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CHAPTER ONE

INTRODUCTION

1.1       Background to the Study

Business processes and objectives operate and survive because they are primarily providing an effective and meaningful service to their customer (i.e. the user). For that service to be effective, the perceptions and expectations of the user must be met in order to provide a successful service delivery outcome. Conversely, the perceptions of the user to the initial input of the service delivery process of the organization is of equal importance, as it will determine the strategic and operational objectives of the organization, and consequently provide the added value needed in achieving the end product of customer satisfaction.

Facilities management is a diverse profession, the main aim of which should be to provide quality environments, which are fit for the purpose for which they have been designed. For (Alexander, 1996) it “is a total quality approach to sustaining an operational environment and providing support services to meet the strategic needs of an organization”. FM is a constant balancing act between the competing pressures of time, cost and quality. However, with ever-decreasing budgets and competition in the market place, cost often becomes the prevalent consideration. However, (Wauters, 1995) has identified that reducing facilities costs does not automatically increase bottom line profits and points out that unless savings are affected without impairing the organization’s performance dependent on these facilities, the opposite may occur, i.e. profits will fall.

It is possible to achieve quality whilst positively affecting the balance sheet. A quality workplace can induce productivity gains in the workforce, improve workplace satisfaction and act as a catalyst in attracting and retaining talented members of staff, thereby increasing profits. In a time of increasing numbers of the workforce deserting the traditional office in favour of home working, the provision of quality working environments is becoming increasingly important. However, it is the diversity of the profession that is one of the key barriers to the provision of quality working environments. Traditionally facilities managers have come from engineering backgrounds and may have a different focus to the new breed of facilities managers who come from many diverse backgrounds. A key challenge, therefore, is for facilities management to tailor itself to the needs of these diverse backgrounds. It should also be borne in mind that the facilities manager is not the key customer. The customer is the user of the facility.

To provide a quality workplace, the customer must define their requirements clearly. However, requirements tend to be defined by facilities managers, largely without input from the building users. It appears that greater interaction is required with the users of the facility in defining requirements and desirables. It is also difficult to cater for individual needs in terms of the working environment. For example, while one building occupant may feel cold, another finds it too warm; one may want the light above their desk turned off, while their neighbour feels it is too dark. This is an inherent problem in open plan offices, which are now the norm. Therefore, in considering quality working environments, consideration must be given to how individual needs can be catered for and building occupants given greater control over their immediate environment. This study considers trends in outsourcing and how facilities management service providers can meet the requirements of the industry by implementing quality and performance management techniques into their processes.

1.2    Statement of the Problem

For more than a decade, the oil and gas industry has been reorganizing to function more efficiently and effectively, the business has changed dramatically as oil companies have sought to define and focus on their core business. The oil and gas sector tend to collaborate with the FM service providers to provide professional services and improve the holistic work environment by outsourcing. In order to maximize the value obtained from outsourcing, users intend to take a proactive role in the outsourcing process, taking initiative in management. Anshori and Langner, 2007 studied the importance of customer satisfaction and supreme service provision in the hotel industry using Surabaya Plaza Hotel in Indonesia with the aim of gaining  insight into the concepts regarding customer satisfaction in the hotel industry and to explore the very needs and wants of Surabaya Plaza Hotel’s guests. This was to discover the opportunities a hotel management has in improving the experience of current guests and in becoming more competitive in winning new customers.

Durodola (2009) studied the management of hotel properties in south-western Nigeria using the facility management perspective with the aim to investigate the degree of beneficial application of facilities management principles in the management of hotel organizations in the study area. Abolade, Omirin and Dugeri (2013) carried out a study on users’ satisfaction with property management service in commercial properties in Lagos, Nigeria. The purpose was to examine users’ satisfaction with the management of commercial properties by Estate surveyors with the view to drawing a framework for more user friendly management of such properties.

This study notes however that even though outsourcing is one of the most researched areas in facility management studies, its impact on facilities management services provision in oil and gas downstream sector is largely unclear. This is because although a wide range of services are being outsourced in the oil and gas sector in response to the emerging trends outlined above, there has been no comprehensive empirical based research reported in the literature to provide insights into such a relatively evolving and important concepts as outsourcing and users satisfaction in the oil and gas downstream sector. This therefore underscores the need for this research which is to make facilities management services delivery sustainable in oil and gas firms in Nigeria. In specific terms, this study proposes to address this by first identifying the drivers of outsourcing and then conduct an empirical survey of facilities management services being outsourced in the oil and gas downstream sector. It then assesses users’ satisfaction of outsourced facilities management services in the oil and gas sector.

1.3    Research Questions

This study is thus aimed at providing answers to the following research questions:

What are the services that are most outsourced in Nigeria’s Oil and gas firms?

What is the relative importance of factors that influence users’ satisfaction with outsourced facility management services in the Nigeria Oil and Gas firms?

What is the degree of effectiveness of outsourcing as a means of service delivery in the sampled oil and gas firms?

1.4  Aim and Objectives of the Research

The purpose of this study is to assess the degree of effectiveness of outsourced facility management in Nigeria oil and gas firms of the downstream sector using user satisfaction indices, with a view to discovering ways of improving facilities management services provision in Nigeria oil and gas downstream sector. In order to achieve the above stated aim the following objectives are set to: -

identify FM services that are most outsourced in Nigeria’s Oil and gas firms.

identify the relative importance of factors that influence users’ satisfaction with outsourced facility management services in the Nigeria Oil and Gas firms.

determine the degree of effectiveness of outsourcing as a means of service delivery in the sampled oil and gas firms.

