Consolidating exterior services provides cost containment and service standardization.
Managing a portfolio of hundreds or thousands of facilities is a time-consuming and rigorous responsibility for property management and purchasing directors. But, the use of new technology and consolidation can save maintenance budget dollars and provide value for the maintenance spend.
After working for over 20 years in the exterior facility and property management business, I have noticed corporations beginning to centralize their operations and services. With the economy changing, technology, budgeting and methods of accountability are more significant to the management of these services. Internet and hardware advancements have delivered automated accounting software and real-time, Web-enabled portfolio management, including digital cameras and a way to “big brother” your entire system for quality assurance.
Although most companies utilize some of these advancements, they still do not effectively lower costs and cut budgets according to a plan. Unlike the 1980s, there are now fewer corporations that permit regional managers to handle facility management and purchasing duties. Even so, there is no single-source approach to invoicing or setting quality assurance standards for hundreds of properties. These services are mostly contracted locally and billed nationally. This creates a snowstorm of invoices and problems monitoring quality assurance.
What Is ESM?
More companies are recognizing that outsourcing exterior services allow site managers to focus more on selling techniques, customer service and store operations. With this, a new term has entered the retail market space over the past year – ESM or exterior services management. This concept is being embraced as the retail marketplace recognizes the fragmented, sometimes chaotic nature of dealing with multiple vendors providing multiple services, especially when the portfolio includes locations across the United States.
Having an industry-focused professional management company take responsibility for store exterior services allows the store manager more time to focus on core business decisions. ESM companies work with pre-qualified contractors, who have often undergone extensive background checks. These contractors, because of the volume of business, offer the ESM company the lowest cost per service. The ESM provider is responsible for invoicing, quality control, renegotiating contracts, specification preparation, billing disputes and is often the buffer for legal actions.
Bidding vs. ESM Management
When bidding for services, detailed specifications must be prepared, along with pre-bid documents, including rules for when to submit the bid. A pre-bid meeting is generally scheduled, too. The portfolio manager must then receive the bids and evaluate them to identify the best service provider. But what happens when no one bids? Contractors must be sought out to submit bids, quality issues often being put aside just to get the work done. Working with ESM companies, the national office submits specifications and agrees upon a cost per service, per store. Some ESM companies guarantee savings on long-term contracts. Once a price has been agreed upon, there is no need to bid at the local level. The local contractor is assigned the job by the ESM company and starts work on the launch date.
Web-Enabled Portfolio Management
One of the reasons why ESM companies are able to function at the national level is the technological advances of the Internet. These advances include digital photography, wireless laptops and supportive software. With these tools in hand, the ESM company can connect national facility management teams to sites across the country. When a storm occurs in Kansas, a vice president of facilities in Atlanta can see, on the Internet, the damage done to his facility and can make time- sensitive decisions to get the store back in operation. The data available is upgraded daily to allow instant access to current levels of spend per service and ground activities schedules, as well as to keep better control of work orders in progress.
Traditionally, the exterior maintenance industry prices each project by the amount of time a crew will be on the site performing services. The longer a service company can spend on a site, the less travel time is incurred and better production per crew member can be achieved. The larger the project, the less expensive it is to purchase services. If the project is large enough, then only large service companies can complete the service to the customer’s expectations. In the ESM world, in any given part of a city, there may be several sites under contract.
ESM companies combine the buying power of all sites and offers to qualified contractor partners. If this much combined square footage is all one project, then it may require the larger contractor and reduce the competitive nature which helps drive down the costs for all portfolio manager. ESMs, in effect, combine the buying power of all customers in purchasing exterior services. This is cost containment and is an ongoing process, which ESMs utilize to guarantee cost reduction to facility management.
Industry Focused Professionals Provide Savings
The future of how retailers deal with their exterior services, especially those responsible for multiple locations crossing state lines, indicates a growing interest in ESM. The cost savings; efficiencies of management; issues of quality, consistency and dependability all indicate that working with industry-specific professional providers, as opposed to local contractors, is the wave of the future.
Savings are generated by the ESM method by consolidating management of sales and marketing, insurance and legal and invoicing and invoice justification. By undertaking these services for numerous contractors, ESM companies can lower management costs and pass those savings on to the customer. Contractors enjoy this relationship as their focus is on completion of the task, which makes up their core business. In essence, the ESM platform creates a win-win situation for everyone. The customer receives lower cost services; the ESM profits by managing numerous locations and the contractor stays busy without having to be concerned with management issues.