Who's afraid of the procurement wolf?
I read an interesting article in PFM last week in which Tim Fryer was speaking to Noel Clancy, CEO at Shepherd FM, about procurement. I’ve been consulting with a number of senior figures in the FM contracting world recently and a recurring theme seems to be frustration with the procurement process. I can certainly empathise with this and would be keen to understand what could help create a system that would be viewed in a more favourable light.
The key question that arises when you discuss this subject is whether or not the procurement process allows companies to evaluate quality alongside the cost of service provision. Should the evaluation process be the same when assessing a product as it is when assessing a service? It’s my understanding that the procurement process intends to establish ‘best value’ and does so in most cases by looking at the quality/price balance although I have spoken to a number of clients that have told me that they consistently win the quality side of the bid but come 2nd on price so are missing out on the business. This begs the question – just how important is quality?
In Tim’s piece he raises a good point; is it fair to hold procurement alone responsible for the selection criteria and are they being given enough of a remit to look at long term value and quality of service? He also touches on the fact that procurement is a transient role. A client of Workplace Law Career Network (who shall remain nameless) went one step further on this matter when we spoke last week and said that it is highly unlikely that someone in procurement will be with the company the length of an FM contract and that they simply aren’t accountable. He went on to raise fears about TFM contracts, en vogue in the current economic climate, but largely untested with very few contractors actually in a position to deliver a total facilities management contract with equal levels of quality across soft and hard FM service provision. At the end of an unsuccessful tenure the procurement team have gone and the incoming FM contractor has a mess to clear up.
My network tells me that FM contractors are now being far more selective about the work they tender for. Clients should remember that there are time and cost implications from day one of the tender process and with this in mind if contractors perceive that their bid will not be evaluated in a fair and balanced manner is it worth them even throwing their hat in to the ring? The implications of this are that the contractors that can afford to ‘buy’ work will continue doing so and this may affect their ability to deliver a comprehensive service and still make a margin. Does this mean that corners will be cut?
Although frustrated, few FM contractors are likely to be able to claim that their procurement process is any different. When we tender for a recruitment PSL the emphasis is on cost, rarely are we asked about knowledge of the sector or what makes us unique. In many cases the referral of a company director outside of the procurement process stands for nothing and one potential client, in a one size fits all rejection letter, stated that any future contact with directors of that company is ‘unacceptable’. I’ll be sure to tell this long standing contact of mine, and someone I consider a friend, that I’m not allowed to speak to him next time he calls me or I see him at networking event. FM contractors seem to have the same frustrations, a good relationship with the Director of Estates, for example, who truly understands the needs of the organisation stands for nothing as soon as procurement become involved in the process.
To clarify though my aim isn’t to use this blog as a big stick with which to batter procurement divisions, instead I want to know what needs to be done to improve the process. I’d really love to hear thoughts of those that work in procurement – are your hands tied, do you feel restricted about the criteria you can judge tenders on? I’m also keen to know if I’ve called the whole thing wrong and I’m just speaking to FM contractors bitter at missing out on work because they got their pricing wrong!