HEFCE Report 00/14

Facilities management

Improving the management of support services in higher education

National report by the UK funding bodies Value for Money Steering Group

March 2000

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Contents, foreword, executive summary and self-assessment checklist.

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Contents

• Foreword
• Executive summary

Main report

1. Defining facilities management
   • What is facilities management?
   • Benefits of facilities management
   • Adopting FM
   • FM self-assessment checklist
2. Identifying initial objectives
   • Defining stakeholders
   • Consulting stakeholders and setting objectives
   • Service specifications and service level agreements
   • Self-assessment checklist
3. Developing the management approach
   • Alignment of activities
   • Integrating and co-ordinating key support activities
   • Management structures
   • Informed client function
   • Development of management skills
   • Funding service delivery
   • Legislation
   • Self-assessment checklist
4. Focusing on service delivery
   • Review of current service arrangements – decision tree
   • Procurement management processes
   • Market testing
   • In-house services
   • Contracting out (outsourcing)
   • Partnering arrangements
   • Self-assessment checklist

Annexes

1. Background to the study
2. Membership of steering groups, project staff and review groups
3. Participating HEIs and organisations
4. Bibliography and sources
5. Useful references

Foreword

The future presents ever-increasing challenges for institutions: one such challenge is to improve the management of their support services. These services are vital for institutions in providing better quality outputs to meet the needs of their students, academic staff, customers and visitors.

Facilities management costs the UK higher education sector approximately £5 billion each year. This report provides guidance on how to make the most of FM: it includes action checklists and references to more specific material.

The report also provides examples of the benefits gained by several higher education institutions from using facilities management as a practical and innovative management approach. As part of their FM arrangements, these institutions have co-ordinated and integrated a much broader range of support services and physical resources. They have aligned these key business operations more closely to their core activities, and improved the management of them, because they are important to the institution’s business success.

Institutions are only too aware that the outcomes of teaching quality assessments and undergraduate recruitment and retention surveys have emphasised that high quality services must be maintained. Some HE institutions will already be using some or many of the management techniques, tools, ideas and solutions included in this report; others will be able to select the ideas and approaches that will work in their organisation. A thorough review of support service arrangements, using the guidance and principles contained in this report, will help all institutions to achieve their service goals.

The study clearly demonstrates the improved value that many institutions could obtain from their facilities management arrangements. I trust that you will find this guide helpful in realising this value.

Professor David Wallace
Chair, UK VfM Steering Group
Vice-Chancellor, Loughborough University

March 2000

Executive summary

Introduction

Institutions will want support services that offer the best possible standards to meet students’ and other customers’ needs. Better co-ordination between core activities and support services means that institutions can respond faster and more effectively to those demands for services.

This study is intended to demonstrate the over-arching nature of facilities management and the benefits to be gained from adopting a co-ordinated approach. How this approach is applied in practice by institutions will be considered as part of specific studies of support services (see Annex A – Background to the study, for further details).

The definition of facilities management in this report reflects the nature of the HE sector and the requirements of institutions. Facilities management in day to day practice uses a range of existing (and evolving) management techniques, tools, ideas and solutions.

Defining facilities management

This study defines facilities as the support services and physical resources of the institution that are key to its business success. This definition for facilities management (FM) recognises that FM arrangements may include a broad range of academic support, administrative, and technical services; and that these arrangements can differ widely for individual higher education institutions (HEIs).

Facilities management is not about ‘contracting out’ key services to external service providers. It is about establishing an integrated resources infrastructure and management approach that will enable HEIs to support the delivery of core activities, and meet the clearly identified and agreed needs of their customers.

Institutions that want to gain the benefits of FM need to adopt a planned approach that takes into account management input, evaluation of options, implementation costs and so on. To be effective the management of ‘facilities’ should embody strategic, tactical and operational dimensions.

The practical benefits include:

• a shared understanding of the business agenda, with integrated goals for core activities and key support services
• co-ordinated strategic, tactical and operational management arrangements and enhanced management skills
• defined and improved levels of service, linking service to the institution’s organisational culture, to facilitate organisational change
• value for money procurement processes for key support services.

As part of the study, a facilities management self-assessment checklist was developed with the help of HEIs. Institutions may find the checklist helpful to review their present support services arrangements and to prioritise the actions identified, as part of a management action plan.

