The facilities management value tree
Facilities management sells contracted service across an estate you do not own. Value is decided per work order and per asset, in the gap between what the contract promised and what the field actually did.
01 The same tree, this industry
Where the money is made and lost here
The structure does not change: value is profit plus how well that profit becomes cash, profit is revenue minus cost, and revenue is price times quantity. What changes is which drivers sit underneath each branch, and which system holds them. If you have not read the general version, start with the Enterprise Value Tree and come back.
Two units carry everything here: the work order and the asset. Revenue is contracted against an estate; cost is incurred by a technician standing in front of a specific piece of equipment. When those two records cannot be joined, neither contract profitability nor asset performance exists.
Every driver below names the metric it lands on. Follow one and you get its formula, the system the number lives in, and the ways it is commonly misread.
02 Price
What decides the price you actually get
Contract structure
Fixed price, cost-plus or SLA-linked. Each moves the risk of a bad estate to a different party, and each needs different data to defend.
Price realisation net_revenue ÷ list_revenuePriceOut-of-scope and variation work
The work that was not in the contract, performed anyway, and billed only if someone recorded it as extra.
Average net price net_revenue ÷ unitsPriceSLA penalties and bonuses
Service credits that arrive as a deduction, calculated from response and rectification data you also own.
Contribution margin (net_revenue − variable_cost) ÷ net_revenuePriceEscalation clauses
Indexation on labour and materials, which protects the contract only if it is actually applied at renewal.
Price realisation net_revenue ÷ list_revenuePriceProject and additional works
Higher-margin work sold into an estate you already serve. The cheapest revenue in the business.
Attach rate orders_containing_the_attached_item ÷ eligible_ordersPriceMobilisation recovery
The cost of standing a contract up, recovered over a term that termination can cut short.
Customer acquisition cost (sales_cost + marketing_cost) ÷ new_customers_won03 Quantity
What decides how much you sell
Sites and assets under management
The estate itself: how many locations and how many assets you are contractually responsible for.
Active customers count(distinct customers with at least one purchase in the window)VolumeWork order volume
Planned against reactive. The ratio is the single best predictor of whether a contract makes money.
Schedule adherence units_produced_as_scheduled ÷ units_scheduledVolumeContract retention and renewal
Multi-year terms mean a lost renewal is several years of revenue, not one.
Customer retention rate customers_retained ÷ customers_at_startVolumeFirst-time fix
A repeat visit is volume that earns nothing and costs twice.
Perfect order rate orders with no error at any step ÷ total_ordersVolumeCoverage and response
Whether you can reach the site inside the SLA, which shapes both cost and penalty.
On time in full orders_delivered_on_time_and_complete ÷ total_ordersVolumeAdditional works conversion
Findings from planned maintenance turned into quoted, accepted work.
Win rate opportunities_won ÷ opportunities_closed04 Cost
What it takes to operate
Field labour productivity
Wrench time against paid time. Travel, waiting and paperwork consume more of the day than anyone plans for.
Capacity utilisation actual_output ÷ practical_capacityCostSubcontractor spend
Specialist trades bought in, at a margin that depends entirely on how the work was scoped.
Cost to serve (delivery + service + returns + order_handling) ÷ customers or ordersCostParts and materials
Held across many sites and vans, duplicated wherever the item master is not shared.
Inventory turns cogs ÷ average_inventory_valueCostTravel between sites
A routing problem priced as a labour cost, and the easiest saving in the business.
Freight cost per unit total_freight_cost ÷ units_shippedCostRework and repeat visits
The cost of a first visit that did not fix it, usually caused by missing asset history.
Mean time to repair total_downtime_hours ÷ number_of_failuresCostEnergy on managed estates
Where the contract carries consumption, this is both a cost line and a service the client will pay for.
Energy per unit energy_consumed_kWh ÷ units_produced05 Cash
Where the cash actually sits
Billing against work completion
Work is done daily and billed monthly, against evidence that has to be captured in the field.
Days sales outstanding (accounts_receivable ÷ net_revenue) × days_in_periodCashUnbilled work in progress
Completed jobs waiting on a signature, a photo or a variation approval.
Cash conversion cycle dso + dio − dpoCashRetention and milestones
Money held back on project works until practical completion.
Days sales outstanding (accounts_receivable ÷ net_revenue) × days_in_periodCashSupplier and subcontractor terms
Paid before the client pays, which funds the contract from your balance sheet.
Days payables outstanding (accounts_payable ÷ cogs) × days_in_periodCashVan and site stock
Inventory scattered across an estate, expensive in total and invisible individually.
Days inventory outstanding (inventory_value ÷ cogs) × days_in_periodCashMobilisation capex
Systems, people and equipment committed before the first invoice.
