Facility management: taking care of
Written by: Jason Hovet, David Friday
Photo by: Tomáš Kubeš
Facility Management (FM) has come
a long way in the past five years. As FM providers have found
the most work in office buildings and retail centers, the business
is looking at new markets, which will take FM to industrial zones,
government sites, and company boardrooms.
"FM IS IN A DIFFERENT SITUATION today and the know-how is
growing," observes Zbyněk Passer, marketing director of PasserInvest,
one of the largest domestic developers. "Only three years
ago, when holding meetings, most providers were only in the basic
mode." Now service levels in the industry are quite higher.
Included in this is the human touch - meaning the employees who
clean and maintain the property grounds. "The human qualities
are growing," Passers says. Paul-Eric Jarry, CEO of Optimal
Facility Management, is reassured by this. Optimal operates around
central Europe, and Jarry confirms "that the professionalism
and commitment of workers here is excellent." The company's
internal training programs, coupled with promotion opportunities,
is having an effect on employees. "The practical result," Jarry
believes, "is a very low employee turnover rate."
For all FM's progress, its size here still doesn't compare with
EU neighbors, where FM started finding its feet at the beginning
of the '90s. "The most developed markets are in Great Britain
and Scandinavia," says Bohuslav Kyjánek, director at AB Facility.
By comparison, he believes the Czech market is only about a fifth
the size. "This means the potential here is very high," he
points out. That potential depends on clients, however, and not
all are completely open to outsourcing FM, yet.
The outsourcing question
For a developer, if they own a few buildings, it could make sense
to have their own team," opines Mervin Murray of Lordship,
a leasing agent. "If there's only one building, it is usually
more advantageous to have someone do all FM instead of hiring and
training people yourself." However, the Lighthouse Vltava
Waterfront Towers, which opened late last year, went in a different
direction, opting to manage their own single building through a
single manager. "We originally didn't want to do it in-house," says
Jan Lovětínský, the towers' marketing manager. In the end, he explains
that they were able to get someone who was experienced enough to
handle everything. Likewise, the many buildings at BB Centrum,
run by developer PasserInvest, are operated by a combination of
in-house and outsourcing. The latter accounts for the technical
side, like energy. Their own team handles property upkeep. "We
know our buildings best," Passer notes.
On the market, this isn't uncommon as many FM providers remain
specialized. But as the clients' needs increase, many firms are
expanding their services to meet the need. Danube House, which
opened early last year and is part of the expanding River City
complex, chose Centra to manage the building. Besides the physical
maintenance and administration duties, Centra can also provide
transport, laundry, real estate services, and more. At Danube,
however, Centra outsources security and technical FM, and concentrates
on maintenance and administration. There's a third area it works
on, which is client relations. "This is an important part," says
Ondřej Fukal, Centra's director in the FM division. "Every
issue is unplanned and we act as a go-between [for the tenant and
The idea behind FM is to allow clients to "concentrate on
their core business" - a line often uttered by FM providers. "If
you have a satisfied customer you don't hear from them," says
Jana Vlková, commercial director at PBW Czech Republic. "The
most common request is just to have an undisturbed operation; they
don't want to have to solve technical problems." PBW - whose
main priority is the commercial and administrative side of the
business - is in a unique situation being a joint subsidiary of
PBW Real Estate Fund, which owns Myslbek and IBC building, and
parent company of Praha Facility Management (PFM), which handles
technical maintenance at those buildings and others.
While FM in office buildings - or even a shopping center - can
prove a challenge, it can be more difficult when a business needs
to operate multiple sites. Take Carrefour. In 1998 it cooperated
with Optimal when it was constructing a hypermarket in Ústí nad
Labem. Today, Optimal manages all the technical equipment in Carrefour
hypermarkets in the Czech and Slovak republics, and has helped
cut energy consumption and costs by 15% and 20%, respectively.
Optimal's Jarry thinks more companies are seeing "that an
FM supplier is a fantastic tool to improve performance." For
example, centralizing operations through one team is a big plus
for processing and tracking data. "The main advantage for
every multi-site client is that everything is generated by scale," says
the director of Optimal, which handles technical maintenance for
(among others) more than 300 Česká spořitelna branches.
The next level
Currently, FM in office and retail is the most developed segment
of the market. The area with the greatest potential, though,
operates on another level. "The industrial field is certainly
the next high growth FM market," says Jarry, "but isn't
as mature yet." Industrial FM brings new worries. Centra's
Fukal contrasts the two fields by explaining that if water is
leaking on a desk at an office, the desk can just be moved and
work goes on. However, if water is dripping on a machine in a
factory, the machine needs to be shut down and moved, the leak
fixed, the machine moved back...which costs a company valuable
production time. Kyjánek, from AB Facility, looks at it similarly. "In
industrial zones, a mistake in providing services can mean a
drop in production," he warns.
His company knows well the difficulties in industry. AB Facility
provides complex FM to a 42-hectare site in northern Bohemia that
houses Mondi Packaging Paper (formerly Frantschach Pulp and Paper),
along with 15 other companies. Complex FM is just like it sounds:
the company handles more than 80 services from fire and emergency
- a major concern at industrial sites - to personal, administrative,
economic, and technical services. "Every industrial area,
including in this one, has high standards for security and environmental
protection," Kyjánek says. "Our execution has to be 100%."
