THE MAGAZINE FOR FACILITIES MANAGEMENT PROFESSIONALS | 14 OCTOBER 2010
FMWorld www.fm-world.co.uk
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CHINA:
A key report on China’s FM sector
6/10/10 14:42:34
FM CASE STUDY KPMG BY DAVID ARMINAS
KPMG
“FM FORMS PART OF A HOLISTIC PROPERTY STRATEGY WHICH MEANT IT WAS ALREADY IN THE BUILDING TWO YEARS PRIOR TO OFFICIAL OCCUPATION.”
DEVELOPER: CANARY WHARF GROUP PROJECT MANAGER: TURNER & TOWNSEND FIT-OUT CONTRACTOR: ISG COST AND COMMERCIAL MANAGER: EC HARRIS M&E & SUSTAINABILITY CONSULTANT: AECOM CONSTRUCTION MANAGER: CANARY WHARF GROUP FIT OUT ARCHITECT: SWANKE HAYDEN CONNELL BUILDING DESIGN ARCHITECT: KOHN PEDERSEN FOX CLIENT STRUCTURAL AND FACADE ENGINEERS: RAMBOLL
NOTE
Construction firm Canary Wharf Contractors, part of the Canary Wharf Group, won a Green Apple Award for “innovation in construction” and a Gold and Silver award in the Considerate Constructors Scheme in 2010.
KPMG: THE SPACE TO MOVE PETER SEARLE
At KPMG’s new Canada Square office in Canary Wharf, you are just as likely to run into clients as you are employees. And that’s just the way FM planned it.
WATCH a tour of the Canary Wharf building at www.fm-world.co.uk
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our years ago, KPMG took a long, hard look at its future space requirements. “We sat down and said: ‘what will the workplace need to be like in two or more years’ time?’,” says Andy Moseley, UK head of workplace facilities at the professional services provider. “We asked ourselves how our workplace could support our business plan.”
Client-centric KPMG has increased its focus on the client, which Mosely feels is at the centre of its business offering: “client-centricity”, he says. To achieve this aim, the consultancy required office space in which clients would be as catered for as employees. “We needed a KPMGbranded building that would be recognisable as such,” he said. “We didn’t want to inherit a building from a developer and then ‘KPMG it’, retrospectively.” The consultancy pooled its knowledge about the work environment from its London sites, which at that time totalled 600,000 sq ft. A two-hub property strategy, developed in 2002, indicated that KPMG could reduce the number of its London buildings from five (three in the City and two in Canary Wharf ) to one City building and one purpose-built Canary Wharf premises. The business’s total space has increased from 485,000 sq ft to 515,000 sq ft (400,000 sq ft at 15 Canada Square, Canary Wharf and 115,000 sq ft at
Less is more: KPMG’s new Canary Wharf office replaces several outdated sites
Salisbury Square in the City, which it retained). Canada Square will gradually take over from Salisbury Square as the consultancy’s UK headquarters. KPMG also vacated five floors at Number 1 Canary Wharf, not far from its new building. “KPMG had a mixed bag of properties, some of which were at the end of their useful life in terms of supporting increasingly sophisticated IT technology,” says Moseley.
