Strategic sourcing and procurement of facilities management services

The purpose of this paper is to provide insights into strategic sourcing concerning facilities management (FM) and how it can contribute to a sourcing decision that combines the benefits of internal and external provision with consideration of business risk and cost.

The paper investigates a strategic sourcing and procurement process in a large public organisation in Denmark based on participating in internal meetings, a workshop, document studies and interviews. The process is compared to a new ISO standard with guidance on strategic sourcing and development of FM agreements.

A problem in the new ISO standard is that it is based on sequential model starting with detailing the demand and needs before investigating sourcing option. The case shows that the way needs are specified are depending on the chosen sourcing models. Based on a thorough analysis, the organisation decided to change the sourcing strategy with insourcing the most critical building-related activities and changing the procurement strategy from one integrated FM contract to three bundled and seven single-service contracts. The concept of right-sourcing is discussed.

The research is based on a study of one public organisation, which limits the possibility to generalise the results. However, it provides detailed insights into the strategic sourcing process in FM, which can give inspiration for practitioners and further research.

The paper throws light on a strategic sourcing process which is rarely available in public because of confidentiality considerations, and it provides the first evaluation of the new ISO standard from 2016.