outsourcing of facility management - … outsourcing... · ekonomika a management 82 innovation in...

Ekonomika a management

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Introduction

The world financial crisis has influenced thewhole entrepreneur society in a negative way.As a result of the crisis many enterprises areforced to undertake many costly actions, whichsometimes are not even linked to theircompany’s main focus of activity. Outsourcingrepresents a new way towards rationalization ofenterprise activities, which means to submitinternal side activities not generally linked tothe main company’s focus of activity, to externalsubjects. Outsourcing of facility management isone of the possibilities which mean the solutionof this situation by the organisational changes.The main aim of this paper is to presenta basic project for proposal of facilitymanagement outsourcing which depends onmany factors (industry, region, experiencewith implementation of outsourcing andform of outsourcing). The paper also pre-sents partial results of the researchconcerning on outsourcing utilization incompanies of wood processing industry inSlovakia with the focus on the area ofoutsourcing of facility management usingthe methodology of correlation analyses.

1. Facility ManagementTo explain the areas of the facility managementwe can use the definition of IFMA (InternationalFacility Management Association bringing togethermore than 18 000 members from 50 countries).IFMA defines Facility Management as "a methodwhose task is to match the employees of theorganization, work activities and work environ-ment that brings together the principles ofbusiness administration, architecture, humanitiesand sciences." Facility management is, accordingto the definition, characterized by linking threeareas, namely [20]:� Areas related to employees, i.e. human

resources and sociological aspects;

� Areas of work, i.e. the performance andfunding;

� Working environment, i.e. architecture andengineering.The final effect of all reciprocal ties is to

strengthen all processes with the help of whichemployees in their workplaces – in a pleasantand performance supporting environment –give an optimal performance. Ultimately, facilitymanagement contributes positively to theeconomic growth in the body and thus boostsits competitiveness.

As stated by Serina [18] it is clear that thefirst two areas are identical in all managements.It is always about a set of activities, supplying orassignments for a group of persons. For facilitymanagement, the third area marked as workingenvironment, is specific. Essentially, we can saythat the facility management aims to ensure thesupport of the company or building so that theemployees have everything they need tooperate and that the costs of providing allservices were as low as possible (Fig. 1).

German National Association of FacilityManagers GEFMA emphasizes the cost (i.e.economic) aspect of the processes that supportthe core business of the organization. Definitionaccording to GEFMA is: "Facility managementis defined as an analysis and optimization of allcost-relevant processes relating to building,construction of another facility or organizationperformance not belonging to the principalactivity of the organization" [20].

The Technical Committee CEN TC 348 FacilityManagement established the European standardof facility management in 2007 which is valid alsoin Slovakia as BS EN 15221 Facility Management.The tentative standard defines facility managementas follows: "Facility Management represents theintegration of activities within the organiza-tion for the purpose to ensure and to developagreed services which support and increasethe effectiveness of 'core activities'”.

OUTSOURCING OF FACILITY MANAGEMENTMilota Vetráková, Marek Potkány, Milo‰ Hitka

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According to Gao and Cao FM has manyvarious definitions. In fact, there are considerabledifferences in responsibilities among differentfacility managers, so that many facility managersare confused with their responsibilities in orga-nizations. However, in other traditional disciplinesin construction and real estate industry, such asarchitecture, project management and town planning,

the confusion was rarely [6]. The fundamentalpurpose of FM is support organization strategyand core business to enhance organization’s economicbenefits and core competence. Therefore, FMshould be guided according to organizationstrategy and FM strategy is part of organizationoverall strategy. Figure 2 shows the position ofFM strategy in organization strategy frame.

Fig. 1: Business Areas of Facility Management

Source: [9]

Fig. 2: The Position of FM in Organization Strategy

Source [6]

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Innovation in facilities management (FM) isa complex process as FM is a diverse discipline[12]. The use of facility management servicesfrom a number of their providers can be foundin many organizations in the banking sector,multinational retail chains, internationalcorporations, as well as public and thegovernment. The focus in the facility servicebusiness has traditionally been on operativelevel outcomes such as customer satisfactionand technical quality [7].

