SS-013 Ver 1.0 (May 23)
Savings are often linked to a Client contract and this must form an integral part of the Contract negotiations with any Supplier partner.
Security Equipment maintenance costs are key to ensuring both the equipment is maintained at the highest standard but also the services can be maintained at the same level.
Be sure to include regular inspection and maintenance of all Security equipment on site and that prices reflect the capital cost and life expectency of the equipment
1. Savings and Efficiency in Operations
2. Savings Drivers / Triggers
- Existing Supplier partner contract sunsets within six months
- Cost-plus supplier over-spending
- Renewed savings strategy
- Program optimizaton that redefines client objectives, SOW and levels of transparency
- Transitioning a Supplier partner
- Early stages of transformation planning
3. Key Points
- Be clear on desired outcomes
- Identify deal breakers early in the contract planning phase
- Identify and engage all the necessary stakeholders to ensure clear communications and agreement
Confidential & Proprietary | 2024 CBRE Inc.
The following pages provide for a guideline to enable savings to be negotiated, implemented and monitored with a Supplier partner. When in doubt on potential savings consult your Global Solutions Lead to assist you on your requirements, especially where Global partners are involved.
4. Security Services Cost Structure Analysis
Cost Component
Insights
Impact on Price
Equipment and Replacements
Operating and Service Costs
Labour, Licenses & Overheads
- Import and export costs affect the cost of the equipment and replacements
- Physical capital for Security systems and replacements, contributes more
- Manpower productivity and the level of automation adopted are the key factors contributing to the cost of Security monitoring systems
- Annual maintenance contracts cost more and depends on the reliability and longevity of the equipment
- Overheads typically include licenses, safety regulation adherence, administrative cost,
equipment depreciation, insurance etc, - Port congestions have increased, leading to delayed shipments. European logistics
companies are facing shortage of Ukrainian lorry drivers, who are well represented in
driving profession across Central Europe
MEDIUM
MEDIUM
HIGH
Savings Drivers and Levers
BID
Page 1 of 5
Strategy
Services
Equipment
MRO
Description
Direct Negotiation with Supplier partner
Yes
Yes
Yes
Direct negotiate with incumbent Supplier partner to determine best options to offset increase (ie., - SOW optimisation, frequency, specification modifications, fixed prices) etc,
Manage RFP initiative to test market and ID all qualified Supplier partner options
Yes
Competitive Sourcing Event
Yes
Yes
Explore alternative brands, service approaches, materials, specifications, etc,
Yes
Alternative Products / Services
Yes
Yes
Seek improvements in how maintenance and / or equipment can be delivered to and maintained on site (ie- automated parts monitoring)
Yes
Demand Innovation improvements
Yes
Yes
Re-engineer the SOW to fit Client specific requirements
Yes
Reengineer SOW
Yes
Consolidate work with other projects to increase potential spend discounts
Yes
Consolidation / Bundling
Yes
Yes
Ensure that Should Cost models are applied to maintain accurate costs and cost modelling
Yes
Should Cost Modelling
Yes
Yes
Pass through inflation cost increases to customers (where applicable)
Yes
Pass-Through
Yes
Yes
Confidential & Proprietary | 2024 CBRE Inc.
SS-013 Ver 1.0 (May 23)
Savings Strategies
BID
Page 2 of 5
Confidential & Proprietary | 2024 CBRE Inc.
1. Where can Addressable savings be found in Security Services?
Security guarding represents some 70-90% of spend on Security services, the remaining 10-30% (excluding management and administration) covers equipment and technology. However, this component is increasing as we move to more Hybrid versions of security operations. Additionally, in those countries where guarding is used less, the ratio of guarding to other costs is also reduced.
This section looks at some possible options to consider first as they are usually easy to implement:
Possible areas of Savings
Possible Actions
Scope. Are we delivering to the right scope? Are we over-delivering – have we accepted a legacy scope that is above the MSA service level without challenging it?
Has a Scope Gap Analysis been conducted? If not – carry out a scope Analysis – check that the scope being delivered is what is required. Look for out of scope services.
Check for:
- Check client’s specified Service Levels - Is the client’s specified service level what is being delivered or is there a legacy SL that is too high?
