Commercial property maintenance: Outsource or perform in-house?
Today’s businesses and organizations continue to evaluate the advantages and disadvantages of outsourcing various professional services and functions as compared to keeping those tasks in-house. Commercial property maintenance is one of those services being reviewed. Outsourced contract maintenance is becoming more and more prevalent as the method for companies to maintain their assets. Basically there are three (3) approaches to commercial property maintenance management: In-house staffing, a hybrid of in-house and outsourcing and complete outsourcing. Each company reviews their individual needs to determine which of these approaches may be applied and to what extent to meet their maintenance and other goals.
Commercial companies review the key advantages and disadvantages of outsourcing maintenance with particular focus on cost, work quality, obtaining expertise, tools, equipment and technology, risk reduction and management focus on core business.
ADVANTAGES OF OUTSOURCING Core business focus: Outsourcing enables company management to concentrate on their core competencies and strategic objectives to continue and enhance sustainable growth of the company Cost savings: Cost control is a driving issue for commercial and other businesses and a prime consideration for outsourcing. In-house staff wages and benefits (such as pension, medical, vacation) continue to increase and in many cases have become too costly for the company to subsidize and sustain. A contractor has more flexibility to adjust the numbers of employees faster than in-house staff and hiring costs are absorbed by the contractor. An outsourced contractor assumes the burden of these and other financial liabilities associated with their workforce.
Staffing flexibility, expertise and work quality: An outsourced contractor can quickly provide flexibility in delivering the proper staffing level and required skills with less cost and time investment. In addition the contractor can provide expertise that may not be available, or is insufficient within the in-house staff. This expertise also positively impacts the quality of the work being performed. It provides the flexibility to utilize specialized services as needed, instead of incurring the added cost of developing in-house competencies that are not needed on a permanent or continuous basis.
Personnel issues: Outsourcing of the maintenance function means personnel grievances, disciplinary actions and issues become the responsibility of the contractor. Payroll, time keeping, labor relations, HR, benefits, etc., are handled by the contractor which releases company management from the responsibility and time requirements of performing those functions.
Tools, equipment and technology: An outsourced contractor can provide staffing that is well trained in the use of the most current technology. This eliminates the need for the company to provide training to the in-house staff in its use, or spending money to acquire and implement the technology. This is also true for specialized tools and equipment. The contractor is required to supply the tools and equipment to perform the work required.
DISADVANTAGES OF OUTSOURCING Loss of control: Outsourcing the maintenance function may be cost-effective, but there are restrictions when working with contractors, such as the client company’s inability to directly manage and instruct the workforce. Another example is it may be difficult for a service provider to fulfill all of a client’s requirements such as staff flexibility or craft availability within the client’s expectations. Also, the client and contractor may have different approaches, management styles and philosophies, which can lead to conflict.
Lack of availability of certain skilled talent The location of the commercial property in certain markets may mean that the skilled talent pool may be limited and the required skill sets may not be easily obtained. It could also mean that these special skills that must be acquired outside the market may command a higher cost in the long run.
Staff turnover: In-house employees tend to have more years of service at a facility than contractor employees and have a higher understanding of the business and its expectations. The outsourced workers may not possess as much allegiance to the company. Therefore, the knowledge that the outsourced staff possess regarding the site’s maintenance function, equipment and business operation is more easily lost if and when they leave.
Redundancy in management roles: Roles may be duplicated within a client and contractor organization and this will contribute to the overall cost of maintenance. If roles and responsibilities are not clearly defined and understood inefficiencies within the maintenance organization can result in conflicting priorities and confusion.
Response time: Response time to problems may be handled more rapidly in-house when compared with a phone call to an offsite vendor when dealing with specialty contracts. The company must balance the needs of the site against the decision to outsource this work. The company must negotiate an acceptable response time, such as 24 or 72 hours or whatever is required. A longer response time can equate to more downtime and lost production.
The commercial property management/ownership must determine the cost-effectiveness, control, flexibility and focus required at their unique sites to properly manage their maintenance function within their particular budgetary constraints and to meet their strategic objectives regarding property maintenance. Outsourcing does not mean management no longer has responsibilities. In fact, outsourcing requires dedicated management personnel to oversee, coordinate and collaborate with the outsource organization. The decision requires a detailed evaluation of all factors to determine whether the most strategic choice for commercial property maintenance is outsourcing or performing it in-house.
Glenn Ebersole, Jr., P.E. is strategic vice president of business development/marketing at Hollenbach Construction, Inc.