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July 30, 2015

Five lessons on agreements we can learn from Europe

While Greece looked to be heading for bankruptcy, Europe hammered on about fulfilling the agreements to pay off its 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. What can real estate and facility managers learn from the polemics of the 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 because organizations operate in long chains. This mutual interdependence emphasizes the need to make good contracts, particularly when it comes to service provision for incidents. Imagine that the air conditioning breaks, while the outside temperature rises. What should be stipulated in an agreement?

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, because it sets a clear framework. 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, because it is particularly an integrated view of contract management that has major added value. This prevents everyone 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 standardized: from the first notification of the problem through to its resolution. For this, Key Performance Indicators (KPIs) – or targets – are set, and reports are created to measure the extent to which these KPIs are achieved. However, it’s important to retain flexibility, because practice may show that the handling time is much shorter than was agreed. In this case it makes sense to modify the agreements and KPIs.

3. Relevance varies by user, service or location
Failure of an air conditioner in a server room has a higher priority than the same dodgy air conditioner in an office space, because any failure in the server room could bring down the organization’s entire IT infrastructure. An incident may have different consequences for the operational processes, depending on the 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 part of the IT department. So there is a departmental overlap, 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 arrangements made earlier
It might be the case that the tenant of an office building has already signed a number of contracts with suppliers, such as the painter, the air conditioning supplier or the cleaning company. For a tenant, it’s good to know in advance what agreements are in place, so he does not locate help for every incident himself.

Clarity in advance is important so as not to end up with problems down the line. If good contracts 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 crisis in Greece can be avoided.

Vincent Henricks
Product Manager Integrated Services Management