Maintaining the balance between client and service provider

Maintaining the balance between client and service provider

Official agreements are essential in providing clear detail on the scope of services required from FM contractors, but can they be future-proofed to ensure they remain relevant in the future?

One of the most frequently-shared pieces of information from FM service providers is the announcement of a new or updated contractual agreement.

Contracts are seen as an essential element of business operations by both clients and service providers, which are typically used to formalise the agreement between the main stakeholders and provide a clear understanding of all the requirements involved.

In addition to setting out the scope of works included in the deal, they should also include the payments agreed and all terms and conditions.

These agreements are regarded as essential in providing protection to both the client and the service provider, ensuring that the services set out in the agreement are delivered, while also allowing those providing the services to receive the correct level of remuneration.

Everyone in business – and most certainly those working within the FM industry – will know that contracts are not capable of covering every eventuality within the complex world of the management of facilities, raising the question of how to deal with new or unexpected developments after the contract has been signed.

Industry experts have discussed their experiences within contractual arrangements over the years, citing both good and less positive aspects. The issue of new or unexpected developments occurring is frequently included in these conversations, with some advising that these can be included in the ‘special’ or ‘one-off works’ sections of formal agreements.

These are frequently included, particularly within wide-ranging contractual arrangements, to allow both sides to negotiate the details of extra works required. This will include the replacement of new plant and equipment in the event of a failure not covered within planned and preventive maintenance (PPM) schedules, or additional services required within any other hard or soft service FM contracts.

Most FM industry professionals accept that it is not possible to include every possible eventuality within the scope of a contract and this is regarded as both a strength and a weakness, depending on a number of aspects and attitudes adopted by those involved. There is a long list of potential developments, including difficulties that can emerge when individuals are unable to work together in a productive manner.

One of the most essential things to avoid within all working arrangements is the adoption of entrenched attitudes, which has been another frequent topic of conversation addressed in recent years. Regular communication, the forming of meaningful partnerships and a focus on honesty and clarity are all recommended to avoid situations developing that have the potential to cause long-term issues that may lead to the early cancellation of the contract and the issues this includes.

With the FM sector frequently referred to as a “people industry”, regular communication is one of its many strengths and an essential element of any relationship, helping to provide solutions whenever needed and resolving any misunderstanding. This also implies that positive connections will need to be formed between key personnel, raising questions over how to deal with the situation when individuals cannot ‘get on’ with each other.

Rather than allowing the situation to develop to the point where it affects the contract and overall relationship between client and service provider, experts recommend acknowledging that this is another part of life and needs to be resolved by ensuring that all individuals continue to be behave in a professional manner. Everyone will be keenly aware that while some people can form meaningful bonds on an almost instant reaction, others will find this difficult for any number of reasons.

Retaining a sense of humour and perspective while encouraging all individuals to adopt a more tolerant and understanding attitude are frequently seen as the best attributes to apply in dealing with and –where necessary – avoid stressful developments emerging.

Thoughts have also been shared by both customers and service providers over the issues caused when the client adopts a parent/ child approach to the running of contracts. This is seen as harmful on a number of levels and unlikely to the lead to the forming of meaningful relationships between the two sides involved.

Examples include constant demands for remuneration from clients for every missed key performance indicator (KPI) targets, regardless of any extenuating circumstances, combined with the regular issuing of demands and commands. These are regarded as going beyond the bounds of a reasonable approach that may also have the regrettable result of restricting the use of initiative when new or unexpected developments occur.

The examples included above are intended to provide the relevant background information necessary to understand all the highly variable detail that can occur, develop and both influence and impede contractual agreements after the initial signing of the deal. Popular opinion concludes that it is not possible to plan for every new development in the course of a professional agreement that covers several years, although legal experts advise that it is possible to include clauses that allow adjustment when or if changes occur.

This provides another opportunity to emphasise the benefits enjoyed within meaningful relationships and particularly where there are high levels of trust established between the major stakeholders. Similar to the levels of optimism used in the compiling of economic outlook reports, trust is frequently seen as being difficult to quantify but something that is important to encourage within business relationships and formal agreements.

Individual professionals and companies describe the issues experienced when contractual agreements are followed to the letter and become too restricting, but this does not mean that they cannot include scope for changes and further developments to be added in the future.

The devil, as always, is bound to be in the detail – as the popular saying tells us – but should not cause major difficulties as long as the main parties involved adopt a reasonable attitude.

This could include a suggested period of adjustment, for example, allowing both sides to adapt to the new requirement and assess how effective their reactions have been.

Changes to the scope of contracts may require those responsible for delivering it to engage with training to gain the skills required, which can be undertaken in the period suggested.

One of the most important developments to avoid is that of allowing contractual difficulties to descend to the point where litigation is entered into, attested to by business professionals in all industries. These are regarded as involving a great deal of cost in terms of financial outlay and the time required to define and submit all the details of the disagreement to the court.

While the winning parties in these disputes may be awarded costs and possibly compensation, this is never guaranteed and can frequently result in unexpected outcomes that can damage the reputation of all those involved.

In conclusion although it is possible to allow contracts to adjust to new developments after the initial agreement has been signed, including the considerations outlined above – and no doubt several others – it should be achievable to allow everyone to make the necessary adjustments and allow for additional actions to take place.

One of the most essential elements to deliver is the avoidance of so much detail that the main aims become lost, or that there is so little background information that confusion and misunderstandings are likely to result.

It is essential for any binding agreement to allow both sides to continue to operate in a profitable, reasonable and sustainable manner and provide all stakeholders with the opportunity to further enhance their relationship and extend their joint working relationships in the years ahead. Those wishing for more evidence need only to examine the high levels of disruption experienced by any business when one of their main suppliers goes into administration.

Maintaining the balance between client and service provider is another vital factor in allow professional relationships to develop in the most positive way and allow all stakeholders to enjoy the beneficial outcomes that should result.