Why bigger isn’t always better

March 27th, 2018

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The collapse of Carillion should alert clients to the fact that choosing large well established service providers does not necessarily afford the level of quality and surety that perhaps led to their appointment in the first place.

Quality vs. value

The FM industry remains a commoditised environment and when clients are looking for “value” they are often attracted to large firms which are happy to offer excessively low margins. The corporate sales machines are impressive, slick presentations and attractive delivery models offering guaranteed year on year savings. This is where most clients fall into the trap and simply become revenue generators for the corporate engine. After all, if your service provider has annual revenues running into the £billions they need growth in the £millions.

Naturally for any contract sold at low margins there will be an expectation placed upon the service providers’ delivery teams to actively look for ways to improve revenue and margins. This often creates tension as clients perceive that they are not receiving the services they thought they had procured. How often are the added value deliverables presented by the long since departed sales team, actually scheduled out and reviewed on a regular basis to establish a) whether those commitments have been fulfilled b) to measure the impact of those initiatives?

Ironically Carillion, like many other larger providers outsource some of their core delivery services which can lead to compromises in quality over cost. This situation can be exacerbated when the tier two service providers don’t get paid on time. Ethical business practices are important, so it’s essential that clients take an active interest in how promptly their service provider is paying their supply chain, especially when they have paid the service provider on time.

Often it’s the financial value that dictates how important an individual contract is to the service provider, but developing strong relationships over the lifetime of the contract can be difficult if your allocated Account Manager is under pressure to manage their next contract win.

Small but stable

It’s important that organisations don’t discount SME’s as they have a lot to offer and are often ‘simply better’ than their larger competitors in delivering an intrinsically good service. SME’s tend to have much better employee retention rates which can be a good barometer for employee engagement and customer focus. Fundamentally SME’s are passionate about their businesses, they value their customers and work harder to establish those all important business relationships.

So what are the really important criteria for selecting a service provider? It would be naïve to suggest that cost isn’t a primary consideration; however, there are several factors that indirectly affect the overall ‘cost’ of the service provision to the client. For example:

  • How much do they value your business? Are they responsive and reliable?
  • Do you have trust in their ability? Do they have a collaborative and transparent approach?
  • Do they understand and serve your needs in a proactive manner?
  • How much of your own management resources are absorbed?
  • How easy would it be to disengage if things didn’t work out?

 

Increasingly clients are recognising the benefits of procuring services aligned to core competencies rather than a broad Total Facilities Management approach. It is here that SME’s can demonstrate their expertise and the value they can bring as a result.

Whilst SME’s are potentially more vulnerable to acquisition and the impact of fluctuations in cash flow, a robust due diligence process will soon determine their suitability and financial stability. Those SME’s owned by a strong parent company are able to offer potential clients the best of both worlds; a best in class service aligned with financial strength.

 

Mark Pawson

Operations Director

 

 

About us

Team Q Maintenance has an annual turnover of c. £16m and employs around 120 people. Our core business is the provision of M&E Maintenance services to commercial and industrial properties for both public sector and private sector clients. Closely aligned to M&E Maintenance, we also have the capability to design and install M&E Projects, carry out building fabric maintenance and provide energy services. We are part of the Turner Group, a Glasgow-based and family-owned group of companies with a turnover in excess of £160 million employing over a 1,000 people.

To find out more about what we do, visit our website or head over to our parent company’s website for more information about the wider Turner Group. Or alternatively, call our head office on 01992 507 320.