From buildings to business facilities

In a typical construction project, the efforts of the consultants and constructors are focused towards the achievement of practical completion and the handover of a finished building. The construction process is tailored to this end and the interests of consultants and constructors are all aligned to achieving this measurable conclusion to their labours. The commonly used systems of procurement, with a few exceptions such as leaseback and PFI/PPP are all geared towards a huge effort up to practical completion, with as little as possible thereafter.

This makes perfectly good business sense for the supplier; if the construction process is well managed, with attention to detail and the minimisation of defects, then the effort up to practical completion should yield few defects requiring remedial works thereafter. The contractor has every incentive to target practical completion because construction resources are expensive and to deploy them to fix faults after practical completion only erodes the contractor's profit margin. Successful contractors have evolved a number of strategies for coping with this, including the use of lighter, more flexible snagging teams or the provision of a maintenance service during the defects liability period.

The flaw with this approach is that from the point of view of the user, buildings are never finished and completion is never practical. That is not to say that constructors do not deliver what has been specified, it merely reflects the fact that the end of the construction process is only the start of the life of an evolving business facility. All businesses demand flexibility from their buildings and enlightened consultants take pride in delivering quality solutions that are flexible and easy to maintain. It is not unusual however, for a building to be designed, constructed and handed over in good order, only to be systematically decommissioned by the operators. This is not because operators are incompetent; it is because they simply do not always understand the design subtleties of what they have been presented with.

The level of technical expertise deployed in building operation is generally much lower than in construction, even though the total costs are in fact far greater over the lifecycle of the facility. In part, this is because there is still a tendency to appoint maintenance and operation contractors based on lowest price and relatively limited take up of facilities management consultancy. Equally, the eagerness with which constructors hand over 'finished' buildings often gives rise to unwelcome legacies that the operators then have to address, effectively completing the contractors (and consultants) jobs. This inevitably points to building operation as having the greatest opportunity for contractors and consultants to add value and command more worthwhile fees.

Golden opportunity
Suppliers who have realised this opportunity have created facilities management teams within their business, however these are invariably separate operating companies and do not provide the building user with a single, continuous point of responsibility. To a certain extent, the PFI/PPP approach seeks to achieve this by transferring the risk of building operation to the contractor who has managed the construction process. Leaseback schemes such as BOOT (Build Own Operate and Transfer) have also developed to fulfil specific niche markets, such as energy centres, document archives and other equipment-intensive facilities. There is no obvious trend to extend this approach into mainstream accommodation however, because the need for flexibility in say, office accommodation often makes the provision of performance-based contracting difficult and expensive to procure. What is needed is a 'joined-up' consultative approach that extends the expertise of construction into the business of operation and keeps the responsibility for operation firmly attached to the business of construction.

Some businesses do employ a facilities or operations consultant, but this often takes the form of a managing agent from a real estate background. This approach has certain advantages, since a managing agent will often be involved early on in the life of a new building, handling lease agreements, licences to alter and service charge negotiations as well as offering procurement advice for outsourced services. The majority of the cost and effort associated with the day-to-day management of any building has little or nothing to do with real estate issues however, and it is high time building services engineers woke up to the fact that they are missing a major opportunity.

When businesses do employ facilities consultants, they look for experience of the procurement of a variety of hard and soft services as well as the adaptation and repair of buildings. There is now a positive shift by informed clients to incorporate engineering disciplines into their facilities management resources, working alongside the real estate professionals, not for them.

The demands of this industry, which is reported to be growing at in excess of 10% per year, require the skills of professionals who can demonstrate their credentials as "best in class" and the building services engineer, above all construction and property professionals, is perhaps best placed to bridge the gap between construction and operation. As experts in the working parts of a building, they have the most to contribute to its ongoing life, in terms of problem solving, adaptation and maintenance. As such, they understand some of the problems faced by building operators as well as having some professional respect for the decisions taken by constructors. The professional benefits are also clear; experience from the operation of a new facility should always feed back into the next construction project.

One of the most effective areas in which the services engineer can operate is that of the procurement of outsourced services. Building maintenance, particularly of the hard, engineering services is one of the biggest costs associated with the operation of any building. Here the services engineer has a starring role to play, but few services engineers stay involved in building operation post handover, preferring to move on to the next creative challenge and keep their design skills fresh.

The facility lifecycle
In order for building services engineers to actively engage in the operational life of the facilities that they create, they need to have a better understanding of forces at work in this environment that is so different from construction. Constructors seldom understand the true cost of equipment or service failure, because they do not generally understand the cost drivers of the businesses that their buildings are intended to support.

Whereas it is easy to build expensive redundant equipment into a design, a more valuable approach is to understand the "right cost" of redundancy and to treat risk management as opportunity management; recognising that money saved by not over-designing for un-necessary resilience could be used to provide the user with an enhanced facility that actually gives them a measurable business advantage.

To achieve we need to understand the operational environment; its costs, supply chains, risks and opportunities. This is no easy task, for cost-in-use depends on the business priorities and costs of the user as much as the tangible characteristics of the building, equipment or service in question.

Figure 1 shows the life-cycle of a business facility, annotated with some of the services that building services engineers can provide. The 'building box' between the black lines shows the part of the lifecycle in which building services engineers routinely operate. This is a place of fierce competition, diminishing returns and increased litigation, yet most consultants appear to remain there out of choice.

Construction is a well-established industry and trends in profit margins for consultants and contractors alike are largely driven by the relationship between supply and demand, rather than by step-changes in technology or new methods of working.

As long as contractors and consultants are focused solely on the end of construction for the realisation of their profit, there will be no incentive to exploit the longer-term opportunity of building operation. It should be a cause for alarm in our industry that some clients who are procuring large scale PFI projects requiring strategic engineering and building advice are engaging the services of management consultants from financial backgrounds. It seems that as a profession we either lack the skill to advise and persuade in business terms, or that we are blind to the risk of not seizing the opportunity in time.

The challenge for services engineers then, is to demonstrate to investors, facilities managers, landlords and owner-occupiers that there is real value for money to be had from engaging their professional services both before and after the design and construction phase of a new facility. For the services engineer to offer their clients a service that is of benefit to their business, they must be able to help to define what is needed from a facility before it's design is conceived, and stay involved with it after construction, to both advise on operation and to learn the lessons of a changing environment.

The creation of business facilities that remain true to their engineering potential is far more challenging than just making and finishing buildings. It is also more interesting, satisfying and in the long term, lucrative. What is more, a growing number of informed clients will ensure that it is where the future lies for our profession, whether we like it or not.