According to a former chair of the Facility Management Association of Australia and his partners in a new business there is plenty of steam left in the outsourcing business and still some big challenges to crack – technology for instance
New opportunities for energy savings exist through incorporating capital expenditure into maintenance contracts, says the managing director of a facility management start-up.
Steve Taylor, who formed Platinum FM with Sue Pridmore and Nick Rix in November, says new models are emerging where the infrastructure funding costs are built into the operational savings.
“If you went into 20 private schools around Australia – and I’m talking about the ones that are relatively well known – you would find a massive amount of opportunities to make them more sustainable but they just don’t want to invest the capital,” he said.
“The amount of opportunities that are across our industry on that alone is staggering, absolutely staggering.”
Platinum FM is exploring a model with potential clients where they would provide the investment capital for an energy project to enable the client to reduce operating costs.
“We’ll finance it but we’ll link it into an operational maintenance contract,” he says. “…what we would do is ask for a five-year deal to maintain it.
“So they are paying the same amount of money for five years so in capital terms they are not forking out… but they are actually getting the net benefit of their operational performance and the net benefits of the cost savings from the energy and the cost savings from maintenance.”
FM as core DNA
With corporate FM experience across organisations such as Myer, BBC Television, BHP Billiton, Australia Post and government organisations, Platinum FM’s three founders know the market. While the facility management industry is saturated with various companies benefiting from the outsourcing trend, this new company’s point of difference is it’s been set up to focus solely on FM.
“Most of the large successful companies in the market today do not have FM as their core DNA,” says Taylor. “They come from other sector backgrounds such as construction, catering, labour hire, corporate real estate or engineering maintenance. Over the years, they have leveraged a position into the FM industry. Although this has been beneficial for supporting industry growth, it diminishes the focus on investing purely in FM.”
Platinum FM’s vision is to build a company that has a sole focus in FM in both a strategic and operational capacity. They are targeting four key markets – commercial, retail, local government and aged care, although they are getting opportunities in other sectors since starting the business.
“Being at the forefront of FM development, change and market trends will allow us to feed our intellectual property into operational contracts,” Taylor says. “We see a big opportunity to target that small to medium facility management market where we can add a lot of value and give the customer the attention that they deserve for outsourcing the work in the first place.”
Technology focus and a user pays basis
Platinum FM has partnered with a technology group to streamline work activity.
Sue Pridmore says the technology enables decisions to be made quickly, optimising service delivery.
For example, if a sub-contractor attends to an emergency maintenance issue at a site, the system finds scheduled works and drags those planned tasks into the work detail. This improves site delivery and reduces costs.
“The difference between Platinum FM and the rest of the FM market with regards to technology is that the cost model does not require the customer to pay a premium for high capital intensive systems. The customer pays for what it uses,” Pridmore says.
Outsourcing is here to stay and public private partnerships are here to stay, but maybe not all the universities
Taylor says the facility management industry moves in cycles and at the moment public private partnerships are big. “You can see that just through what government agencies have been doing, particularly the public private partnership (PPP) arrangements, 25-year contracts, there is more and more of that happening across the board.
“I can’t see outsourcing slowing down,” he says. “I think organisations have CEOs in there who want to reduce – through the balance sheet – the head count. They often go for outsourcing arrangements so we have set up this business both from a consulting point of view and from an operational point of view.”
There are some markets, according to Taylor, where there are question marks over outsourcing and the university sector is one of them.
“Although we want to work in that sector there’s situations in different places where you see on one side the PPPs to get the student accommodation going and on the other side –Melbourne University is a good example – they don’t outsource, they do more out tasking of services. So they won’t bundle it all up into a facility management contract. It’s very much a disaggregated-type model.”
Sustainability and energy efficiency are key
“Energy performance is inextricably linked to maintenance,” says Taylor. “You can’t just go and put an asset management plan in place for maintenance without taking into account the energy performance of the building.”
Sustainability is a key feature of an FM contract for a commercial building from the procurement of energy coming into the building and looking at different ways of improving the energy consumption to changing behaviours to use free air flow rather than the plant to cool and heat.
“The sub component of that is the monitoring and verification – so putting a proper monitoring system in place that can track and record all of the energy performance and verify that to the customers,” Taylor says.
This process is crucial because you have to understand how the building is operating before making a business case to change it.
Taylor says getting the best from a building requires an education process, guiding the client on behaviours. “The culture of the organisation can often dictate how well your energy is performing from an operational point of view,” he says. “Simple things like switching off lights and PCs and having that basic stuff in place.”
The big issues: technology & talent
Taylor says the biggest issue in facility management is technology integration.
“There are so many systems out there,” he says. “There are so many companies with different solutions but some of them are very clunky in how they go about their business.”
No one has yet to crack the technology market
He believes there are vast opportunities to streamline technology systems, particularly on the large-scale national level.
“No one, from what I have seen, has really cracked that market,” he says. “So if technology can be delivered better across the industry, I think you’ll see more cost savings coming out of it and probably more outsourcing happening because they will probably see that organisations are delivering the outcomes.”
There needs to be a bigger drawcard to attract the talent pool and an agreement with RMIT is a start
Taylor has been involved in the industry for more than 20 years, including as chair of the Facility Management Association of Australia for three years, and says recruitment of graduates is difficult.
“The talent pool is still going to other sectors,” he says. “I think that the industry has to do more to entice and encourage post graduates to come into facility management as opposed to law, engineering or whatever.”
Platinum FM has an arrangement with RMIT to employ graduates as it builds the business. In addition, RMIT will work with the company on research development in certain markets.
“They will also give us access to a talent pool to work on projects with us … and earmark the talented people that we could employ,” Taylor says. “That will be something that will grow as our business grows.”