1.5  Significance of Study

Outsourcing is a strategic management option that has the potential to improve organizational efficiency and effective management of resources as well as increase users’ satisfaction about quality of services in oil and gas downstream sector. It is therefore worthy of research efforts. Theoretically, the study is justified in that lessons drawn from this research will aid in developing a body of knowledge on outsourcing of facilities management services in Nigeria. This is based on the fact that most research to-date on outsourcing and facilities management focus primarily on the experiences of developed countries in Europe, United States and Asia. Little or nothing had been written about the provision of outsourcing services in the oil and gas sector generally in Nigeria.

Most of the current literature in Nigeria are therefore preliminary and pedagogic addressing issues such as definitions and scope [Odiete (1998), Ojo (2002)], facilities management tools [Mbamali and Adebayo (2006), Opaluwah (2005)] and which of the professionals within the environmental setting is best suited to serve as facilities manager or to handle what is within the facilities management field (Odiete, 1998, Ahmad, 1998 and Ojo, 2002). It is only recently that facilities management has come to be applied to specific sectors of the economy usually education and hospital sectors. Most of earlier studies have taken place in South Africa [Kotze and Nkado (2003)] and United Kingdom (Amaratunga and Baldry, 1999 and Amaratunga, 2000). Most of the studies in Nigeria have been devoted to clarifying what facilities management really entails and distinguishing it from the traditionally practiced property management and maintenance management. The present study will fill this gap by providing a pioneering application of facilities management to a major economic sector in Nigeria and that is the oil and gas sector. 

Oil and gas industry continues to struggle to find a balance between rising global demand, diminishing known resources, and in maintenance distribution and operating costs. While mergers and consolidation continue, oil and gas management are determining other approaches to recover their base lines. One particular measure is to include business process outsourcing in their operational mix. Much of this orientation has been caused by operational processes becoming progressively more complicated and more costly in terms of managing a variety of business functions; hence businesses are handing parts of their core work, such as engineering services apart from finance and accounting, to outside service providers. Identifying the relative importance of factors that influence users’ satisfaction with outsourced facility management services in the Nigeria Oil and Gas firms is a major justification for the study. The justification for this study is also further boosted by the fact that the knowledge gathered from this research will immensely assist government and stakeholders alike in the establishment and possible enactment of relevant laws, regulations and guidelines in the development of efficient framework for outsourcing and facilities management practice in Nigeria.

The study reported in this thesis contributes to practiceby identifying factors associated with high levels of performance that stakeholders in the oil and gas sector should consider while making outsourcing decisions as regards facilities management services provision in the industry. Also the outcome of this study will assist the facility management industries to assess the feelings of users of its services about service quality. Finally, the service providers can know in more detail the expectations of their clients by understanding their relationships and the trust built can provide the platform for effective service delivery in the oil and gas downstream sector.

1.6    Scope and Delimitation

The scope of this study is limited to internal users i.e the management and staff of major oil and gas downstream companies in Nigeria; in particular Total, Oando, Forte-oil, Conoil, MRS and Mobil. It should have been ideal to cover both the major and independent marketers in Nigeria, however, the researcher opted to restrict the scope to major marketers in Nigeria because a study of both independent and major marketers would make conclusions unnecessarily wide varied and incapable of clear interpretations since the study is perhaps the first of its kind in Nigeria. Thus, a study restricted to major downstream oil and gas companies in Nigeria on the other hand, would allow the researcher to form definite conclusions, which may be more amenable to clear interpretations and create a pedestal for further research.

Again, it would have been ideal to address the user satisfaction with outsourced facilities management to all sectors of the economy. However, this is unrealistic for the same reasons mentioned earlier. A study of the user satisfaction with outsourced facilities management to sectors as varied as banking, education etc with their differing problems and standards would merely result in generalized and shaky conclusions which may lead to varied implications of inadequate understanding. A study devoted to the oil and gas downstream sector, on the other hand, would afford the researcher a more concentrated study in a hitherto neglected area of the economy; also, the time frame allowed for the research as well as associated logistics make it imperative that the research be limited to the major oil and gas marketers of Nigeria.

1.7   Definition of Terms

Facility Management: Facility management is a profession that encompasses multiple disciplines to ensure functionality of the built environment by integrating people, place, process and technology

Outsourcing: Outsourcing allows companies to focus on other business issues while having the details taken care of by outside experts. This means that a large amount of resources and attention, which might fall on the shoulders of management professionals, can be used for more important, broader issues within the company. The specialized company that handles the outsourced work is often streamlined, and often has world-class capabilities and access to new technology that a company couldn't afford to buy on their own.

User Satisfaction: User satisfaction” concept is based on different approaches. The process-oriented approach considers user satisfaction as the difference between expected satisfaction and achieved satisfaction.

Quality Service:  An assessment of how well a delivered service conforms to the client's expectations. Service business operators often assess the service quality provided to their customers in order to improve their service, to quickly identify problems, and to better assess client satisfaction.

Oil and Gas Downstream sector: The downstream sector commonly refers to the marketing and distribution of products derived from crude oil and natural gas. The downstream sector touches consumers through products such as gasoline or petrol, kerosene, jet fuel, diesel oil, heating oil, fuel oils, lubricants, waxes, asphalt, natural gas, and liquefied petroleum gas (LPG) as well as hundreds of petrochemicals.

Users: The person, organization, process, device, program, system, or other entity that exploits another person, organization, process, device, program, system, or other entity.