical stress and transition,  the protection and sustaining of natural resources to name just a few.  The list could go on and on, each important on its own merits.

Therein lays the problem.  The list is long, capital is short.  There is not enough money available in all of the world to fix all of the world’s problems.  What are we to do?  What role can FM play in the search for solutions?

FM has a responsibility and a need to lead in the development and implementation of effective solutions.  While we are not charged with saving the world from all of its ills we are the stewards of a large portion of its assets, represented by the existing built environment, new facilities and the natural resources consumed in their development and operation.  How we exercise this responsibility is determined by our day to day actions and the decisions we make. 

How then shall we go about contributing in a manner that informs our organizations, elevates FM’s leadership role, properly preserves and deploys capital, and stewards natural resources for which we are both consumers and interested in sustaining?  Here are a few thoughts.

Recapitalize the built environment:  As recovery makes investment capital available we must make good decisions about where and how to invest.  Much of that investment must be in recapitalizing the existing built environment, including facilities and infrastructure.  It is too large and too important to do otherwise.  Further, recapitalization extends the useful life of assets and avoids unnecessary diversion of funding to new development, which also lessens consumption of resources.  Your job:  Perform condition assessments and develop informed strategies and plans.

Improve FM’s financial skills:  As capital comes available there will be enormous competition as long pent up initiatives in all areas of business reach for the same resources.  New product development and maturation, sales, marketing, research and talent will all be consumers of what is a finite resource for every company.  FM’s ability to understand the business as a whole and develop solutions that solve enterprise problems and make economic sense will be a lever for increased capital flow to projects that make a difference.   Your job:  Improve financial analysis capabilities inside FM and develop strong links with your CFO.

Build effective business cases:  Effective business cases begin with objective analysis of accurate business data which leads you to the right projects and initiatives.  Once you have the right capital investment strategy and portfolio it is up to you to effectively make the case and gain executive approval.  The very best plan and strategy in the world is absolutely useless if not acted upon.  Too often FM fails in gaining project approval because it does not present a balanced and compelling case.  Your job:  Improve or add effective communication and presentation skills to the FM suite.

Develop a long term budget lens:  Not that FM can drive this one, but we can encourage and inform the dialogue on investment return.  The traditional short term focus on investment return marginalizes long term benefit generation.  Investors require a quick return so we build projects and operate in ways that maximize short term return.  Sometimes in doing so we accelerate future capital deployment.  Not paying attention to a growing deferred maintenance backlog is one example.  That backlog will most likely continue to grow, asset condition will continue to deteriorate, and eventually (sooner rather than later) it will need to be replaced.  The short term focus also works against adopting new technologies that improve building efficiency.  In today’s world of rapidly changing technology this issue is not to be discounted.  More efficient buildings provide greater productivity, lower operating costs and higher occupancy rates, each a key competitive lever in its own right.  Your job: Present business options that explain Total Cost of Ownership over the entire life of the asset.

Improve your sustainable profile:  Sustainability has moved deep into the consciousness of the business world primarily because it makes good business sense.  Nearly everyone cares about doing the right thing, but when you can do the right thing and improve competitiveness and the bottom line you have a real winner.  That is why your Board of Directors is putting pressure on leadership (and don’t think they aren’t) to improve sustainability.  You should be doing it for yourself as well.  Sustainable initiatives can improve quality, lower operating cost, allow redeployment of resources, extend life cycles and a host of other good outcomes that you care about because they make your life easier.  FM is one of the biggest levers for sustainable performance and should be one of its biggest champions.  Taking a leadership position on an important issue with executive level visibility which provides social and business benefits improves FM’s credibility and perception as a savvy and visionary partner.  Your job:  Become a Subject Matter Expert in sustainability and how it can be leveraged to improve your business.

