Property and Facilities
Management City of Sydney
Local Government & Public Sector
Building Maintenance & Facility
Management Conference - 2017
Sherif Awadalla1
Agenda
1. The City Of Sydney
2. Outsourcing Evolution
3. The New Model
4. Partnership Principles
5. Alignment of Incentives
6. Benefits
7. Setup for Success
8. Summary Benefits
9. Questions
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The City Of Sydney
Complex portfolio:
• 256 properties
• Circa 400,000 sqm of built space
• Value of circa $2.2b
• Annual Revenue Budget: $66m
Leases:
Footway/Laneway - 510
Commercial - 488
AGP and Creative Spaces – 107
Other community – 198
Other - 106
Mix of assets including unique heritage requirements and significant exposure
to the public.
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Service Infancy
oResource intensive as all trade staff and management
structure internal to the organisation
Sherif Awadalla
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In-house services model
Internal delivery
of facility and
Property
management
Services
Client
Organisation
oGood understanding of the requirements and needs of the
organisation
Sherif Awadalla
o Full control of service delivery
Sherif Awadalla
oRidged delivery, largely dependant on available expertise
Sherif Awadalla
oClient organisation bares 100% of the service delivery risk
Sherif Awadalla
Client
OrganisationoReduced internal trade staffing
Sherif Awadalla
First Outsourcing Progression
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Direct Engagement of Trades and Services
Pro
perty
Ma
na
ge
me
nt
Facility
Ma
na
ge
me
nt
Tra
de s
upp
liers
o Larger contract management staffing structure
Sherif Awadalla
oReduced labour costs and access to a greater labour force
Sherif Awadalla
oModel tends to focus on operation and tactical delivery with
limited long term strategic focus
Sherif Awadalla
oClient organisation bares the majority of the service delivery
risk
Sherif Awadalla
Client
OrganisationoAll the advantages of an outsourced integrated services
model
Sherif Awadalla
Third Outsourcing Progression
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Guaranteed maximum Price
Integrated
Service Provider
Pro
perty
Ma
na
ge
me
nt
Facility
Ma
na
ge
me
nt
oClient organisation loses visibility of service delivery
outcomes and asset performance and condition IP
Sherif Awadalla
oModel can result in underservicing as the service provider
can be financially incentivised to underservice.
Sherif Awadalla
Client
OrganisationoAll the advantages of an outsourced integrated services
model
Sherif Awadalla
Fourth Outsourcing Progression
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Managing Agent Model
Integrated
Service Provider
Pro
perty
Ma
na
ge
me
nt
Facility
Ma
na
ge
me
nt
oDecoupled the trade spend from the management spend
resulting in no financial incentives over or under service.
Sherif Awadalla
oModel tends to lean more towards a reactive service as the
service provider does not own financial outcomes
Sherif Awadalla
oClient organisation loses visibility of service delivery
outcomes and asset performance and condition IP.
Sherif Awadalla
Which Model Are You Running With?
In-house
services
model
Internal
Trade Staff
Client
Organisation
Direct Trade
Model
Individual
Trades
engagement
Client
Organisation
Integrated
Cost Plus
Model
Individual
Trades
engagement
Client
Organisation
Guaranteed
Maximum
Price
Individual
Trades
engagement
Client
Organisation
Managing
Agent
Individual
Trades
engagement
Client
Organisation
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How Did We Do? Can We Improve?
In-house
services
model
Internal
Trade Staff
Client
Organisation
Direct Trade
Model
Individual
Trades
engagement
Client
Organisation
Integrated
Cost Plus
Model
Individual
Trades
engagement
Client
Organisation
Guaranteed
Maximum
Price
Individual
Trades
engagement
Client
Organisation
Hybrid Self
Delivery
Model
Individual
Trades
engagement
Client
Organisation
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The Journey
Internal and external
stakeholder engagement
293 questions collated
and reviewed
Approach developed for new
property services contract
new contracts
Consultants engaged to
develop
Model Developed and
communicated
Procurement approach
developed and agreed
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Sherif Awadalla
City Of Sydney Model
• No visibility of data
with integrity
questionable
• Limited financial
risk on the supplier
• No asset
monitoring and
management
• Outcome based
contract
• No energy
performance
• Reactive model
with limited risk
Current
Contract
Construct
Facilities Management
Contract
Property Management
Contract
Asset Compliance
Contract
Sustainability & Utilities
Contract12 of 20
• Separate contracts to attract best
of breed service provider
• Increased ownership and
accountability
• Increased visibility of data
through MIS
• Alignment of incentives
• Increased focus on asset life
cycle management
• Strong focus on WHS and
compliance with City’s policies
and procedures
• Outcome based KPIs
underpinned by quantitative
measures
• Increased focus on vacancy
rates, rental income and tenant
satisfaction.
