Facilities no longer poor relation

The annual conference of the British Institute of Facilities Management (BIFM) has chosen a feisty theme — 'No FM, No Commerce'. If your enterprise does not manage its facilities efficiently, you are going nowhere.

Such confidence by the leaders of the facilities mangement industry is a welcome contrast with the recent past. I spoke about three years ago to the North Eastern branch of BIFM about partnering for construction, refurbishment and maintenance. I argued that any partnering arrangement would be insecure if the facilities management team had not been involved at the earliest design stage. The facilities manager has much to contribute to the practical delivery of the architect's vision.

The audience was surprised. The idea that clients, architects and main contractors should see facilities management input at the design stage as a fundamental of partnering was far from their practical experience. As one member said to me afterwards, 'We are used to being treated as caretakers. To be regarded as an essential part of the supply chain would be very welcome.'

That was then. This is now. The construction industry has recognised the importance that clients attach to a well-planned and managed workplace environment. The company that I chair has changed the name of its long established service provision unit from Willmott Dixon Maintenance to Willmott Dixon Property Services. We have substantially restructured it into two distinct parts, Network, providing a national branch network from which any customer can seek ad hoc support 24 hours a day and Partnerships which provides bespoke teams working in long-term partnerships with sole customers such as the London Borough of Tower Hamlets. This part of our business turned over £30m last year, and will turn over some £40m this year.

PFI is about sufficient risk transfer to take construction capital expenditure off the balance sheet of the public sector. The simplest version is that a consortium (Special Purpose Vehicle, or SPV) from the private sector comes together to bid for a building or a major refurbishment project. It will assume responsibility for design, construction and subsequent management and maintenance of the project and the employment of some or all of the staff. It will be paid nothing until the building is complete, after which it will receive a 'rent'. If management and maintenance are an essential part of PFI, the role of the facilities manager becomes crucial. His or her expertise can advise the SPV architect at the earliest possible stage about the sustainability and maintenance requirement of the future building. If the design ignores future maintenance responsibility, the financial burdens upon the SPV will worsen throughout the life of the project. PFI does not allow the contractor to walk away from the problem after the twelve months' defects liability period. This is not a 'snagging list' scenario. It is real financial responsibility for decades.

I sense that the PFI model will begin to change over the next year or so. The public sector, at union insistence, may seek to retain most of the employees in its direct employment. That will reduce the potential staff savings and productivity improvements which private sector management can achieve. It will also significantly alter the financial basis of PFI and may make it unviable in some cases. It may even reduce the volume of public sector construction projects, because less risk transfer means more public sector debt and heavier public expenditure, which the Treasury and the financial markets dislike. However, even within a revised PFI structure, some clients may seek to transfer as much maintenance risk as they can offload onto the SPV.

SPVs will need to show at the bidding stage that they have the design skills available to reduce long-term maintenance to the minimum. They will also carry more conviction if they can show how they will handle the delivery of fabric maintenance and internal asset management. If the client workforce has already been outsourced, does the SPV have its own efficient team of operatives to replace and/or absorb the existing contractors? If transfer of in house operatives under TUPE is envisaged, can the consortium handle the process? If there is to be no transfer and the workforce remains in-house, can the SPV efficiently manage the maintenance risk when it is unable to employ the client's in-house workforce directly but has still accepted responsibility?

Challenges indeed. Doubtless we will explore them further at the conference.