- Look at frequencies, volumes and response times – high volumes, greater frequencies and faster response times have a cost. Check that these are to the correct SL specified by the client – if nothing is specified – check and adjust SLs based upon a risk and service evaluation to make sure they are appropriate for the site, service and risks etc
- Is the service level right for the site? Particularly for security systems maintenance – more frequent service visits, faster response times and comprehensive maintenance add significantly to the cost. But is these are too high for the site type and risk, then they can legitimately be reduced.
- E.g. a Four hour response time for a low risk site or low priority system can be reduced to next day. Four annual maintenance visits can be reduced to two – or one if one of these could be done virtually by an on-line check
Service Level. Are we delivering to the right service level? Are we over-delivering the service?
Guarding Services
Possible areas of Savings
Possible Actions
Service Integration
Is it possible to combine Security guard roles with other related functions? E.g. can reception and Security functions be combined? Can the Security roles take on other FM functions or roles? E.g. confidential waste collection, mail room post sorting, checking fire extinguishers etc. operating a loading bay/goods in facility. Conversely – do you need so many guards? Can the functions of the guards be replaced by sharing their roles between other FM staff and service providers if this can be done without compromising security or risk to the people performing the role? If this is backed up by some remote systems and more flexible guarding – it can be very effective
Check the need to security roles
Can the security guard tasks be performed by other roles? Are the tasks really needed? Is a dedicated security guard presence needed or can it be done in another way?
Remote of Mobile service options
Does the guard service have to be physically present on site all the time or could the guard perform the same role by a temporary presence e.g. coming on site to lock and unlock the site and patrol but not be physically present all the time? Can the guard service be removed or reduced by using mobile patrols or remote monitoring - possibly a mix of on-site and remote guarding?
Service Level Alignment
This process looks at the Security service levels at sites that are more or less identical in size, purpose, risk and population. E.g. if Site A is very similar (as described above) to Site B – then they should both have the same service level. There would be no obvious reason why Site B would have a higher service level than A. I.e. Site A has four mobile patrols per night – while site B has one. If there is no obvious reason why Site A needs four (4) patrols – then it can be reduce to one also – saving 75% of the mobile patrol costs. It is often the case that similar and identical sites will have different security levels as a legacy for no obvious reason. Applying this approach intelligently (i.e. allowing for risk, purpose and building configuration) can achieve significant results at little cost
Use of Security Technology
Sometimes Security guarding can be more effective if the guard is replaced, or a team reduced in numbers by using security hardware and technology. It is a specialist function to carry out a review to see how practical this is, understand any risks and price any installations to establish a return on investment (ROI).
Typical examples of the possible use of technology to reduce guarding costs are:
- Remote monitoring of CCTV etc. to reduce site control room staff
- Combine multiple control rooms into one
- Better use of access control systems and hardware at the entrance to replace a guard
- Remote monitoring of CCTV, alarms etc. in place of a guard force, or part of one – e.g. by removal of an out of hours guard presence
- Combining a mixture of mobile and reactive guard services with monitoring
SS-013 Ver 1.0 (May 23)
Savings Strategies
BID
Page 3 of 5
Confidential & Proprietary | 2024 CBRE Inc.
Possible areas of Savings
Possible Actions
Service Levels
Check that service levels are appropriate and correct. Inherited service levels may be higher than those in the client’s MSA – align these to reduce costs.
Are response times appropriate to the site and system? The faster the response, the higher the cost – make sure these align with the client’s MSA – if possible reduce them to the practical minimum – without risking safety and security
Are legacy services comprehensive? (inclusive of parts and labour) – If the MSA does not specify comprehensive maintenance – reduce it to maintain only or maintain and respond ((whatever the MSA requires) – Comprehensive maintenance can added 200% to the cost of maintenance
Are service maintenance visits appropriate? – Two annually is the norm, some high risk sites may require 4 or there may be legally required service visit frequencies – if there are none – then ensure no more than two annually – one if possible. Tailor maintenance arrangements to the site type and risk. Low risk and low impact sites do not need the same regime as high risk sites. The same applies to parts of systems – a perimeter door or turnstile – being safety and security issues need faster rectification than a CCTV camera that may not be so critical and can be left to another visit or slower response time
Security Systems Maintenance
Intelligent Maintenance
On line diagnostics and repairs – some more sophisticated systems that are IP addressable, especially alarms and access controls can be rectified without visiting site – it may be legally possible to carry out one on line and one physical maintenance visit – significantly reducing costs – and vehicle use
Break-Fix only maintenance
Modern electronic Security systems that use digital and IP based systems act like IT systems. Most of the equipment used requires little adjustment, unlike older analogue CCTV and VCRs. This means maintenance can be more or less stopped and repairs only carried out when something fails – this is called ‘Break-fix’. It can almost eliminate the cost of PPMs (planned maintenance).
