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The success of outsourcing depends on the effective provision of services by service providers. Although outsourcing is gaining popularity, and clients expect a satisfactory performance from service providers, the number of reported cases of failure is increasing (Brown, 2002; Copeland, 2001; Chan, 2008; Crocker, 1999; James, 2000; Van der Werf, 2000). Organisations should thus take care when deciding upon outsourcing arrangements. To execute outsourcing processes effectively, FM professionals in clients and service providers should be skilled in negotiation, finance and interpersonal communication. Two of the most important drivers of outsourcing decisions are cost efficiency and production reorganisation (Franceschini et al., 2003). Companies should focus their efforts on core business, medium- or long-term targets and diversification opportunities (Kippenberger, 1997a,b; Linder et al., 2002; Underdown and Talluri, 2002).

The literature suggests that outsourcing strategies arise from the desire to focus on fewer, more manageable core activities, as Skinner (1969) observes. Companies aim to improve their efficiency by outsourcing non-core activities to specialist providers (Harland, Knight, Lamming and Walker, 2005). This resonates with observations made by Prahalad and Hamel (1990) and Hendry (1995). Corporations, public sectors and nations are advised to formulate strategies for outsourcing to minimise the risk of long-term disadvantages due to the cumulative

97 effect of poor outsourcing decisions, such as those identified by Bettis et al. (1992).

Facilities-management drivers

Strategic planning plays a significant role in aligning real-estate portfolios with corporate real-estate services and capabilities (Acoba and Foster, 2003). In this study, four facilities-management drivers focus on two areas, FM resources and FM practices and processes respectively. There are two drivers in FM resources involving adequacy and coordination whilst there are two other drivers in FM practices and processes involving competence of service providers and quality of performance. Adequacy of facilities-management resources includes people, budgets, systems and coordination of facilities management resources includes information and organisational structures. Competence of service providers in FM practices and processes includes planning, design and quality of performance in FM practices and processes includes construction and maintenance operations. i) Adequacy of facilities management resources

Grimm (1994) argues that smart FM practices and processes arise from the smooth operation of an organisation. The adequate provision of facilities plays a vital role in some business service oriented sectors such as hotel, commercial mixed-use premises and leisure facilities. In these industries, services should be tailor-made to satisfy the needs of specific customers. To determine the adequacy of FM resources, the efficiency of resource deployment can be measured by the costs of practices and processes and the spaces they occupy. Alignment occurs when the resources required to deliver FM services (in the form of practices and processes) are sufficient in terms of number of personnel, budget size, plant equipment, inventory size, etc. Under- or over-provision represents a mismatch (Grimshaw, 2003; Jensen et al., 2012;Leifer, 2003; Nutt, 2004; Varcoe, 2000).

The significance of strategic plans for the optimal deployment of an organisation’s resources is addressed as follows. Usage of space has been proposed as an important measure of resource efficiency (Bon et al., 2002; Pugsley and Haynes, 2002). Portfolio statements provide a general evaluation of resource usage,

98 including measurements of the cost and location of space, capacity analysis of the amount of space and number of personnel used, and space requirements, including methods of providing space (Kessler-Park and Butler, 2002; Osgood, 2003). However, FM resources are still used inefficiently in the corporate context, according to some strategic plans. Acoba and Foster (2003) note that the inappropriate allocation of already scarce human and capital resources is due to a lack of internal and external strategic planning, and that this difficulty is exacerbated by longer lead times before implementing programmes. There is, thus, a need to emphasise the importance of strategic planning and to improve the design of such plans to optimise resource allocation.

ii) Competence of facilities management service providers

Bon et al. (2002) state that facilities management will be one of the key corporate real-estate management skills in the future. Competence is considered one of the crucial components of business success (Becker, 2000; Krumm et al., 1998; Price, 2004). In some organisations, emphasis has been placed on FM executives (facilities directors with greater authority than facilities managers) and the development of business skills such as marketing, human resource management and contracting (Alexander, 2003). It is imperative that FM service providers develop both generic and specific forms of competence.

Generic external FM competencies, and competence in the provision of FM support services, are basic requirements for the effective deployment of FM resources. The International Facility Management Association (1992) identifies generic competencies in the following areas: real-estate and strategic planning, operations and maintenance, human and environmental factors, planning and project management, facility function, financial management, quality assessment, innovation and communication. Combining strategic focus with operational efficiency is becoming more and more important as facilities managers take on hybrid roles, diversifying their skill-sets to reflect the new business-service environment and encourage relationships among users and providers (Alexander, 2003; Barrett, 2000; Robertson, 2000).

99 Furthermore, contemporary facilities managers should have certain basic intrinsic characteristics. For example, a corporate real-estate manager with important skills such as the ability to think innovatively, listen and negotiate and act proactively and cogently is not only able to foster a productive working environment and promote strategic alliances, but to think for and with the customer (Schaaf and Puy, 2001). Facilities managers can bring vital information to the process which informs decision making at critical stages (Smith and Jackson, 2000). The generic management skills, knowledge and experiences of executives in FM organisations have also been investigated in terms of the management of customers, services, working environments and assets (Alexander, 2003; Barrett, 2000; BIFM, 1996; Nutt, 2000).

