1.

Explain three (3) potential benefits and three (3) potentials risks in performing the outsourcing
facilities management services for Corporate Real Estate.

Potential Benefit
i. More time to concentrate on core business processes.
 The benefit of outsourcing facilities management operations is that it enables the
business to focus on their core operations, without having to worry about their
facilities.
 Facility management covers all non-core activities of an organization. These
 possibly will include housekeeping, kitchen services, security and others.
 For example, outsourcing these operations enables the business to focus more on
operations like marketing, daily operations, and strategic planning, which can
increase the overall productivity of the business.

ii. Access to professional, expert and high-quality services.

 Outsourcing is a form of privatization in which institutions of higher education

 contracts with an external organization to provide appropriate functions or
services.
 In the others words, it means hiring someone who is experienced and highly
capable for providing that specific service.
 As such, it makes a huge difference when professionals and experts trained in that
particular field take over the operations for the company.
 For example, outsourcing facilities management will ensure efficiency, reliability
and effectiveness in service delivery, which will be highly beneficial for any
business.

iii. Saving on time and costs

 Staff have more bandwidth to focus on the core business, making them more
productive and management more efficient
 In-house facilities management is expensive. If facilities management operations
are outsourced, the organisation saves a lot of cost, because staff training and
operating costs are incurred by the service provider.
 Although the outsourcing provider also requires payment, this will be considerably
lower than having an in-house facilities management department.

iv. Enhanced Flexibility

 Facilities Management Companies ensure that a change in the organisation is kept
up to date.
 It ensures that as an organisation changes its specifications, facilities management
will have the ability to avail is services when needed.
 This is very unlikely when it comes to in-house facility management which is static.
  For example, when outsourcing facility management requirements, the owner need
not be tied to one particular vendor which
 ability to terminate the contract with just a short notice keeps vendors on their
toes, and they are compelled to stay on top of their game at all times. Basically, you
are their customer and you will always come first. Thus, you are always in control of
things.
 As the business grows, facilities management has to ensure that there are no lost
aspects of the business and control the growing segments on behalf of the
organisations.
 It is a major relief to businesses that was once out of control.

v. It makes it easier for the business to grow

 Growth is a target for every business.
 However, in-house facilities management might not be able to keep up with the
growth of the business.
 The scope and reach of the in-house department might become inadequate to deal
with the growing requirements of the business.
Potential risk

i. Loss of Managerial Control

 When a property owner signs an agreement to have another company perform
the function of an entire department or single task, the management and control
of that function are turning over to the outsource company.
 All the managerial control will belong to another company.
 Loss of control of key of elements that influence business function operation &
success such as loss of confidentiality and control of information
 Security issue may arise when the outsource company is not trusthworthy
 For example, the vendors may get knowledge of product being manufactured
and turn it for own.

ii. Quality Problems

 The outsourcing company will be motivated by profit.
 Since the contract will fix the price, the only way for them to increase profit will
be to decrease expenses.
 As long as they meet the conditions of the contract, the property owner will pay.
 In addition, the property owner will lose the ability to rapidly respond to changes
in the business environment. The contract will be very specific and additional
cost will be charged.
 In some cases, a vendor’s level of service may not meet the owner’s
expectations.

iii. Expensive and hidden cost

 Outsourcing, though cost effective, might have hidden costs, such as the legal
costs incurred while signing a contract between companies.
 The property owner might also have to spend a lot of time and effort in getting
the contract signed.