Identifying initial objectives

To obtain value for money, the institution will need a clear and agreed set of objectives and criteria for FM arrangements, based on the needs of its stakeholders. This is a strategic exercise and will contribute to the institution’s corporate plan. A better delivery of service outcomes through facilities management could be achieved by linking more explicitly the institution’s strategic, tactical and operational documents (for example, the estates strategy through to service level agreements) to the corporate strategic business plan and the evaluation of customers’ needs. Policy documents will have a bearing on the issues identified and discussed.

Facilities management needs to operate in partnership with academic colleagues to enhance resource management skills and processes, such as planning, service definitions and so on. Service level agreements can play a valuable part in developing this partnership. Appropriate resources will then be required to match stakeholders’ needs, to underpin the whole process of service delivery of support services.

Developing the management approach

As the nature of the services changes, so business opportunities will need to be re-evaluated, and the business case revised. An institution focused on customers will have management structures that are flexible in meeting customers’ needs. The emphasis therefore moves away from the management structure per se, to allowing individual managers greater flexibility in meeting service demands. This may be achieved through co-ordination with other support service arrangements, as part of an integrated and co-ordinated management framework that looks beyond traditional support service boundaries. Institutions are recommended to define the service levels required against their strategic objectives, and to understand the important contribution made by these services to business success. Diminution of service provision on cost grounds alone is short sighted and can damage an institution.

Institutions will want to determine their own analysis of what represents a key support service. Some institutions that have adopted a facilities management approach have started with an analysis that identified the key support services and the essential interconnections. By carrying out a review in this way, the areas of overlap in service provision are identified. This gives the institution’s management team opportunities for flexibility in service delivery, and opportunities to maximise income and/or reduce costs. Flatter management structures and better lines of communication are created, providing an opportunity to direct support services in a more appropriate and responsive way. However, there is no one ‘correct’ structure.

Whatever management structure is adopted, another important element for effective FM arrangements is the ‘informed client function’. This role may be undertaken by a member of the senior management team, or by a group of individuals who are independent of the more detailed service delivery processes. They should ensure that the institution’s requirements are reflected in any procurement process, be it in-house or contracted out, in terms of corporate standards and faculty, school or departmental standards.

The informed client function is a critical one, acting as the client representative for both internal and externally procured support services. It requires a thorough knowledge of existing arrangements, and of the institution’s business, culture, values, goals and objectives. The informed client function also involves co-ordinating views within the institution in establishing service level agreements, to define the service requirements from service providers (whether internal or external); and in formulating the institution’s corporate strategic plan, to set the objectives. Higher education institutions must decide what value they accord to FM.

Developing service-oriented funding mechanisms, investing in staff training and management skills, and adopting quality and service standards are other issues that senior management teams need to consider. If FM is to develop further, the role of facilities management needs to be reflected more clearly in job descriptions, responsibilities and management skills.

The concept of core activities and key support services has implications for financial models. Specific activities and services may flex between each grouping in line with changes in their contributions and market factors. Service standards and delivery costs are closely aligned. If institutions want to ensure the delivery of desired standards, then financial models will need to be developed on the basis of life-cycle costing, so that by defining the service the institution manages the costs arising.

Focusing on service delivery

Clear objectives based on stakeholders’ needs and appropriate structures are not enough. All support services, whether internally or externally provided, ought to be subject to review: there should be procedures to test the market, benchmark services and to maximise the use of limited resources. Performance indicators could be developed to monitor and to link the individual service contributions for co-ordinated services. Some performance indicators for facilities management services will be developed as part of the funding councils’ Estates Management Statistics Study.

The development of a procurement strategy as part of the institution’s FM arrangements is essential, as the difference between good and bad procurement can be as high as 25 per cent of non-pay costs (‘Procurement Strategy for Higher Education’ – Joint Procurement Policy and Strategy Group, September 1996). To ensure that appropriate service standards are operating across the institution and that existing support service benefits are maintained, institutions may wish to undertake periodic reviews. As part of this report, a decision tree has been developed that indicates some of the issues that institutions could consider in developing their facilities management arrangements (see Section 4 – Review of current service arrangements).

The application of market testing should be in the context of an overall strategy for the development and delivery of the institution’s support services. Such a strategy could then be applied to the management of in-house services. In-house services ought to operate in a similar way to services contracted out, namely, there should be a strategic informed client function. As part of the study, a number of ‘push and pull’ factors and ‘dos and don’ts’ have been identified regarding in-house and external services (see Section 4 – In-house services and Contracting out). These capture the considerations to be borne in mind by HEIs, and in some cases the consequences of failing to consider adequately the options for service delivery.