In the face of current economic realities and the attendant belt-tightening approach of most businesses, particularly this year, Femi Akintunde, Managing Director of Alpha Mead Facilities & Management Services Ltd (AMFacilities), has advised businesses to sign long-term facilities management contracts to enable them retain the high standards of their buildings and systems, reports Bennett Oghifo
The unfavourable economic environment in the country is also having negative impact on the facilities management sector, as most businesses now focus on cost-saving measures.
However, the ability of business owners to retain the top-rate quality of their establishments, particularly as things are this year, will depend on their willingness to sign long-term facilities management contracts, said Femi Akintunde, Managing Director of Alpha Mead Facilities & Management Services Ltd (AMFacilities), a leading Facilities Management Company in the country.
According to Akintunde, organisations that take a long-term approach to facilities management contracting would “be able to manage their maintenance cost and hedge against the imminent price fluctuations, without being hard-hit by the prevailing market conditions.”
Akintunde, who was analysing some of the key economic indices and how they will affect the Real Estate and Facilities Management industry in 2016, advised organisations seeking to pursue cost-cutting programmes by reducing maintenance budget to think long term, because, according to him: “The excitement of cheap service goes long before the pain of poor quality.”
He said, “For the FM industry in Nigeria, I can tell you, one of the ways to survive this year is not the short cut. The only way to survive is to speak the language of business to your customers; and that language is value addition to help them meet their bottom line.”
He said: “The current market conditions compel most businesses, including Facilities Management, to run on stringent cost frameworks. But this is not the time to begin to structure short term contracts because you want to cut cost. Cutting cost by engaging in short term contracts is not sustainable. It is only a matter of time before the pains of poor quality catches up.
“Rather, this is a time to sit with your FM service provider and have a partnership approach to business. Having a long term view of your maintenance cost is one of the ways to hedge against the market this year. Organizations with short term views will not only spend more this year due to eminent price fluctuations, they will also spend the next three to four years incurring additional cost, due to the high rate of deferred maintenance they are accumulating now.”
He further explained that structuring long term contracts has lots of advantages for the businesses and FM providers. He noted that this gives the FM providers comfort to invest in building capacity, explore economy of scales, and seek alternative ways of adding value to the business.
He said, “This is a time where organisations must seek ways of responding to our current economic realities. But it is also a time organizations must focus on their core business, rather than focus on structuring short term FM contracts or pursing cost reduction without recourse to quality or efficiency of service. Imagine a case where an organization is expending executive time every month to review Facilities Management cost, when its competitors are in the boardroom thinking of how to get the largest part of the small pie in the market. 2016 is not a year when any business can afford to be distracted. My advice is focus on your core business to drive revenue. Let your FM provider handle how to reduce your operating cost.
“Businesses need to understand that long term contracts are not cast in stone. The fact that it is long term does not mean it cannot be reviewed if either of the parties is not meeting the stated obligations. So long term contracts only give comfort to the contracting parties.”
He said, “For example, when an organisation gives you long term contract, as a Facilities Manager, it gives you comfort to invest in building capacity that will serve the organisation for long, and you will really strive to understand the business. But if you have a two or three year contract, or even one; like some companies do, it is likely for you to do touch and go because the time is too short, and you don’t know if you are going to be there tomorrow.”
Akintunde also urged FM professionals to earn the trust of the market by delivering real value. “Facilities Management professionals must seek ways of building capacity that can show real value to the customers. This is not a time to compete with price. FM Organizations looking to compete with price will hurt themselves this year, because what the market requires is not low price.
“Low price cannot deliver to the level of sophistication the market demands today. What the market requires is efficient and quality FM services that can help them perform optimally and improve the life cycle of their assets. If you manage a generator at low price for example, you will not be able to service it at the right time and that will affect the asset lifecycle cost. But if you can show the customer how your FM process will help them get the required 10,000 hours out of their generator, they will appreciate you better than when you price too low; and a generator that is supposed to deliver 10,000 hours ends up packing up at 4,000 hours. The customer has already lost 6,000 hours on the generator and has to also bear the huge cost of replacement. No customer will appreciate you for that. They will forget that you priced low and blame you for inefficiency.”