Capex intensity capital_expenditure ÷ net_revenue06 Where the numbers live
The systems behind the branches
A value tree is only usable once each box maps to a system and a record. These are the six that matter most in facilities management: what each one is actually for, the records inside it the tree depends on, and which branch it feeds.
| System | What it holds | Key records | Feeds |
|---|---|---|---|
| CAFM / IWMS | The contract and the estate: sites, assets, SLAs, planned maintenance schedules and every work order raised against them. | Site, Asset, Contract, Work order, SLA, PPM schedule | Price, quantity, cost |
| Field service / mobile | What the technician actually did: time on site, parts used, photos and the sign-off that makes it billable. | Job, Technician, Time entry, Part used, Signature | Cost, cash |
| Asset register | The equipment itself: make, model, criticality, history and remaining life — the record that decides repair or replace. | Asset, Class, Condition, Service history, Warranty | Cost, quantity |
| HR and rostering | Establishment, shifts, skills and certifications, which gate who can attend which asset. | Employee, Roster, Skill, Certification | Cost |
| Procurement and inventory | Parts, subcontractors and the item master that decides whether two sites can compare a price. | Item, Supplier, Purchase order, Van stock | Cost, cash |
| BMS / IoT | Live plant data from the estate: runtime, alarms and consumption, the leading indicator ahead of a failure. | Point, Alarm, Reading, Meter | Cost, quantity |
Almost every hard question in facilities management needs two of these joined. That join — not the calculation — is the work.
07 Where it leaks
Value lost between two systems
These are the losses that no single system can see, because the evidence is split across two of them. Each one is a real number that stays invisible until the join exists — which is why the tree is an integration exercise before it is an analysis one.
| Where value leaks | Why it happens | The join that finds it |
|---|---|---|
| Work done, never billed | A job is completed in the field and the variation approval, photo or signature that makes it billable is missing, so it ages quietly into an unbilled balance. | Join the field job record to the contract billing rule and flag the gap daily |
| The same asset under several identities | An asset is tagged differently in the CAFM, the asset register and the client's own system, so failure history never accumulates against the thing that keeps failing. | Resolve asset identity across CAFM, field service and the client estate |
| Reactive work funded as planned | Fixed-price contracts assume a planned-to-reactive ratio. When reactive grows, the contract is losing money months before the P&L shows it. | Join work order type to contract profitability, monthly, per site |
| Subcontract margin invisible | Specialist work is bought per job and sold inside a bundled rate, so the margin on it is never measured per trade or per supplier. | Join subcontractor invoices to the work order and the contract rate applied |
| SLA penalties calculated by the client | Response and rectification times exist in your own system, but the credit note is built from the client's numbers because yours cannot be produced fast enough. | Join response and rectification timestamps to the SLA definition, continuously |
08 Worked example
A contract that grew and stopped earning
Revenue on a multi-site contract rose 9% while contribution fell. The tree splits it: reactive work displaced planned, subcontract cover filled the gap at a bought-in rate, repeat visits rose because asset history was fragmented, and a month of completed work sat unbilled waiting for variation approvals.
| Component | Effect | What sits behind it |
|---|---|---|
| Additional works | +€0.9m | Project revenue sold into the estate |
| Reactive displacement | −€0.6m | Planned ratio fell on eleven sites |
| Subcontract cover | −€0.4m | Bought-in trades at contract rates |
| Repeat visits | −€0.3m | First-time fix down; asset history split |
| Unbilled work | −€0.2m | Completed, awaiting variation approval |
| Net | −€0.6m | More activity, less contribution |
Illustrative figures, shown to demonstrate the split. The point is the shape of the walk, not the numbers — on your own data the same bridge is built from your ledger.
09 Diagnostics
Six questions to ask in facilities management
Ask them of your own team before anyone asks them of you. In most organisations at least two of these cannot be answered without a manual exercise, and those two are the plan.
- Can you produce profitability for one contract this month, including unbilled work?
- What is your planned-to-reactive ratio by site, and which direction is it moving?
- Is an asset that has failed four times identifiable as the same asset in every system?
- How much completed work is sitting unbilled right now, and what is each job waiting for?
- Do you calculate SLA credits, or does the client tell you what they are?
- What is field wrench time as a share of paid time, and how would you evidence it?
10 The metrics behind it
Definitions for every box
11 Questions
Frequently asked
What is the single most valuable join in FM?
Work order to asset, with a resolved asset identity. It turns a list of jobs into a service history, which is what makes repair-or-replace, first-time-fix and reactive-ratio all answerable.
Why does the planned-to-reactive ratio matter so much?
Because a fixed-price contract is priced on an assumed ratio. Reactive work costs more per job, arrives unscheduled and breaks the roster, so a drift of a few points turns a profitable contract into a loss long before the annual review.
How should out-of-scope work be handled?
Captured in the field, at the moment it is identified, against the contract scope definition. Anything reconstructed later is a negotiation rather than a bill.
Does this work across a mixed estate?
It is designed for one. The point of resolving assets and standardising the item master is exactly that thirty sites bought different equipment from different suppliers under different codes.
See this tree on your own data
Connect the systems above, define each box once, and the tree stops being a slide.