2. OutsourcingIt is possible to explain the term outsourcing asthe acronym consisting of three English words“OUTside reSOURCe usING”. This expressionis a term of the American business English andit means „utilization of external resources“.In theory, outsourcing is a quite popular topicwith help of which a lot of experts point out thetrend and efficiency of external resourcesutilization in external company management. Ingeneral, it is theoretically presented as a moderntrend of management which serves to transfer sup-port company activities to an external provider.

The breakthrough in the development ofoutsourcing from the perspective of economictheory can be ascribed to works of R. H. Coase(published in 1937) and O. E. Williamson(published in 1961). According to R. Coast,there can be only reached to the efficientallocation of resources in economics, ifproperty rights are well determined and theneffectively enforceable, with very low cost tobargaining. Generally, these costs have beennamed as transaction costs. Between the basicprinciples of transaction cost and incompletecontrol theories exists dependence [2]. By theparticular application of transaction costs can inan otherwise standard competitive modeldramatically improves its ability to rationalizeobserved real exchange rate dynamics [11].

During its development outsourcing becamea complex object of doing business and that iswhy it can be characterized from different pointsof view. One can find a lot of definitions of differentauthors. According to the authors I. Hunter, J.Saunders, A. Boroughs, S. Constance „out-sourcing is a transfer of internal businessactivities or a group of similar activities andassets to an external producer or providerof services who is able to offer requiredservice on agreed date and price“ [8]. It is

a special form of co-operation concerninginternally executed processes where the objectof performance is agreed in a contract. Thisway outsourcing differs from another “partner-ships”. Nowadays outsourcing is utilized world-wide as one of tools of the strategic companymanagement, namely as a tool of optimizingcompany resources consumption aimed atbasic strategic company goals.

Practical utilization and application ofoutsourcing is wide and favourite in manyindustries in all developed countries since itbrings many positive effects. In our geogra-phical conditions, in spite of initial distrust to it,its practical application is better now andoutsourcing finds its application in manyindustries as well. The reason is foreigncompanies’ and their management know-howpenetration to our market.

In practice it is not possible to outsource allactivities. It is ideal to determine a plan basedon company business philosophy, it means tofocus on a core of company interest and not tooutsource this base [22]. This procedure islogical – it is a must to have some area whichthe company fully deals with and not to let it tothe other company. Doing that company’s ownexistence would be threatened. An organizationmay outsource not only company activitieswhich are classified to the category of „noncorebusiness“, which means processes ensuringsupport activities in the company – it means itis right to select a process where we do notanticipate aversion to changes or aversion is asweak as possible and requirement for changesis strong. So it should be a process which doesnot work optimally or there are some costs orqualitative reserves.

Outsourcing utilization is often connectedwith the area of information systems/informationtechnologies (IS/IT), where the extent ofcontracts is the biggest. In this case we speakabout outsourcing of IT infrastructure, applicationsof technical support, hardware, software, dataadministration, professional staff, web sitehosting, development of applications for businessprocesses, help desk services (customerssupport), networking (net connection), commu-nication services, data centres operations, ITinfrastructure. Areas, where to utilize outsourcingapart from IS/IT is possible, have been recentlyfound in many companies’ activities: Accoun-ting and administration evidence, Facility

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management (cleaning services, supportingservices, catering services, property services,security services), Human resources, Ecologyand environment, Logistics, Science andresearch activities.

Today, outsourcing is used primarily asa tool of strategic business management.Priority task of outsourcing is been becomingthe providing and increasing of the quality levelof performing activities and cost savings to paythe attention to core business [15]. Companiesfrequently point to the cost savings for laborand training, but also cite the benefits ofreleasing corporate resources for alternativeuses and allowing corporate resources foralternative uses and allowing the business tofocus on its core competencies [16].

Praxis has confirmed that ideas about costssaving are often higher than it is actually. Theproblem seems to be that the level of own costsfor realizing of the outsourced processes isquite difficult to identify and to know in thephase of decision-making. Companies can hardlymonitor the costs of own processes and then todetermine the level of potential costs saving.The methodology of Activity Based Costingcalculation is necessary to know to it. Thiscalculation considers as a basic philosophy ofcosts causes the business processes [1]. Oneimportant issue that determines the eventualform and structure of the ABC system is seniormanagers' demand for data utilizable fordecision making. All these requirements needto be defined in relation to the structure of thesystem. An effectively implemented Activity-Based Costing system then provides accurateproduct costing and proves a useful aid formanaging business operations [13].

