Good Practice and Pitfalls - the FM Service Provider Tender Process | Macro

Good Practice and Pitfalls - the FM Service Provider Tender Process


By Chris Bond, Director of Consultancy at Macro International

Put yourself in the shoes of an asset owner; perhaps the owner of a new commercial office tower. Construction activity is winding down, testing and commissioning is in progress, and users are due to occupy. Facilities Management services are needed - ‘hard’ (physical asset maintenance) and ‘soft’ (e.g. reception, security, cleaning). You may decide to employ staff, or you may choose to outsource through one or more FM service providers. If the latter, consider the following practices and pitfalls of the tender process:

  • DON’T leave expectations to chance. Agree how you want to balance quality and cost. Too often tender processes start with a non-negotiable statement of high quality, and end with tender award based on lowest price, which doesn’t meet the scope or quality requirements
  • DON’T ignore the value of mid-bid presentations. Held during the bid development period, these allow you to assess bidder progress, and address any misunderstandings or deficiencies before bid submission, when it may be too late
  • DON’T leave the tender structure to chance. Provide bidders with a comprehensive tender layout, describing the required document order, sections and contents, particularly the pricing structure. Bid evaluation of unstructured submissions is a nightmare!
  • DON’T use a modified construction Form of Contract for FM services – it won’t work. There are comprehensive international FM Forms of Contract available, and these can be adapted to suit the Middle East environment
  • DON’T over negotiate. If the tender process is undertaken in a fair and competitive environment, bidders will price their submissions accordingly. A ‘Best and Final Offer (BAFO)’ from shortlisted bidders is fine, but hammering down the price can quickly lead to downstream service shortcuts and quality issues
  • DO plan the appointment of FM service providers during construction. Between three and six months before handover is typically required for tender, mobilisation and on site start. It is also beneficial to appoint during the testing and commissioning process – the FM service provider can gain asset understanding prior to full operation
  • DO consider the use of output-based specifications. These are where you state the outputs - ‘this office needs to be clean at all times’ - not the inputs - ‘employ three cleaners working a two shift system, five days a week’. Advantages include:      
    • Passing the risk of correct service delivery, and the reduction of variations, from the client to the provider (what if the office needed four cleaners?)
    • Assigning risk to the party most able to manage it – good FM service providers do this, it’s their job
    • Allowing competent FM service providers to more effectively plan and price their bids, and also demonstrate innovation, for example, introduce multitasking and change service delivery timings
  • DO put in place a formal question and answer process during the tender period, and issue answers to all bidders. This keeps the playing field level, reduces tender misinterpretation, and supports an open and auditable process
  • DO consider the use of a prequalification process, typically on the basis of financial standing, relevant project experience and quality assurance systems. This acts as a  filtering stage to identify organisations most suitable for the full tender
  • DO use a formal evaluation process, with clear criteria and parameters (such as bid scoring and weighting). This should be included with the tender documents so that bidders understand the basis and emphasis of evaluation, and can tailor their bids accordingly. It will also provide a clear quality assurance process for auditing purposes
  • DO agree a contract period of at least three years, with a suitable termination clause. Unless there are specific circumstances, shorter contract periods help no-one and don’t foster a sense of partnership.

If you’re not sure what to do or haven’t tendered previously then DO get help from a consultant who’s done it before.  The cost will be outweighed by time and savings in the long run.

A version of this was printed in Construction Week

Follow Chris on Twitter @chrisbond_007