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SLAs, KPIs, Benchmarking – more than mere terminology

At the concluding session of the Seminar at the Clean India Show 2012 in Bengaluru in December, the key points of discussion were the importance of Service Level Agreements (SLAs), Key Performance Indicator (KPI) models, Service Quality & Contract Retention and making Benchmarking Standards.

Industry experts — Vinay Deshmukh, CEO, Fobes Facility; Julian Harrison, Strategic Projects Director, OCS and Ravi Manchandani, Managing Director, Afoozo Pvt Ltd agreed that SLAs form an important part of any service contract, as it provides the basis for managing the relationship between the service provider and the customer for the level of service to be delivered. They further added that with the increase in professionalism, service providers as well as the customers have now realised the importance of maintaining service contracts that clearly define requirements and thereby, help strengthen their relationship while working together.

In India, a service contract is drawn on a stamp paper and is generally required to be fair to both parties with the inclusion of an exit clause that allows the service provider as well as the customer to terminate the contract with a period of notice. The contract has to be clear in the event of any breach and should lay down the solutions to be put in place to remedy the breach.

Several meetings and discussion go in outlining the needs of both the parties. The contract should include details on notices, arbitration and jurisdiction, that may be needed in case of any serious issue. It cannot just rely on the communication shared between the service provider and the customer. These are necessary to safeguard the rights of both parties along with their responsibilities and efforts made to ensure that they are fair to both.

SLAs have to be crisp, clear, and measurable on the service provided so that the customer and the service provider can easily check and ensure that all the agreed parameters in cleaning are being followed without any deficiency. This kind of professionalism is slowly becoming apparent as the cleaning industry evolves to keep pace with the changing dynamics of the industry. The norms, limits, means of measurement, frequency of monitoring are just a few examples of the clarity needed between the customer and the service provider.

Service Level Agreements need to be crisp, clear and measurable

KPIs need to be client driven, realistic, credible and measurable

Realistic benchmarking is the key to reducing costs and adding value to services

There have to be clauses in the contract that will deal with any situation taking place in the course of the service being provided. For example, the SLA has to take into account the time required by a worker to transport and set up equipment from one place to another and should not be based on the highest expectations. It should be clear on the equipment maintenance, breakdowns and the effects thereof on the operations. These clauses will define the limits within which a service provider can achieve and base the assessment from the customer on the same with these set parameters. There is also a need to be exact while detailing the SLA, in terms of the person-in-charge of audits/checks, the frequency and also the reporting structure in case of any non-conformities recorded by the in-charge. It helps the service provider and the customer as it simplifies the management, monitoring and supervision of the work.

The frequency of cleaning activities has to be clearly defined to reduce unnecessary burden on the resources and also to improve performance. The schedule for every concerned person will give information on making the optimum use of the available resources for maximum efficiency. The schedules have to take into account the time of travel, the maintenance of the machine, and the operational needs of the machines. This will help in monitoring the work undertaken and also showcase the flexibility and system oriented work culture of the service provider and help deal with absenteeism. The schedule will have all the details required for an efficient work profile.

SLAs have to have details of operational maintenance including the format for service schedule and details of periodicity of report submission and the concerned person to receive the report and act on accordingly. All these have to be a part of annexure that will be referred to in the service contract.

Similarly, Key Performance Indicators are designed to measure and manage performance and compliance to standards and service levels. The specifications are measured by KPIs which need to be client driven, realistic, credible and measurable and may be based on “inputs” or “outcomes”.

In a bid to move up the value chain, service providers need to demonstrate and measure the impact of their services upon the success of the core business. Without this relationship, FM services are generally considered a cost centre only and therefore often sourced on the basis of price alone.

Finally realistic in-house benchmarking helps companies reduce costs, identify best practices, strengths and weaknesses, add value to their facilities, support business case for change, justify costs &practices and conduct trend analysis. Alternatively for outsourced contractors or service providers, benchmarking helps in comparing clients to those from other organizations, understand areas of improvement and gain the benefits by comparing to a broader database.

Benchmarking will also in the longrun help facilities make savings per unit area over time. The actual amount of money saved could vary from service provider to service provider and from cline to client. However a large magnitude of savings could be realized through proper benchmarking. One variable is how effectively one’s facilities are already being managed; other is the cost of utilities and labour in one’s geographic region.

It should be understood that proper SLAs in addition to realistic benchmarking and a regular check with KPIs would help service providers and clients grow their relationships and take them to newer levels of excellence.

 

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