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30 July 2015

Five lessons on agreements we can learn from Europe

While Greece looked at their future heading for bankruptcy, Europe put the pressure on about fulfilling the agreements to pay off their debts. Greece by contrast believed that the conditions were too rigorous, and wanted a new round of negotiations. The result: months of difficult discussions and plenty of incomprehension on both sides. But what can real estate and facility managers learn from the polemics of world leaders on making agreements and sticking to them?

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In today’s economy, production and service provision processes are becoming increasingly complicated as organisations operate in long chains. This mutual interdependence emphasises the need to make strong agreements, particularly when it comes to service provision for incidents. Imagine that the air conditioning breaks, while the  temperature rises outside. What should then be stipulated in a contract?

1. Make uniform arrangements in advance, which apply to everyone

Initially setting up an agreement system takes a lot of time and money, but it quickly pays for itself by setting clear frameworks. It’s clear to everyone just where their responsibility lies and what is expected of them. You do need to ensure that everyone uses the same working method, as it is an integrated view of contract management that provides a major added value. This prevents everyone from having to reinvent the wheel.

2. Evaluate the agreements which have been made, and adjust them where necessary

The way an incident is handled can be standardised: from the first notification of the problem through to its resolution.  It is for this reason that Key Performance Indicators (KPIs) – or targets – are set, and reports are created to measure the extent to which these KPIs are achieved.  It’s important to remain flexible, practice may show that the handling time is much shorter than was agreed. In this case it would makes sense to modify the agreements and KPIs.

3. The priority varies by user, service or location

Failure of an air conditioner in a server room has a higher priority than the same dodgy air conditioning unit in an office space, as any failure in the server room could bring down the organisation’s entire IT infrastructure. An incident may have different consequences for the operational processes, depending on its location or service. If this is established clearly at the start, the incident can be resolved more efficiently.

4. Agreements affect multiple departments

Perhaps the air conditioning is the responsibility of the facility manager, but the servers are under the IT department's responsibilities. We have here an overlap between two departments, but who takes charge when the problem occurs? The responsibilities of those involved must be established in Service Level Agreements (SLAs).

5. Take account of previous arrangements

It might be the case that the tenant of an office building has already signed a number of contracts with various suppliers, such as the painter, the air conditioning supplier or the cleaning company. It is important for any tenant to know what agreements are already in place, so that he does not take responsibility for every incident himself.

Knowing exactly what agreements are in place is very important to ensure a fast resolution of any facility management problems.  If solid arrangements have been made, both parties know exactly where they stand and what should happen in case of an emergency. There is then a quick resolution, avoiding months of long meetings, high emotions and dismissed decision-makers, and the air conditioning is quickly back in action.

Vincent Henricks
Product Manager Integrated Services Management