what’s the connection between the Mona Lisa and an FM?
I had been looking at a copy of the Mona Lisa and then the next day a conversation with a facilities manager then started this train of thought off.
The Mona Lisa contains a number of visual gags and one of the joys of looking at it is to spot these details, but any good painting, or photograph, or view will have all sorts of details that make up the whole visual experience. Just as it is nice to stop and smell the roses from time to time it is also good to let the eyes wander over something and feast on the smaller elements that you’ll find. Even something familiar can yield new things when you stand back and look.
So what does all this have with a facilities manager? Well the day after I had been exploring the copy of the Mona Lisa I was in a meeting with a couple of FMs and one mentioned to me the level of cost from a supplier that is made up of fees. He has a very valid point, because down there in amongst what we might lump under the heading of overheads is a growing list of fees and charges.
The media love to shout out about stealth taxes, but look beyond their screaming headlines and you will find a whole raft of costs that have sprung up in recent years. At one stage we were having to cope with 1000 new pieces of legislation a year (according to one seminar that I attended) and all of this has a cost factor that flows down the supply chain and ends up being paid by the consumer.
When we talk about the big picture, in this case the price, it’s worth taking some time to look at all of the detail that makes up that price and consider how much of it we might be creating ourselves. My colleague took the view that as much as a third of the price was made us through fees, and that is certainly a piece of detail worth examining because, whilst some of those fees or charges will relate to statutory requirements there are likely to be some that don’t.
Last week I was on my KPI soapbox and one of the points that I made was that there is a cost in insisting on all sorts of complex KPIs. Some of that is direct cost; the time it takes us and our supplier to work on them every month, but there is also an indirect cost in that the supplier will rightly build in a price factor to cover the risks attached to those KPIs.
So what else can we influence? Well risk transfer is something that has become a lot more prominent in recent years as we have sought to avoid the risk of cost to our business through failures on the part of our suppliers, but there is a cost to it that ought to be considered. If you want to have your supplier carry massive indemnities how much are the premiums they will have to pay to insure that risk?
And don’t just think in isolation here because some of the supplier’s costs will be spread across their client base. I am talking about industry wide issues here and maybe it is a topic that we should be taking a wider view on.
For now though, look at what you are paying for and talk to suppliers about how you can work together to get these costs down: The old faithful cost benefit analysis will help you out here.