Innovate:  Innovation can be a game changer.  Whether it be by integrating technologies in a new way, rethinking your business/service model, developing new space paradigms that improve collaboration, or partnering with other parts of your business to add value – all have potential to improve FM’s performance and value.  Innovating, however, requires taking risks, something that many FM leaders are reluctant to do.  Risk is minimized by thorough due diligence and that should be your approach.  Have a good idea?  Think it through.  Engage others.  Model it.  Run a small pilot project.  Innovate!  Your job:  Be alert and receptive to new ways of doing old things, and new ways of adding value in your area of responsibility.  Be willing to fail on occasion on your way to wins that make a difference.

Getting A Stalled Project to the Finish Line

I’m sure we have all had the experience of working on a project that seems like it will just never end.  When that happens each team member has a responsibility to share in ownership  of the problem and the solution.  In highly analytical environments just getting a project approved or started can seem daunting.  Once it is approved, however, tight execution and driving to the finish line should be everyone’s focus.

Why is it then that some projects, even those with solid work invested in them, can’t seem to finish the last five percent of the course?

When a project is stalled project leadership or organizational management have the primary responsibility to get it back on track.  What can they do to get it reinvigorated?   Let’s start with these…

• Ask the hardest question first:  What am I doing or not doing that is contributing to the delay?  Leadership’s number one responsibility is to remove obstacles to the success of others.  Are you really doing that?  Are you getting past the happy talk and searching for root causes, then taking ownership for those that only you can effectively mitigate?  Better yet, are you the root cause because of indecisiveness or lack of attention?

• Use analysis as a decision tool, not an implementation tool.  Once the project is authorized and funded the time for analysis paralysis is past.  If you did not take the time beforehand to conduct thorough due diligence then it is probably too late to do it now.  When projects are approved they come with a schedule that has consequences for late delivery.  Post-approval is not the time to be developing options – it is the time to get the project done.

• Change the mindset of the project team.  If they are bogged down they know it without you telling them, and they likely aren’t feeling very good about it.  Here you need to be a bit of a cheerleader while also instilling a new sense of urgency.  As a leader you can step in to motivate, assist and remove barriers, but avoid the urge to take over at all costs unless absolutely necessary.  Let the team retain accountability for the outcome but help them get to it successfully.

• Augment skills or knowledge.   You may find that the team has designed a good project but does not have all the skillsets/knowledge it needs to implement it successfully.  For example, solving a vexing process issue may require the intimate knowledge of those closest to the process to investigate, process map and re-engineer a solution.  As good as that solution may be it is useless if not implemented correctly.  If implementation requires technical expertise, say developing or modifying an application, then the team may not have the requisite expertise.  Get it for them.

• Re-plan the project.  Refusing to recognize reality by sticking to a plan that everyone knows is not working only further demoralizes the team and adds unnecessary pressure.  This is where leadership must be candid with itself.  Take a breath.  Recognize reality.  Develop a new plan to complete the project from its current state, communicate and vett the plan with the team to achieve their buy-in, then work the plan…and work it hard. 

• Kill procrastination.  If you were too uninvolved in the initial effort then pick up your game.  If you were indecisive then make this project a priority and move it along when it is in your own space.  Stay better informed and create a sense of urgency by requiring frequent status updates.  Ask what the team needs from you to break current deadlocks and then deliver the goods.

Not every project (at least in my world) runs perfectly.  That does not mean, however, that they must be unsuccessful in the end.  In fact, overcoming the challenges of difficult projects is a big learning tool, experience addition, and character test.  Successfully recovering a project in trouble is a big plus in any project manager’s toolkit.

Mobile CMMS: The Future Maintenance Team's BFF

This week's post comes to us courtesy of Ashley Halligan, an analyst at Software Advice.  Ashley focuses here on a topic that is important to all FM's, the adoption and deployment of CMMS solutions (and by extension all forms of FM technology) to speed response and improve quality of service.

By Ashley Halligan

Anyone who's worked in the maintenance management industry knows that maintenance is a constant task--the slightest oversight can result in costly asset malfunction, leading to expensive repairs or--worst case scenario--replacement. That said, having an around-the-clock maintenance team is a valuable addition to any facility --but having the appropriate staff available at pertinent times may be impossible. 

