Doug Burr, Senior Advisor, Real Estate and Facilities Management Advisory
Ron Walker, Managing Director, Real Estate and Facilities Management Advisory

Like every other aspect of an outsourcing agreement, success depends on detailing where you are, where you want to be and what it’s going to take to get there. Design and execution of the facilities management sustainability plan – along with all the data gathering and number crunching – falls to the service provider. Since they are already skilled at developing strategies to reduce cost and consumption, most of the upfront work will focus on establishing the parameters of the reporting process. Obviously there is no one-size-fits-all approach, but most agreements will include:

Commitments for energy reduction – Virtually any organization can reduce energy costs without impacting business performance. Leading service providers can tap a worldwide knowledgebase to help you baseline and benchmark your properties to identify areas where gains can be made. Energy savings of up to 20 percent are possible. Energy reduction commitments are increasingly common in outsourcing agreements and are structured so a percentage of the savings is typically shared with the service provider.

Commitments for water/sewage reductions and diversions – Growing water shortages are a concern worldwide. Water conservation practices – high-efficiency appliances and fixtures, changes in landscaping and irrigation practices, innovative uses of gray water, rainwater catchment and storm water runoff diversions – can reduce water consumption by as much as a third. Big points can be scored with shareholders, customers and employees, not to mention significant cost reductions with modest capital investment.

Tying a portion of the management fee to achieving LEED-EB O&M (leadership in energy and environmental design for existing buildings operations & maintenance) certification for one or more buildings – Putting a percentage of the management fee at risk incents service providers to reach sustainability objectives particularly important to your organization. Given the maturity of the integrated facilities management industry, many leading service providers are willing, and able, to meet this pay-for-performance target. Obviously, any capital improvements needed to achieve certification rest with the client.

Sustainability in the governance model – Set targets for individual buildings and the portfolio as a whole and track progress carefully. Empirical data produces better operational results and, ultimately, contributes to higher profits. When service providers meet or exceed commitments, they should be rewarded.

For the full story, read How to Champion Sustainability, Reduce Costs and Consumption and Win Friends in High Places… Without Increasing Your Spend.

Filed under: How to..., Outsourcing, Real Estate and Facilities Management by EquaTerra