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Wednesday, 8 April

Approved Suppliers - What Do You Mean 'Approved'

Whether an owner or manager of a single property or a multi-national responsible for a large property portfolio, everyone, at some point, will have to rely on outsourcing to external suppliers to ensure the consistent running of their buildings, writes Chris MacDonald.

The property manager will have a list of contractors that they've worked with for a while, which have become their go-to supply chain. In another sense they form the ‘approved list’. Nothing wrong with that, there’s a process to deal with building related problems and they get resolved, so surely that’s the issue dealt with?

Ultimately, delivering a prompt, reliable, cost effective and safe service, that limits risk, adds value and leads to better tenant retention is what we’re all seeking.

 

To do this well, and to minimise risks to a business, real engagement is needed with the supply chain. It’s worth taking a little time to consider the following question:

  • What does an ‘approved list’ of suppliers mean and why have one?

Maintaining an ‘approved list’ of preferred suppliers is integral to ensuring the agent or property owner, has done everything possible to ensure the integrity and safety of the suppliers, tenants, public and clients interacting with a property.

 

What does it stand for?

The term 'approved list' is one that has become commonly used across the commercial property industry and is increasingly used by service providers in an effort to reassure clients that their suppliers are 'approved'. But what does it stand for?

Every organisation will have a different take on both the meaning and importance of an 'approved list'. The purpose of an approved list is to ensure that all elements of the supplier have been pre-assessed, vetted, approved and are subject to ongoing monitoring and management by competent professionals. It's not enough to rely on suppliers - and assume they have completed a risk assessment or that the engineer sent to complete the work is qualified to do so. Without physically assessing work in progress and reporting on the activities witnessed, suppliers could be doing anything on site, especially unmanned sites, putting everyone at risk. Just because they have a risk assessment, doesn’t mean the engineer will follow it.

Most approval processes will look closely at what could be considered as the key assessment points including: health & safety, quality, environmental, whether the supplier is accredited by an industry recognised assessment scheme such as PICS, Safecontractor, Alcumus or Constructionline, together with the physical resource and ability to deliver the service. Yet many questions that should be considered are often ignored, for example:

  • Is the work being subcontracted? And, if so, how should the increased risk of a subcontractor attending site be managed?
  • Is the supplier financially secure? Do they have the working capital to complete the work? Can they wait 30 days or more for payment without collapsing mid-way through the contract/project leaving you unable to complete the work?
  • Is the supplier accredited by an industry recognised assessment scheme? What is the scheme actually checking, are they updating annually and does it meet your standards?
  • Has the Construction Industry Scheme (CIS) risk been identified? Has the contractor been verified with HMRC to ensure they are paid minus the correct deduction? A property management company's CIS status and its clients will be at risk if suppliers do not meet the requirements of the scheme or they are treated incorrectly when making payments.
  • Do the engineers receive adequate training, tool box talks and refresher courses as required by law? Is the engineer trained to use a MEWP and work at height for instance, have you seen the certification?
  • What are the administration capabilities of the supplier? Are they able to invoice quickly, provide live time feedback, and return quotations within SLA?

 

I could go on...

Requesting ever increasing volumes of information from a supplier, as part of managing the qualification process, involves encouraging them to engage with the whole process. It requires open discussions through various avenues, giving them the opportunity to input, whilst providing clarification on areas of confusion or uncertainty, in order to develop a good relationship. It's at the start of a relationship between supplier and client that forms the foundations of a successful long-term partnership.

Let’s be honest, no supplier wants to be subject to ongoing monitoring and performance reviews but it’s essential and - again - they need to understand why it’s important and engage with the process. Everyone at some point in the chain is a supplier, and whatever hoops the end supplier has to jump through you can bet your own business, in some way or another, also has to for your clients. Suppliers need to be made aware that safety standards will be measured and monitored and costs will be interrogated to ensure best value. Open dialogue is important so that they understand the objectives, budget constraints, diversity of portfolio, even tenants expectations and sensitivities need to be taken into account, a lease might be coming to an end and the property manager is keen for them to re-sign, for example.

It's no mean feat to consistently maintain a healthy supply chain, one that is loyal and willing to drop everything to help at 5pm on Friday afternoon. By engaging with the supply chain and working together for the same common goal, the results will be obvious and will certainly make the initial investment of time and effort worthwhile.

 

Encouraging suppliers to work with teams breeds a working partnership that benefits everyone involved. It leads to a transparent working relationship that keeps costs under control, delivers a better service and minimises risk.

By Chris MacDonald, MD of Propertyserve UK

Propertyserve procures, manages and delivers facilities support services to UK commercial and residential organisations. We currently provide reactive fabric maintenance solutions to more than 4,000 properties nationwide through our fully managed and compliant supply chain.

Article written by Chris MacDonald

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