3. Partial Results of ResearchConcerning on OutsourcingUtilization in Wood ProcessingCompanies in Slovakia

Within the solution of the research project VEGA1/0360/08. “Functional and Design Parametersfor the Evaluation of Economic Effectiveness ofOutsourcing in Wood Processing Companies”by means of a partial solution we have foundout possibilities of outsourcing application incompanies processing wood in Slovakia. Throughthe research which was done as a combinationof a questionnaire and personal interviews wewanted to get responses to questions which

characterize basic areas of outsourcing inselected wood processing companies inSlovakia. Our aim was to map the currentsituation in areas utilizing outsourcing and tofind out potential opportunities, interest andbarriers of practical utilization of outsourcing ina company practice of wood processingcompanies in Slovakia.

The preferred research goal was to carryout quantitative research by using the selectedsample of companies of wood processingindustry aimed at outsourcing utilization. Duringsolving the research project within the definedresearch goal by means of the questionnaireexecuted through e-mail correspondence,telephone or personal conversation. Weaddressed totally 146 companies/enterprisesbelonging to the wood processing industry andlocated in Slovakia. At first we contacted all thecompanies associated in Association of SlovakRepublic Wood Processors and later we haveaddressed individual contacts in given industry.

Since we made an effort we succeeded tosummarise 49 completed questionnaires whichpresent about 34% return. Representation ofindividual companies which were willing to provideinformation for the research in a structure ofclassification due to company regional locationand due to the size of companies - based onclassification of the European Commissionnumber 2003/361/EC (Tab. 1).

As the primary goal of the task theresponse to the question “To which rate and inwhat areas is outsourcing utilized in companiesof wood processing industry in Slovakia andwhat are preferred reasons of its utilization?“may be determined. This way defined goal isquite wide and that is why it was necessary todivide the research into several partial questions.Within the frame of content specification of ourcontribution we will present only partial resultsof the research in the following part togetherwith the presentation of statistical reliance (bythe correlation analyses) of selected questions.

For the valuation of statistical reliance ofindividual questions correlation analysis wasused. Correlation means the linear dependencebetween random variables. Statistical dependenceis called the correlation coefficient in the caseof linear dependence between the variablesdegree of tightness. Correlation coefficient oftwo dependent random variables x and y is theproportion of covariance and the product of

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standard deviations. Correlation coefficienttakes its values from the interval <-1,1>. Thereader is referred to as the covariance whichexpresses the same time as changing thevalues of two variables. Pearson's correlationcoefficient is calculated by dividing the cova-riance standard deviations. Pearson correlationcoefficient (Pearson's product moment – r) ispossible to determine by this formula:

xy – x–y–r = ––––––– (1)

sxsy

where: r – Pearson’s product moment(coefficient),x, y – variables x (y), sx, sy – standard deviations of variables x (y),

Interpretation of the size of the correlationcoefficient is a very common problem. Accordingto Cohen and the correlation is trivial under 0.1,

from 0.1 to 0.3 correlation is small, from 0.3 to0.5 correlation is medium and over 0.5correlation is large. Correlation from 0.7 to 0.9is very large and from 0.9 to 1 is almost perfect.

Questions in questionnaire were aimed foridentification: the region covered by thecompany (table 2, marked as a question A),sizes of the company (B), the use of any formof facility management outsourcing (C),reasons of use/non-use of outsourcing (D/E),assessment potential of economic efficiency ofoutsourcing use (F) and interest in the use ofoutsourcing services in the future (G). All ofquestions in questionnaire were comparedeach other through correlation analysis of pairsand then the correlation dependence wasexpressed. Tab. 2 presents the correlation matrixof the individual questions with expression of itslevels depending.

