The Importance of Strategic FM in Local Authority Property Management

Lynda Cox
Local authorities have become significant property owners, and the way they use and manage these valuable assets is central to their service delivery.

Individual authorities vary in the size and nature of their property holdings, but all face the challenge of justifying ownership, rationalising the portfolio, and allocating resources appropriately.

Property is resource-hungry and accounts for a significant proportion of the local authority budget. The trend is towards rationalising the portfolio, especially the corporate estate, and disposing of properties. In London boroughs especially, this can release valuable land and often sought-after heritage properties. These can be replaced by leasing, owning and/or sharing smaller and more efficient buildings. Maintaining and operating any facility efficiently and safely requires ongoing robust facilities management (FM) regimes with regular reviews.

For many authorities, however, a fragmented approach to the portfolio is very common.

For many authorities, however, a fragmented approach to the portfolio is very common. They may not have procurement specialists and contract managers with sufficient understanding of the strategic importance of property and FM. Some authorities may not have accurate property or asset data or indeed have a clear understanding of their requirements or what the market can offer. It's essential to have the right data and clarity of need in order to make optimal estate and FM decisions.

FM services and costs are always scrutinised when efficiency savings are required, as they represent a large part of the property-related overhead. In recent years authorities have increasingly looked to the private sector to access these savings, but often in a fragmented and ad hoc manner. This lack of strategic FM planning has resulted in some authorities being overloaded with individual service providers, and less advantageous contracts. As authorities move towards becoming commissioning organisations this needs to change.

Most authorities know that sound asset management and thinking about FM strategically is advantageous to them. Some are well on the way to achieving this. However a long-term perspective is needed, which can be difficult when property and FM form part of a short-term political framework with short-term funding arrangements.

The more forward-thinking authorities have started to centralise their FM budgets and services, pulling them back into the corporate function, to gain greater control of both budget and compliance. The centralised approach may well bring these benefits, but authorities are finding that each service area and type of property is different and cannot necessarily be served by the same type of FM contract.

The more forward-thinking authorities have started to centralise their FM budgets and services, pulling them back into the corporate function...

Local authority commissioning is usually complex and attempts to simplify it tend to backfire. There is no shortcut to rigorous contract documentation – and in some cases it may be better to have a bespoke contract for each service and group of properties, bearing in mind that the contract must be sufficiently robust to manage private sector providers. The pre-contract work is vital and often doesn’t get sufficient attention.

The NHS, by comparison, has a more developed approach to FM. Obviously the NHS has greater criticality and more stringent compliance issues, but there are lessons to be learned for local authorities from this experience. In the NHS, property has typically been managed on a national government level and is more usually considered a strategic resource. FM is accepted as a strategic cost and the discipline has a higher profile with greater understanding.

At Faithful+Gould, we encourage authorities to explore new commissioning models, alongside a collaborative approach and robust public-private sector partnerships. Engaging with the private sector in a less adversarial way, for example. The variety of service delivery models is expanding, with some authorities favouring framework agreements to streamline the tendering process.

The variety of service delivery models is expanding, with some authorities favouring framework agreements to streamline the tendering process.

We provide expert advice on the framework approach. We are currently working with a number of authorities, helping them assess which framework is right for them, and then supporting the subsequent procurement. We also support authorities in the development of their contract management skills, by knowledge transfer and upskilling. We act as a critical friend in reviewing current contract arrangements and procuring new contracts with FM providers.

Our strategic facilities and asset management consultancy services are often successfully commissioned alongside our project management, commercial management and building surveying services, as the strategic decisions made often inform operational delivery such as refurbishment, new build and reconfiguration of property.