"Understanding the Basics of Total Facilities Managment (TFM) Contracts"

TFM is a popular method of buying FM services. It is where a number of services are bought together and there is a unifying management structure under the FM contract. Typically TFM will include the larger FM services such as the maintenance and cleaning services and would be combined with other FM services such as security, catering, mail room.

The main benefits of a TFM service is that suppliers can utilise synergy between services and there is a single unifying supply chain with less interfaces for the customer to manage.

The following show a number of TFM models that typically a supplier may propose when FM services are tendered. At Landmark we have found successful bidders using any of the following models.

One of the most common TFM models delivered by the market includes a combination of self delivery and subcontract mix (See Figure 1 below). Historically suppliers evolved from a single service eg catering, maintenance etc. and as they have grown their facilities management capability, they have added other services. However, often suppliers either do not or cannot demonstrate a core competency in all service areas and across all geographies. This then leads to either strategic partnering with specialist suppliers or sub-contracting as client requirements develop. Typical organisations in this category have been CBRE, JLL, Sodexo.

Some companies in the market are seeking to develop a self delivery model of all FM services (See Figure 2). To achieve this they will need to restrict their offer to certain client types / geographies as this model is almost impossible to implement across a diverse global portfolio. Typical organisations in this category are Anabas and Salisbury. Some of the larger FM companies have hybrid models where they have strengths in self delivery in some locations but will supplement this with a sub-contracting strategy elsewhere; this would include organisations such as ISS and Equans.

Other organisations focus on investing in the management and FM systems and developing relationships with suppliers to deliver the majority of the FM services through their supply chain. (See Figure 3). Typical organisations in this category are Macro, Cushman and Wakefield and Fisco. Those organisations who have a sub-contracting model are more suited to widely spread portfolios which may include both large and small properties.

From Landmark & Associates perspective none of the models have proved to be “the best” in all circumstances. It really depends on the individual approach by each supplier organisation to quality and cost. All of the models are capable of delivering the required quality. Often the criticism of a TFM subcontractor approach is that client’s believe they can cost more because it encourages profit on profit. We have often found that the opposite can be true as FM management companies are able to choose more relevant “value for money” sub-contractors and self delivery suppliers with many internal business units are just as likely to have profit on profit.

We therefore recommend you choose your tender list based on other attributes of each potential bidder and worry less about which model they use. Then select the preferred bidder on its merits (most relevant quality and cost to meet the business need).