Tab. 1: Structure of Database of Presented Research Enterprises

Size/Region Micro Small Medium-size Large Totalenterprises enterprises enterprises enterprises

West 2 7 6 1 16

Middle 4 10 5 2 21

East 3 5 3 1 12

Total 9 22 14 4 49

Source: [15, p. 36]

Tab. 2: Correlation Matrix of the Individual Questions of Questionnaire

A B C D E F G

A - 0.09 0.33 0.21 0.37 0.12 0.16

B trivial - 0.28 0.39 0.13 0.16 0.14

C medium small - 0.77 -0.58 0.04 0.42

D small medium very large - -0.60 0.19 0.56

E medium small large large - 0.07 0.53

F small small trivial small trivial - 0.08

G small small medium large large trivial -

– A Region – E Reason for rest of outsourcing

– B Size of enterprises – F Evaluation of economy efficiency of outsourcing use

– C Outsourcing use in Facility management – G Interest in using of outsourcing

– D Reason for use of outsourcing

Source: [15, p. 35]

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The statistical analysis of correlationreported a high linear relationship between thepossibility of outsourcing use in facility

management and main reasons for outsourcinguse, but also with the main reasons for rest ofoutsourcing in companies.

Fig. 3: Main Reasons for Outsourcing Use in Wood Processing Industry in Slovakia

Source: [15, p. 39]

Wood processing industry in Slovakia isinfluenced by the economic crisis causingstagnation in the construction industry and decreasein the customer demand for construction,woodwork and furniture products. Many companiesare looking for any ways of cost savings andrecently more and more companies increasinglyhave used the possibilities of outsourcing.

The outsourcing is commonly used in largeand medium-sized enterprises when the mainreasons are reduction of overhead companycosts, orientation into core business and increaseof quality for outsourcing processes (Fig. 3).The use of outsourcing services absence mainlyin micro and small enterprises. The main reasonof inefficient using of outsourcing in the smallcompanies is regarding to the lack of companiesoffering outsourcing and little time thatcompanies spend on the research in this issue.

As it has been already mentioned,outsourcing of facility management includes notonly technical management and administrationof buildings, but also maintenance, specialinspection, services, educational and cateringactivities, emergency and energy services.According to the survey result outsourcing offacility management (Fig. 4) in the complex

form is most used in large enterprises. In theother types of enterprises (middle-size, small) itis used mainly in areas of administration,educational and catering activities. In micro enter-prises is outsourcing use only in administrationactivities (law and economic consulting,accounting and payroll administration).

Priority task of using facility managementoutsourcing in company practice is becomingincreasing quality level of outsourcing activitiesperformed with the aim of cost saving [4].However, experience has confirmed ideas oncost savings are often higher than it actually ispossible. The problem to determine the leveland to know their own costs for theimplementation of the outsourced processes isquite difficult. For many companies is extremelydifficult able to track costs on their ownprocesses and subsequently to determine thelevel of potential cost savings from using ofoutsourcing services.

Interest in the use of outsourcing servicesin wood processing enterprises, as the resultsof the survey present, is evident (Fig. 5). Alllarge companies and more than half of middle-size and small companies have expressedinterest in expanding the use of outsourcing

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services in the close future till three years.Assuming the fulfillment of the benefits that theimplementation of the outsourcing can bring forcompanies, a significant number of middle-size, small and also micro enterprises considerthe use of outsourcing services in the longerterm of 5 years. The survey also detecteda lack of interest in the outsourcing use in somebusinesses, the main cause is solving ofimportant issues how to keep the market ina competitive environment, but also a lack oftime and space to deal with this problematic.

4. Project of Facility ManagementOutsourcing

The basic prerequisite for facility managementoutsourcing is optimization of business costsfor their administering and improving the qualityof services delivered. To implement theoutsourcing of facility management in theorganization it is necessary to prepare a high-quality project of its ensuring. The generalmodel (design) of applications of outsourcing isvery difficult to present because it is influencedby many factors, such as the specific features

Fig. 4:Used of Facility Management Outsourcing in Wood Processing Industry in Slovakia

Source: [15]

Fig. 5: The Possibilities of Outsourcing Application in the Wood Processing Industry in Slovakia

Source: [15, p. 42]

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of the company (industry, size, region, organiza-tional structure itself, ...), the nature of theoutsourced activities, the timetable for theimplementation, financial budget and type ofoutsourcing relationship. In spite of it, there areattempts to define certain phases ofoutsourcing theoretically.

