14th Annual National PPP SummitDay 1 – Tuesday 3rd June 2014

Case Study: Facilities Management Best Practices

John Hesketh, Leighton Contractors

• The opportunity for facility managers

• A framework for evaluating O&M best practices

• Examples of best practice from SEQ Schools PPP

• Strategies for effective service relationships

Overview

The integration of processes within an organisation to

maintain and develop the agreed services which support and

improve the effectiveness of the primary activities

Source: RICS Guidance Note, Nov 2013

Facilities Management - Definition

In Practise this Means...

Understanding how a clients’ infrastructure assets support its core business and then designing and delivering services that improve the core services

And why is the facility

manager’s contribution

critical in a global sense?

The Global Infrastructure Gap

Source: World Economic Forum (in collaboration with The Boston Consulting Group, “Strategic Infrastructure: Steps to Operate and Maintain Infrastructure Efficiently and Effectively”, April 2014

1. Reduce demand

2. Build new assets

3. Optimise existing assets

Three Levers to Close the Gap

O&M Best Practices

• Enhance peak capacity

• Apply demand management

• Optimiseavailability

• Adopt customer-centric model

• Enhance the user experience

• Use smart technologies

• Implement lean processes

• Optimiseoutsourcing

• Rightsize mgtfunctions

• Sustainability and HSE focus

• Embed HSE &sustainability

• Stakeholder co-operation

• Invest in maintenance

• Control asset stress

• Enhance disaster resiliance

• Whole life cycle approach

• Value for money contracting

• Efficient project deliver

Adapted from: World Economic Forum (in collaboration with The Boston Consulting Group, “Strategic Infrastructure: Steps to Operate and Maintain Infrastructure Efficiently and Effectively”, April 2014

A Framework for Evaluation

Task

• Identify all maintenance related processes

Evaluation

• Are all processes necessary?

• Is maintenance planned on a risk based basis?

• Are resources effectively utilised?

• Are the size of workforce teams optimal? etc

Outcomes

• Improvement plan

Part 2

SEQ Schools - Examples of Best

Practice O&M

SEQ Schools PPP

• Successful proponent: Aspire Schools

• Contract award: April 2009

• Contract value: $340m

• Term: 30 years

• Scope: Finance, design, build, maintain seven schools (6 primary schools, 1 secondary college)

Best Practice Example – Increasing Utility

Managing capacity enhancements using modular

units

• Modular units can be added to the schools to increase capacity delivering a number of benefits:

• Minimises initial capital investment

• Provides flexibility to meet changes in demand

• Can be deployed quickly

Optimising availability through maintenance

planning

The use of comprehensive and integrative planning of maintenance and refurbishment works optimises the availability of the schools

Best Practice Example – Increasing Utility

Enhancing the user experience

“The best thing about the new school is the sense of pride the children and the community have in their school...the school provides the platform to be the best we can be.”

Tammy Swaine, School Principal

Best Practice Example – Customer Centric

Customer Centric Approach

The provision of a 24/7 help desk provides a single point of contact for teachers and other key stakeholders to provide feedback and register service requests.

Best Practice Example – Increasing Utility

Performance: 97% of issues resolved at first contact

Sustainability

• Rain water harvesting for use in toilets and landscaping irrigation (saving of 60,000 litres of potable water)

• LED lamp replacement –estimated saving of $30k per year

Best Practice Example – Reduce Cost

Whole of Life Approach

Input to design of the sports halls resulted in the installation of drop down lights – eliminating safety risks, reducing cost of maintenance and minimising risk of damage to flooring system

Best Practice Example – Extend Life

The FM’s Evolving Role and Opportunity

An increasing opportunity to optimise the utility of assets and enhance the

value of PPP solutions

Part 3

Strategies for Effective Service

Relationships

Effective Service Relationships

Client

Commitment

Clear objectives and aims

Contract and contract management

Partner selection

Service Provider

People

Expertise

Structure

Understanding

Reliability

Continuous improvement

Service culture

Contract

Flexibility

Performance management

Leadership

Cultural Alignment

Communications

Adapted from: Ishizaka & Blakiston, “The 18C’s model for a successful long-term outsourcing arrangement”, Industrial Marketing Management, March 2012

Particular characteristics to FM contracts:

• Perceptions

• Multiple clients and needs

• Cost versus value

• Often only apparent when fails

Performance Management

Augusta20

BayView13

Brightwater26

Coomera Rivers18

Murrumba23

Peregian Springs22

Woodlinks15

Event History Summary May 2014 - All Events

Performance Management

Perceived Quality

Technical Quality

Functional Quality

Observed and measured maintenance quality

Service recovery quality

Source: Rasila & Gersberg, “Service quality in outsourced facility maintenance services”, Journal of Corporate Real Estate, Vol. 9 No. 1, 2007

Developing KPIs

1. Identify the user’s expectations

2. Assess how do the O&M services impact achieving these expectations

3. Evaluate the consequence of O&M service failure

KPIs should reflect this relationship

SEQ Schools PPP – Example

KPIs

Service Requirement Performance Standard

Reporting Service Provider (SP) shall submit a daily performance report

Performance report submitted by 9:00am

Cleaning Provide routine cleaning to ensure facilities cleaned to specified standard for start of each day

No failure to provide routine cleaning

Maintenance Provide planned maintenance Maintenance services provided as per programme

Helpdesk Provide helpdesk to receive, record, action and monitor faults, incidents, service failures and requests

No failure to log reports

Maintenance Trapped occupants of lifts are released within 45mins

Occupants released within 45mins

Security SP to respond to security and safety incidents within 30mins

Response within 30mins

• Flexibility benefits both the asset owner and the service provider

• Evolving risks – legislation changes, technology developments etc

• Pricing refresh mechanisms

Managing Change

• Significant opportunity for the FM profession

• Best practice O&M optimises the utility of assets

• Framework of international best practices provides an excellent evaluation tool

• Be customer centric

• Performance management and flexibility key to a successful service relationship

Summary and Conclusions

Thank you

Questions?...