Moving from Input to Output Specifications | Macro

Moving from Input to Output Specifications

input_to_output

Chris Bond, Director of Consultancy, Macro International

So, you decide it is high time your car had a service. You take it to the dealer’s service centre and instead of just handing over the keys, you provide a list of requirements. This states exactly which parts of the car to service, the specification details for the replacement equipment and the car’s performance, and the number of required technicians and the time of the service. This would of course be an unusual scenario (and no doubt cause some raised eyebrows from service centre staff), but is an example of the use of an input specification.

This, is one of two ways in which services are procured and delivered in the Facilities Management industry, the other being an output specification.

So what’s the difference? Simply put, input specifications are prescriptive and tell the FM service provider exactly what to put in to a specification to achieve a specific result - resources, time, and equipment. An output specification defines what is to be delivered, but not how it will be delivered. More formally, output specifications may be described as ‘the definition of a series of outcomes to meet the service objectives without specifying the actions required to achieve it’.

In essence what separates inputs and outputs is the issue of risk transfer. Input specifications, due to their prescriptive nature, retain a much larger proportion of service risk with the client. For example, a service delivery failure may be due to an incorrect client-defined requirement (number of service staff) rather than a failure on the part of the FM provider (maintenance not carried out) - the risk of failure therefore stays with the client. On the other hand, output specifications pass this risk onto the party best able to manage it, i.e. the FM provider.

In the Middle East, clients have historically preferred the use of input specifications. There are well founded reasons for this, linked to the maturing nature of the market, concerns over FM provider competency, and the fear of a loss of management and control if requirements are not prescriptive. However, now is the time to move towards a greater proportion of output-driven services. For this to be effective, it requires:

  • A market containing competent and skilled FM providers - this is improving as regional and international providers enter the market
  • Well defined output requirements – in the form of measurable  performance levels
  • Robust forms of FM legal contract

An output approach is mutually beneficial and includes:

  • The transfer of service delivery risk to the party best able to manage it
  • Reduced client management input and monitoring
  • Service delivery which is results-orientated
  • Encouraging innovation and added value – the more control providers have over the inputs, the better they are able to effectively achieve the outputs
  • Provides flexibility to FM providers

Additionally, providers can be contracted to self-monitor on delivery and report to the client, for final checking. Measurable output requirements, user feedback and evidence of conformity will help to allay fears of a loss of control. And what if service delivery doesn’t meet the requirement? That’s what a good legal form of contract is for - well written, strong performance requirement clauses will address this.

This is not to say there is no market for input specifications – there is. Particular and specific requirements will always be needed in certain situations, and the two types can happily co-exist.

There are of course barriers to overcome, such as moving away from micro management of the provider, and procurement processes that recognise value as well as cost; however output specifications are increasingly being adopted by clients once the benefits are understood.

In other words, don’t tell them how to do it – tell them what you want.

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A version of this article has previously been published in Construction Week