innovative procurement solutions for service delivery
TRANSCRIPT
Innovative Procurement Solutions
For Service Delivery
I P W E A C O N F E R E N C E 2 0 11
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Background
• Facility Management Association (FMA) of Australia
• FM Action Agenda
• Innovation Working Group
• Innovation in Procurement
• Innovative Procurement Solutions Project
– FMA publication March 2009
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Introduction to Project
The Innovation Working Group survey confirmed that further FM innovation was required
in areas of services procurement.
The initial scope of the project and proposed key areas were defined as:
• Contract Model (head contractor vs managing agent)
• Relationship (traditional vs partnering/alliancing)
• Pricing Structure (lump sum vs target cost)
• Commercial Model (KPIs and approach to risk and reward models)
• Contract Term and Extensions (fixed duration and extensions vs evergreen)
The guidelines form the outcome from this project.
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Pace of Change Over Time
Change
Time
Improvement
Change Step improvement
Old World “Brave” New
World
Clients
Contractors
GAP
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Procurement Stages
Make or Buy Decision:
What to Contract? Part 1
Business Case
Part 2
End of Contract Term
(Contract Anniversay)
Part 8
Implementation
Management
Part 6
Development
Specifications
Part 4
The Procurement
Process (to Award)
Part 5
Relationships, Pricing
Structure and Incentives
Part 3
Managing Service
Delivery
Part 7
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Content
Innovation is dependent on a number of ingredients. For this
presentation I am going to focus on four, namely:
• Trust
• Delivery Model
• Contract Relationships
• Commercial Model
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Trust
THE TRUST TAX
TRUST = SPEED COST
THE TRUST DIVIDEND
TRUST = SPEED COST
Source: 2004-2006 Coveylink
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Delivery Model: In-house
Stakeholders &
Customers
In-house Strategy,
Management &
Operational - Strategic
- Technical works mgmt
- Contract Governance
- Business Management
- Project Management
- Accounts / Analyst
Customer Service
Agreement & KPIs
Performance Based
Service Level
Agreement - KPIs
External Technical
Consultants
Building
Fabric HVAC Lifts Cleaning
Specialist Contractors
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Delivery Model: Managing Agent
Performance Based -
Service Level
Agreement - KPIs
Managing Agent
Supervision, audit and
approval of payments
External Technical
Consultants
Performance Based
SLA with KPIs
Stakeholders &
Customers
In-house Strategy &
Management
Building
Fabric HVAC Lifts Cleaning Subcontractors could
be contracted to
Managing Agent on a
pass through basis Specialist Contractors
Customer Service
Agreement & KPIs
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Delivery Model: Head Contractor
Head Contractor
Stakeholders &
Customers
In-house Strategy &
Management
- Strategic
- Technical works mgmt
- Contract Governance
- Business Management
- Project Management
- Accounts / Analyst Performance Based
Service Level Agreement
- KPIs
External Technical
Consultants
Building
Fabric HVAC Lifts Cleaning
Specialist Contractors or Self Perform
Customer Service
Agreement & KPIs
Performance based
agreement with KPIs
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Delivery Model: Alliancing / Partnering
Participants
Sub
Contractor 2 Sub Contractor 1 Sub Contractor 3
PROJECT CONTROL GROUP /
ALL IANCE LEADERSHIP TEAM Client Service Provider
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Contract Relationships
Long-term Relationship
Adjustment of Objectives
Trust and shared goals
Sharing of risks and
opportunities
Ad Hoc relationships
Arm’s length
T R A D I T I O N A L A L L I A N C I N G / PA R T N E R I N G
T R A D I T I O N A L N O N - T R A D I T I O N A L
R E L AT I O N S H I P
C O N T R A C T I N G
Transformational
Transactional
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Pricing Structures
Lump Sum
Schedule of Rates
Management Fee
Reimbursable/
Target Fee
Medium
More scope
Productivity
incentive
Poor
Good
Benchmarking
Service
Provider
Client
Risks
Defined
Broad
Scope
Limited BAU
Better
Innovation
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Vision
and
strategy Customer
Business
Process
Financial
Innovation
Commercial Model
T H E B A L A N C E D S C O R E C A R D
Kaplan & Norton
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Summary
Proactive contract management
SLAs, KPIs & incentives
Appropriate relationship
pricing structure
Right delivery model
and contractor
