i-FM: The online resource for facilities professionals

Some offer real promise; but it must be a rare one indeed that not only gets developed and implemented but is still evolving and successful 20 years later.

That's the origin of the Modus Group, a bright idea conceived over a beer by a self-employed management consultant and a project manager friend. The concept was simple: to use their collective experience in the construction business and in corporate relocations to offer advice and management services to companies wanting to make significant change to their work environments. Instead of going down the traditional route of finding space based on cost or location and then calling in architects or designers to somehow make it work, clients would turn to this new business to develop first an accommodation strategy based on a real understanding of specific business culture and needs.

"We left the pub confident that we'd hit on a really clever niche consultancy service that would fly off the shelves," recalls Tony Benzecry (left). "But this was the late 80s/early 90s, the UK's last big recession. The market proved far more receptive to straightforward implementation advice than to the consultancy that we thought would be the unique characteristic of our offer."

So, times being what they were, the fledgling business settled for that, with the intention of returning to the broader service when conditions improved. And the pressures of running a new business being what they are, Modus spent the next five or six years evolving into a solid, if modest, design & build contractor within the offices sector. New contracts were generally found through referrals from current and past clients until a large dose of good luck intervened. Having fitted out a marketing suite for a developer's prominent new building in central London, the company was invited to use it as their offices so that the space would look at least part occupied. Spotted there by the sugar giant Tate & Lyle, Modus was taken to be a significantly bigger operation than it actually was at the time, which led to the big commission needed to push it up to the level of the serious players in the market.

Cliff-hanger
By the late 90s, the business had added a string of technology companies to its client list, drawing it beyond offices and into specialised environments including disaster recovery facilities and data centres. By 2001, the company was turning over £50m a year. Hindsight let's us guess what happened next. "When the dotcom bubble burst, we fell off a cliff," Benzecry says. "So we spent much of 2002 thinking hard about how the business should move forward, determined to arise phoenix-like in a more sustainable shape.

"That led to the creation of an FM business over 2002-3, mainly to provide an after-sales service to our fit-out clients. To be honest, though, we didn't really have any understanding of what FM actually meant. We just believed – as many contractors have concluded – that it would be a good idea to try to hang onto clients by extending the range of services offered. We went into it with much more hope than knowledge – which, looking back, was not the best way to do it.

"FM is an entirely different business to the design & build services we were providing. They may both deal with property but that's where the similarity stops. Completely different people, mindset, processes, client expectations, buying methods, routes to market - all different."

That recognition brought with it a decision to develop the right response to the market opportunity. For the company as a whole, it's been a process culminating in the current four service lines - Workspace (office fit-out), Projects (building refurbishment), Unitech (technical fit-out) and FM.

And that evolution continues. Modus is now developing its capabilities in mission-critical engineering services, bringing the FM approach to bear on critical environments like data centres. "We've actually been working in this area for years without labelling it as something extra or different," Benzecry notes. "But now we are seeing that this is an increasingly valuable proposition. More and more businesses have this kind of need, and there isn't too much direct competition to meet that growing demand. We see it as a good differentiator for us."

Client work
A part of the attraction FM has for Modus lies in the nature of the client relationship. Going right back to the original pub days, Benzecry – who assumed the role of Chief Executive following a 2007 MBO – has been interested in understanding what clients want to achieve and why. It has, he admits, been difficult to bring that management consultancy orientation into project work: the pace is generally too fast. But the longer lasting relationship inherent in FM deals makes that ground more fertile.

He explains: "FM appeals to the management consultant in me, because it is about working within a relationship over a reasonable period of time. There's the opportunity to mess with – in a good way – the situation; whereas if you are delivering a one-off construction project, there is a limit to what you can do to change things. In an FM relationship, you can look at increasing service levels, at innovation, at up-selling to the client. That's a much more appealing place to be.

"I'm far more interested in helping our clients than in just running a contracting business," he adds. "If we can bring something more than just basic services to them, that's good for them and good for us, as well."

Another side of the same principle is evident in Benzecry's business development policy: "The one thing we have decided as a company is that we will not compete purely on price. If a tender goes out to six companies and it is clear the decision is going to be made on cost, we won't take part. We want to be able to add value; and we want to be able to respond to the client need in some way that makes that possible."

Support service
FM at Modus got its start with the selling in of relatively low level maintenance services to fit-out clients. Over time, the company accumulated a fair bit of work this way, including some larger contracts for both mobile engineering and static services. "That then forced us to get more professional about what we were doing," Benzecry explains. "Along the way we've moved from FM as a small-time adjunct to construction services towards it being a big-time operation. Which of course meant bringing in the right people and the right processes. And that enabled us to go back to our fit-out clients and say 'what do you really need?'"

A key factor in this development was a service Modus calls 'warranty support management'.

"It's a simple idea. As we approach the end of each fit-out contract we introduce someone from our FM team – the warranty support manager – who discusses with the client what our obligations are for the next 12 months and what their obligations are: the need to maintain kit to protect warranties, for example. We ensure that the various responsibilities are clear, then produce a series of SLAs to capture that. We also offer various options to increase the level of service we provide according to the nature of the client's business, the environment and so on. For example, the typical construction contract is not good at setting out service obligations – if the AC system fails, OK, someone has to come back and repair it; but there is little guidance as to when that might happen and how long it might take. I have come to see this period as the great destroyer of client/contractor relationships: the client will see any problems that arise as high priority, but the typical construction firm will have moved on to the next contract and really does not want to devote resources to going back to sort our relatively minor (from its point of view) issues.

"So, historically, there have been problems in this post-occupation period. But by doing what we've done with the follow-on process we've minimised the problems and often developed new business out of it."

Most Modus fit-out clients do buy some level of added service for the 12-month post-handover period - and that often leads to a continued relationship after the period is up. More than half of those clients stay with the company for FM support. And of course that means Modus is likely to be in the right place should the opportunity for more project work arise later: it's a neat circle, especially in better economic times.

Growth market
Modus has always seen itself as something of a boutique operation, and Benzecry wants it to stay that way. Its business orientation is generally hard FM, which he views as the more critical area of operation for clients. Moreover, as the business has evolved at Modus, the company has become more selective about the opportunities it pursues. "High demand, high expectation, invisible FM – that's where I want us to be," he declares. "We're not interested in body-shopping, commodity FM or price-driven contracts. Also, we want to deal direct with the client, not as a part of someone else's team."

There are one or two exceptions to those principles, of course: Modus has a handful of contracts where it manages all FM services; and it recently signed on to a deal being led by Serco.

Also an exception is the company's one venture outside the UK. In recent years, it has done some project work on the continent but only in response to specific client request. Any idea of opening offices elsewhere in Europe is 'something for the future'. Despite that view, Modus did establish a presence in Dubai last year - but only after an invitation from a partner who wanted to launch FM services and needed an experienced operator to work with. "It was clear even while we were discussing the idea in 2008 that the development bubble would burst. But there are still some good FM opportunities, and there will be more both there and in the wider region," Benzecry says.

Sticking to its home territory, the UK, Modus is forecasting growth in its FM business, but expects flat performance for the group overall. Benzecry believes that 2010 will be difficult generally, with better conditions to follow in 2011.

At this point, contracted FM accounts for about a third of the group's £100m turnover. But, taking in all FM-related work - contracted plus project work with the same clients - it's more like two-thirds, he says.

Summing up, Benzecry adds: "FM is a great place to be. Going into 2010, the one part of the business I feel I can completely rely on is FM.

"If in ten years' time we were considered to be an FM business that would be fine with me."