Is it time to review your property’s service delivery model?

To insource or outsource and to what degree?

The client is one of the largest landowners in Victoria. The property group within this organisation is responsible for the management of properties which generate a significant proportion of the organisation’s total revenue.

With over 14 years since going to market for property management services, there was a need to ensure the scope, service specification, KPIs, contract governance and approach to property management services was still appropriate to deliver on organisational and government objectives. The operating environment has a large volume of complex stakeholders and assets managed within the portfolio have high risk profiles. These features have implications for the suitability of outsourcing the management of some functions and / or asset types, as well as enabling the realisation of their purpose.​
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Grosvenor’s approach utilised a two-phase process. The first phase involved a review of the property management portfolio, to identify improvement opportunities in the current state. Grosvenor investigated the current state, collated market and benchmark information, analysed options, selected a preferred option and made recommendations. The second phase focused on the procurement of services to deliver on identified improvement opportunities.​

Phase 1

The current state research found while the service delivery model was largely appropriate, there were opportunities to improve portfolio and service outcomes by addressing current barriers in the system and data management and contract management.​

Grosvenor considered four options (listed below) for the client’s service scope and service delivery model to optimise property management outcomes.​

Grosvenor analysed the four options against the design criteria (strategy, people design, technical, foundational, and contract management) and recommended Option 2 – Increase outsourced service scope.

This option would enable the client to better utilise provider capabilities and streamline current outsourced services. It reflected the operating environment and asset and stakeholder risk profiles.

The benefits of this option were:​

• Reduced transition risk. ​
• Market capabilities were leveraged to deliver more technically focused services for lower-risk portfolios and low-risk services​
• They had greater accountability for stakeholder management. ​
• Increased opportunity to leverage service provider capabilities. They were better enabled to deliver on its strategic purpose and realise greater commercial value from its portfolio​
• Reduced some ambiguity regarding data management​

Grosvenor made 7 recommendations for Phase 1 to better position the client to achieve future state service outcomes and address key findings identified as part of this review:

• Clarify roles and responsibilities of internal staff in the delivery of property management and leasing services, with consideration of the roles and responsibilities of the external services provider
• Provide staff with training regarding processes and procedures related to data management and use of systems, including protocols around data management and how to access data from service provider and their own systems
• Identify and implement opportunities to increase efficiency associated with decision-making processes
• Address system complexity by improving the process for data capture/upload into Provider’s system
• Implement a contract management plan that supports the realisation of a partnership-based relationship with Service Provider
• Clarify contract roles and responsibilities
• Follow established contract governance structure and performance management protocols

Phase 2
Grosvenor then commenced Phase 2  to support the procurement, including developing specifications, contract and contract management plan, and supporting the tender process and transition. In addition, the client engaged an independent probity advisor to ensure compliance. Sufficient market capability existed to provide for a competitive tender process and to ensure they achieved value for money.

Grosvenor used an open tender approach for the reason that there was:​

• increased opportunity to achieve value for money​
• an unbiased approach to supplier market​
• sufficient competitive tension​
• market capability, reducing need for closed tender process​

The outcome
The client adjusted their service delivery model to better meet the needs of the organisation. Grosvenor was re-engaged to run the procurement of a property management provider, resulting in greater visibility of portfolio performance and improved portfolio outcomes.

Do you need to review your property service delivery model? Contact Ned Lawson for a free chat!