Steady integration This summer, KPMG began www.fm-world.co.uk
moving people into 15 Canada Square. By October, all 4,000 employees will have been relocated. The consultancy’s holistic approach to the relocation meant that FM was already on site in the new building two years prior to official occupation. FM was also included in the initial planning stage, along with the architects, quantity surveyors, construction firms, HVAC businesses and fitout specialist. It was a truly integrated team, says Stuart Cranna, KMPG’s workplace area www.fm-world.co.uk
manager for London. “Right from the start, we dealt with issues directly, there and then, with the entire supply chain present,” he says. “And in 2008, we held our meetings on an unfinished floor on site amid ongoing construction, often over a builder’s tea.” KPMG’s on-site presence during construction meant that the client and suppliers were no longer unknown quantities. “We could say to suppliers: ‘it’s our building and you are working on it’,” says Cranna. “This was great for observing and
monitoring progress and we built up a good relationship with the construction teams. According to Cranna, this arrangement made for a smoother, slicker operation: “If there was an issue raised during a meeting, we would walk to the part of the building in question, see for ourselves what needed attention, and then return to the meeting room to make a decision on the spot,” he says. “This allowed us to solve those unforseen problems quickly. “ Having the team on site held other advantages. “We knew
what we were getting from the start because we could actually see it in front of us,” reveals Cranna. When the first occupants were shown around the new building six months before relocation, the FM team had already sorted out many of the usual teething problems. “We were working with the HVAC system a good year before people started moving in,” Cranna says. KPMG believe that a building must be flexible enough to accommodate various functions that need more or less space. FM WORLD | 30 SEPTEMBER 2010 | 27
“THE FM TEAM IS OFTEN LEFT TO PICK UP THE PIECES AFTER A MERGER BUT WHAT COMPANIES TEND TO FORGET IS THAT THEY ARE ALSO IMPACTED AS A GROUP OF INDIVIDUALS”
FM FEATURE M&AS NICK MARTINDALE
M&AS: WHAT’S THE BIG DEAL? Organisational buyouts are starting to make headlines again, and once more FMs are being presented with a range of last-minute, challenging, issues. But the experience can present personal opportunities too.
Illustration: Aude Van Ryn
when things were happening and we would have to mobilise for or integrate with a new site with six weeks’ notice.” Ian Fielder, chief executive of BIFM, says this is a common complaint. “A lot of mergers and acquisition discussion goes on at board level but once the decision has been made to move ahead to the next stage in the process most of the FM team would say they should be involved, even as early as the due diligence stage,” he says. Often one of the first challenges for an FM director of a dominant partner in such an arrangement will be to address the fears of those in both their existing team and in the acquired business. “The FM team is often left to pick up the pieces but what companies tend to forget is that they are also impacted as a group of individuals,” says Liz Kentish, director of Liz Kentish Coaching and chair of the BIFM Women in FM group. According to Lionel Prodgers, director of consultancy Agents4FM, FM needs to work with HR to organise roadshows and workshops to inform
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hen US food giant Kraft acquired chocolate manufacturer Cadbury earlier this year, it signalled a general revival in merger and acquisition activities. Companies were seeking out bargains in readiness for an economic upturn. There were plenty of other examples too. In April, car rental firm Hertz agreed to buy its smaller rival Dollar Thrifty for $1.2 billion, while computer equipment manufacturer HP acquired smartphone business Palm for the same amount. Also that month British Airways finalised plans to merge with Spanish airline Iberia. Deals done in 2009 at the depths of the recession included those between Pfizer and Wyeth, Oracle and Sun Microsystems, and Yorkshire and Chelsea Building Societies. Such activity can present a range of issues for FM directors and their teams, not least because they are often unaware of any deal until late in the day and can find themselves having to react at very short notice.
FM QUICK FACTS
of UK executives are putting aside capital for merger and acquisition activity rather than paying down debt or dividends, compared to 25 per cent in November 2009
57%
of global business executives believe they are “likely” or “highly likely” to buycompanies in the next 12 months
27%
Short notice Until 2009 Gail Mee worked for Siemens, initially as FM manager before becoming mergers and acquisitions transition manager. She was at the company for six years, at a time when it was on a major acquisition spree. “Within FM we were very late to be approached for any sort of merger or acquisition,” she says. “We would get a knock at a point 30 | 30 SEPTEMBER 2010 | FM WORLD
42%
The value and volume of mergers and acquisitions fell by in 2009 compared to 2008
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M&AS
staff about what is happening and keep them on side. “You need to ensure the workforce is fully operational so you’re not risking operational failure or people not understanding the arrangements that are likely to happen,” he says.
