How flexible is facility management?

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The world of facility management (FM) has been turned upside down in recent months by the corona crisis. Office buildings were completely or largely empty. This still applies to many offices. This requires a lot of flexibility from both FM teams and their suppliers. For example, company restaurants closed completely, while more frequent and more thorough cleaning became crucial for a safe return to the office.

In a normal economic recession, FM's main task is to cut costs wherever possible, an effect that is clearly visible in the annual NFC Index. We are now in a health crisis that shows that (parts of) the FM work field are indispensable. It also stresses the need to design the service provision more flexibly. Because what happens to the costs if everything suddenly comes to a standstill?

Minimal decline in NFC Index expected
This year, Colliers has again assisted many organizations in comparing their facility costs with the national averages. During this process, the benchmark increasingly became a baseline measure of "pre-corona times''. We asked the organizations about their future expectations for the costs of accommodation and FM activities. Although the average presence at offices decreased by 80% to 90% of the number of employees, we expect the NFC Index to be only 2% lower this year than in 2019. That is a decrease from 490 euros to 483 euros.

Organize services more flexibly
The corona crisis makes clear the need to organize services more flexibly. The largest services now consist mainly of fixed costs, such as security and reception. The fixed costs of the restaurant were also included. All extra services were canceled, but the contract sums remained.

The NFC Index naturally also consists of variable costs that are strongly related to the presence of employees. This concerns electricity, water, waste, coffee and meeting services. In the total of housing, workplace environment and fixed services, this only yields a cost decrease of 5% compared to last year. Since there are also additional costs for adapting the work environment, ICT, resources for making the office "corona-proof" and for furnishing the home workplace, the NFC Index hardly decreases.

More working from home offers opportunities
Due to the corona crisis, we are expected to continue working from home more often. We tend to do this all on the same days. The daily office occupancy will therefore fluctuate even more than before. This has a major impact on FM services, but also offers an opportunity to organize them differently. With Tuesdays and Thursdays as the most popular working days, the working week is often compared to a camel. Facility teams can try to “flatten” the camel humps by assigning working days to specific teams, or they can act like a chameleon. To this end, FM would have to change the service level per weekday.

Lessons from the hotel sector
An FM contract is rarely flexible, because it often specifies, based on averages, what must be delivered, when and at what quality. It is often decided to avoid as many risks as possible by agreeing on a fixed cost level. That makes the services rigid, as the corona crisis has proven to us in recent months.

Of course, a contract can never be set up for a pandemic, but we can better adapt the services to the office occupancy. We can learn from the hotel sector for this. There, a different service level is provided in the high season than in the low season. Also on a daily basis services are tailored to the hotel occupancy. This can be translated to FM.

Choose a basic service level and scale it up for busy office days. For example, the restaurant is closed on Fridays, but you can still order sandwiches. If necessary, the restaurant will open its doors. Flexibility always comes at a price. The costs for the extra services per employee will be higher, but the lower volume compensates for this. That is also more sustainable.

Ready for the post-corona era
What does this require from an FM team? First you have to gain insight into the new office occupancy. Then you determine the need for FM services per day. You adjust the services accordingly by talking to your suppliers. And finally: always think a step further. What innovations are possible that benefit both the company and the supplier? This is how you prepare FM for the post-corona era.


How flexible is facility management?

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Denise Hoogendoorn

Head of Facility Management Consultancy

Rotterdam

I am Head of the Facility Management Consultancy Department and working for clients in the Netherlands and EMEA. I advice clients on a range of Facility Management and Real Estate topics,  including benchmarking, setting up facility services, outsourcing, strategic FM, customer satisfaction,  sustainability and circularity. 

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