How to fix a failing FM contract with remediation

A failing FM contract is rarely beyond saving. In our experience, what decides the outcome usually isn't just technical. It's whether both sides genuinely want to fix it.

Contract remediation works when the client and the contractor treat it as a joint effort to recover a contract they've both invested in. It tends to fail when one side doesn’t act in good faith.

This article sets out what good remediation actually involves, and when reprocurement, in part or in full, is the more honest answer.

WHY REMEDIATION IS USUALLY WORTH THE EFFORT

A great deal is invested in an FM contract on both sides: time, cost and operational continuity. Walking away is expensive and disruptive for everyone, which is why making the contract work is usually in everyone's interest. The contracts that recover best are the ones where the client and the supplier both recognise the problem early and commit to resolving it together, rather than waiting until positions have hardened.

START WITH A DIAGNOSTIC, NOT A VERDICT

The first job is to understand the full picture before forming any view. That means reading the contract documentation in full: the specification, KPIs, SLAs, reporting obligations and the correspondence around performance. It means speaking to both sides separately, to understand what each party believes is happening, and comparing that with what the data actually shows. And it means establishing the legal and commercial position before any action is taken.

Only then is it possible to agree a shared, honest problem statement that both parties recognise. Remediation that begins with a verdict rather than a diagnosis tends to entrench the dispute rather than resolve it.

GET TO THE ROOT CAUSE

Most failing contracts are failing for reasons that sit beneath the presenting symptoms. Contracts are often set up by people who then move on, leaving those who inherit them to discover the nuances. At go-live you might understand ninety per cent of what's needed to make a contract work. The remaining ten per cent only emerges over the following months, which is exactly why mobilisation and transition matter so much.

Root cause analysis is the part of remediation that separates a lasting fix from a temporary one. Treat the symptom and the underlying problem remains, ready to resurface.

BUILD THE PLAN: THREE TYPES OF ACTION

A remediation plan usually combines three kinds of action. Contractual: formal notices, improvement plans and using the contract as the framework for resolution. Commercial: renegotiation, incentive structures and, where needed, changes to the commercial model. Relational: resetting governance, rebuilding trust and investing in the working relationship. The right mix depends on the root cause. The aim throughout is a contract that performs as it should, with both sides putting in the effort to get it there.

WHEN PART OF THE SERVICE CAN'T BE RECOVERED

Sometimes a single service line genuinely can't be made to work within the existing arrangement. When that happens, reprocuring just that element is often far less costly and less disruptive than putting the whole contract out to market. Partial reprocurement is a risk-mitigation tool, not an admission of failure. It lets you fix the part that's broken without unpicking everything that works.

DIAGNOSE BEFORE YOU RETENDER

Reprocurement is not a shortcut around remediation. We've seen a service retendered at significant additional cost, in one case around £20m more, because the original problem was never properly diagnosed. The contract hadn't failed because the supplier was incapable. It had been set up on the wrong assumptions and the wrong cost profile, and nobody had done the root cause work to find that out. Replacing the contractor simply reproduced the same conditions under a new name. Retender without understanding why the contract failed and you risk paying more to inherit the same problem.

CONCLUSION

Remediation isn't a crisis response. It's a structured, joint process that starts with an honest diagnostic, gets to the real root cause, and combines contractual, commercial and relational action to recover a contract worth recovering. Where part of the service can't be saved, partial reprocurement keeps the disruption contained.

And where the whole arrangement isn't recoverable, the honest advice is to retender, on evidence rather than frustration. The organisations that engage early tend to have the most options open to them.

Landmark & Associates are RICS-accredited FM consultants with 25 years of experience supporting contract remediation across more than 900 property transitions and £3bn of FM contracts. If you're managing a contract that isn't working, we're happy to have a direct conversation.

Talk to us about a failing contract: info@landmark-and-associates.com

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