Money for nothing

Are you ready to guarantee 100% performance? If so, prepare to reap the rewards. If not, why not?

Alan Millin (MSc. CEng FIHEEM) urges FMs to ‘raise the bar’ by guaranteeing 100% performance for 100% payment.

How many times have you been at the car wash, waiting patiently for your turn, only to find yourself stuck behind someone who demands that his car have every little blemish cleaned or polished, and all for a few dirhams? Have you ever thought: “What does this guy expect for 15 Dirhams, blood”?

Perhaps you have used the services of a car-washer at home or at the office and then thought that he had not cleaned the car very well. Next time you see him you tell him to make sure he cleans the wheels or the windscreen properly, or you won’t pay him.

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When we look at this in more detail though, the customer has paid money, however much or little that may be, to have his car cleaned, and that is just what he expects to get. Why should he pay the full price if the cleaners are not going to do the full work?

In a management meeting of a major company we were once discussing personnel performance and annual bonus payments.

One person suggested that, if a member of staff had achieved 95% or more of his annual target, that person should receive 100% bonus. If he achieved less than 95%, the bonus would be reduced, and if he achieved more than 100% of his target, the bonus would increase. Sound familiar?

The Vice President of the company pounced immediately. He flatly refused to consider paying 100% bonus to someone who only delivered 95% of his target. Only if someone achieved 100% of his annual target would he get 100% bonus. Anything less than 100% success reduced the bonus, while over-achievers would take home more.

So what does this have to do with facilities management, you may ask … Quite a lot, it would seem.

Let us say you have engaged a cleaning company to service your office facility, and part of the scope requires that all the waste bins be emptied daily. You find that not all the waste bins are being emptied daily.

Would you be happy paying the cleaning company 100% of its invoice value for reduced service, or would you take action to resolve the issue and get the value you required?

What about engaging a contractor to fulfill your operation and maintenance requirements? You might identify a percentage of completed Planned Preventative Maintenance (PPM) tasks as a Key Performance Indicator (KPI).

You may well have signed a contract agreeing that 95% PPM tasks completed is regarded as excellent, so the contractor gets paid in full if he hits this mark.

Let us put it another way though. You have just paid 100% of the fee for only 95% of the work that should have been completed. Our friends the auditors are going to love you now, aren’t they?

But do we also deliver less than we get paid for? I have seen several contracts where the FM provider can deliver something less than 100% while expecting to be paid in full.

Why should our customers receive less than they pay for when we demand compliance from our own providers? Of course, it is nice work if you can get it. Submit a proposal, negotiate with the client and convince them that 95% delivery is the norm and that it is actually worth paying 100% of the fee for this service.

Maybe there is another way though. What about if we agree to 100% service delivery as the requirement for 100% payment? I can almost hear the groans now, but why? All we have to do is deliver what we say we will.

Guaranteeing 100% delivery in return for 100% payment sounds realistic, does it not? The bins would be emptied, the facility cleaned, the PPM tasks completed, the monthly reports would be on the client’s desk at the required time each month.

Remember that the client is not paying us to empty most of the bins or to complete most of the maintenance tasks or to submit a report late or only 95% complete.

In the world of air conditioning, purchasing companies have been specifying ‘zero tolerance’ on chiller performance for several years now. Zero tolerance is not strictly the case though.
The buyer will accept better performance than specified, although as he does not need it, he won’t pay for it, but not poorer performance. The buyers will get what they are paying for as a minimum or the provider pays a penalty.

We often hear of ‘raising the bar’ with regard to FM service delivery. Perhaps raising the bar might be to guarantee 100% compliance or the client pays less than the full amount.

If we exceed our obligations we could get paid even more, assuming we remember to negotiate this at the outset. Would giving such a guarantee be a good selling point in your proposal when others are content to operate at 95%?

Are you ready to guarantee 100% performance? If so, prepare to reap the rewards. If not, why not?