Assessing value for money in FM service contracts is difficult at the point of bid evaluation as an assessment must be made on which of the suppliers will actually deliver the specified services to the defined service standards for the prices submitted. Where the appointed supplier does not achieve this, a ‘performance gap’ exists between the sales pitch in the bid and service delivery once the contract is live.

Unfortunately, unlike contracts for goods, FM services cannot be ‘sent back’ if they do not meet the required quality standards, and it is a big upheaval to change
supplier once appointed. It is only once the contract is live that a true assessment of value for money can be made, and with the benefit of hindsight, a determination made if another higher cost bid may have provided better value for money.

The FM procurement process and contract documentation is critical in managing this risk and in particular:

• Evaluation process, activities, criteria and weightings
• Identifying and managing excessively low bids
• Appropriate contract performance provisions