Outsourcing: The Inside Story of Contracting Maintenance and Engineering Tasks

Your Content Goes As if outsourcing wasn’t tough enough, the COVID-19 pandemic has further complicated the decisions maintenance and engineering managers must make.

As if outsourcing wasn’t tough enough. Since I wrote my February 2020 column exploring the external factors maintenance and engineering managers should consider when choosing a provider or contractor, nearly everything has changed.

The coronavirus pandemic has affected most aspects of institutional and commercial facilities. Now, as we discuss the internal factors managers need to consider when outsourcing maintenance and engineering activities, saying that these are strange times is an understatement. Never in my lifetime have we seen this great an impact on facilities and nearly every other area of society.

I have been reading different articles on the impact of the pandemic to the economy and the workforce, and one major concern that comes up repeatedly is the availability and skill set of available labor when things return to whatever normal will look like. I imagine that in many facilities, outsourcing maintenance and engineering activities now will be considered a more practical option moving forward.

I mentioned in the last column the external factors managers should study when considering outsourcing, including the scope of service required, the experience of the contractor and key performance indicators. By understanding the activities involved in the scope of work, managers can identify potential contractors and their relevant experience, and of course they can measure contractor performance against agreed indicators.

But what initiates the consideration of outsourcing in the first place? What internal factors influence those decisions? Let’s look at three internal issues managers must address when they consider outsourcing.

Outsourcing: Assessing In-House Technician Skills

Finding skilled and competent personnel has become a challenge. I hear it all around the world — the workforce shortage, the shallow pool of competency managers have to choose from, the aging staff, technicians moving onto other organizations or just outright quitting. These are all real challenges for managers.

Outsourcing work to an organization that specializes in facility maintenance or a needed skill can be an attractive strategy for managers. The process removes the responsibility of many activities that managers are accountable for and ensures that the contractor provides qualified and competent resources and services.

A contract service provider also can offer specialized services for which managers might not be able to justify adding full-time, in-house staff. Many contractors offer a full range of facility management services, wrapping several possibilities together under one contract. These bundled services can make managing the process much simpler and more convenient rather than forcing managers to oversee a full staff and deal with human resources responsibilities.

Managers considering outsourcing also need to weigh the level of customer service and quality of the workmanship the contractor can provide, compared to that of in-house technicians. I’ve already mentioned skill set and competency, but there is a difference between skill set and workmanship. A skill set describes a person’s abilities, where workmanship is defined as the degree of skill in which a product or service is done.

For example, I have had my windshield replaced several times over the years. Each time, a technician came out and replaced the damaged glass and went on the way. The windshield was replaced correctly, and I was satisfied with the work done. Then several years ago, I had to replace the windshield on my wife’s car.

The technician came out to the house and started replacing the damaged glass. While the seal was setting, the tech vacuumed the entire interior of the car. When that was done, not only did he clean the windshield both inside and out. He also cleaned all the windows in the car, tidied up around the driveway, closed up his mobile shop and went on his way.

That technician took great pride in his workmanship, and the example demonstrates the difference between a skill set and workmanship. If a contractor is not providing the same level of workmanship to our internal stakeholders, then how well is our customer service being executed?

Cost Considerations When Outsourcing Maintenance and Engineering Tasks

Cost reduction or avoidance is another issue managers must consider when discussing the possibility of outsourcing. We are all striving to reduce costs, optimize our resources, work smarter not harder, and do more with less. The pressure that managers and their staffs face every day in carrying out their duties is tremendous.

When  the goal is to reduce costs, top executives in organizations tend to look first at labor. They don’t look at resource utilization or process improvements first. I’ll talk about those later.

With that said, cost reductions and avoidances can take many shapes, such as recruiting, training, payroll, and health and retirement benefits. They enable the facility to take the services of highly experienced and trained experts to execute their work in a more efficient and effective form.

In my February 2019 column I wrote about trades utilization. I’ve also made several presentations at NFMT conferences about the true cost of maintenance. The typical maintenance technician spends 24-26 percent of the day walking to and from the job site and another 18 percent looking for parts and tools. Those activities amount to almost 50 percent of a day spent not doing what the organization is paying him or her to do. Several factors contribute to those numbers, but the fact is that no operation in the world can function cost-effectively at that utilization rate.

So managers must determine if there is an internal issue with processes or people and, if so, whether outsourcing will provide a more cost-effective return on investment. Managers need to keep in mind that the organization is paying for technician expertise, and one expectation in that scenario is that the technician brings along best practices. I’m willing to pay for quality service, but I’m not willing to pay 100 percent for 50 percent of service.

Tech talk

Investments in technology and innovation also come under close scrutiny when discussions turn to outsourcing. Although technology continues to advance rapidly, so do the associated costs. Many operations either do not have the funds available to invest, or they lack the skill set to maintain the installed systems.

Take the internet of things (IoT) and the network of accessible devices — thermostats, sensors and actuators, among them — that a facility can use to monitor and manage energy use. Advances in HVAC systems can be particularly expensive, especially when applying smart technology to reduce heating and cooling costs substantially. These sophisticated systems need highly competent people to maintain them cost-effectively and efficiently.

Drones also are becoming more common in and around facilities. Some are basic, while others are extremely advanced in their use of technology, such as the capability to perform infrared imaging. Outsourcing to companies that specialize in this technology or advanced innovations can be beneficial.

The most successful organizations capitalize on capability, partnerships and innovation resourcing, according to a recent Forbes article, which uses the term capability sourcing. As discussed earlier, managers across all industries face a shortage of competent talent, and using outsourcing expertise can enable them to tap into a rich pool of resources to compensate for this shortage.

When managers decide to outsource, they are also committing to a partnership, and they should view these partnerships as strategic relationships. In my February 2020 column, I mentioned that an outsourcing contract should include three elements: key performance indicators, a communication plan, and a process for resolving conflicts. In the outsourcing relationships I’ve seen fail, one of these three elements — or all of them — was missing from the contract.

Maintenance and engineering managers considering outsourcing maintenance activities must weigh both internal and external considerations in making the final decision. The impact on facilities of the coronavirus has only made the decision more complex.

Whether the decision is to retain maintenance and engineering work in-house or to outsource the activities, managers need to consider all the possibilities in determining which option is best for their departments and organizations.