FM and the Business of Higher Education

1. Alan Masterton: “FM and the Business of Higher Education”, IFMA conference, June 09
FM AND THE BUSINESS OF
HIGHER EDUCAT ION
CHALLENGES AND OPPORTUNITIES FOR THE FM SECTOR
A L A N M A S T E RTO N , M B A , F R I C S , S C U P
D I R E C TO R O F O P E R A T I O N S P E R F O R M A N C E , U N I V E R S I T Y O F S Y D N E Y 1
Higher education is viewed increasingly as a key component of national competitiveness, where the race to build
knowledge economies and move to higher value production requires the training and development of skilled professionals.
Whilst the “demand-side” benefits of higher education are becoming well understood at national levels, the alignment of
“supply-side” inputs such as facilities, marketing and funding is less well developed. Understanding and supporting
these overall objectives is the challenge and opportunity for the FM organisation, enabling FM to participate fully in
corporate level decisions and achievements.
Sector Scale and Opportunity
Higher education is a large global business, with a turnover of around US$300 billion per year 2 .
Over the past 20 years this sector has been experiencing high growth rates; one quarter of tertiary
aged population are now enrolled in a higher education program (a 300% increase in twenty years) 3 ;
with further growth occurring in line with the projected 50% increase in the world’s population by
2040, from 6 billion to 9 billion 4 .
Particularly high growth is being experienced in Asia; for example in India the number of
students doubled in the 1990’s, from 4.9m to 9.4m and in China there has been a six times increase in
enrolment, from over 2% of school leavers in 1980’s to 17% in 2003 5 .
Governments are increasingly viewing higher education as a key component
of national competitiveness
Governments are increasingly viewing higher education as a key component of national
competitiveness, where the race to build knowledge economies and move to higher value production
requires the training and development of skilled professionals. These trends are in line with the rise
of the “knowledge economy” and the competition for top students and funds.
Campus Diversity
From an FM perspective, the higher education sector offers a wide and daunting range of
campus scale and style. For FM performance reporting and benchmarking purposes, campuses are
1 The comments in this paper are not made on behalf of or represent the views of the University of Sydney
2 The Economist, “The Brains Business”, 2005
3 UNESCO, tertiary gross enrolment rates, 2008
4 US Census Bureau, “World Population 1950 to 2050”
5 The Economist, “The Brains Business”, 2005
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2. Alan Masterton: “FM and the Business of Higher Education”, IFMA conference, June 09
classified frequently by the following five categories; by type of degree, by enrolment scale, by public
or private funding, by degree duration and by campus setting.
Each category can have a profound influence on the success of the FM service. For example,
from research focused campus will have significantly different equipment and operating needs to a
teaching focused campus; there can be striking differences in the funds available to publicly funded
universities versus privately funded ones; an urban campus location will face significantly higher
constraints on growth and development costs than a parkland campus.
The wide variety of campus types can have a profound influence on the
success of the FM service
For long established universities, one of the most significant influences can be their ownership of
land and buildings. Governments often gift the land for educational use and, over the years, typically
fund many of the academic facilities. Whilst this provides a short term advantage of lower operating
costs, this can also bring about a longer term risk of significant life-cycle liabilities, involving FM
departments in frequent budget battles over the need to set aside sufficient funds for asset renewal.
Understanding Academic Needs
Given such diversity of campus types, it is no surprise that academic need are equally diverse,
both at an institutional and discipline/faculty level. Institutional needs relate to meeting their public
purpose; securing adequate funding; ensuring good governance and maintaining the quality of
institution-wide achievements. These achievements are increasing being measured and displayed in
league tables such as The Times “World University Rankings” 6 and the Shanghai Jiao Tong
University, “Academic Ranking of World Universities” 7 .
Discipline/faculty based needs often relate to meeting specific teaching & learning outcomes;
meeting specific research outcome and securing community & peer recognition. The needs for
teaching and learning include the quality of student enrolments (inputs) and the percent and level of
graduates (outputs). The role of FM in meeting teaching and learning needs is helping to support
student recruitment and user satisfaction; adjusting to the emerging drivers of e-learning and
planning and creating facilities for new teaching formats.
The FM service has to support and cope with the emerging drivers of
e-learning, high cost of research and increasing external scrutiny
of educational quality and success
The needs for research include maximising the quality of research (often judged informally by
citations or increasingly formally by expert panels); supporting the research program by securing
research funding and recruiting top quality staff. The role of FM in meeting research needs includes
delivering and maintaining expensive and unique research facilities (often requiring multi-site, multi-
stakeholder collaboration) and using the quality of the research facilities to support the ongoing
search for top staff talent.