To increase a company’s competitive advantage, a competency framework is crucial to support both headquarters staff and support personnel in sharpening and developing their communication and leadership skills, and cultivating productive client-organisation relationships (Osgood, 2003, Roberts, 2001). Skilled facilities managers with special entrepreneurial skills, thorough knowledge of the core organisation and the ability to co-coordinate diverse activities provide the means by which an organisation delivers and sustains a satisfactory relationship between ‘hardware’ and ‘software' management. Such managers create an appropriate working environment and establish the service-provision relationships necessary to meet the organisation’s strategic needs in a cost-effective way (Alexander, 2003; Amaratunga and Baldry, 2002; Duffy, 2000). Brown et al. (2001) observe that facilities managers must be capable of improving quality and ensuring optimal service delivery and performance during the project-management process. In their words, the core skills of the contemporary facilities manager are maintenance management, outsourcing and contract management, post-occupancy evaluation, space planning, life-cycle costing and process mapping.

Specialised facilities such as hospitals and factories may require specific skill-sets over and above these generic competencies (Barrett, 2000). It is crucial to deliver

100 positive outcomes and develop specific knowledge regarding the management of such technical areas as property and asset management and the promotion of health and safety in the workplace (Roberts, 2001). In addition, Brown et al. (2001) propose that the FM role be extended to include responsibility for project delivery. In other words, facilities managers with core skills in managing operational building assets are capable of combining project management and facilities management.

The most effective measure of the competence of FM service providers is their performance. Companies’ trust in service providers is directly related to the latter’s performance. For example, Alexander (2003) observes that the individuals most proficient in facilities management are empowered within organisations. Chotipanich (2004) finds that the conditions and capacity of the FM market, in terms of service availability, supplier capability and available technology, can affect decision making and the choice of service-delivery methods on a global scale.

iii) Coordination of facilities management resources

Chotipanich (2004) states that the key factors determining FM practice can be categorised into two groups: internal factors, which include organisational characteristics, the features of the relevant facilities and the business sector to which the organisation belongs; and external factors, which include economic, social and environmental conditions, legislations and regulations, the context of the FM market and the local culture and context. The co-ordination of resources is important to an organisation’s FM practice. Proper coordination and integration between IT systems, people, processes and places greatly increase efficiency and maximise cost relief for various stakeholders. The challenge is to meet the needs of the business in a consistent fashion, and to achieve this goal through the optimal use of resources (Bodrozic, 2005; Green and Jack, 2004).

Co-ordination is necessary to both design and operation. At the operational level, Barrett (2000) proposes a generic model of interactions within the FM organisation between the facilities manager and various functional units. According to this

101 model, the role of the facilities manager is that of coordinator. Regarding the human resource trail, for example, Nutt (2000) states that FM responsibilities may include arranging transport, providing support for communication and managing information exchange; they may also accommodate wider arrangements such as providing support for communities and families and arranging social and leisure activities.

At the design level, the efficient coordination of physical resources can increase staff efficiency in facilities management. Regarding the design of the working environment, Duffy (2000) describes four practical conditions that affect the working relationship between designers and users/clients: (1) performance; (2) a willingness to demystify design by using data; (3) the use of a systemic design process that places equal weight on IT and resources belonging to the physical environment; (4) enthusiastic involvement in the design process as a whole. In addition, Allard and Barber (2003) observe that companies that excel in terms of teamwork are also those that promote efficient communication among executives through innovative workplace design.

Co-ordination is a significant driver of corporate success in facilities management. Corporations gain economies of scope when they align their resource usage and capabilities with the use and management of real-estate services. In other words, co-ordination enables them to gain a competitive advantage and to optimise their products and services (Green and Jack, 2004; Krumm, 1998).

iv) Quality of facilities management performance

It is important to investigate the ways in which FM professionals for whom resources are limited can manage a sophisticated and global real-estate portfolio in a highly decentralised corporation without sacrificing quality. This is understood to pose a significant challenge to FM practitioners. Osgood (2003) tries to solve the problem by introducing a strategy-alignment model based on the quality of space occupied by real estate. Chotipanich (2004) observes that the capacity of the FM market in terms of service availability, supplier capability and available technology can affect decision making and influence the choice of service-delivery

102 method. The quality of facilities management is affected by the performance of the various service providers involved in contract procurement. For example, the individuals most proficient in facilities management are empowered within organisations (Alexander, 2003).

Scholars continue to discuss the benefits of emphasising quality by engaging real-estate service providers at all levels of an organisation; to improve workplace design for the benefit of the company, for example, or to increase awareness of the need for social responsibility among the workforce by promoting ethical FM practice (Allard and Barber, 2003; Grimshaw, 2003). Zappile (2004) defines quality in terms of four absolutes: (a) conformance to requirements, (b) prevention, (c) zero defects and (d) price of non-conformance. Ultimately, he concludes that customer satisfaction plays a key role in the quality-based process, and that the efficiency with which limited in-house resources are utilised can be used to measure quality in the world of corporate real-estate management. Regularly reviewing quality is considered to be an effective means of ensuring ongoing improvement to an organisation’s facilities management.