The Exit of Benchmarking Cost. FM Target is Quality and Cost

The Exit of Benchmarking Cost

FM Target is Quality and Cost

Remko Oosterwijk, Cluster FM of Capgemini Consulting

Oslo, 25

October 2007

Program

ƒBenchmarking in practice

ƒHistory of benchmarking in the Netherlands and Europe ƒMethodology of Measuring Quality Facility Activities (MKFA) ƒThe CEN project 2007-2010

ƒBenchmark results ƒConclusion

FM consulting: FM & RE strategy, cost reductions, consolidation and

more. Together with clients we…

…..used cost/quality ratio’s to define cost reduction possibilities

Areas of cost reduction in merging FM 1. Per site

• New fault reporting system

• Reduce number of suppliers

• Consolidate contracts and buildings

• Standardize contracts and service levels

• Focus on improvements in high cost processes

• Central strategy on RE & FM 2. Horizontal integration

• Joint RfP internationally

• Work internationally together 3. Vertical integration

• Outsourcing of operational personnel

• Outsourcing of services, either bundled or completely

• Reduce total FTE-time currently spent on processes

• by more efficient co-ordination from external supplier

…looked into the consolidation strategy in Europe

…reduced 20% of FM costs by outsourcing parts of their FM organization based on our Business Case

• Facility management solutions in M&A projects

• Building Business Cases on outsourcing (national and internationally)

• Defining Strategy on Outsourcing (national and internationally)

• (Internationally)

• Defining Real Estate Strategy

• Defining Facility Management Strategy

• Standardization of facility management processes (national and internationally)

• Setting up chain of offices including RE, FM, ICT services in 20 countries

• Benchmarking cost and quality (national and internationally)

• Introducing workplace innovation concepts

• Knowledge of reducing usage of square meters

• Setting up Shared Service Centers

• Managing transformation projects

• Define, standardize and improve facility processes

• Defining Service level agreements

• Facility management solutions in M&A projects

• Building Business Cases on outsourcing (national and internationally)

• Defining Strategy on Outsourcing (national and internationally)

• (Internationally)

• Defining Real Estate Strategy

• Defining Facility Management Strategy

• Standardization of facility management processes (national and internationally)

• Setting up chain of offices including RE, FM, ICT services in 20 countries

• Benchmarking cost and quality (national and internationally)

• Introducing workplace innovation concepts

• Knowledge of reducing usage of square meters

• Setting up Shared Service Centers

• Managing transformation projects

• Define, standardize and improve facility processes

• Defining Service level agreements

…and have proven expertise in…

We have proven experience in: We have proven experience in:

Why clients work with us? The FM & RE consultants have international

standardization expertise.

•Chairman CEN/TC 348. The European Committee in Standardization in FM

•Chairman NEN 2748- Dutch Committee in Standardization in FM

•Founder of benchmarks Facility Management according to the NEN 2748

•Founder of the NFC (Netherlands Index Facility Costs)

•Founder of the benchmark Quality and Costs

•Project manager and team benchmark Quality and Costs according to the scientific Method MKFA

•Dutch representative in the European working group “Quality” CEN/TC 348

•Project leader international FM benchmark

•Since 1996 we yearly benchmark cost of 160 facility organizations based on the NEN 2748

•One of our consultants is Dutch representative in the European working group on FM Quality

•In 2007 we have performed an international benchmark on FM cost and quality in eight European

countries with 35 sites in scope

•Chairman CEN/TC 348. The European Committee in Standardization in FM

•Chairman NEN 2748- Dutch Committee in Standardization in FM

•Founder of benchmarks Facility Management according to the NEN 2748

•Founder of the NFC (Netherlands Index Facility Costs)

•Founder of the benchmark Quality and Costs

•Project manager and team benchmark Quality and Costs according to the scientific Method MKFA

•Dutch representative in the European working group “Quality” CEN/TC 348

•Project leader international FM benchmark

•Since 1996 we yearly benchmark cost of 160 facility organizations based on the NEN 2748

•One of our consultants is Dutch representative in the European working group on FM Quality

•In 2007 we have performed an international benchmark on FM cost and quality in eight European countries with 35 sites in scope

Our FM team consists of specialists on international benchmarking, Real Estate and Facility Management

Our FM team consists of specialists on international benchmarking, Real Estate and Facility Management

We help clients with our benchmark experience in cost reduction projects

Short History of Benchmarking in the Netherlands and Europe

ƒStandard realized in 2001 – NEN 2748 ( building offices) ƒStandard for Health care and Education a few years later ƒEuropean Benchmark initiative in 2002.

