Integrated investment

SMART SOLUTIONS
The contract deploys seven Service Delivery Managers (SDMs) covering the UK, with a team of 20 Facilities & Building Managers supporting them across the portfolio. The managing agents JLL, Savills, BNP and Workman are lined up by fund and work alongside the FMI and the asset managers to help deliver close strategic alignment for the funds.

Says Mike Smart, MD of Bellrock Workplace and Compliance Services division: “We were able to spend the time to develop our software platform, Concerto, to meet the needs of the programme. While prior to this we had the experience of working with asset management organisations and this enabled us to understand the type of hybrid relationships between the FM and the PM world in terms of design, making this operating model quite unique.”

According to Tyson, another major difference to the established norm is that Bellrock has total responsibility for the supply chain spend. “We needed a model that made the SDMs accountable for all expenditure (similar to a traditional FM contract P&L). Bellrock needed to be responsible for contracting the cleaning, security and other services, or the suppliers would just go around them to the managing agents and they wouldn’t be in control of the delivery. The managing agents bought into this and now in terms of payment processes, our average payments are under a week on a large part of our portfolio and the suppliers love it, which means that over time it will give us better leverage in the market.

“The other side of that is social value, as we can look at an opportunity to help smaller suppliers start a business with for example, window cleaning or catering.”

Concerto can produce data on a minute by minute basis, the managing agents can check a service charge down to the amount and minute it was spent. With immediate access to factors such as the rate of first-time fixes a managing agent can see how the quality of the service is impacting their areas of responsibility, whether it is the service charge or rent collection. This goes to meet a key aim of the Mercury Model, which, by making service delivery subject to a higher level of scrutiny helps create a performance culture within the supply chain.

“We took in a bit of change theory and introduced balanced score cards,” explains Tyson.

“These cover areas that directly impact the occupier, such as sustainability, operational performance and financial outcomes from an investor perspective. We have a building performance team within LGIM who generate balanced score cards on a monthly basis and these hit the SDMs, the PMs and the asset managers at the same time. These are marked red, amber and green against their own targets to show how they’re getting on.”

The level of engagement this has created has also changed the culture within LGIM Real Assets, and is one of the primary reasons why the new model is so effective. Says Smart: “With the client we build a performance matrix to analyse the operating capability across a load of different values; including first time fix, reactive ability and performance quality. In terms of decision making, that is invaluable, so for example, you might be looking at a supplier who has been providing services to buildings covering the whole of England, and wonder if that’s the best solution?

“The data tells the truth, so say you come back to performance data on the operation of the building and you start to get a picture that company X are really poor in Manchester but excellent in the South West. That requires a conversation between SDMs, PMs and our supply chain, to work together on what the best solution looks like when utilising the data evidence.

Says Tyson: “This process has helped LGIM to move away from the more traditional managing agent approach based on telling suppliers ‘we’ve a number of sites in the UK, can you give us the best price’? Instead, suppliers are well aware they’re working within a meritocracy, so they may lose some contracts, but if they deliver in other areas they can still benefit.”

“The ultimate advantage is a renewed focus around the occupier experience, as by analysing the scope of services, whether for grounds, BMS, M&E, or cleaning, all of which are so important in multilayer environments, you’re addressing and regenerating the quality of delivery.”