Today's blog comes from Peter Allen, Partner and Managing Director, TPI.
Looking under rocks to find near-term cost savings in 2009?
Most companies today are thoroughly examining new areas of cost structure improvement in various areas. Although the spending is often widely distributed and not easily visible to the CFO, facilities management spend in most companies is much greater than IT spending.
First generation facilities management outsourcing projects are reliably returning a net 10 to 15% savings on facilities operations and maintenance, while at the same time bringing new transparency to this area of spend.
Even more attractive is that facilities management outsourcing projects are quick to execute, with little or no new capital investment. Projects usually return significant savings in the first year of the new contract. Many of the site services such as cleaning, catering and security are already outsourced so that the shift to a new facility manager is transparent to the organization.
The benefits are significant:
- Annual savings of 12% to 20% (total spend) can be achieved within 3 years.
- Savings of 4% to 8% are typically achieved in the FIRST year of the contract.
- There is little or no capital investment required by the client, and savings usually substantially exceed transition expenses.
- The majority of work remains on-site so redundancies are low compared to other types of outsourcing.