Exceptions to this may be:
- Old analogue systems that need recalibration
- Systems in polluted and dirty environments that need cleaning, especially CCTV
- Systems with lubricants, moving parts or fluids that need topping up e.g. some types of CCTV housings
- Where there is a legal or quasi-legal requirement for planned maintenance checks e.g. some alarm systems with police response
- Where there is a safety issue potentially. Where the client specifies a maintenance regime (although the client may be persuaded to change)
System Condition
This is not easily rectified – but clearly, a Security system that is old and in poor condition will cost more to maintain than a new one or one that’s been well maintained. It is important that asset conditions are established in transition and that a system beyond its maker’s stated life expectancy (rarely more than 10 years) should be listed for upgrade and the client informed if the system is in bad condition – maintenance costs during bids are based upon an assumption that the system is in serviceable condition, fit for purpose and not too far beyond its life. If this is not the case, there is a strong case to go to the Client and recommend and upgrade / replacement or cost increase
Fault Analysis
Keeping fault logs and requiring maintenance companies to keep fault logs and carry out fault analysis will help identify issues and enable their rectification and identification of excessive faults relating to a site, system or component, as well as user/operator errors
User / Operator error
Sometimes untrained users and operators can cause faults or false alarms that are reported and treated as faults. This is the case with alarm panels where incorrect setting and un-setting causes faults which result in maintenance call outs. Make sure that fault analysis identifies these issues. Users and operators can be trained and excessive user errors reported to clients and treated as pass-through costs
1. Conclusion
There are any number of possible combinations of the options above and more than have been listed. A number of critical factors must be considered before the change can be made or is likely to be accepted by clients – here are a few considerations:
Does the change still comply with the MSA/ client’s security policy and standards etc.? (Although this can be challenged if the case is strong enough)
Are the risks still properly managed and understood?
Is the return on investment strong enough and therefore compelling?
Are there any safety risks e.g. to staff still on site such as loss of first aid cover?
Can all the Security tasks still be carried out (if required) by the remaining guard force or other staff?
Are there any planning, statutory or landlord issues with installing Security hardware such as turnstiles or do other tenants need to be consulted – e.g. a shared entrance
All the above options can be combined. Sometimes the saving opportunities may be easy to see and achieve, more often these easy options have been used long ago
CBRE has developed a template format that ensure all the issues relating to more complex, higher risk solutions which require capital spend are addressed and give the CBRE account team and other stakeholders the opportunity to assess and comment on the viability and issues related to the proposal. This document is the Change Business Case.
SS-013 Ver 1.0 (May 23)
Savings Strategies
BID
Page 4 of 5
Roadmap for Procurement wins
Enable Immediate Action
Create Transparency and the right set up
to implement immediate actions
Take Action to secure supply and mitigate
Price increases now and in the next months
Deploy advance solutions to manage costs and
set targets to enable resiliency
Institutionalize to prepare for the new normal
Build capabilities, tools and processes to
manage future uncertainty
- Have you prioritized categories based on exposure?
- Is a cross-functional inflation nerve center in action to quickly capture value?
- Are you deploying a full set of levers to mitigate short-term challenges (eg, supply, demand, inventory)?
- Have you identified a full suite of levers that mitigate risk via technical, demand, process, financial, and commercial levers?
- How will you define longer-term value creation in the face of continued uncertainty?
- Do you have effective cross-functional partnerships in place to execute all levers?
- Do you have effective strategic partnerships in place to assure supply and to stay relevant?
- Do you have a way to accelerate alternatives (eg, new Supplier partners, new locations, new designs, new materials)?
- How will you improve the procurement operating model with the learnings from mitigating current challenges?
- Which new systems and tools will you put in place to assure future resilience?
- Do you have the right talent and capabilities in your team?
- How will you redefine procurement governance and cross-functional collaboration to enable both agility and resiliency?
Link to CBRE
Market Indices and Inflation data
Link to CBRE
Inflation Commercial Guidance
Confidential & Proprietary | 2024 CBRE Inc.
Useful Links
SS-013 Ver 1.0 (May 23)