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Procuring Maintenance Contracts PracticallyJuly 2017

Witten by Martijn Groen, Associate Director, Gardiner and Theobald

BSRIA recently published Maintenance Contracts - A guide to best practice for procurement. As one of the authors, I thought a brief article about the concepts advocated would be beneficial. It is also worthwhile to broadly explore the practical value of the guide for FM practitioners.

The crux of it - business requirements

Essentially everything involved with procuring maintenance services is dependent on business needs. If an organisation has a large and diverse property portfolio, then the maintenance requirements may be more complex than expected. If it needs a state-of-the-art building then the building assets will be more expensive to maintain. If the business relies solely on its building to operate, assets become business critical and as such the primary objective is to prevent failures and breakdowns.

As will be clear, getting your head around all the aspects involved with defining business requirements can be daunting, particularly when developing the building and asset registers, the maintenance specification and choosing the right maintenance strategy and regime.

The balance of in-house against outsourced

Outsourcing may not always be the best option. Where an organisation employs people that have the right skill level and competencies and has invested in training, in-house maintenance may be a better option. However, specialist services and a proportion of statutory testing will still have to be outsourced and there are risks involved with delivering maintenance services in-house.

For most organisations, it will make more sense to just outsource. This allows the FM to take a step back and take a strategic management role rather than getting bogged down with all that is ‘hands-on’. FMs should be taking a more proactive stance, which allows the organisation to look both inward and outward. Additionally, the transfer of risk is appealing and above all, the organisation can concentrate on what is core business.

Overview of pivotal maintenance strategies & regimes

Did you know that applying Planned Preventative Maintenance (PPM) all round is not necessarily the best answer? If you consider that PPM includes dismantling assets and replacing components early while they still ‘have mileage’, it will be easier to see that cost efficiency can be achieved by applying a condition based approach to non-business critical assets where risk of failure is tolerable.

Condition based monitoring evaluates when an asset requires maintenance. This is mostly achieved through sensors that are placed on assets so that vibration and heat can be tracked and analysed. This allows maintenance to take place ‘just-in-time’ before a breakdown occurs.

Statutory compliance maintenance only supported by reactive maintenance to rectify problems is viable but requires careful consideration before applying. For example, this strategy is effective for industrial buildings and mothballed areas, or back-office type properties if the organisation is under significant budgetary restraints.

Always the challenge – legal matters and the contract document

Should you use a standard form of contract such as NEC3 or CIOB? Or is using your own contract okay? In truth, there is no right or wrong answer. A contract relies solely on its terms and conditions (T&Cs). The better the T&Cs, the better the agreement holds up in disputes and court.

Unfortunately, organisations tend to add a lot of the information acquired during tendering (for example, bidder’s raw tender, commercial negotiation documentation, award criteria) as schedules to the contract. As this leads to a convoluted document, it is recommended to always create tailored contract documentation that includes only relevant information that is essential to the agreement. This would include the contractor’s plan and service delivery methodology but not their tender!

Putting it down into words – the maintenance specification

Most organisations wonder whether it is better to go input based or output based. Again, it is a matter of the organisation’s technical expertise and the amount of risk to be delegated to the supplier. However, for most organisations an output based specification provides the best starting point, as the organisation will have a role in agreeing the final solution. This allows the FM to capitalise on the contractors’ technical expertise and knowledge.

Action time - tendering & evaluation

In essence, tendering a maintenance contract is similar to procuring any other FM service. Typically, the stages within the procurement processes comprise:

  • Pre-qualification of bidders
  • Bidders invitation
  • Bid evaluation
  • Commercial negotiation
  • Contract finalisation
  • De-briefing and contract award

Public organisations also face compliance with specific procurement legislation which requires careful attention and the necessary amount of time investment to ensure that the organisation is up-to-date with the latest requirements. While private sector organisations have more liberties, it is still considered good practice to comply with what is prescribed under the public procurement regulations e.g. being fully transparent in your bid process, evaluation, and contract award.

Obviously, the maintenance contract guide explains each of these activities in more detail. But most FM practitioners will be familiar and experienced in procuring FM contracts so we’ll move on to the last aspect of the guide.

Finally - monitoring & control

Typically, the monitoring and control of the contract involves a combination of reporting, evidencing, inspecting, recording and governing activities and a flexible stance towards these is recommended. This is because excessive oversight may cause friction and be detrimental to the service provider/client relationship. This would be counter-productive to what the organisation is trying to achieve. At the end of the day, keeping things straightforward and practical tends to be the key to successful FM operations.

Maintenance Contracts: A guide to best practice for procurement (BG66/2016), is aimed at helping clients, facilities managers and their organisations to understand better the key success factors in procuring maintenance contracts.

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