ƒEstablishing NFC Index 2005 ( workplace cost € 12.000 - 2007 )

Benchmarking: horses

Some results of recent benchmarks (NL)

Trendwatch: discussion about insourcing cleaning, security and documentmanagement.

Facility Management between 5% and 10 % of total cost of FM

€ 16

Cleaning / m2

€ 10

Energy (water, gas and electricity) / m2 bvo

€ 12.000 Cost of a workplace

Agenda MKFA

ƒWhy? ƒHow?

ƒWhat offers the MKFA?

MKFA is the abbrevation of:

Meetmethodiek Kwaliteit van Facilitaire Activiteiten =

Methodology to measure quality of facility processes and

service levels

The MKFA measures quality objectively on the base of the NEN 2748

ƒ On the base of the framework per activity (input, throughput en output). ƒ According to the NEN 2748

ƒ Measures objectively (quality related to product and organisation) ƒ Express quality in percentages

Involved parties in setting up the MKFA:

Facility Organizations, FM Science and FM consultancy

Members:

ƒ30 Facility Organizations (profit and non-profit)

FM science:

ƒProf. Dries van Wagenberg, CFM ƒWageningen University

Project Management:

ƒCapgemini Consulting

Reason set-up MKFA: wish of 30 Facility Organizations

ƒUnderstanding of facility cost improved from the mid 90’s (mostly by benchmarking). ƒView on “Steering” in Facility organizations has improved the last couple of years. ƒShift from “steering on facility cost” to “steering on cost in relation to other steering

dimensions”.

Organizations participating in benchmarking Facility Cost wished to have insight in cost drivers.

The most time consuming part of the project MKFA was to define

quality according to the aim of the project

ƒ A lot of point of views ƒ A lot of definitions ƒ A lot of perceptions

ƒ A lot of ways to determine quality ƒ A lot of ways to measure quality ƒ Etc.

Project team question: Which quality issues would you like

to measure and why?

Measuring quality is part of the steering tools of a Facility Organization

Supplier performance Service Level per process Quality of processes Perception of end user Employee satisfaction Client satisfaction Facility cost Steering the Facility services

Systematics MKFA

Weighted questions Domains and sub domains (INK)

Input Throughput Output Effect

(Process) Facility theme

X

The MKFA contains 10 domains/ 25 sub domains in MKFA

according to the NEN 2748

1. Building

Providing building, grounds and garages Insurance of the building

Maintenance building and installations Transform building and installations Usage of energy and water Managing

2. Food and drink related services -Restaurant,

-Service on the work places -Coffee, beverage and sweet machines -Catering 3. Risk management -Security -Prevention of calamities -Reception 4. Cleaning 5. Moving 6. Document management -Document creation -Postal services -Document Reproduction -Archives 7. Waste removal

8. Space and auxiliary items 9. Telecommunications 10. Facility Management

-Facility Management -Purchase management -Service centre

The MKFA offers several sorts of facility steering information

ƒInsight in quality of input (staff and material) ƒInsight in quality of processes

ƒInsight in service level

ƒInsight in cost compared to other organisations ƒInsight in cost/quality comparisons and benchmarks

The MKFA contains 75 KPI’s for 25 processes on the base of 1200 questions and compares the KPI’s with facility cost.

ƒ Improve competitivenessin global market

ƒ Improve effectivenessof primary and Facility Management processes ƒ Improve transparencyin procurement and contracting

ƒ Qualityimprovement of output ƒ Supports certification

ƒ Means of communicationbetween stakeholders ƒ Development of new tools and systems

Added value for Facility Management

Results (1)

ƒ Standard: EN 15221-1 Facility Management – Terms and definitions ƒ Content: FM Model, relevant terms, list of services (structure and description) ƒ Purpose:

• Improve communication between stakeholders

• Improve effectiveness of primary and Facility Management processes

• structures the service providers in their services • helps clients to define their needs……

EN 15 221-1 Definition Facility Management

ƒIntegration of processes within an organization to maintain and develop the agreed services which support and improve the effectiviness of its primaire activities

FM Model evolution

- Space & Infrastructure - People & Organisation

K P I s D E M A N D P L A N N I N G S L A s S U P P L Y D E L I V E R I N STRATEGIC TACTICAL OPERATIONAL Corporate Business Units C O M P A N Y P R O V I D E R Internal External BUSINESS PROCESSES FACILITIES PROCESSES

- Space & Infrastructure - People & Organisation

K P I s

Results (2)

ƒStandard EN 15221-2 Facility Management – Guidance on how to prepare Facility Management agreements

ƒScope:

• both public and private European Common Market cross-border, as well as domestic, client/Facility management agreements or relationships, and

• the whole range of Facility Management services including planning, management, management and service, service and subcontract or operations.

