Developing a fresh approach to procurement

Universities and education establishments spend billions every year on estates management. But with budgets under pressure and students expecting to study in world-class facilities, a more strategic approach to buildings maintenance procurement can bring you top marks

Whether we’re talking about the historic colleges of Oxford and Cambridge or the twenty and twenty-first century buildings of more modern universities, maintaining the fabric of Britain’s universities is a big – and expensive – business.

According to the latest report from the Association of University Directors of Estates (AUDE), costs fall into four categories. The largest is repairs and maintenance, coming in at £762 million per annum and 31.3% of total property costs. This is followed by energy at £582 million (23.9%), cleaning at £293 million (12%) and security at £202 million (12.0%).

While these are substantial sums, the same report also notes that “Maintenance spend is never the thing universities are keen to prioritise, certainly not in times of real financial squeeze, and estates and facilities teams are often under pressure to cut maintenance budgets.”

Strategic approach to maintenance
Against this backdrop, it is vital that estates departments think tactically about expenditure. One way to do this is by developing a more strategic approach to maintenance, repair and operations (MRO) procurement, an area that offers an enormous and unrealised opportunity to make cost and efficiency savings.

Although the term MRO is still not a commonplace one within this sector, with universities more likely simply to refer to it under the catch-all “estates management”, MRO procurement is, and needs to be, an important cost-efficiency target, says David Mills, Industry Sector Manager, RS.

This is partly because institutions need to attract fee-paying students from the UK and overseas, but also because the higher education sector, like many others, is under pressure to find efficiencies and cost savings.

“MRO procurement can be an important agenda in terms of a university presenting itself as an attractive place for potential students,” explains Mills. “If the facilities and resources appear less attractive, it will attract fewer students, and therefore less funding.”

This can also mean putting time and money not only into ensuring buildings and facilities look good and work well but making them as technologically innovative as the cutting-edge research often going on within their walls. The growth of connected lighting inside Internet of Things (IoT) enabled buildings is a case in point, and is an area where this sector is looking to lead, with universities earlier this year coming together to form an innovative IoT hub. With IoT technology growing exponentially, being seen to have embraced this technology could help institutions attract students wanting to work in this field.

The fact that so much procurement in this area is managed by in-house teams also means there is a risk that too much time and emphasis is put on chasing down on price at the expense of seeing the bigger, more strategic picture, Mills contends.

For example, there may be a lack of understanding that while cost obviously needs to be an important factor in any MRO procurement process, there can be an indirect cost too – in time, effort and extra paperwork – associated with constantly having to source and agree multiple quotes to get the cheapest deal for every single item.

Focus on stock
There is also the danger of wasting valuable space – and tying up working capital – by storing quantities of spares (especially lighting) on campus “just in case”.

The fact many university estates are large and sprawling, and often contain a mix of heritage and more modern sites, can make investing in low carbon, energy-efficient building technologies another procurement challenge. Especially when managing older sites, making the transition to technologies such as LED lighting, combined heat and power units, and smart energy management systems may not always be straightforward.

In all these areas, suppliers such as RS can help, both directly in terms of solutions but also simply in working to change the mindset and approach of your buildings repair and maintenance team, argues Mills.

Key to this is developing a more strategic procurement or purchasing strategy around MRO that can allow you to streamline processes and, in turn, reduce bureaucracy. One way of achieving this is through product standardisation. “Across a university or college, you might have numerous brands of MRO products, which could be reduced to just one or two brands,” explains Mills. “By ordering just one approved brand, it’s possible to negotiate better costs through economies of scale, to ensure the quality and consistency of products, reduce stockholding and to make re-ordering more streamlined.”

Another solution is to make use of procurement platforms that integrate with your website, effectively an integrated electronic catalogue, which can help to automate the buying process.

The fact that RS can deliver stock within hours or the next day can also negate the need to hold stock on site. “We can help by offering solutions, but also by sharing our expertise with teams and sharing data to show best practice,” explains Mills. “I see my role as a facilitator; it is about how to derive benefits from the corporate perspective. But it is also about encouraging the general direction of travel.”

For more MRO insight, click here