Kyjánek further notes that differences in production can be another
complication. "FM for industry is totally different than for
offices because of the different customer preferences," says
Radka Motlochová, the marketing manager of Okin Facility. Okin
won a "project of the year" award, given by the Czech
chapter of the International Facility Management Association (IFMA),
last year for its work in the factories of Adast, a manufacturer
of printing machines. As the main partner, Okin not only provides
FM services, but also deals with other external FM suppliers and
is implementing a new reporting system, all helping to cut operating
costs by 20%. Motlochová, too, sees the opportunities in industrial
FM. "Outsourcing of support services in industrial areas is
only at the beginning," she predicts.
Industrial FM isn't the only growth area for the future. "In
terms of volume, we believe the market will expand in areas such
as industry and government services," Optimal's Jarry predicts.
While the government isn't traditionally a big user of outsourcing,
opportunities are appearing (see sidebar, p. 40). According to
Ondřej Štrup, the corporate facility manager at Skanska and founding
president of the Czech branch of IFMA, more people are now recognizing
FM's value. "It's starting to be in fashion," he says.
Raising FM's profile here has been IFMA's job, and it's carried
it out by communication and education - even some universities
now offer courses. EU entry has also helped, and EU norms are currently
being worked out in Brussels. "This will be useful as a benchmark," Štrup
remarks, "so clients know what they are getting." This
is welcome news, especially when clients are becoming more demanding,
as Jarry explains: "Quality wise, the quest for performance
has just started. We reckon that the increasing concern with costs
will lead FM operators to sophisticate their offer and adapt it
to every client's specific profile." Therefore, more emphasis
will be put on balances between capital and operating expenditures. "This
is a big challenge," Jarry admits, adding that not all providers
will be up to it.
Money from nothing
While many companies concentrate on updating technology in their
production equipment, not as many worry about their energy technology.
THAT COULD CHANGE however, as Energy Performance Contracting (EPC) starts
to gain steam. "EPC is still relatively new in the Czech Republic
and is used far less than in other countries like Germany or Austria," says
Bohuslav Kyjánek, director of AB Facility, which has the country's largest
energy performance contract with Motol Teaching Hospital.
In EPC, both parties share the energy savings, and savings are also used
to finance the modernization of energy equipment. Currently this type
of contract works best with public enterprises, like hospitals and schools,
which have tight budgets. What helps is that there generally is no initial
investment, which, according to Miroslav Marada, of MVV Energie, eliminates
some of the financial risk.
Up to now, MVV has concluded 26 contracts, all long-term, six of which
are with industrial concerns - although these make a 47% share by value
- with the rest in healthcare and schools. In total, Marada says, the
contracts are worth CZK 300 million but have generated savings of CZK
750 million. Siemens also offers EPC and has 15 contracts today, mainly
with schools and health centers, notes division director Dušan Bakoš.
Public enterprises, he estimates, make up 80% of the market.
The biggest public contract currently is Motol Teaching Hospital, which
AB Facility and ECM Facility cooperate on. From a CZK 100 million investment,
the companies expect to save Motol CZK 160 million over eight years.
This is an advantage private companies are also starting to see. "The
proportion of private customers is growing," Bakoš says, adding
that contracts for private clients are shorter, usually around five years.
This is being helped by firms - especially in industry and manufacturing
- wanting to make operations more effective. "It is obvious that
need for investment into energy saving measures and technologies is growing," Marada
says and concludes, "this should increase interest for EPC."
Start to finish - and beyond
After years of lobbying, Prague
was finally selected in 2003 to host the International Facility
Management Association's (IFMA) annual conference. For Ondřej
Štrup, the Czech branch's founding president, it just proves
the country's potential in FM. "[The conference] showed
we are interesting for FM providers," he says.
The REAL TASK now is how to make FM interesting to companies.
The future could mean moving FM from a strictly operational
role - as it's seen now - to more of a strategic role. "Right
now you're just a fireman putting out fires and doing only
what is needed," Štrup comments. His hope is to get decision-makers
to start looking at the company real estate differently and
to involve facility managers in planning, such as for relocations
or expansion. "You must have a strategy for your space," Štrup
believes. That strategy can even begin at a building's conception. "Currently
an architect is doing the work of a facility manager," he
says, explaining that including a facility manager early on
can save a few headaches later.
One solution may be prime contracting, which is a new idea
here and still relatively young in western Europe. Štrup believes
this is a way to move facility management into the construction
process. Defined as "a systematic approach to the procurement
and maintenance of buildings," prime contracting is simply
creating a team that deals with subcontractors and has overall
responsibility for projects. The idea is to replace contract-driven,
short-term projects with a multi-project team in order to create
better relationships with contractors. This then should help
lower construction costs and better forecast maintenance and
Prime contracting is still in a testing phase in much of Europe,
with no projects yet started in the Czech Republic. One example
is the British Ministry of Defence, which awarded five regional
contracts for FM on its sites around the United Kingdom starting
in1998. In Scotland alone, the team integrated more than 40
contractors on 21 core and 300-plus small sites, which boosted
cost efficiency by 30%. How soon a project like this will be
here is not known. But most FM providers know that public sector
projects, such as FM at Czech army bases, would be a lucrative
contract. Says Centra's Ondřej Fukal, "There's a huge
amount of potential there."