Results (3)

ƒPurpose:

• promote cross-border relationships and produce a clear interface • improve the quality of Facility Management agreements

• give assistance in, and advice on, the drafting and negotiation and in specifying arrangements in the case of dispute;

• identify types and make recommendations for the attribution of rights and obligations between the parties of the agreement;

CEN/TC 348 organisation

CEN/TC 348 Facility Management Chairman: R.W. Oosterwijk (Capgemini)

Secretariat: J.R. van der Zwan (NEN)

WG 4 Taxonomy of Facility Management Convenor: M. Christen (CH) Secretariat: E. Huegentobler (SNV)

WG 5 Processes in Facility Management Convenor: prof. K. Alexander (UK)

Secretariat: C. Molloy (UK)

WG 6 Space measurement in FM Convenor: prof. U. Elwert (GER)

Secretariat: E. Finck (DIN) WG 1 Terms and definitions

Convenor: P. Stadlöder (GER) Secretariat: J.R. van der Zwan (NEN)

WG 2 Facility Management agreements Convenor: S. Mitchell (UK) Secretariat: J.R. van der Zwan (NEN)

WG 3 Quality in Facility Management Convenor: W. Moderegger (GER)

Secretariat: E. Finck (DIN)

CEN - Facility Management - Views

Product Provider view Processes KPI Financial view Client view Quality SLA Accounting Costs Ressource view Supply Demand WG 5 Processes WG 3 Quality WG 4+6 WG 4 Taxonomy

FM Value Map – Third version

Resources: Facilities Management

Society Customers Staff Owners

Surroundings Core Business

Satisfaction Cost Productivity Reliability Adaptation

Economical Social Physical

Space Services Know-how Relations

Facilities Technology Manpower Management Activities Innovation Communication Coordination

Benchmarking Benchmarking

Benchmarking

Benchmarking Facility Management

National & International approach Capgemini Consulting

Content

1. National approach

ƒ MKFA

ƒ Measuring cost & service levels

ƒ Examples 2. International approach ƒ Scope ƒ KPI’s ƒ Cost reductions?

Examples of possible

benchmarks

from the MKFA

Consumptieve Dienstverlening - Medewerkers en middelen 89 80 26 72 75 79 87 67 87 91 92 92 62 87 0 10 20 30 40 50 60 70 80 90 100 C apge m ini N ede rl and S c hi phol Gr oup G em eent e A m er s foor t G em eent e C apel le a/ d IJ ss e l G e m e e n te D o rd re c h t G em een te E de G em een te E ns c hede G em ee nt e Lee uw a rden Ge m e e n te Zw o lle M ini s ter ie B IZ A Mi n iste ri e B U Z A Mi n is te ri e V & W -S S O P rov in c ie G e ld er lan d P rov inc ie Z ui d-H ol land K w a li tei tp er ce n tag e Consumptieve Dienstverlening - Processen 64 81 62 73 86 59 90 49 88 73 90 74 86 83 0 10 20 30 40 50 60 70 80 90 100 C apge m ini N ed er land S c hi phol G roup G em een te A m er s foor t G e m e ent e C a pel le a /d IJ s s el Ge m e e n te D o rd re c h t G em een te E de G em een te E ns c hede G e m ee nt e Lee uw a rden Ge m e e n te Zw o lle M ini s ter ie B IZ A Mi n iste ri e B U Z A M ini s ter ie V & W -S S O P rov in c ie G e ld er lan d P ro v in c ie Zu id -H o lla n d K w al it e it p e rcen tag e

MKFA measures service levels

Example: Consumption services – employees & resources Example:Consumption services –

employees & resources Example:Example: Consumption services -Consumption services -Processes_Processes

Schoonmaak - Eindresultaten & kosten per m2 Bvo

€ 15, 89 € 16 ,56 € 20 ,57 € 16 ,46 € 12, 03 € 11, 2 6 € 1 0, 40 € 1 7, 81 € 16 ,12 € 13 ,40 € 22, 1 6 € 22, 2 2 € 17 ,27 € 16 ,77 € 2 2, 55 0 10 20 30 40 50 60 70 80 90 100 A hr end Ba lla s t Ne d a m C a pgem ini N eder land Ge m e e n te C a pel le a/ d IJss e l Ge m e e n te D o rd re c h t Ge m e e n te Ed e Ge m e e n te E n sch e d e Ge m e e n te Lee uw ar den Ge m e e n te Z w o lle Ho ri z o n C ol lege M ini s ter ie BI Z A M ini s ter ie BU Z A Mi n is te ri e V& W -S SO Pr o v in c ie Z ui d -H ol land G e m idd el d K w al it ei tp er c en ta g e € 0,00 € 5,00 € 10,00 € 15,00 € 20,00 € 25,00