Hand-holding This was one area which Siemens generally handled well, says Mee, who now works alongside Prodgers at Agents4FM. “We’d learned the hard way through some too-speedy mergers so we spent effort in the softer areas,” she says. “We spent a lot of time developing induction processes for all the people who would be transferred in and I implemented and rolled out the first induction packages with our HR partners for people being transferred into our FM team. There was a need for hand-holding and because we were such a large and complex organisation.” Others, though, were less fortunate. One FM, who asked not to be named, working for a large blue-chip recently acquired by an international rival said a lack of communication had a detrimental effect on the whole team. “There was muddiness on both sides but it did feel as if the takeover was happening to us rather than us being involved in the process,” she says. “It was a difficult time to stay motivated and carry on delivering when there was all this uncertainty going on in the background.” Once a merger or acquisition has gone ahead, FM directors must bring the two disparate FM teams together. In mergers, senior execs are likely to have already decided which team will take the lead, while in acquisitions it would normally be the acquirer.
Smoothing the path One thing to watch out for here, says Kentish, is power struggles between individuals in parallel roles. “It may be that you can have two roles, although probably not identical ones,” she says. “Or it may be that one person has more experience and can take the lead.” FM will also have to redesign the internal arrangements to accommodate the new setup, points out Prodgers. “You’re likely to be talking about move management, bringing similar functions of the business together, probably into consolidated space, and at that point you do start to think about redundancies,” he says. Ensuring communications and IT systems are running effectively, complete with any new branding, is also a priority, he adds. A further headache comes from inheriting a second set of suppliers, which will usually lead to a reduction in the number of providers. “It’s very difficult to split it and have competing suppliers doing different parts of the business,” says Kentish. “There’s no easy FM WORLD | 30 SEPTEMBER 2010 | 31
FM FEATURE SECURITY PAUL HARVEY
SECURITY
SECURITY CHECK What does ‘security’ mean for today’s business? More than keeping employees safe, the security function now combines technology and manpower to provide customer service beyond asset protection, offering a key competitive edge. Illustration by Raymond Biesinger
I
n a world of diverse and complex security risks, delivering effective security and visitor management is a real challenge. Risk management has the potential to impact multiple business functions. If integrated into the wider business risk strategy, security and visitor management can be seen as business enablers that ensure other parts of the business can operate with minimum disruption and risk. Modern security does not have to be viewed just as a cost, but more so a mechanism for contributing to the goals of an organisation including customer service and retention of employees. The implications of getting security and visitor management wrong are immense. If people do not feel safe, then productivity and staff turnover can suffer. If visitors have a bad experience there is a possibility that customers and investors will take their business elsewhere. If visitors experience negative treatment the message they receive is that the organisation does not want them there. The visitor experience will influence the perception of the business, which is especially important in competitive times. Excellence in security comes from understanding the wider challenge of securing the working environment, critical assets and infrastructure. By delivering a better user experience and a warm and friendly welcome the business reputation is being protected, and achieving robust and secure visitor management is critical – the challenge is to deliver the best from both. The security sector has traditionally operated in individual silos with facilities and purchasing departments having to select different providers in each discipline to achieve their security specifications. In particular, the current price competitiveness of the guarding market has placed financial constraints on the development of the industry’s infrastructure.
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As a result, it is not uncommon for a single location to use completely different service partners for manned guarding, CCTV, front of house, access control, remote monitoring, keyholding and patrol services. The tangible benefits for the FM function and enduser of rationalising the supply chain are significant. Decreased time in dealing with operational reviews and a streamlined back-office ensure effective time management, cost reduction and removal of conflict of interest between service lines.
