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2017 NASFA National Conference:
Facility Management Outsourcing:
The Tennessee Story
June 13, 2017Virginia Beach, VA
The Tennessee Story
John HullDeputy Commissioner
State of Tennessee Real Estate Asset Management
Kevin PowellDirector of Facilities Management
State of Tennessee Real Estate Asset Management
Tom FosterAlliance Director
JLL
The Tennessee Story
• Governor Haslam elected in 2011
“Provide the best service at the lowest possible cost”
• Poor management program for office buildings
Inadequately funded and staffed; no accountability
Facilities problems
Operational issues
Facility Management Outsourcing Tuesday, June 13, 2017 – 9:45am-10:45am
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The Tennessee Story
The choice:
Evolve TN’s existing in-house management program
OR
Manage a private sector provider
The Tennessee Story
The goal – a business model that could:
• Deliver the highest-performing program…
• … capable of producing sustainable, transformational results…
• … with the least time and cost
The Tennessee Story
The solution needed to include:
• High performing assets
• High customer satisfaction
• Reduced building and occupant risk
• Automated systems
• Accountable workforce
• Lower operating costs
• Improved life-cycle decision making
Facility Management Outsourcing Tuesday, June 13, 2017 – 9:45am-10:45am
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The Tennessee Story
Thus…
A private sector provider
The Tennessee Story
Operating in a “run to fail” mode led to
life safety issuesfor employees
and the public.
BEFORE: 11 windows fell out of the Polk Building from not correcting a glass to frame separation.
Where we were
The Tennessee Story
Where we were
This room contains dampers that allow fresh air into the War Memorial
Building, which houseslegislative offices.
The room had not been entered for an estimated 25 years.
Facility Management Outsourcing Tuesday, June 13, 2017 – 9:45am-10:45am
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The Tennessee Story
Insufficient maintenance practices
led to energy-inefficient facilities.
BEFORE: No air filters on coils in War Memorial for 25 years
AFTER
Where we were
The Tennessee Story
Where we were
Lack of proper training resulted in higher
operating costs
Early morning(before 5 a.m.) photos
of Tennessee Tower
BEFORE: Systems running 24 hours/day.
AFTER
The Tennessee Story
Concrete falling from buildings
Flooding in basements
Electrical shortages in buildings
Improperly installed equipment increasing
utility bills
BEFORE: Falling concrete posed hazards to employees, building visitors, pedestrians, and property.
Where we were
Facility Management Outsourcing Tuesday, June 13, 2017 – 9:45am-10:45am
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The Tennessee Story
BEFORE: Untrained staff typically hired others for repairs
AFTER: Repair self-performed by staff saved $1800
Inability to self-perform regular daily repairs resulted in unnecessary delays, problems, and costs.
Where we were
The Tennessee Story
399
320
050
100150200250300350400450
2011 2017
Number of Leases
What we knew
The Tennessee Story
1,150
2,150
0
500
1,000
1,500
2,000
2,500
2011 2017
Tennessee Tower Tenants
What we knew
Facility Management Outsourcing Tuesday, June 13, 2017 – 9:45am-10:45am
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The Tennessee Story
Prepare for the transition
• Tennessee state jobs affected – 131
– Vendor chose to hire 31
– Vendor performed services with 79
The Tennessee Story
Managed by DGS
Other AgenciesLeased
1.5M SF4%
Other Agencies State-Owned
22.5M SF66%
State-Owned
6.4M SF19%
Leased3.6M SF
11%
University of TN28M SF
29%
TN Board of Regents35M SF
36%General Govt.
34M SF35%
Get a win!
Total: 97M SF (est.) General Government: 34M SF (est.)
Start with what you can control
The Tennessee Story
You will make the news
• “State's explanation on outsourcing makes no sense”
• “Campus Workers Unmask Scheme To Privatize All Tennessee Property”
• “Democrats Say Nashville Firm Reviewing Benefits Of Outsourcing Is Too Close To Haslam”
• “Legislators hear worker concerns about job outsourcing”
• “Haslam unveils outsourcing details amid Capitol protests”
Facility Management Outsourcing Tuesday, June 13, 2017 – 9:45am-10:45am
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The Tennessee Story
“Advertisements contain the only truths
to be relied on in a newspaper.”
Mark Twain
The Tennessee Story
FM outsourcing timeline
Jan. 2011GovernorHaslam takes office
Sep. 2011STREAM established
Mar. 2012Facilities master planning begins
Apr. 2013FM contract signed
July 2013FM vendor services begin
July 2014Year 1:$5.5M cost savings
July 2015Year 2:$7.7M cost savings
July 2016Year 3:$12.8M cost savings
Dec. 2016Second RFP for FM released
The Tennessee Story
Procurement
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The Tennessee Story
Operations
The Tennessee Story
Operations
The Tennessee Story
Operations
Facility Management Outsourcing Tuesday, June 13, 2017 – 9:45am-10:45am
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The Tennessee Story
Operations
The Tennessee Story
Operations
The Tennessee Story
Operations
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The Tennessee Story
$4.01 $3.75$5.73
$0.96 $2.05
$2.97
$0.58
$1.92
$4.18
$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
FY14 FY15 FY16
Mill
ions
Self-performed work Procurement Energy
Total Cumulative Savings:$26.2M
CustomersMeasure results; repeat the message: money saved against the plan
The Tennessee Story
CustomersCustomer Satisfaction
The Tennessee Story
Governance pyramid
Executive
Management
Operational•Monitors contractual deliverables and
aides in resolving issues.
•Monitors operational performance.
• Provides strategic alignment plan for the next fiscal year.
• Assures transparency by providing an independent review of contractual deliverables.Departmental
Facility Management Outsourcing Tuesday, June 13, 2017 – 9:45am-10:45am
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The Tennessee Story
50%
30%
20%
KPIsFinancial Operational Customer Satisfaction
• Savings Creation Operational
(30%)• Savings
Creation Utilities
(15%)• Diversity
Spend(5%)
The Tennessee Story
50%
30%
20%
KPIsFinancial Operational Customer Satisfaction
• Reactive Maintenance Completion
(12.5%)• Preventive
Maintenance Completion
(12.5%)• Critical System
Uptime(5%)
The Tennessee Story
50%
30%
20%
KPIsFinancial Operational Customer Satisfaction
• Tenant (10%)• Client (10%)
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The Tennessee Story
Lessons Learned
• Plan for the future of employees in outsourced positions
• Communicate early and often will all affected audiences– Employees
– Executive branch agencies
– Legislators
– News media and the public
• Ensure you have the governor’s support – you’ll need it
The Tennessee Story – Questions?
Facility Management Outsourcing Tuesday, June 13, 2017 – 9:45am-10:45am