MKFA combines facility costs & service levels

Example: Cleaning, quality & costs / sqm Example:Cleaning, quality & costs / sqm

International approach

Scope of our benchmarks in 2007

8 countries &

Approx. 20 sites in scope

Scope, FM services

Property related services

1. Grounds and landscaping

2. Building structure and fabric 3. Indoor climate and utilities

4. Energy

5. Switchboard

User related services

6. Document Management

7. Internal movings 8. Stationary Supply 9. Reception

10.Meeting rooms & video conferencing rooms 11.Safety & security

12.Consumption services 13.Vending machines 14.Cleaning

15.Space planning and Management (incl. storage) 16.Mail handling

17.Other FM services on site We defined property- and user related services We defined property- and user related services

Total Cost - Property Related Services 2006

Total Cost - Property Related Services

2006 Total Cost - User Related Services 2006Total Cost - User Related Services 2006

Total cost for FM services are calculated

- 100.000 200.000 300.000 Consumption Services Space Planning Internal Movings Coffee Machines Stationary Supply Meeting Rooms Mail Handling Other Services Safety & Security Cleaning Document Management Reception Cost (Euro) - 100.000 200.000 300.000 400.000 500.000 Grounds & Landscaping Indoor Climate & Utilities Building Structure &

Fabric Energy Switchboard

Cost (Euro)

Example: The total cost for FM services 2006 in Country A was 5.2 million Euro for sites in scope

Example:The total cost for FM services 2006 in Country A was 5.2 million Euro for sites in scope

A cost = Manaement, Purchasing/Demand Organisation B cost = Operating Cost -Internal

Example:

KPI’s for Energy are calculated

Office 2 Office 3 Office 4

Cost / SQM Cost / SQM - 5 10 15 20 25 30 35 40 45 Country A Country E Cost/Sq m

Country B Country C Country D 16.2

8

20 23

42 1081

Service Level – Energy

Service Level – Energy

- 5 10 15 20

Country A Country B Country C Country D Country E

Av er ag e S er v ic e L ev el 19 16 17 16.8 13.3 ƒNotes •Best practice •Opportunities •SWOT •Cost reductions ƒNotes •Best practice •Opportunities •SWOT •Cost reductions

Example:

KPI for Cleaning / sqm is calculated

ƒNotes •Best practice •Opportunities •SWOT •Cost reductions ƒNotes •Best practice •Opportunities •SWOT •Cost reductions

Total cleaning costs per sqm UFA, sqm not used excluded

Total cleaning costs per sqm UFA, sqm not used excluded - 5 10 15 20 25

Count r y A Count r y B Count r y C Count r y D Count r y E

Cost per SQM and Service Level

Cost per SQM and Service Level

0 5 10 15 20 25 0 5 10 15 Cost/Sq m ( € ) Service Level Cost/Sq m ( € )

Service Level – Cleaning

Service Level – Cleaning

5 10 15 20 ag e S er v ic e L ev el Country A Country B Country C Country D Country E

In a workshops we have interactive discussions on possible

cost reductions

Costs reductions?

1. National reduction of costs per site, per country 2. Horizontal integration: international reduction of costs

per service, for example by outsourcing services 3. Vertical integration: national & international reduction

of costs by outsourcing FM

Consolidation of buildings?

Standardisation of services?

1. Reduction of contracts

2. Reduction of invoices

3. Standardize service levels Costs reductions?

1. National reduction of costs per site, per country

2. Horizontal integration: international reduction of costs per service, for example by outsourcing services

3. Vertical integration: national & international reduction of costs by outsourcing FM

Possibilities for cost reduction…

Possibilities for cost reduction… … and areas of improvement_{… and areas of improvement}

We would like to use outsourcing to free up management resources! How can we leverage on the use of technology? How do we create recognition within Capgemini that FM is a “real profession”? How can we professionalize account management in FM? We are thinking about making meeting room management a self service function! How do we improve environmental friendliness? We are planning to increase bundling of services!

Conclusion

ƒBenchmarking on cost is an added value for most of the FM Organizations ƒEnd users are interested in quality of services and partly in cost

ƒService providors are focussed on quality and cost ƒInternational development is Quality and Cost ƒEuropean Standards challenges you into a new focus:

Sponsors

Dutch Ministry of Transport and Public Works

Headsponsors:

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