Facility Management Outsourcing. The Tennessee Story. The Tennessee Story. The Tennessee Story NASFA National Conference:

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1 2017 NASFA National Conference: Facility Management Outsourcing: June 13, 2017 Virginia Beach, VA John Hull Deputy Commissioner State of Tennessee Real Estate Asset Management Kevin Powell Director of Facilities Management State of Tennessee Real Estate Asset Management Tom Foster Alliance Director JLL Governor Haslam elected in 2011 Provide the best service at the lowest possible cost Poor management program for office buildings Inadequately funded and staffed; no accountability Facilities problems Operational issues 1

2 The choice: Evolve TN s existing in-house management program OR Manage a private sector provider The goal a business model that could: Deliver the highest-performing program capable of producing sustainable, transformational results with the least time and cost The solution needed to include: High performing assets High customer satisfaction Reduced building and occupant risk Automated systems Accountable workforce Lower operating costs Improved life-cycle decision making 2

3 Facility Management Outsourcing Thus A private sector provider Where we were Operating in a run to fail mode led to life safety issues for employees and the public. BEFORE: 11 windows fell out of the Polk Building from not correcting a glass to frame separation. Where we were This room contains dampers that allow fresh air into the War Memorial Building, which houses legislative offices. The room had not been entered for an estimated 25 years. 3

4 Where we were Insufficient maintenance practices led to energyinefficient facilities. BEFORE: No air filters on coils in AFTER War Memorial for 25 years Where we were Lack of proper training resulted in higher operating costs Early morning (before 5 a.m.) photos of Tennessee Tower BEFORE: Systems running 24 hours/day. AFTER Where we were Concrete falling from buildings Flooding in basements Electrical shortages in buildings Improperly installed equipment increasing utility bills BEFORE: Falling concrete posed hazards to employees, building visitors, pedestrians, and property. 4

5 Where we were Inability to self-perform regular daily repairs resulted in unnecessary delays, problems, and costs. BEFORE: Untrained staff typically hired others for repairs AFTER: Repair self-performed by staff saved $1800 What we knew Number of Leases What we knew Tennessee Tower Tenants 2,500 2,000 2,150 1,500 1,000 1,

6 Prepare for the transition Tennessee state jobs affected 131 Vendor chose to hire 31 Vendor performed services with 79 Get a win! TN Board of Regents 35M SF 36% University of TN 28M SF 29% Total: 97M SF (est.) General Govt. 34M SF 35% Start with what you can control Other Agencies State-Owned 22.5M SF 66% State- Owned 6.4M SF 19% Managed by DGS Leased 3.6M SF 11% General Government: 34M SF (est.) Other Agencies Leased 1.5M SF 4% You will make the news State's explanation on outsourcing makes no sense Campus Workers Unmask Scheme To Privatize All Tennessee Property Democrats Say Nashville Firm Reviewing Benefits Of Outsourcing Is Too Close To Haslam Legislators hear worker concerns about job outsourcing Haslam unveils outsourcing details amid Capitol protests 6

7 Facility Management Outsourcing Advertisements contain the only truths to be relied on in a newspaper. Mark Twain FM outsourcing timeline Jan Mar July 2013 Governor Haslam takes office Facilities master planning begins FM vendor services begin Sep STREAM established Apr July 2014 FM contract signed Year 1: $5.5M cost savings July 2015 Dec Year 2: $7.7M cost savings Second RFP for FM released July 2016 Year 3: $12.8M cost savings Procurement 7

8 Facility Management Outsourcing Operations Operations Operations 8

9 Facility Management Outsourcing Operations Operations Operations 9

10 Customers Measure results; repeat the message: money saved against the plan Millions $14.00 $12.00 $10.00 Total Cumulative Savings: $26.2M $4.18 $8.00 $6.00 $4.00 $2.00 $1.92 $0.58 $0.96 $2.05 $4.01 $3.75 $2.97 $5.73 $0.00 FY14 FY15 FY16 Self-performed work Procurement Energy Customers Customer Satisfaction Governance pyramid Departmental Assures transparency by providing an independent review of contractual deliverables. Executive Provides strategic alignment plan for the next fiscal year. Management Monitors operational performance. Operational Monitors contractual deliverables and aides in resolving issues. 10

11 Facility Management Outsourcing KPIs Financial Operational Customer Satisfaction 20% 50% 30% Savings Creation Operational (30%) Savings Creation Utilities (15%) Diversity Spend (5%) KPIs Financial Reactive Maintenance Completion (12.5%) Preventive Maintenance Completion (12.5%) Critical System Uptime (5%) Operational Customer Satisfaction 20% 50% 30% KPIs Financial Operational Customer Satisfaction Tenant (10%) Client (10%) 20% 50% 30% 11

12 Lessons Learned Plan for the future of employees in outsourced positions Communicate early and often will all affected audiences Employees Executive branch agencies Legislators News media and the public Ensure you have the governor s support you ll need it Questions? 12