And in comes the true value of mobile CMMS and its impending trend--providing improved reaction time, resulting in immense cost-savings. 

Because of the sometimes hefty investment of CMMS systems, some organizations have been hesitant to move forward with such an investment. Additionally, some techs are intimidated by new technology--some feeling as though these systems and applications may eliminate the need for their jobs. 

However, these systems and apps help automate communication at an organizational level so that all people have access to synchronized data. 

Some of the core functionalities of these products are as follows: 

Paperless work order management: Managing work orders either on or off-site saves significant amounts of times, allowing data entry that's immediately synchronized into the CMMS organization-wide. This also alleviates the need to handwrite notes that can be miscommunicated, and also take time to reenter at a later time onsite. 

Inventory management: Having synchronized inventory management is another efficient tool in the field--allowing immediate access to available assets, as well as equipment that may be issued to other jobs or locations. At the touch of a finger, a maintenance technician can see if an asset is available and immediately disperse it to the needed location.

Asset management and QR codes: Having an asset's entire maintenance history available instantly helps with assigning jobs, or assessing potential issues. Quick Response or QR codes provide a tool to scan an asset's code, bringing up its entire history--including preventive maintenance, malfunctions, reactive maintenance, etc. 

Having these functions available by all maintenance personnel in all locations an organization may have--provides a platform for instant communication, immediate updates, and a more cohesive reactivity plan in the case of malfunction or emergency. 

Read Halligan's original story here. 

Connecting the Dots - Why Economic News Matters to FM's

It is never a safe or necessarily wise thing to try to predict the future, and I am not.  Make no mistake about that.  But all of us should maintain an awareness of the world around us as we plan our personal and business lives.  I am generally an optimist and pragmatic, believing that trends are cyclical; when it's bad it is bound to get better, and when it is good a healthy dose of realism when planning is prudent.  That said, I also recognize that some highs are higher, and some lows are lower.
As I listen to the voices around me and filter them through my own biases and experience, some resonate.  A couple of information "dots" that I am now connecting give pause. 

Bill McBride over at the Calculated Risk blog is one of the best I see at giving us hard data coupled with objective information.  If you track his history over the last few years you will quickly understand why he is respected as one of the best in the area of simplifying economic information (why I appreciate him so much) for greater understanding.  He gives us this reality check as it relates to employment numbers.  We all know it has been a rough road.  Looking at this graph makes it clear that this has been a very deep and wide trench.  It is good that we have begun to claw our way up, but last week's employment numbers amplify that we have a long way to go.


Robert Zoellick, departing president of the World Bank offers a sobering summary of world wide economic fragility in this recent Wall Street Journal interview.  The list is long...Europe's issues, lackluster U.S. job growth, general lack of political will to make necessary choices, the impending "cliff" facing the U.S. economy, escalating difficulties in developing nations as they struggle with trickle down effects and their own issues all combine to form a daunting image of the months and year(s) ahead. 


The Conference Board offers supporting albeit more positive analysis, including the following statement on the outlook for advanced economies.  


"Advanced economy growth is expected to slow down from an already meager 1.6 percent in 2011 to 1.3 percent in 2012. For 2013-2016, the outlook suggests some recovery in advanced economies, bringing these countries back to the pre-recession growth trend of a little more than 2 percent."


I am not suggesting doom and gloom here and I note again that I am not a trained or even amateur economist.  However, I do pay attention to the data points as those who are expert talk.  From all accounts this will continue to be a period of increased risk and fragility.  This month and the rest of the summer will be important as Europe makes decisions that will affect all of us for decades.  Those dots have connected and will continue to do so.  They bear watching, closely.


As FM leaders we share a responsibility to guide our organizations through the future.  Keeping our eyes and ears attuned to the outside world as it changes and adapts economically is an important function in forming strategy and capital development plans.  

