Trust and Contract in Facilities Management

Report, 2007

Both public authorities and private companies increasingly outsource facilities management services to external suppliers. A new service industry with its own culture and contracting practices is developing. This study discusses factors that influence trust and relationship culture in the Swedish FM sector. A multilevel perspective is taken, so that processes on institutional and market levels are discussed in relation to contract principles and management as well as interpersonal relations. The study is based on a review of FM literature and interviews with leading clients, consultants and service providers. The findings are analysed using general theories on sources of trust and the relationship between trust and contract. A general background on the development of FM is included, and the empirical section outlines views on trends, market structure, contract models, procurement, contract relationships and management, differences between clients, etc. The discussion focuses more specifically on trust issues. It is concluded that while industry level efforts to develop standard contract and create trust in contracting out FM services have been successful, contracting practice is slower to harmonize because of the influx of first time clients. Although there does not seem to be a straightforward relation between contract design and relationship quality, it was found that detailed service specifications and active monitoring may support both learning and trust since they entail mutual understanding and focused discussions. Less extensive contracts may, paradoxically, result in less innovation because of lower client and supplier engagement. This risk is higher when FM services are perceived as support services compared to when they are seen as strategic service relations. Further, it is concluded that since relational trust develops between client employees and supplier employees who interact closely, services need different kinds of management depending on the interaction patterns they entail. Typically, low level interaction relations such as technical property services may need a focus on fostering trust, while soft services call for formalization and distance.