FM NEEDS ETHICS AT ITS CORE
The recent RICS/IFMA Raising the Bar report found that FM as an industry
is still focussed on cost and not adding the strategic value it can. Is this
focus on cost driving unethical business practices? Is the Carillion collapse
an indication of a fundamentally broken business model for outsourced
One of the most shocking revelations that surfaced earlier this year about
Carillion was that it was not an isolated anomaly. Many of its competitors also
appear to have taken on too much risk, decisions that have le them with
decidedly shaky financials. A common thread is that a good proportion of their
business was, and still is, large public-sector contracts.
Is the market broken? The need to drive price down has perpetuated a ‘race
to the bottom’, where suppliers are competing relentlessly to reduce cost.
Contracts are being secured purely on the ability to take cost out of the business,
and everyone – client, supplier and consumer – is paying the price.
Paul Bagust, Global Property Standards Director, RICS, says that his
organisation is calling for a more ethical approach to business. “We are
developing a framework that is fairer, more collaborative and more transparent,”
he explains. “A model that all FM professionals are expected to follow. To this
end we are dra ing new procurement standards that promote best practice, and
a new FM contract in collaboration with JCT.”
We asked a panel of industry leaders why the market is failing, and what the
solution is. Paul Bagust was joined by Deborah Rowland FRICS, Director - Public
Sector A airs, Sodexo; Kath Fontana FRICS, Managing Director – Technical
Services, ISS UK and Rory Murphy FRICS, Commercial Director, VINCI Facilities.
Why is the market failing?
Deborah: The way that Government contracts FM is commodity driven. FM is
not a commodity, it is a service. When you commoditise something, it drives a
behaviour of price cutting.
This behaviour starts with the client in the way in which they procure, but has
been exacerbated by some suppliers who immediately race to the bottom line.
They bid low for those contracts, despite knowing that they will be potentially
loss-making on the core contract.
Kath: There are competing tensions in the market. The race to the bottom on
price is because the tenders are heavily weighted on cost. Suppliers are required
to meet the expectation of the market. These competing tensions can result in
suppliers taking on contracts that may grow turnover but are loss-making.
Another fundamental reason why the risk/reward balance is wrong is that
there is not enough e ort put into the front-end of the procurement process.
8 APRIL 2018
Much of the time suppliers have to make judgements based on information
that is fundamentally inaccurate and incomplete. Over the years that problem
has got worse, because projects are continually re-outsourced so there is no
consistent approach to quality data - essentially ‘eating fruit from a poisoned
It is also di icult to address these shortcomings during the tender process
because you could be judged on any caveats that you include. So, the challenge
for any supplier is when do you raise issues with the procurement process, and
do you include caveats?
Paul: If FM continues to sell services it knows it cannot deliver at the expected
cost then it is at risk of following the model set by the financial services industry.
I believe that this will seriously damage its reputation as a profession.
Rory: Yes, I think that is true. But it is also about identifying the kind of customers
that you are comfortable working with. Which is easier said than done.
What is the solution?
Rory: We need more professionals on both sides running the FM business. We
have to ensure that people are competent, and we have to define what those
competencies are. Parts of the procurement process need to be standardised,
but there needs to be room for bespoke elements too, provided they are
Deborah: I agree with Rory. We need to see professionalisation in FM of those
who do the procurement, and those who manage the contracts.
Paul: There is a need for stronger leadership too. We need more FM professionals
making business decisions at the highest level. When we talk about ethical
standards for the industry, these are not just nice to have things, they are actual
requirements. People need to behave ethically, and that needs to become an
Kath: All suppliers compete on quality, e iciency and risk transfer. But let’s
emphasise the quality and e iciency and minimise the risk. In order to do this,
the industry needs to invest in quality data, correct specifications and proper
Rory: Let’s compete as a profession on our intellect and the quality of our
solution. None of the industry should be competing on who’s brave enough to
take the biggest risk.
WORLD FM DAY - ENABLING POSITIVE EXPERIENCES
World FM Day, initiated by Global FM, is a
special day each year when the sector gets
to highlight the brilliant and vital work that
facilities managers do for business worldwide.
“It aims to raise
the profile of the
not just in
FMs are working
and well-being” says Nigel Lucker, Chair of the
WFMD Task Force.
The British Institute of Facilities Management
(BIFM) is urging all FMs to get involved to raise the
profile of the FM industry which plays a pivotal
role in positive customer, client and employee
experience in sectors as diverse as residential,
sport, workplace and healthcare.
This year’s World FM Day which has the theme:
‘Enabling Positive Experiences’ takes place on 16
The day is a great opportunity for global
knowledge exchange, and to join peers across the
world to discuss and share experiences both good
and challenging, and most importantly to promote
the FM profession and celebrate successes.
A supporters’ pack is available on the BIFM
website with ideas and advice to help those
working within FM mark World FM Day. It includes
ideas on how you can spotlight a ‘hidden hero’,
get involved on social media or host a fundraiser.
The pack also includes information sheets on
organising an ‘FM team shadowing day’ and ‘lunch
role of FM in
INDUSTRY INSIGHT FMJ.CO.UK