Successful preparations for outsourcing

An organisationally coordinated service operation, an agreement for service delivery with the customer, well-planned decision documentation and well-prepared employees. That’s how Gävleborg County Council summarises its preparations for outsourcing its property management activities by contract. This action will enable the council to reduce the costs of property management by around 20 percent.

In November 2005, county councillors made the decision to outsource Gävleborg County Council’s service management unit, Länsservice. The reason for this was that for a long period the county council had been encumbered by a financial deficit. The aim of the outsourcing was to achieve substantial cost savings. Contracting out such a major activity was, of course, not something taken lightly by the county council. On the contrary, the procurement was preceded by a thorough analysis and evaluation of requirements for procurement of the service activities.

Omar Jarnulf, Internal Consultant at Gävleborg County CouncilPreparations for outsourcing

“The possibility of outsourcing service activities was something that had been discussed internally within Länsservice for some time, so it came as no great surprise,” says Omar Jarnulf, Internal Consultant at Gävleborg County Council.

However, the extent of the outsourcing was changed due to a new political decision after the 2006 elections. The original idea was to gradually outsource all of Länsservice’s activities, which consist of functions relating to properties, catering, mail room services and office cleaning. The outsourcing now only covers property management instead.

“The reason why the council chose not to abandon the property management option was that the operation fulfilled the requirements for savings set by the county council. In addition, the operation had already been set up in a way that ensured the transfer would proceed relatively smoothly. For example, agreements with the customer were already in place, with the incorporated services defined and regulated.
“Consequently, the outsourcing could be implemented relatively rapidly and would provide results in the form of the desired cost reduction,” says Jarnulf.

Pushing ahead

In order to prepare for the outsourcing, a project group was appointed, and their first task was to develop documentation and agreements prior to the procurement. The initial challenge was to produce good decision documentation within a short space of time.

“We really had to get a move on. The project group’s mandate was to ensure that we received tenders that corresponded to our requirements. The actual evaluation was then carried out in two stages: looking at legal and financial compulsory requirements and obtaining references from the tenderers relating to comparable contracts,” says Jarnulf.

The project group consisted of representatives from the previous internal contractor Länsservice, the county council’s property company X-fastigheter, trade unions and consultancy company Fasticon. According to Omar Jarnulf, the AFF documents proved very useful; these are a collection of documents offering checklists, etc. and assistance with the process of specifying the scope, quality and price for procurement of services within facilities management.

“The composition of the group and the fact that X-fastigheter and Länsservice had previous experience of working with management contracts enabled us to be fairly efficient with the process, and the AFF documents provided additional guidance,” says Jarnulf.

Three different perspectives

The county council’s overall objective with the contract is: 

  • from an ownership perspective, to achieve market price and cost-effective management;
  • from an employee perspective, to achieve a transition in activities that will lead to further development on the part of personnel;
  • from a managerial perspective, to secure a commercial service that will be further developed and quality assured;

The employee perspective in particular is something that Omar Jarnulf highlights as an important part of the process.

“If you don’t succeed in getting the employees on board, it becomes a real uphill struggle. At the outset, there were, understandably, many employees who felt anxious prior to the change. After all, they were getting a new employer. Therefore it was important for us to advocate open dialogue with personnel.”

Frantic work on the integration process was carried out to prepare Coor’s takeover. Since 1 March Coor is  subsequently responsible for management and ensuring that activities run smoothly.

“Coor has a good structure for this type of comprehensive takeover and that has been essential for us. We’re talking about a total of around 400,000 m2 gross floor space widely distributed throughout the county. In addition, there is of course the capacity to deliver cost-effective property management and serve as a new employer for our 70 or so property technicians.”

“The image we have of Coor is that they will do their best to ensure that things go well. It is naturally too early at present to properly evaluate the takeover. But we can certainly say that our overall impression to date is ‘so far so good’,” concludes Jarnulf.

Four tips for efective procurement

Facts about Gävleborg County Council

The primary task of Gävleborg County Council is to offer good health and medical care as well as dental care for everyone living in or visiting Hälsingland and Gästrikland. The county council has two A&E hospitals, Gävle and Hudiksvall, a hospital in Bollnäs for scheduled operations with an emergency medical unit and psychiatry and rehabilitation units, as well as a large number of health centres. The county council has a well-developed network of healthcare units throughout the county, with 8,000 employees, and has a turnover of around SEK 6.6 billion. The county covers two provinces, ten municipalities and has a total of around 275,000 residents.

Facts about the service assignment

The assignment means that since 1 March 2007 Coor is responsible for management of the county council’s properties. In addition, Coor will develop and supply certain administrative and technical services. The agreement runs for four years with an option for extension. The assignment has involved 63 people from Gävleborg County Council have been employed with Coor Service Management.