The future of security While key change drivers such as regulation, increasing employment costs, market consolidation and changing security requirements are stimulating industry change, the strength, initiative and ability of the competitive forces within the guarding industry are determining its shape. Companies that are embracing change and competing on product and service differentiation are moving ahead of their competitors. As a result, the security guarding industry has the opportunity to change from a low profit, mediocre-performing sector to become a profitable, stakeholder focused, professional partner. Unless security guarding companies develop a knowledge base and the capability to provide solutions as opposed to manpower, they will not be able to move away from the cycle of cost reduction. There are constant calls for end-users to buy on quality not price; the stark reality is that there is no added value consistently coming from the sector to justify margin increases. Providing a well-trained guard at a post is not adding value, it is fulfilling a requirement. Developing an effective overall security strategy and providing a cost-effective solution adds a dimension that justifies a margin increase. Companies that are adopting holistic integrated service solutions, combining manpower, physical and electronic security, are beginning to develop www.fm-world.co.uk
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FM ANNUAL REVIEW GRAEME DAVIES
Post-May landscape The coalition acted quickly on entering office. Cabinet secretary Francis Maude was immediately tasked with slashing the cost of the government’s procurement. Maude called in the 19 biggest suppliers to government, including those with FM divisions such as Serco and Capita, and won £800m of concessions. He has moved on to the next tier of government suppliers, 34 companies including Mitie and Carillion, and began negotiating similar concessions. The move caused one of the most memorable boobs by a major 20 | 9 DECEMBER 2010 | FM WORLD
2010: WHO WINS?
12% in the six months to September
£211m £102m G4S
SERCO
TELEREAL TRILLIUM
£570m
FIGURES DETAILING GOVERNMENT EXPENDITURE SINCE THE COALITION TOOK OVER IN MAY
As the year draws to a close, we look back on a difficult year for the economy and forward to the deep spending cuts that will affect FM providers in 2011. Who will benefit from the public sector fallout?
FM company in recent years when Serco wrote to all its suppliers demanding a 2.5 per cent rebate on their bills. The letter implied that non-compliance could jeopardise future relations. Serco’s reputation, and share price, took a knock, while Maude publicly admonished the company. It promptly retracted its demands. The UK economy enjoyed a significant fillip in the second quarter of the year, partly on initiatives which began some months before by the previous
SOME PLAYERS BRAVED THE CONDITIONS AND EMERGED ON TOP...
CAPITA
T
he past twelve months has been a tumultuous, memorable year for the FM sector. A year in which we saw a change of government, the advent of coalition politics and the announcement of the most farreaching spending cuts for decades, cuts that will change the way we do business with government. We also saw recovery from recession, with a storming second quarter performance from the wider economy as the private sector regained some of its battered confidence. But during the second half of the year companies such as Connaught and Rok went to the wall, their businesses unable to cope with reverse market conditions. The year began with a period of relative calm though even before May’s general election, Labour’s final budget confirmed a significant reduction in public spending in a bid to wrestle down the country’s huge budget deficit. For the FM sector though, the prospect of vast swathes of public sector work being outsourced to more efficient private sector operators began to resemble a long-term opportunity rather than a threat. The only imponderable was who the real winners and losers would be.
WINNERS £3.35bn
Other companies which have continued to perform through the downturn include Mitie,which recently reported profit growth of
government, partly due to the weakness of sterling and partly due to a pick up in the global economy. But the effect was only temporary as growth began to abate a little in the third quarter – and threatens to slow to a crawl in 2011. The private sector gained some confidence from the lurch out of recession and major construction projects such as London’s Leadenhall (the ‘cheese grater’) and Fenchurch (‘walkie talkie’)
2. 5 % £100,000 LOSERS
...BUT OTHERS FAILED TO STRIKE THE RIGHT BALANCE
The amount Rok senior management spent on company shares just weeks before the banks withdrew funding
When Serco contacted all its suppliers this year demanding a 2.5% rebate on all bills, the company drew government criticism
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FM WORLD | 9 DECEMBER 2010 | 21
FM WORLD INTERVIEW JOHN CRAWSHAW AW
L
ionel Prodgers (right), former BIFM chairman, interviews the first director of the BIFM, John Crawshaw (left), in the second of a series of interviews with key players in the development of the facilities management profession.
