Think FM: why is profit it considered a dirty word?

Profit isn’t a dirty word, so why does the (FM) world think it is? That’s Jeremy Waud, chairman of Incentive FM, speaking at last week’s ThinkFM, the BIFM’s flagship conference. Waud was part of a panel debate discussing how to disrupt the race to the bottom which has seen Carillion fail in spectacular style, disruption at Mitie, and Interserve and Capita issue profit warnings.

And while many have been quick to lay the blame at the supply side’s door, Waud said clients had to take their share of the responsibility. “The customer gets who the customer wants. There’s too much repeat procurement, too little creativity and too much focus on margins from customers,” he told the 250-strong audience who were largely nodding in agreement. “Proving you have been through the process by re-tendering every three years doesn’t prevent you getting the same outcome each time,” Waud added, referencing Einstein’s well-used quote that the definition of insanity is doing the same thing over and over and expecting different results.

One client-side facilities professional who has clearly got the message is Ed Hudson at UBS who talked about how he wanted UBS’s FM suppliers to be successful “so that together we can invest in innovation”. To this end he is focusing on longer-term contracts with them.

But Ruby McGregor-Smith, former CEO of Mitie who was talking in her new role as senior adviser at Mace, argued that not all service providers are looking for long-term relationships. With a long contract it’s very difficult to know all the things that might change so partnership and flexibility are hugely important, she said. “Outsourcing works best with great relationships and joint goals.”

But she accepted that the service provider has a duty not to bid certain contracts. “The problem is that many companies bid for things they cannot do. You have to know what to bid for. If it’s bid right it will be fine. But why bother bidding if the customer is pre-historic and just beats you up on price?.”

Following a presentation from George McFarlane, director of sector development at the CBI, on the future of tarnished procurement models, all the panellists agreed that SMEs had been taken out of public sector procurement because of the complexity and cost of bidding. “George, you’ve got to sort it out,” urged McGregor-Smith to laughs from the audience.

The panel debate was the high point of the day, which included both keynote sessions and more practical how-to break-outs. There was the odd dud session – a talk from Siemens with a whizzy video demonstrating the factors that affect workplace productivity and the future office said nothing new; and my 15-year-old son wouldn’t have learned anything fresh from an afternoon breakout on project management. But this was a good conference, with interesting speakers prepared to talk about the key issues facing our industry. It more than lived up to its tagline to Think Beyond FM and Adapt or Disappear. The pertinent question of the day goes to the brilliant David D’Souza, head of engagement at the CIPD, who, in this new era of data privacy, asked “when does a smart building become a stalky building?”

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Magenta Editor