In the following part is presented a briefsummary of the draft form of the implemen-tation process of outsourcing, according tovarious authors, for example to Corbett [17]and others [3], [10], [15] in accordance with therequirements of international standard ISO10006. ISO 10006 "Quality management – QualityDirective in the Management of the Project" isan international standard that providesguidance on elements of the quality system andprocedures, for which the application in termsof project management is important. Thisstandard complements ISO 9004-1 standardand is applicable for projects of varying scopeand complexity. The general applicationprocess of outsourcing facility managementcan be defined in several phases:� Analysis of the areas identified for

outsourcing facility management,� Definition of requirements for the supplier,� Selecting an outsourcing provider,� Terms and conditions for setting the

outsourcing relationship,� Management of the transition phase of

outsourcing relationship.

The overall implementation time ofoutsourcing greatly depends on many factorswhile the time horizon of implementation isestimated from a few months to one year.

4.1 Analysis of the Areas Identifiedfor Facility ManagementOutsourcing

The aim of this stage is to analyze the areas oforganizations with potential to be outsourcedby facility management with the calculation ofpotential benefits in the reduction or costsavings. Based on the analysis of the functionalareas, a company must answer a few questions:� What is the available offer of facility

management services on the market?� Which areas related to the administration of

building would be appropriate to outsource?� Outsourcing of which area will be of the

highest benefit?

� What will be the potential cost savingsresulting from the use of outsourcingservices?

� It is appropriate to use the services of onesupplier or more service suppliers?

� Analysis of strengths and weaknesses ofthe current status and opportunities andthreats status outsourced?

For the analysis of the area identified forfacility management outsourcing is possible touse a suggestion about potentialities for theSWOT analysis's development concerning threatsfrom the authors Simeonov and Lambovska. Bypresenting empirical results of their implemen-tation, the instruments of measuring and evaluatingof threats are substantiated, provided threatsevolve from the aggression degree of licensinginstitutions [19].

The critical question of this phase, whichgreatly affects the decision-making of theenterprise, is to identify potential cost savingsand other benefits arising from the use ofoutsourcing services. It cannot be presented inthis contribution in complex form. From resultsour proposals is obvious that the economicanalysis of the potential of outsourcing inpractice it is necessary to work with conceptssuch as ABC calculation, criterion cost ofoutsourcing and transaction cost. Primary taskis to establish the level of potential cost savingsas the primary effect of the use of outsourcing[14]. In the first step is necessary to determinecriterion outsourcing costs (CCO), for the potentialanalysis of economic calculations of advantages,respectively disadvantages of using outsourcingservices as follows formula 2:

CCO = own costs of process (or activity,operation) – transaction costs (2)

From results follow the need to determineown costs of selected business process and itsdifference from the level of transaction costs(additional costs required to management theoutsourcing relationship determined on thequalified estimation). Transaction costs ofoutsourcing can be expressed as the total costsof accounting period or on the level of costsrelated to the specific unit. The specific unit isdetermined on the base of discussed area ofoutsourcing (facility management, administration,logistics and other), as well as on the level of

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price offer of the external subject for given typeof service (employee, document, administration,area and other).

The complex presentation of this methodologyis presented in the literary sources Potkány, M.Outsourcing Companies in the Wood ProcessingIndustry in Slovakia. Zvolen: TechnicalUniversity in Zvolen, 2011. 79 p. ISBN 978-80-228-2194-0. Very important information can befound in [21] and [5].

4.2 Definition of Requirements for the Supplier

Based on the results of the previous phase, it isnecessary to define basic requirements for thesupplier(s) of outsourcing services, whereby itis recommended not to focus on specific resultsbut to identify the type of outsourcingrelationship and definition of responsibilities forservices rendered. Definition of requirementsshould include:� detailed specification of the range and

quality of delivered services,� method of technology and information

exchange in connection with outsourcingsrelationship (acknowledgment and acceptanceof services),

� definition of liability (in the form of insuranceguarantees determining the extent ofinsurance coverage),

� qualification requirements and the size ofthe supplier with proof of ownership ofresources to provide services: licenses(certificates, certificates serving as permitthe implementation of the activity or asproof of their quality), references (list oforganizations using the services providerwho predicate of the ability to provideservices).