The Magic of Doing One Thing At A Time

Tony Schwartz has a great blog post at HBR on how multi-tasking is not always such a good thing.  Good stuff and I'm a believer.  It's more than longing for "the good old days," it's about being able to maximize the impact of our time.  Check out ....  http://bit.ly/y7wvHy

Agile FM

You hear a lot these days about “agile” project management.  This term is generally used by IT project managers to describe software development and system roll out projects.  The general sense is that agility improves project outcomes by valuing open collaboration, speed of process, and transparency.  While “Agile Project Management” is an important and valuable tool in the PM context, even in non-IT environments, I do not believe this limited scope should be taken as the definition, or necessarily even the goal of what we might call “Agile FM.”

Given FM’s scope of responsibilities and today’s business climate with limits on capital resources, changing priorities, new competencies and more, it is important that FM be agile in the way it approaches its responsibilities and delivers services.

At a recent meeting I heard what I think is a very good articulation of an agile organization, and I think it can be directly applied to the FM function in nearly any enterprise.

Become More Efficient at Everything We Do

Efficiency is key to optimizing work processes in a manner that improves speed, quality, cost, and customer satisfaction.  The greater the gain in any of these dimensions the more efficient a process is.  Efficiency is not always about speed, rather it is about the time and/or cost of the process relative to the quality of outcome.  Anything you do to improve the quality in those dimensions makes it more efficient.

Aside from providing better outcomes to a process, improved efficiency also delivers another benefit – opportunity.  The financial and human resources freed up by more efficient processes are available for application to other areas.  The accumulated savings of multiple efficiency gains can be deployed against other processes or problems.  In effect, the organization self-funds improvement activities.   Continued over time this behavior will develop into a culture that thrives on innovating solutions and creating new opportunities.

Accelerate Transformations

Accelerating the pace of transformation provides a needed sense of urgency to help overcome resistance to change, and supports the development of favorable expectations.   This cannot happen without a focused plan and executive sponsorship that demonstrates steady commitment to transformation processes. 

Transformation is often about simplifying, creating clear pathways through complex systems and processes.  When thought of this way transformation doesn’t seem so daunting.  At its base it is about making work, and therefore life, easier.  Who doesn’t want that?  But initial changes that improve processes and systems are not the goal.  True transformation changes organizations in ways that encourage and support future transformation.  In many ways it is about creating a new culture, one that accepts constant change throughout the organization without paralyzing it.  By leveraging the existing culture and organizational values a new culture of transformation is established and nurtured.

Two final points on transformation:  First, this new culture will need to be nourished.  Abandoning efforts to validate it after the first few wins risks a quick, and likely painful regression.  Secondly, a key deliverable of any transformation initiative should be the building in of change tolerance to all core processes.  This enables the kind of continuing change that keeps moving the organization forward.

Illuminate Trade-Offs, Make Decisions

Agile organizations are by definition constantly evolving organizations.  That means that there is a never ending process of discovery, investigation, option analysis, decision making, implementation, and feedback. 

The importance of objective trade-off analyses cannot be over stated - the commitment to objectivity is a critical part of agility.  It places less value on assumptions and personal power and more value on transparency and fact-based evaluation.  In the quest for objectivity there is empowerment that supports the asking of tough questions, the kind that might not get asked if the security of that value is not present.  Answers to those questions present and illuminate facts that might not be known if the questions were never asked.

Once the objective analysis presents clearly defined options it is time to decide.  The speed of decision making is important because it helps maintain or diminishes momentum.  On the other side of the coin, the speed of decision making can be largely affected by organizational risk tolerance.  Some organizations have a culture that allows making decisions as quickly as possible, accepting that there is more risk of a wrong decision than if waiting until more facts are available.  Organizations with this model tend to be entrepreneurial in style if not practice.  Other organizations may require nearly all or all known available information before making decisions.  These tend to be long-view oriented and institutional in nature.

Generally, it is better to make decisions at the earliest possible moment in order to accelerate the benefit of those decisions.  Organizations that fall into the latter category mentioned above, those that require greater amounts of information and never ending analysis before making decisions, handicap themselves in the effort to be agile and nimble.  Unless they are in a very protected class they run the risk of analyzing themselves into irrelevancy, or worse.  Today’s world does not coddle those who cannot look, decide and act with precision and speed.

