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Tenders oriented at comprehensive solutions for real estate maintenance

Tenders oriented at comprehensive solutions for real estate maintenance would increase satisfaction of the end consumer in the public sector

Margus Välling, Head of Sales and Procurement at Stell

In a recent speech addressed to the Minister of Public Administration Jaak Aab, the Minister of the Environment Rene Kokk expressed his dissatisfaction with the state of disorder reigning in State Real Estate Ltd (Riigi Kinnisvara Aktsiaselts, RKAS), pointing out organisation and quality of cleaning as the main problem. According to Head of Sales and Procurement at Stell Margus Välling, based on the company’s experience it is quite clear that the biggest problem of RKAS is the lack of flexibility of procurement contracts which do not leave for subcontractors any space to adapt their service to specific needs of the end consumer.

We have been following development of RKAS since its creation in 2001. The idea behind RKAS was and still remains a very good one – there was a clear need to find a solution to a situation where state assets were maintained poorly and value of the real estate belonging to the state was constantly falling. Creation of RKAS allowed to gather best competences and practices that existed in the market of administrative services with the goal of administration of the biggest real estate portfolio in Estonia. Still, 19 years brought plenty of changes.
Stell (former ISS Eesti) has been providing its services to RKAS for a long time, and we know from our own experience that the biggest problem of RKAS is the lack of flexibility of procurement contracts which do not leave for subcontractors any space to adapt their service to specific needs of the end consumer. However, watching today’s market trends we can see that customers value first and foremost flexibility, thorough thinking and proactivity – naturally, state agencies expect the same. As a tenderer we want to work in facilities of RKAS on the basis of philosophy of our company, which is to assure the wellbeing of the end consumer, however, the lack of flexibility of procurement contracts makes it difficult.
Let me bring some examples. One of the main duties of our administrator for business customers is to hold monthly meetings with a representative of the customer. The idea behind such meetings is related not as much to quality control as to making proposals for adaptation of the services and to receiving input information regarding changes or events that the customer is planning to make or organise in the next month. If the customer says that next month a number of their people will travel abroad, and, for example, for two days almost half of the office will be empty, our business administrator will be able to arrange some works (big cleaning, small repair, moving, etc.) for this period, although another time was arranged initially.
Also, if, for example, the needs of the customer have change due to expansion, our business administrator presents proposals for possibilities of better arrangement of the daily cleaning service – by adding another daily cleaner who would assure constant maintenance of cleanness, or by making changes regarding toilets, as more toilet paper will now be used.
Procurement contracts of RKAS often include stringent terms and conditions regarding the time of presence of a daily cleaner at the site and regarding other requirements, and if composition of the state agency changes, addition of changes to the contract and reorganisation of the service is a complicated process. Also, at present RKAS orders through the subcontracting procedure only wellbeing and maintenance services, and its own administrator has to manage a large number of subcontractors and facilities. Since the load on the administrators is very big, and they are unable to keep up with all details due to lack of time, quite often we experience a situation where the administrator asks to provide information that he or she must already possess.
Based on these examples we recommend that the structure of procurement contracts of RKAS could be directed at a comprehensive solution for real estate maintenance that includes the service of the administrator, the goal of which is to maintain and increase satisfaction of the end consumer. At this point one probably has to ask whether such approach will lead to loss of control of state agencies over administrative costs and to increase in such costs. In order to avoid such situation, every procurement contract must state a specific total amount of the administrative costs, and the tenderer must be able to provide the services within these limits. The tenderer must make every effort to ensure satisfaction of the end customer without increase in the costs.
We highly recommend such model, as today we offer similar comprehensive solutions to a large number of business customers of Stell, and we see that it really works. Such approach leads to creation of a model of administrative services that fully depends on the needs of the end consumer and that can be adapted to any changes in the organisation at any time. The same approach is widely used in Scandinavia and the Western European countries.
Obviously, as a counterargument we may hear that commercial companies can do that, however, public procurement contracts make it impossible to use such solutions. Yes, at present they indeed do not allow that, however, this is exactly where I would encourage organisers of procurements to think outside the box and try to find a new effective model.
Let me bring an example from Latvia, where a company similar to Estonia’s RKAS was created just a few years ago. When we met with the management of the company, they were very interested in learning about bottlenecks that exist for a tenderer that provides services to companies like RKAS. We advised them to immediately switch to a comprehensive solution and to a model where services of the administrator are purchased, as it would result in creation of a completely new value for the end consumer and in a better effort on behalf of tenderers aimed at achievement of two goals – control over costs and satisfaction of the end consumer. I strongly believe that it would help to develop our sector and stimulate all relevant parties to try better.
RKAS has been operating since 2001, however in 19 years the Estonian society as a whole and the real estate maintenance market and services have been constantly developing. And just like business companies have adopted and improved forms of cooperation that they offer, I encourage RKAS to once again take the role of the direction setter in the market of administrative services, gathering best specialists and practices under the umbrella of its organisation – just like it did at the beginning of the 2000s.

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