4.3 Selecting an OutsourcingProvider

Selection of the contractor to ensure theassigned area (therefore outsourcing provider),is based on the assessment of criteria set out inthe previous stage. However, the bid foroutsourced activities designated by the supplieris taken particularly into account – its financialstability, number and expertise of employees,licenses, certificates, licenses, references andguarantees the contractor. Own choice of an outsourcing provider can take differentforms and most often takes the form:

� public tender,� tendering,� direct addressing of recommended suppliers.

When evaluating potential suppliers it isrecommended to compile an EvaluationCommission (with internal staff of organizationinvolved in the future cooperation but also withexternal evaluators) and use of multicriteriadecision-making with more preference points orweighted point method with the assessment ofthe criteria scoring system based on definedcriteria such as scale from 1 to 10.

4.4 Terms and Conditions for Settingthe Outsourcing Relationship

In any relationship there must be conditionsaccording to which this relationship is functional,therefore, negotiations about the outsourcingrelationship is an inseparable part of theapplication process of outsourcing. Outsourcingcontract is for a certain period and it is possiblethat, according to its content, the outsourcingrelationship may continue for several years.The contract must be drawn up and written todescribe the plan how the relationship will bemanaged.

In practice, there is no outsourcing contracttype, because every relationship is different. Whencreating a contract, it can be inspired by a so-called checklist contract about outsourcing.Outsourcing contract of a specific type shouldcontain at least the following points [17]:� Definition of the Parties: the definition of

customer service and its supplier.� Subject of the contract: the essence is the

determination and specification of servicesbeing provided within the outsourcingprocess with the possibility of defining theirlevel of quality and specific outcomes.

� The clause on transfer of responsibility: thetransfer of responsibility for servicesperformed for the contractor with thepossibility of defining the fines andcompensation for damages.

� Life of the contract: determining the timehorizon of the contract (minimum time isrecommended for two or for three years).

� How to change the contents of the contract.� Mode of termination of the contractual

relationship: there are several options suchas early termination of the contract,withdrawal, cancellation of the agreement

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(in each case, defining the reasons andnotice period).

4.5 Management of the TransitionPhase of OutsourcingRelationship

The project of outsourcing of facility manage-ment is not finished with selecting the provider(s) and with the conclusion of an outsourcingrelationship contract but it continues in a so-called transition phase. Based on the Takeoverdocumentation, the service provider takes overoperation of the facility management servicesand become the legitimate executor.

The transition phase is actually a process oftransformation when a selected area is replacedby an external service which often leads torestructuring of business processes and also toa change in the organizational structure of theenterprise. The incorporation of outsourcedservices to the restructured business processesshould be closely monitored and evaluated. It isrecommended to create a working position inthe enterprise that would be responsible forrelationship management, evaluation, andsolving of any emerging problems and thepreparation of business administration (the so-called outsourcing manager).

Conclusions

Facility management is an effective form ofoutreach business management which aims toprovide relevant, cost-effective services tosupport the main business activities (corebusiness) and allow them to optimize. Atpresent, marked by the financial crisis, is theapplication of facility management most currentbecause it provides savings and optimization ofoperating costs promotes increased employeeperformance and thus contributes to increasethe profitability of the enterprise. The mostcommon forms of application of facility managementin the enterprise is a partial or completeoutsourcing, whose main components aretechnical and administrative management ofbuildings, interior cleaning of winter andsummer maintenance exterior, provision of energyservices and water management, includingservices. For implementation of the outsourcingof facility management in the organization it isnecessary to prepare the project's qualityassurance which includes an analysis of areas

identified for outsourcing facility management,requirements definition and vendor selection, to determine the terms and conditions relatedto outsourcing and management of organiza-tional change.

Partial results of research concerning onoutsourcing utilization in wood processingcompanies in Slovakia demonstrate thatoutsourcing is commonly used in large andmedium-sized enterprises when the mainreasons are reduction of overhead companycosts, orientation into core business andincrease of quality for outsourcing processes.According to the survey result outsourcing offacility management in the complex form is mostused in large enterprises. In the other types ofenterprises (middle-size, small) it is usedmainly in areas of administration, educationaland catering activities. In micro enterprises isoutsourcing use only in administration activities(law and economic consulting, accounting andpayroll administration). Interest in the use ofoutsourcing services in wood processingenterprises in the future is evident. All largecompanies and more than half of middle-sizeand small companies have expressed interestin expanding the use of outsourcing services inthe close future till three years.