Start Now – Don’t Wait

Agility is about movement and momentum.  Waiting to start only perpetuates the present and loses the opportunity of the future.  Once you’ve made the decision (there’s that word again) then get to it.  Don’t become paralyzed by planning, scheduling, convincing and all the other reasons you could think of to wait until you can get it perfect.  Don’t worry about perfect.  Worry about getting started…now.  Start small if you must, but start now.  Start with small projects, celebrate success, build the culture, change your future.   Develop momentum - you can worry about perfection later.

CoreNet Global Study Predicts Shrinking Office Space

A new CoreNet Global report predicts that the average U.S. office employee space will shrink to 100 sq. ft. or less in the next five years.  The report cites growing collaboration work styles and economic pressures as the main drivers behind this trend, which is moving U.S. occupancies closer to the European standard.

This type of fundamental shift will affect virtually every facet of the design, construction and facility management industries.  Organizations that go this route will be faced with developing new or enhanced workplace policies, including an increased emphasis on office etiquette and behavior management.  FM's will be in the forefront of these changes and in some ways will be most affected.  Designers and builders will complete projects and move on to the next one, while FM's and their HR and operational cohorts will be left to live in, work in, and manage the new work space.

While some will make the point that these new workplace standards fit the work styles of younger generations now becoming predominant in the workforce it is also true that not every type of work will lend itself easily to this change.  Concentrated cognitive work, for example, requires greater visual and acoustic privacy than other forms of work.  In these types of organizations the spatial changes potentially have deep implications to the quality of work product.  In all cases, the importance of thoughtful consideration, function-centric design and accommodation, and well managed socialization of the change process will be essential.

Not to be overlooked are implications to the CRE industry.  A true contraction of space requirements of this magnitude can be expected to affect vacancy rates, project activity, and capital investment in new inventory.

Read the CoreNet Global press release here.

The No Asshole Rule in One Company: A Simple Decision-Tree

Simply too good to pass up, here is a reblog from Bob Sutton's Work Matters site.   What I like about Bob's work is that it is common sense and no nonsense.  He tells it like it is and he is almost always right on.  

I recently posted an updated version  of People and Places that Use The No Asshole Rule.  In that spirit, a group of students in my class Organizational Behavior: An Evidence-Based Approach did a little case study of how a local start-up (with about 150 people now) is sustaining a civilized workplace.  I liked this simple decision-tree as it captures much of the essence of how to enforce the rule -- assuming they actually use this rather than just talk about it!

Customer, Serve Yourself!

I recall many years ago when I was a new employee at a major financial institution and my boss and I were wrapping up an east coast trip.  More or less on the spur of the moment he decided to reroute our trip home through Chicago to check on a rumored real estate deal.  When we got there we learned much to our dismay that the deal was done.  A long term lease for the entire top floor of a new high rise in the loop area … to house a regional data center.  To say this is one of the more nonsensical decisions I’ve ever seen would be true, but it certainly isn’t the only one. 

As a result of this particular event a new corporate policy was implemented requiring that the Corporate Real Estate and Facilities group lead all real estate and development projects.  Shocking, I know.  Previously our group had been a service available to senior management in different regions.  Some used us, some did not.  After this incident choice was removed and the organization got serious about managing its real estate processes.

What is the point of this story?  It is this: Customers have a responsibility to make responsible decisions.  Consultants have a responsibility to assist them and hopefully, to help them avoid these kinds of egregious errors.  While both customer and consultant share responsibility I believe it is the customer who carries the larger burden.

Customers know more about themselves, their strengths and weaknesses than outsiders do.  Consultants can investigate, analyze and suggest cures; but it is the customer who makes the choices.  They decide which consultant to engage, how diligent to be in the process, how objective they will be, and how they will respond to advice and input.  Customers do a disservice to themselves when they shortchange any of these because they didn’t get the answer they expected or wanted, or don’t think the effort involved is worth it.  If the initiative is not worth your effort to do correctly then it certainly is not worth engaging consultants in the first place. 

