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1 April 2019 | Chris Kenneally
Outsourced facilities management is continuing to defend itself in the glare of a national spotlight. For this month's Think Tank poll we asked if you think the market is changing to favour smaller providers?
Here is Chris Kenneally's opinion on what he thinks is happening.
It's not clear. The onerous terms and conditions of these contractual agreements have not changed to allow smaller companies to compete for the work without taking unnecessary risks to the long-term viability of their businesses.
There has always been a cost balance between larger and smaller businesses - overheads being greater in a large business, but small businesses maintain margins, as without them they have no business.
Payment terms need to be revised to match outgoings of smaller businesses that do not have the capability to fund large cash outlays, then wait 60 to 90 days for payment. To create a fair system, we need to look at a value chain that delivers services/goods in a timely fashion, but also recognises the risks being undertaken, rather than just agreeing to sign a contract that would give the business a downstream problem should difficulties occur.
I do not believe that any organisations (large or small) set out to deliberately win business, then not perform. The day-to-day delivery is usually deliberated by the 'local/contract' individuals charged with making it happen.
If first-tier organisations were both contractually and morally obliged to pay second-tier suppliers on time and quickly, the onus would change and create a fairer system for all.
Chris Kenneally is the CEO of Cordant Group