Managing utilities in-house vs. hiring a consultancy

Utility management is not typically at the fore front of many managers’ minds. But for any company wanting to improve their bottom line keeping utility costs under control should be part of their finance strategy.

However, whoever deals with the utilities at a company usually has other priorities as well. Finance also has the accounts to prepare each month. Facilities have health and safety to stay on top of. And procurement managers are currently researching the possibility of outsourcing whatever request has landed on their desk.

When businesses can’t find the time to look at utilities and have no choice but to put them on the sidelines that’s when outsourcing should be entering the conversation. In this article we’ve pulled together five factors that businesses should consider when contemplating whether to look after their utility costs in-house or outsource them.

An expert view

Out of all the reasons to outsource anything within a business, the most common reason is to put it on the desk of an expert. Many of the individuals or teams who look after utilities in an organisation do so as part of their job where they wear many hats. When a business hands over their utility management to a consultancy they will be handing it over to individuals whose only job is to understand and carry out utility management.

Consultancies offer a wide range of services

There is more to utility management that procuring a new energy contract every so often. Utility management covers a wide range of activities and consultancies are more likely to have the knowledge to cover all of them. Activities that consultancies can also help with include:

• Procurement of energy
• Services in water and telecoms
• Environmental consultancy
• Consumption management
• Waste management
• Billing management
• Consolidation of bills
• Tracking the market
• Managing mandatory compliance schemes
• Researching if any voluntary compliance schemes would be of benefit
• Dispute management
• Setting up connections at a new site

Consultancies usually have industry contacts

Whilst consultancies usually offer a wide range of services some will have more on offer than others. However when a consultancy cannot offer a particular service themselves they should be able to put you in contact with another company that can. For example, many utility companies don’t deal with environmental issues themselves (such as biomass heat). However because utilities and environmental issues are closely interlinked, a good consultancy should have industry contacts and partners for interrelated matters.

Allows a business to concentrate on their core activities

Finally we have one the most common reasons why companies outsource any operation of their business. Outsourcing allows in-house staff to concrete on core activities. Outsourcing utilities allows the finance department to create financial reports. Outsourcing allows procurement to research other suppliers for other functions. Outsourcing allows facilities to check health and safety is up to date. Outsourcing also helps free up the administration time of support staff as they no longer have to verify the bills.

Alternatively, build an in-house team

Alternatively an organisation can develop an in-house team which specifically manages the utilities. However this is a solution that is only viable for large organisations that have the finance to hire staff who specifically deal with managing utilities. This will involve training (which may have to be external).

Managing in-house does allow a company to ensure close observation of their utilities, and if you do choose to outsource you should request a certain level of communication from the consultancy. It’s important that any business knows what is happening with their utilities, regardless of whether they use a consultancy or an in-house team.

However, when a company begins to consider outsourcing the utility management the most important factor is to determine the cost, both financial and opportunity. If an organisation chooses an external consultant there will be a fee involved however the savings achieved by external experts should cancel it out (and some consultancies have fee-back guarantees). Alternatively, if an organisation does feel it can confidently train an in-house team then the ROI could be higher from employing someone to oversee utility management.

This blog post was originally published on the Business Cost Consultants website:

http://www.businesscostconsultants.co.uk/managing-utilities-in-house-vs-hiring-a-consultancy/