Intelligent customers understand the environment they work in, what is needed, and what is not needed.  They make fact-based decisions and are candid with themselves first and foremost.  Intelligent customers buy smart, hire smart, design smart, and execute in smart fashion.  In other words, intelligent customers make better decisions and execute better because they know more, have well-honed protocols and standards, and require adherence.

While this story is about a real estate and development project it could just as well have been about deciding whether or not to build a new factory, launch a new product, or any other business decision.  Knowing your requirements, their drivers, what risks and mitigations are involved and a hundred other things are important.  As FM’s we are often in the customer seat as we acquire services to meet our organizational needs.  Are you a smart customer?  Do you know what the requirements really are?  Do you know where the levers are and under what circumstances they should be exercised?  Do you know what your internal customers are looking for, what their business plans are, what frustrates them about your operation?  Do you know the strategic direction and tactics of your enterprise and are your goals and processes aligned with them?

You are an FM.  You serve internal customers.  You are also a customer yourself and every service, product or project you acquire has a pass through effect to your internal customers.  Your smart customer behavior has a direct effect on the health of the enterprise. 

Serve yourself well so you can better serve others.  Be a smart customer.

Applying Lean Six Sigma to Facilities Management - Pt. 2

Two Disciplines with Common Goals Combine to Improve Operations and Profitability

This is the second and final installment on applying Lean Six Sigma in Facilities Management organizations.  Last week's post defined Lean and Six Sigma and discussed their histories.  This week we look at how the two disciplines can be integrated and how one FM organization used Lean Six Sigma to solve a long standing problem.

Combining Lean and Six Sigma

The advantage of combining Lean and Six Sigma is in simultaneously improving the speed of work (Lean) and the quality of work (Six Sigma).  This dual-purposed approach integrates initiatives to improve process efficiency and effectiveness as measured by quality, speed and cost.  Critically important is the vision and leadership of senior management.  Without visible commitment from the top Lean Six Sigma risks succumbing to the pressures that endanger all change management initiatives.  For the initiative to be successful the attention to it must be consistent and long lived.

While both Lean and Six Sigma take a customer first approach the perspectives are slightly different.  It is important that a combined program make customer driven requirements, specifications and expectations a pre-eminent part of enterprise culture.  This is not always easy to do and it should be expected that there will be challenges.  Old attitudes must be changed and operational protocols adjusted.  Services that once focused on cost reduction alone while maintaining an acceptable level of quality must now deliver customer driven results of higher quality with lower cost.  Functional or vertical boundaries must take on open characteristics so that cross-functional improvements can reach the breadth of the enterprise.  Attaining this will mean a fundamental analysis and streamlining of every process involved and a willingness to let the facts and data take you where they will without dilution by old issues of turf, inter-departmental competition and the like.

Goals of Lean Six Sigma

Because they are both quality initiatives the goals of Lean and Six Sigma also have much in common.  They strive to increase the importance of customers throughout the value chain by taking a customer focus on process improvement.  Further they strive to drive these changes throughout an enterprise both vertically and horizontally.  The result is that a successful Lean Six Sigma organization is attuned to and indeed driven by customer requirements, dictating a unified and synchronized provision of goods and services in a manner that reduces or eliminates the normal friction of business.

Eliminating waste, streamlining and synchronizing processes across organizational boundaries, and making objective decisions based on hard data are the hallmarks of successful initiatives.  While Kaizen seeks to make incremental changes that result in immediate improvement which often come from front line workers, Six Sigma looks to institutionalize and maximize gains.  Both seek to change corporate culture in fundamental ways.

Implementation Case Study

Shared services organizations are good candidates for Lean Six Sigma programs.  As service organizations they serve internal customers but never the less have great leverage on the corporate bottom line.  Facilities management is nearly always the second largest cost center on a balance sheet and IT is also a giant.  In many shared service organizations these two reside under the same leadership, presenting an opportunity to join forces to improve the quality, speed and cost of services to the larger organization.  Such was the case when the Facilities and IT groups of a mid-sized company teamed up to tackle a vexing problem.

