Outsourcing in FM: what model is right for your organisation? | Macro

Outsourcing in FM: what model is right for your organisation?


By Richard Hayes, Managing Director, Macro, North America

The decision to outsource services is the realisation that your organisation will be better served by securing services from best-of-breed providers rather than internal resources.  This decision underscores the need to focus on core competencies, while coming to the realisation that survival depends on staying relevant in the market place and ‘ahead of the curve’ regarding mission critical business services.

The relinquishment of these critical services to a third-party provider can take many shapes and forms. In this article, Richard Hayes, Managing Director for Macro, North America, discusses the various outsourcing models and the need for clarity on the roles and responsibilities of the FM team members.

There are no one-size-fits-all models when it comes to outsourcing. Even when an organisation chooses to outsource, there may still be a number of services that are retained in-house. It is imperative to the success of any business to honestly determine which services can be delivered more cost-effectively when outsourced versus being provided in-house. Quite often, this ‘honesty’ can only be achieved by engaging the services of an unbiased, third party consultant.

Although there are many variations to the outsourced models presented in this article, the basic two models are: self-managed and managed.


In the self-managed outsourcing model, internal resources are responsible for managing the vendors that perform services on their behalf.  They must have a thorough understanding of these services in order to manage the vendors effectively.  This includes the capacity to understand the contractual scope of services provided, which should have clear Key Performance Indicators (KPIs) and Service Level Agreements (SLAs) established in order to provide metrics against industry benchmarks.

Their involvement in the vendor selection process, whether through internally developed Requests for Proposals (RFPs) or RFPs generated in conjunction with a FM consultant, is instrumental to the success of the outsourced model.

In addition to selecting the most qualified and cost-effective vendor to perform services, it is equally important to have ‘chemistry’ between your organisations in order to establish a collaborative work environment.

Technology compatibility must also be considered, as it is often inefficient working with multiple work order and FM software platforms.


In the managed outsourced model, the organisation relinquishes the day-to-day control of the outsourced service providers to a third-party that specialises in the services provided. This may be direct (outsourced management provider makes all decisions autonomously) or indirect (organisation instructs outsourced provider who executes on behalf of the organisation).

Quite often, as part of the managed services agreement, the management firm will be required to interview internal candidates of the organisation and, if qualified, allow them first right of refusal regarding employment. Typically, the management firm will charge three to four percent of the cost of the contracts they manage. In addition, the organisation is required to pay for the employees dedicated to managing their account.

The intent of this model is to engage dedicated FM professionals whose sole focus is to monitor and administer contractual FM services on behalf of the client organisation. Through their expertise, knowledge and singular focus on FM services, it is assumed that they will provide additional value by assuring best practices are being employed. In addition, they will enforce the KPIs and SLAs established as part of the contract. In many instances, a portion of their management fee may be ‘at risk’ if certain benchmarks are not obtained.

Customised approach

There is no silver bullet approach to providing FM services. Each FM service approach is as unique as the organisations that deploys them and, more often, requires a combination of self-managed and managed services.

Typically, soft services are self-managed by organisations because they are more closely aligned with their core business. Hard services are rarely performed in-house because they require specialised expertise and knowledge of local laws, ordinances and requirements that impose additional liability.

These specialised hard services should be carefully assessed in order to mitigate liability to the organisation. Organisations that have a diverse portfolio of real estate assets and locations should develop an holistic FM services strategy that addresses the unique needs and resources available to their disparate locations whether owned or leased.

FM services require specialised, dedicated resources so organisations must carefully weigh the cost-benefit associated with incorporating best practices into these FM disciplines.

Packaged management services, that include leasing and lease management services, should be carefully evaluated to see if they provide dedicated, focused resources to carry out the agreed upon FM strategy.

Quite often, management firms utilise their FM services teams as ‘loss leaders’ in an effort to engage clients in more profitable services.

At Macro we know that by employing resources who are dedicated to their craft and solely focused on delivering best-of-breed services, organisations can be assured of delivering FM services to their team and clients that will foster a positive work environment that will be instrumental in team member retention, productivity and satisfaction.

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