Lionel Prodgers: you were the first director of the BIFM, how did all that come about and when did you first hear the term facilities management? John Crawshaw: After 29 years in the army I decided that if I was going to get a decent civilian job I had to leave before I was 50. I was fortunate to get a super job as director of administration of the consulting arm of Ernst & Whinney. I was the first nonaccountant in the firm to have such a senior executive position. It was tremendous fun. There were only eight partners and 50 consultants, but over a threeyear period, we grew to 40 partners and 500 staff. We were one of the first companies that went into ‘chicken coups’ – individual work stations that didn’t belong to an individual but were available for all to use. One of the first developments was with the eight partners. It was decided that we’d have a clear desk policy. So, I went in on the Saturday morning of the second weekend and they still had all their papers over their desks. So I picked them all up, put them into individual black sacks, tied a label on each one and left them in my offices. In the end, I had senior executive consultants charging in and saying ‘some so-and-so has removed all my stuff, where is it?’, and I would say ‘it’s there with your name on it, you didn’t clear your desk”. And after that it worked. All sorts of organisations were looking at the better management of office space. 28 | 25 NOVEMBER 2010 | FM WORLD
LIONEL PRODGERS
HISTORY BOYS
CV
In 1993, John Crawshaw became the first director of the BIFM. Former BIFM chair Lionel Prodgers talks to him about the early days of the institute
John Crawshaw career file BORN: 1937 in England, spent early live in India LIVES: near Uzes, France with wife Penny EDUCATION: Uppingham School CAREER:
Illustration: Elisabeth Moch
It was a very exciting time. John deLucy had just joined the main firm as the facilities director – I had never heard of facilities management at that time. He and I met and he mentioned he was a member of the Association of Facilities Managers and that they were looking for a chief executive. I joined the AFM in August 1991.
people were reluctant to let go of what they had been doing on a voluntary basis – running the magazine, being treasurer and organising the conference. I had to bring all those people in, and then I discovered that we only had enough money to pay our salaries for another two months and the rent for another six, and that was all there was. The press started to take an interest in this new thing facilities management, particularly The Times. FM had a Small Business supplement every month and we were able to put over very gradually what facilities management meant and didn’t mean. But we needed to get bigger. Economies of scale in terms of members was vital. We couldn’t afford to continue with between 200-300 members and our merger with the Institute of Facilities Management (IFM) was a natural progression.
L: Were you the first permanent employee? J: Not quite, there was a secretary and a membership secretary but rather like my job at E&W it was another greenfield site. Between the 22 members of council, not everyone was convinced that they needed a full time employee, let alone an ex-army officer to do that job, so there was a degree of persuasion. Initially I was only responsible for the development of the membership and had no idea of the financial situation and www.fm-world.co.uk
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L: Can you remember how long the discussions took between the AFM and the IFM? J: Talks about a merger had been going on before I joined, but it never came to much. For a while the AFM talked to the International Facility Management Association (IFMA) in the US about merging with them but again that didn’t come to anything. There was pressure from within the FM industry for us to consolidate. People were asking why there were two organsiations in this country when America was a bigger country and yet they only had one. The IFM was a subset of the Institute of Administrative Management. They had a broader base, but it was very much London-based whereas the AFM developed a regional structure around the UK which was run by volunteers.
1955 – 1957: Articled clerk, chartered accountant 1957 – 1986: British Army. Started as a national serviceman in the rank of gunner and subsequently commissioned. Converted to regular army and served in the airborne regiment (7RHA) and Parachute Brigade; rising to rank of colonel, having commanded a regiment in British Army of the Rhine (Germany) and on active service 1986 – 1991: Director of administration, Ernst and Whinney (later Ernst and Young) responsible for administration, finance, training and HR. As a member of the management team he assisted in the development and growth of the consultancy to a £5m business over five years 1991 – 1998: Director of the Association of Facilities Managers (AFM). On the merger with the Institute of Facilities Management in 1993, he was appointed director of the British Institute of Facilities Management. Over seven years in these two roles he became a recognised name within the FM Industry and played a significant part in the development and recognition of facilities management as a professional practice within the UK and internationally. His achievements include the introduction of a professional qualification and the provision of training and development for individual members and organisations, which developed a strong revenue income for the BIFM 1998: retired as a director following a serious illness. Crawshaw was for a short time non-executive director of the Resource Administration Group plc, resigning in August 1999 1999-2001: founded and managed Catalyst Management with Jane Bell, Graham Riche and John Swift until he took full retirement in 2001
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