For years the two groups had struggled with aligning data center operations.  One was responsible for providing and operating the physical infrastructure, the other for equipping and managing data center operations that served the global enterprise.  Frequently there were disconnects in project planning and communication.  The key individuals in the two groups, however, had good relationships and jointly recognized the opportunity to investigate and resolve this issue.  Working inside an organization with a strong commitment to Continuous Improvement and in which resources and tools were available gave these practitioners the tools and management commitment they needed to attack the problem.

Working as a joint team this group used a number of Lean and Six Sigma tools to identify, investigate, and analyze root causes.  Using an Ishikawa diagram (Fishbone) they brainstormed issues that contributed to the problem.  The X-Y Matrix tool then led them through a process of scoring and ranking the issues they identified, resulting in a short list of high value opportunities to affect change.  The Failure Mode and Effects Analysis (FMEA) identified individual failure modes, thereby informing the redesign of the processes involved.

As is usually the case these investigation and analysis tools identified causes that team members were already aware of.  In these cases the issues were quantified and documented to make them visible, understandable, and actionable.  As is also usually the case, this disciplined process of objective investigation revealed causes they were casually aware of without recognizing their full importance, or had been completely blind to.  One such key realization was that annual budgeting cycles for the two groups were not synchronized, with the facilities group being well down the budgeting pathway before the IT group began developing its annual project plans.  The obvious result was that facility budget decisions were made before IT projects and their implications to data center infrastructure were known.  As a result projects were often debated and delayed, preventing IT from providing services internal customers were waiting for. 

While this example may seem obvious that is often the point in these exercises.  The obvious becomes the norm, gets locked in and becomes a part of corporate rubric where it is all but forgotten except in times of stress.  But when discovered these issues can be dealt with and turned from red to green on the process status dashboard.

Keys to Success

As I mentioned this organization enjoyed a long standing commitment to Continuous Improvement and is familiar with Lean Six Sigma principles and protocols.  Over time these have become an ingrained part of their culture.  The environment established by leadership, the continuation of the commitment and the tools provided are all there.  But this is not an organization that has a large quality department.  Rather, Continuous Improvement has been made a requirement of all - it is largely a home grown bootstrap type of initiative. 

That said, tools have been provided.  Key individuals with Six Sigma experience from previous jobs have taken leadership roles as a collateral duty, functioning as coaches and mentors.  All staff in the entire shared services organization down to the first line supervision level (and often beyond) receives training in CI, Lean and Six Sigma courses taught on site by co-workers.  There are no consultants in sight.  Finally, CI project teams and their projects are periodically recognized.

The advantage of adopting Lean Six Sigma in your organization is that it provides a structured set of methodologies and tools which allow you to identify and remove obstacles.  While it is a disciplined approach it is not complicated and need not require a unique set of resources.  Indeed, the best results come from within based on commitment and perseverance. 

Applying Lean Six Sigma to Facilities Management

Note:  This is the first installment of a two part series on Lean Six Sigma.

Two Disciplines with Common Goals Combine to Improve Operations and Profitability

More than ever before companies are under pressure to improve operational efficiency and bottom line profitability.  It does not matter if your business is manufacturing, service or knowledge based; all are under the same pressures.  Increasingly companies are turning to Lean Six Sigma as a strategic tool to achieve measurable improvements at the bottom line, reflecting the results of changes made throughout the value chain, including internal processes, suppliers and most importantly customers.  As a facility management professional you have likely been challenged to keep pace and may have wondered if and how these principles can be applied to your organization.  Rest assured that they can be, and that your staff and internal customers are up for the challenge.   As with any Continuous Improvement (CI) program strong leadership and commitment from the top is a requirement.  Your understanding, sponsorship, and support will help launch and sustain the effort.

What is Lean?

