Residential facilities management
Copyright: David Lawson/Financial Times 1996
Commercial premises monopolise attention as facilities management evolves into a recognized discipline. That is almost inevitable, considering the complex range of services involved in running modern buildings, and the pressures on occupiers to cut costs. Moves into hospitals and schools have been only a small step because once occupational budgets are set, this requires little change in the objectives of improving efficiency.

But the industry is now crouching for a far bigger leap. The proposed sale of 60,000 Ministry of Defence homes has reminded managers that there is a huge property sector yet to conquer. Housing does not fit easily into facilities management, however. Most homes are owned by individuals rather than businesses, and those held for investment have traditionally been handled by letting agents.

Two gaps are opening, however, which could allow FM specialists to move into this sector. Tenants are becoming more demanding, partly because of new laws increasing their power to influence landlords. Investors are also aware of the competition they face from a surge of new rented property coming onto the market, and are keen to improve standards.

Smart owners recognize the dangers of the 'Teflon desk syndrome', according to Oliver Jones, FM managing director at the Symonds Group. This involves agents simply passing on costs in service charges, leading to increasing dissatisfaction among tenants.

'We are having discussions with major residential property estates about how we might reduce charges and provide a better service,' he says. This would combine the skills of property managers with the strategic and and purchasing powers FM specialists provide to the commercial property sector.

But there is grey area between private and investment housing which could fit even more closely into the role facilities managers play as servants of occupiers rather than landlords. Large organisations such as international banks, large manufacturers, hotels and oil companies hold large portfolios of homes for staff accommodation.

'These are crying out for attention,' says Lionel Prodgers, joint managing director of Chesterton Facilities and Property Management (CFPM). Ironically, the first thing an FM specialist might do is sell them off. Accommodation is really just another support service, says Prodgers. They don't own the lorries that move goods, nor the cars their staff drive. So why hold houses?

The Ministry of Defence has half-answered that question selling off the whole of its married quarters. But it will lease back those occupied by service personnel. An alternative would have been to hand over the whole task to an FM specialist, which could pick and choose property as and when required.

This is what Shell has done in Aberdeen for its 1,200-strong Brent Offshore development team. Bell-Ingram, a Scottish manager now part of Chesterton, was called in to look after the residential estate in 1994 after a long history providing professional services on pipeline development as well as finding and managing the division's new offices.

This involved around 100m of housing for staff ranging from the managing director to the newest graduate. Now almost all property is rented.

This is perhaps the crucial difference between property and facilities management. The former takes over responsibility for rent collecting and maintaining the bricks and mortar; the latter steps back and asks strategic questions about how a service should be provided.

Shell's particular needs involve a large, but ever-shifting group. 'There can be 20 people coming and going in one month,' says Ken Thomson, head of CFPM in Scotland. But in the next, only a couple may move.

The large stock of homes was held to ensure a sufficient range of choice. Housing is part of Shell's staff incentives, so it needs to be not just of the right type but the right quality. But that meant carrying the cost of excess. Thomson points out that a 10 per cent void level could waste 1m a year.

Switching to rented homes means he can take on property of the right type when needed. CFPM also standardised all the leases to cut paperwork time and expense. But it is a very thin tightrope to walk, and running this kind of service requires a battery of management tools.

The first was relatively simple: a 24-hour help desk to give tenants an immediate response to problems ranging from a broken dishwasher to a collapsing roof. Shell monitors staff views on their homes, and this contributes - or deducts - from CFPM's performance bonuses.

The rest was more complex - but could prove extremely lucrative in the long run. CFPM has used the Aberdeen contract as a testbed for developing a suite of FM software geared to housing that it now hopes to use in winning further contracts. This covers everything from preventive maintenance, through accounting and tendering to recording the particular needs of tenants. It also helps portfolio management - another area common to FM but foreign to normal property management.

Thomson has to juggle various lease lengths and property types to ensure he matches the various needs of a changing group of staff. That means tracking and forecasting Shell's needs. As the biggest customer in Aberdeen, he can pull heavy strings with local agents to ensure the right kind of property is on tap. Too much empty space and the performance bonus suffers again. Too little - or the wrong kind - and people complain.

This has worked well enough to save 250,000 on maintenance alone, and won CFPM a discretionary bonus from Shell in its first year. The success of the partnership even persuaded the oil company to open its computers to hand over tax information, so Chesterton can calculate staff allowances.

Prodgers now aims to widen the net. Chesterton has recently re-acquired its former agency arm, Chestertons[CORRECT] Residential and wants to back up its property management skills with FM systems to pitch for other big groups.

He points out that many international groups such as banks provide staff housing. And some are suffering from those which have had to be repossessed under cheap loans provided by the firm. One London institution with around 200 properties has already been targeted.