Integrated FM · commercial
One P&L for integrated FM: why service silos leak margin
Integrated contracts are often priced as a stack of single-service bids. Hard services builds its labour model, cleaning works out its productivity, catering sets its GP, security counts its hours, and someone adds the totals together at the end.
The problems sit in the joins. Management and supervision get counted twice or not at all. Each service line assumes its own inflation rate, or none. Mobilisation, TUPE and helpdesk costs land in whichever sheet had space. The board sees a total, but not where the margin really comes from.
An integrated contract needs one set of assumptions, one management structure and one view of risk.
The fix is to price each service on its own drivers, then bring them into one model with shared overheads, a single indexation profile and a common risk register. Done properly, it usually removes duplicated cost and shows which service lines carry the contract and which ones need to be renegotiated or redesigned.
Hard services · pricing
SFG20 is where the price starts, not where it ends
SFG20 tells you what to maintain and how often. It does not tell you how long the work really takes on your client's sites. That depends on asset condition, access, travel, permits, the mix of in-house and subcontract labour, and how your engineers actually work.
A price built only from standard task times will look competitive and be wrong before the contract starts. The labour line is usually the biggest cost in hard services, so small errors in productivity become large losses over five years.
Use the schedule to build the task list. Use site reality to build the price.
The strongest hard services prices combine the SFG20 regime with real asset data, site-specific allowances and a clear view of which tasks are statutory, which are discretionary, and which the client is really paying for.
Financial modelling · risk
Indexation belongs in the model from day one
Most FM contracts include an annual price uplift tied to an index, a fixed percentage or a capped mechanism. Your costs rarely move the same way. Wages follow the National Living Wage and market rates, materials follow supply chains, and energy follows its own cycle.
When costs rise faster than the uplift, margin erodes every year. On a long contract, a gap of a couple of percentage points can take a healthy year-one margin close to zero by the final year.
Forecast each cost type against its own index, and you can see exactly where margin will erode.
Build indexation into the financial model at bid stage, by cost type and by service line, with the contract's anniversary dates. Then you can price for the gap, negotiate a better mechanism, or at least go into the contract knowing the risk. Try the margin erosion calculator to see the effect.
Live contracts · commercial management
Unrecovered change quietly eats margin
On most live contracts, the biggest margin loss is not one large claim. It is dozens of small jobs done in good faith: an extra clean before a visit, a repair outside scope, a temporary security post that became permanent.
Each one seems too small to argue about. Added up over a year, they can cost more than the contract's entire margin.
A simple change process, used every week, protects more margin than any year-end negotiation.
Agree what is in scope, log every change and early warning as it happens, price it promptly and get it approved. Site teams need a process simple enough to use on a busy day, and commercial teams need a monthly view of what is outstanding.
