Archive for October 28, 2008

What can we learn from the Financial Crisis that can be applied to Facility Management?

Shortly after I post the earlier writing on “Financial Crisis and FM”, I receive queries about “how then can learning from the causes for the financial crisis be applied to facility management?”

Great! That’s challenging and sets my mind thinking….I will briefly share my opinions

The banks / financial institutions were “narrow” in their strategic plannings. I believe they felt that by being lenient in lending (even >100% loan) will attract more customers, thus thought they will earn from the interest. You know as well as I do that one main reason that caused the collapse was that the people (lenders) cannot make payment as such caused the system to collapse. That’s simple.

Lesson learnt:

The banks – financial institutions:

  • took a narrow views on the potential gains from charging interest.
  • did not consider CONSEQUENCES! Were the customers QUALITY customers?
  • did not consider long-term for the people, their organisations, effects on its own country & globally.
  • greed took control – now they are not able to digest what they “consumed” from the leniency of loans.

What about that which can be applied to FM?

  • when selecting service providers or vendors, think CONSEQUENCES. Qualify if they are reliable vendors / contractors. Not appointing them just because they are the lowest quotes.
  • Qualify the QUALITY of the vendors / contractors. Verify their people’s abilities, skills, experience, behaviour, etc, besides their financial capbilities…
  • Low cost does not necessary equal to value add.  Ascetain clarity as ambiguities may lead to variation costs, rework, overrun of schedule-resources.
  • Do risk identification and analysis.

In situational planning, consider always the 4-legs of enterprise: Productivity, Innovation, Quality and Safety. These are reasonable and practical guides to ensure effective and value added services provided by facility management.

To Your FM Success!

Making a Difference in Facility Management……

Current Financial Crisis and FM?

What we are seeing now in the market is a PANIC! People who were experiencing their stocks’ value drop by 50% or more cannot take it and are just selling at whatever price they can. So everyone is SELLING SELLING SELLING at whatever price they can get.

On the other hand, many people with cash are skeptical and cautious about the crisis situation dare not to buy anything for fear that it can go lower.So what happens when you have got millions of sellers and no buyers? Stock prices plunge!

When fear and panic happens and people sell irrationally, fundamentals and intrinsic value are thrown out the window.  This is when good companies get dumped together with the bad. ( This is when people sell 20,000 square foot bungalows that worth $5m for $1m).

We all know from history and common sense that the market will eventually recover and go to even higher highs. So, why do people still sell when the market is down? Well, because EMOTIONS always overcomes LOGIC in life, even in the markets.

The most important thing is to focus on fundamentally strong stocks that got hit by the collateral damage and avoid the ones that really got hit i.e. Financials. The market will probably not rebound very fast immediately, it will take months or even years for it to climb back up so no rush.

What then can FM now take advantage of the current situation to add value to its organisation (be it as internal or external FM service provider? Hmmm…..something that we can think about in time of finanical crisis, Think FUNDAMENTAL and LOGIC. Not emotion. :

  • How FM can be a business advantage to our own organisations? 
  • Are we now faced with resources constraints eg manpower, budget,etc?
  • Do we lay off good & experience staff because they are “expensive” to keep?
  • With lesser activities, what to we do in planning for the”rain”
  • Are there any works or planning that can be done now to prepare for future?   
  • Are there costly works that can bring forth now to take advantage of better bargain prices and works
  • etc

In any adversities, there may lie opportunities. Just as any success or crisis may leave clues.

To Your Success!

Making a Difference in FM….



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