Why Contracts are Crucial
Effective FM contracts are the foundation of successful partnerships. They define expectations, align objectives, and mitigate risks. Stan Mitchell compared two contrasting case studies:
- Public Sector Contract:
- Rigid, input-based terms.
- Fixed deliverables with detailed KPIs.
- Client-controlled penalties and cancellations.
- Private Sector Contract:
- Flexible, performance-based terms.
- Incentives for exceeding KPIs and SLAs.
- Mutual discretion on contract termination.
Types of FM Contracts
Mitchell outlined various contract types, each suited to specific needs:
- Fixed-Price Contracts: Predictable costs for well-defined services.
- Performance-Based Contracts: Linked to measurable outcomes like KPIs and SLAs.
- Public-Private Partnerships (PPP): Long-term collaborations for public-sector facilities.
Master Service Agreements (MSA): Streamlining multiple service agreements into a single framework.
Performance Metrics
Performance measurement is essential for FM contracts. Mitchell emphasised the use of:
- KPIs (Key Performance Indicators): Strategic metrics tied to organisational goals.
- PIs (Performance Indicators): Tactical metrics for operational efficiency.
- SLAs (Service Level Agreements): Day-to-day performance deliverables that impact customer satisfaction.
Mitchell reinforced the importance of transparency and collaboration, stating, “If you cannot measure it, you cannot improve it.”