6 The Times Higher Education Supplement, ‘World University Rankings”
7 The Institute of Higher Education, Shanghai Jiao Tong University, “Academic Ranking of World Universities”
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3. Alan Masterton: “FM and the Business of Higher Education”, IFMA conference, June 09
Aligning FM Services
The performance of any service is influenced greatly by what service is required (e.g. client types,
products supported, regulatory environment) and how the service is organised and delivered (e.g.
staffing, technology and processes).
Likewise, ensuring top performing FM services requires a deep understanding of academic needs
so that the FM resources can be best balanced and aligned to these different perspectives and
demand drivers.
Demand Drivers FM Implication Service Outcomes
Top staff Workplace design first class facilities
Student satisfaction Campus design student facilities
Top students Marketing first impressions
Cost containment Space allocation facility utilisation
e-learning IT infrastructure connectivity
Multi-discipline Timetabling & master flexible facilities
teaching planning
Sources of funds Procurement quick reaction
Quality measures Service KPIs high ratings
Table 1: FM Service Alignment
Mapping these academic demand drivers to required service outcomes highlights the FM
implications of top class facilities and design; operating cost containment and optimum space
utilisation; all of which combine to drive high quality ratings.
Service Partners
FM is one of the five main service providers in higher education; the others being HR, IT,
Procurement and Finance. In addition to aligning these individual services to academic needs, the
collective performance of these service providers can be maximised through cross-functional
planning and service leverage.
Research by the Hackett Group shows that companies organized by enterprise performance (as
opposed to individual functional performance) outperform their peers by ensuring that their
enterprise level strategy is delivered by integrated, enterprise level structures and processes 8 .
The traditional service partners for FM are Procurement (for spend savings) and Finance (for
budgeting and long term planning). In the absence of a service partnering / enterprise performance
8 The Hackett Group, “World Class Profile in Enterprise Performance Management”, 2008
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4. Alan Masterton: “FM and the Business of Higher Education”, IFMA conference, June 09
perspective, lower performance can arise due to lack of agreement on who manages the supplier
relationships and misunderstandings over the costs and benefits of facilities.
The emerging service partners for FM are unquestionably IT and HR, both of which offer
significant synergies and leverage for FM in workplace productivity. In addition IT is the key partner
in the planning and delivery of e-learning solutions and managing the mix of virtual and real facilities;
while HR is the key partner in the equally vital field of recruitment and retention.
FM’s emerging service partners are IT for the delivery of e-learning and HR
in the equally vital field of recruitment and retention
Possible new service partners are Finance, in its role in leading the emerging task of performance
measurement and reporting and Marketing, in its role in profiling the institutions and leading the
increasingly important philanthropic funding efforts.
The Future of FM in Higher Education
The “demand-side” needs and benefits of higher education are becoming well understood at
national and institutional levels, ranging from the need for an educated workforce to lead the
knowledge economy and the need to compete vigorously for staff and student talent; linked to the
pressures from the increasing cost of research and greater focus on quality outputs.
Understanding and supporting these needs is the challenge and opportunity for the FM
organisation in higher education. Being effective in the traditional FM aspects asset quality, flexibility
of use and operating cost efficiency is no longer sufficient. FM and its other service partners now
have to support the crucially important aspects of recruitment, productivity, e-learning and institution
profiling.
To be successful in higher education requires moving FM from a from a
Building Management to an integrated Service Management format
To be successful in higher education, the FM organisation requires shifting its approach from a
Building Management to an integrated Service Management format. This will provide a better
alignment of service to client needs and environment; more application of co-ordinated services;
greater leverage of IT and HR synergies and more focus on enterprise measures and outcomes.
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About the author: Alan is Director of Operations Performance at the University of Sydney; a community of
over 43,000 students and 6,000 staff with an annual revenue of over A$1.3 billion. His current role involves
structuring and supporting the achievement of operational excellence, cost to serve efficiency and world class service across
the University's 11 support units. Prior to this Alan was Director of the University’s Campus Property & Services
division and has a career line management and senior advisory roles for global firms such as Coopers & Lybrand,
Balfour Beatty and Lyonnais Des Eaux.
He is a Fellow of the Royal Institution of Chartered Surveyors, an Associate of the Australian Property Institute, a
member of the Society for College and University Planning, has qualifications in land valuation and economics and an
MBA from the London Business School.
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