Value Driven Partnership ModelAddressing Portfolio Complexity
Delivery
Direct
engagement of
trades service
provider delivers
best value for the
City
Portfolio
Complex and
unique portfolio
requiring
divergent service
approach
Options
Collaborative and
transparent
extension
mechanism
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Alignment of Incentives & TransparencyEnabling Genuine Partnership
MIS
Transparent
Information
system enabling
partnership in
governance
Model
Disaggregated
model requiring
commercial and
operational
collaboration
Payment
Payment for
Services made on
completion of
trade works or
management tasks
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Improved Capability, Transparency & Ownership Delivering Value
• Best of breed suppliers for each service PM/FM
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• Improved risk profile through inclusion of trade preventative
maintenance plans with associated KPIs.
• Improved transactional visibility through a transparent integrated MIS.
• Separate engagement of asset condition audits and compliance
certification.
• Improve supplier ownership through a direct FM delivery model and
performance incentives in the PM contract.
• We have also enhanced the City’s in-house capability, systems and
processes to support the contract model.
Current Aggregated Service Model
Tenancy and lease, rent
collection, property
accounting, outgoings,
licenses
Annual fire safety
statement,
Condition survey audits,
compliance and
maintenance audits
asset management,
maintenance of fixed
plant and equipment,
general building,
cleaning, pest,
landscape, minor works
procurement,
consumption monitoring
and reporting, utility
billing management,
ESD advice
Supplier owned and managed MIS provided as a service to the city through a web portal
• Aggregated service provision
Integrated property Services contract
Structure split by Property portfolio type (Commercial, Public Domain and Community)
Structure primarily focused on Customer Relationship Management with limited emphasis on Contract Management and contract governance
Limited technical capability (No FM resources)
No imbedded WHS resources
City of Sydney
City of Sydney Aggregated
Statistical
Governance
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Property MGT Facility MGT WHS & Compliance Utility Management
• Pass-through cost to the city of trade services
• Outcome based KPIs with limited to no risk transfer
Reconfigured to Support the New Model
Tenancy and lease
management, rent collection,
property accounting,
outgoings, licenses
Measures
Vacancy rate, rental income,
debtors and arrears,
property accounting, tenant
satisfaction, property
financial performance
Term 4 years + 2x2x2
Annual fire safety statement,
Condition survey audits,
compliance audits
Measures
Building certification,
compliance, independent
FM performance reports.
Term 3 years
Transition, asset
management, maintenance of
fixed plant and equipment,
general building, cleaning,
pest, landscape, minor works
Measures
WHS, compliance,
information mgt, maintenance
levels, service delivery
timeliness, reporting, quality
control
Term 4 years +
procurement, consumption
monitoring and reporting,
utility billing management,
ESD advice
Measures
Utility consumption targets,
utility payment
management, consumption
reduction innovations.
Term 3 years
Contract Management & Data Analysis
Performance measurement and monitoring, contract escalations and issue resolution, contract variations, contract payment and abatements
MIS
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Property MGT Facility MGT Asset Compliance Utility MGT
Facility Management and Compliance Environment & Utility MGTProperty Management
Stakeholder mgmt., public art management,
tenant liaison, P&L, supplier governance,
SPOC for commercial portfolio tenants,
council business as a landlord & tenant
Facilities Management & WHS, safety and
compliance, supplier governance, FM
budgets, , SPOC for community portfolio
tenants, capital works input, minor works
oversight, council business
Environmental & Utility
Management, utility
Procurement, Compliance
and Reporting
Portfolio ManagementDraft Property Delivery Model
Facilities
Management
Financial & Property
Management
Sustainability
& Public Art
Safety & Compliance
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Investment
Portfolio
Office, Retail,
Stratum,
Industrial, Triple
net
Financially driven
to maximise
financial yield
Community
Portfolio
Public &
Community
Facilities, Town
halls, Footways
& Kiosks
Administratively
driven to
maximise tenant
satisfaction
Known operational, risk, compliance and budget outcomes
Disaggregated Self Delivery
Sherif AwadallaClient
Organisation
oAll the advantages of an outsourced integrated services
model
BO
B S
elf
Deliv
ery
FM
Specialist
Support
City of Sydney Model
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BO
B S
elf
Deliv
ery
PM
oReduced contract management resources
oAlignment of financial and operational incentives
oReduction of management fees
o Increased in-house specialist resources to ensure that the
council is an informed client
oComplete visibility of asset and service performance.