The term “Lean” was first used in reference to quality improvement systems when it was applied to the Toyota Production System (TPS) in the nineteen eighties.  Reduced to its basic premise, the system seeks to improve process efficiency and quality by increasing speed and eliminating waste.  Students of TPS will be familiar with the concepts and methodologies of Kaizen, the never ending effort to discover and eliminate all forms of waste in a process.  While originally developed during Japan’s post-WWII recovery to improve manufacturing quality and efficiency it is now routinely applied to all forms of work processes. 

It is a gross mistake, however, to think of Lean as a one-time project or improvement effort.  It is about establishing a new culture that pervades the organization and becomes a part of its very DNA.  It does not happen overnight, but it can (and should) happen more quickly than you might think.  This rapid adoption occurs best where strong leadership and commitment are obvious to all, setting an expectation.  Including Lean participation and results as a part of performance management signals to every worker at every level just how important it is.  Lean should be viewed as a journey.  One that can begin with early results to be sure, but those first positive outcomes should not lead to a declaration of victory and the sure to follow loss of interest.

Remember that the two prime points of focus in Lean are increasing speed and eliminating waste to improve overall quality and value.  To achieve this Lean practitioners take a customer view of every process and outcome, looking to improve customer value in terms defined by the customer.   Value stream mapping will identify areas for rapid waste elimination opportunities while flow management will optimize the sequence of process steps.  Allowing customers to control the pace of production through pull management systems that deliver products and services based on actual consumption need prevents the waste of over production and the transportation and storage activities associated with it. 

Lean’s attention to eliminating waste evaluates all areas of value provision.  Defects such as bad product or service quality and missed deadlines cause rework and increased resource utilization.  Over producing consumes materials and adds time cost as well as transportation and storage.  And lest you be thinking to yourself, “I see how that applies in a manufacturing environment but what effect does it have for my service organization?” think about the costs associated with your service quality shortfalls, the cost of bad information that leads to bad decisions, or the hidden costs of over-provisioning to provide contingencies that may never be required. 

Lean’s three basic components; Quality, Just-In-Time, and Stable Operations often require a different way of thinking about the work of the enterprise.  Where most are focused along functional lines Lean requires a re-focusing to improve efficiencies throughout the value stream.

  

What is Six Sigma?

Six Sigma is essentially a statistical regime that improves process effectiveness by reducing process variability and improving process yield.  It is a collection of various statistical and analysis tools which are used to discover process defects, and a set of methodologies for curing them.  The term “Six Sigma” represents 3.4 defects per one million opportunities.  Compare that to the average manufacturing quality level of three sigma, or 67,000 defects per million, and think about the human, material and opportunity costs associated with the difference between the two.  Not in manufacturing?  Then think about your service processes and the cost of your defects when applied to your corporation’s cost of producing its products or services.  Customers pay that cost and they know who provides the best quality at the best price.  Customers know where the value is.

Interestingly, the Six Sigma “movement,” if one can call it that, began in the eighties when Motorola took on the challenge of reducing product defects as a way of improving market position at about the time Toyota was inventing its Lean processes.  Like Lean, Six Sigma is best thought of as a philosophy and culture that is customer focused, in which the customer defines product or service specifications and the provider meets those needs with optimized efficiency.

The goals of Six Sigma are much the same as those of Lean but it approaches these from a statistical perspective.  Decreasing process complexity, reducing cycle time, and minimizing defects all contribute to increased customer satisfaction and all can be measured, mapped, analyzed and improved. 

All quality improvement programs include improving financial performance as a goal.  Six Sigma, however, uniquely equips an organization owing to its statistical nature and allegiance to empirical data and the scientific method of investigation.  Pre-project scoping analyses of financial benefits allow management to prioritize projects based on expected beneficial outcomes.  Continuing financial analysis during project evolution keeps the team focused on delivering bottom line results by fine tuning the project.  This also provides management a view into the project’s progress as it evolves, thereby improving and speeding intelligence on “ground level” operational developments.  At the same time it informs management the financial analyses educates the team members and allows them to recognize other opportunities for improvement.

Next week:  Combining Lean and Six Sigma, and a shared services implementation case study.