The total process of outsourcing implemen-tation in a company depends on many factors.Time horizon of outsourcing implementation isestimated within a few months to one year andit is necessary to consider the risks ofoutsourcing use (loss of control over theoutsourcing activity, the possibility of anexternal orientation to their own targets, breachof contract from outsourcing provider). Riskscan be already eliminated in the process ofnegotiating its incorporation into theoutsourcing contract, which will then managethe outsourcing relationship for several years.

Outsourcing is one of tools which are ableto release potential fixed in the areas that donot belong among the core activities. On theother side if the way of outsourcing utilization ischosen correctly as well as the partner –company key abilities and their competitiveadvantages may be strengthened. But the taskof economic and non-economic benefits is stillthe open one as well as the risks of its utilization.It is the competence of each organization to decide freely about the opportunity of itsutilization. Problem of deciding of outsourcing

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facility management practices in use or not ??is a question of its economic efficiency. Theproblem determines the level of its costs ofoutsourced processes that are not among themain items of core business activities. Most ofthe overhead costs must be allocated througha methodology of activity based costingcalculation. To determine the allocation base,there is proposed for each group of overheadcosts to look for its suitable type, e.g. using thefunction CORREL of processor Microsoft OfficeExcel. Data of costs and level of alternatives ofallocation bases are recommended to compareminimally quarterly. Then is necessary todetermine criterion outsourcing costs (CCO), forthe potential analysis of economic calculationsof advantages, respectively disadvantages ofusing outsourcing services. The application ofsuch calculations in enterprises, however,requires changes to the accounting andcorporate governance costs.

This work has been supported by theSlovak Scientific Grant Agencies under thecontracts No. VEGA 1/0268/13, „Perspectivesof Facility Management Application for theIncreasing of Competitiveness Within theWoodprocessing and Forestry Companies inthe Context of Outsourcing Principles.

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prof. Ing. Milota Vetráková, PhD.Matej Bel University Banská Bystrica

Faculty of [email protected]

doc. Ing. Marek Potkány, PhD.Technical University in Zvolen

Faculty of Wood Sciences and [email protected]

doc. Ing. Milo‰ Hitka, PhD.Technical University in Zvolen

Faculty of Wood Sciences and [email protected]

Doruãeno redakci: 13. 5. 2012Recenzováno: 28. 6. 2012, 16. 7. 2012Schváleno k publikování: 17. 1. 2013

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Abstract

OUTSOURCING OF FACILITY MANAGEMENT

Milota Vetráková, Marek Potkány, Milo‰ Hitka

Facility management is an effective form of organizational changes that support the orientation ofthe organization on core business activities. At present, at the time of financial crisis, theapplication of FM is used the most since it provides savings in operating costs of organization. Themost common form of FM application is outsourcing. Outsourcing is understood as a modern trendof management and also the changes which serve to transfer support activities of a company onan external provider. Practical utilization and application of outsourcing is frequent and very popularin many industries of all developed countries since it brings a lot of positive effects. Woodprocessing industry in Slovakia is influenced by the economic crisis causing stagnation in theconstruction industry and decrease in the customer demand for construction, woodwork andfurniture products. Many companies are looking for different forms of cost savings and recentlymore companies have increasingly used the possibilities of outsourcing. The authors present theresults of the questionnaire research aimed at the use of outsourcing within the chosen sample ofwoodworking industry companies in Slovakia. It focuses on the area of outsourcing FM with the useof correlation analysis lining the dependencies of the chosen questions. Within the article there isalso the presentation of the proposal for partial methodology of evaluation for economicaleffectiveness of the potential outsourcing use which within the ABC calculation methodologysuggests implementing conceptual schemes such as criterion outsourcing costs, transaction costsand costs savings. The authors also present the suggestions for general methodology ofoutsourcing FM implementation project which includes analysis of outsourcing opportunities andthreats in this area of business, definition for service supplier requirements, selection of providers,contracting the conditions for the contract relationship and the management of the transonicphases of the outsourcing relationship.

Key Words: facility management, outsourcing, wood processing industry, changes.

JEL Classification: L69, M21, M29.

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