You read about the upcoming big trends in FM all the time, like technology and energy management. Of course these are important on a wider scale, but what about the day-to-day? Is your Facilities Management under control and performing well? If you’re tendering for a new contract, or have recently awarded one, this is not the end of the process; it’s just the starting point. Thinking about how you will monitor the performance of the contract to ensure maximum performance at optimal cost is critical.
Performance Management typically gets a light touch because nobody wants to be ‘too contractual’ and no one wants to start on the wrong foot with a new contract. There’s usually a period of time where relationships and trust have to be built, but sometimes, those relationships have already developed over a period of years. In these cases, maybe performance hasn’t been measured at all. How, then, can we start the conversation on this? No matter your stage, it’s vital to get things right from the start for successful contract management.
At its core, Performance Management is simply a continuous improvement process to ensure service is delivered at the quality as described in your contract (hopefully better!). As a constant process, the basics are laid out in four steps: Plan, Develop, Monitor and Report, and Reward.
Plan
It’s not realistic to measure all Performance Management topics because that would be time-consuming and possibly not relevant to your operation. You need to concentrate on what really matters for your contract. Maybe you’re responsible for a technical building where operations are 24/7 and you have to monitor closely the maintenance and repair regime. Or perhaps you’re operating in a building where everything must be in pristine condition and you have to keep a close watch on cleaning, repairs and projects. Whatever the situation, you have to decide what really matters to your operation and then plan what you’ll be monitoring from your contractor.
Develop
I learned through many years of experience that involving your supplier in developing a Performance Management mechanism is crucial. In this way, you can create realistic Key Performance Indicators based on SMART guidelines (remember these?). I’ve seen so many complex mechanisms that end up not being monitored because of the workload involved or because the supplier can’t comply with the requirements. It’s best if you set realistic targets as this will help you demonstrate the quality of the work for which you’re paying.
Monitor and Report
Monitoring and reporting are great ways to understand the good and the not-so-good things you are dealing with in your contract. If you have a supplier reporting to you, then this is their chance to summarise their activity and demonstrate the performance of their services based on the SLAs of the contract and the KPIs agreed between parties. This is also the opportunity to see the trends in all areas of the contract. Depending on your preferences, you might want to see an executive, lengthy, or exception-based report. However, the important thing is to understand these trends and take action for the future of the contract. A well-redacted contract includes a period for reporting; if you don’t have it, please get that incorporated as soon as possible!
Reward or Penalise
Historically, it’s been more common to see penalties for not meeting targets of KPIs rather than rewards for consistently meeting (or surpassing) them. This stage is always the most controversial part of the contract, although all parties know this will apply when a contract is signed. Recently, there has been a widespread approach to not only penalise but also reward your suppliers for good services. A fair contract will incorporate both, rewarding for constant good performance, innovation, and quality of service.
In the ideal world, Performance Management should be implemented straightaway so you can trial and test it before going live, but if that is not the case, then it’s never too late to do it. Just keep in mind that a contract is a commercial relationship between parties wanting something from the other. For successful Performance Management, remember the following:
- Do you really understand your contract, including responsibilities for each party?
- Do you know if you have enough resources to manage the contract?
- Do you know what the measure for success is, including SLAs and KPIs?
This article was originally published in PFM Magazine in February 2024.
