In second year, Trammell Crow still struggling

The firm has cut the cost of maintaining campus facilities, but workers say savings have come at the expense of quality. Inside the cozy, newly renovated second-floor offices of the Franklin Building Annex, Trammell Crow officials get their early morning cup of brew from the coffeemaker in the corner before continuing on to the offices where they keep watch over the operations of Penn's Facilities Services department. Meanwhile, just a floor below in the heart of Facilities, countless housekeeping and maintenance workers file through the concrete-floored halls, where they punch their timecards, retrieve tools from their lockers and trudge to their first job of the day -- often, they say, without the necessary equipment. For the workers, the stark contrast between these two worlds represents the way Facilities has been run in the 18 months since Penn hired the Trammell Crow Co. to manage its on-campus buildings. And for the facilities that now rely on Trammell Crow for their upkeep, the adjustment period has meant slow responses to maintenance requests and poor housekeeping for the Penn community. With big ideas and a team of high-powered executives, Trammell Crow descended upon Penn in April 1998 aiming to improve many of the University's management procedures and to provide better service at a lower cost to its customers -- the schools and buildings across campus that file maintenance requests. "It's a work in progress," Director of Facilities Services Operations Jim Bean said. Some of those goals are indeed being met. So far, the company has saved "a lot of money" thanks to its "aggressive agenda for change," Vice President for Facilities Services and Contract Management Omar Blaik said. But critics say service has yet to improve and many employees claim that Trammell Crow has refused to spend the money needed to hire more employees and purchase new equipment. "I think that there are significant areas that need to be improved," said Executive Vice President John Fry, who spearheaded the 1998 deal. "What I feel good about is that they're tackling all these areas with a very good spirit." By most accounts, Trammell Crow has initiated the process of transforming a department filled with red tape, and company officials say they are finding ways to make facilities management better and more efficient. Trammell Crow has a tremendous financial incentive to do just that. It will only profit from its contract with Penn if it can cut costs from what was spent on facilities before the takeover. But as the budgets have become tighter, skeptics worry about a decline in quality. Employees say the cuts have led to understaffing and a shortage of quality equipment. A controversial beginning In October 1997, Penn announced its shocking and groundbreaking decision to outsource its facilities management to Trammell Crow, a move that spurred campus-wide controversy as students, faculty and staff alike criticized the University for conducting secret negotiations without any input from those most affected. The University community was outraged at Fry and President Judith Rodin, claiming that the deal reflected an administrative push to make the University a profitable business rather than a bastion of learning. For Penn, the agreement meant savings of 15 to 20 percent in management costs at almost no risk -- the University would pay a fixed amount whether Trammell Crow saved money or not. But employees were worried about losing their jobs or at least key benefits, like deep tuition discounts for family members. The response from students and staff was immediate. University Council -- Rodin's main advisory body, comprised of students, faculty, staff and administrators -- urged the University Board of Trustees to reject the deal after calling its first special meeting in more than 20 years. Numerous campus groups -- including the Graduate and Professional Students Assembly and the Undergraduate Assembly -- demanded more of a voice in the decision. And a number of employees filed a class-action lawsuit against Penn and Trammell Crow, accusing them of conspiring to illegally reduce worker benefits. When the Trustees met in November to make a final decision, about 200 employees, students and residents congregated on College Green to rally against the outsourcing. Still, the Trustees approved the deal -- a move unprecedented in higher education that made Penn the first university or college to hand over its entire facilities operations to an outside company. Guaranteed savings For Penn, the beauty of the deal is that its facilities management costs can only go down. Under the agreement, Penn gives Trammell Crow about $52 million a year to run its section of the $110 million facilities operation -- about the same amount the old management spent to run the same facilities. "It's a fixed cost for Penn," Blaik said, adding that it grows only by inflation or added square feet. "The risk is now Trammell Crow's, not Penn's." But since there is no money built into the deal for Trammell Crow, the company only earns the difference between what Penn pays it and what it spends on operations -- an amount Blaik estimated to be about $1 million per year so far. Tyrone Chilcote, Trammell Crow's liaison to Penn, refused to comment on how much money Trammell Crow has made. Some workers said that Trammell Crow has cut back on costs by not ordering supplies in bulk -- a move that sometimes leaves them waiting weeks before they can complete a job. By contrast, with the University managing the facilities, an electrician who has worked at Penn for 32 years said, "We never had to wait for stuff. We had the job done that day." Chilcote said Trammell Crow's policy is to order supplies based on need. Officials are looking at ways to revamp that policy, Bean said. "We don't want our people having unproductive time," he added. Blaik said Penn officials are also keeping close watch over the company's other areas of management to make sure that Trammell Crow doesn't cut corners to make more money -- indeed, if the company sacrifices quality for profit, the University can make Trammell Crow pay a penalty. The agreement also specifies a limit to the amount that Trammell Crow can earn, though officials refused to say what that limit is. Any extra savings are returned to Penn's coffers. The University and Trammell Crow are still working together to finalize details about the way the company will pay Penn for taking part in its first attempt at higher education outsourcing. The original agreement called for a $32 million lump sum payment. Leaks in the system The firm took over six months after the Trustees approved the deal, and retained about 70 percent of Facilities Services' employees. Since then, officials say there have been two main improvements under Trammell Crow: customer service is centralized to better serve campus facilities and a more efficient capital planning process has been put in place. "We've begun to address longstanding problems in a much more creative and strategic way than we have in the past," Fry said, adding that maintenance and housekeeping are two areas that clearly need more work. The company simplified maintenance services by decentralizing it into five zones across Penn's campus -- each with their own set of supervisors and workers -- to give each building administrator a point person for maintenance requests. Trammell Crow classified all University buildings into either the Residential, Health System, Infrastructure, Eastern campus or Core campus zones. But while the new system is beneficial for the smaller campus zones, it has posed problems for the larger, more spread out areas, like the Eastern zone, which encompasses athletic facilities, the Graduate School of Fine Arts, the Law School and the School of Arts and Sciences, among others. Everyone agrees that the zone system is proving problematic for schools like SAS that have many buildings spread across campus. Blaik said administrators are working on ways to alleviate the problem. But workers say the entire zone set-up makes it difficult for them to do their jobs properly, particularly since for four of the zones, all equipment is now located in the Annex on the 3400 block of Walnut Street, instead of at various locations around campus like it was previously. A 32-year veteran Penn electrician said that no matter where he has a job, he has to go to the Annex to pick up and return supplies. "It takes three times as long to get the same job done," he said. "You constantly keep going back to the same job because it never gets finished. God help you if you forget something." A five-year housekeeping employee agreed. He said a shortage of housekeeping trucks means "we gotta push [the equipment] around campus." "How do we go from a flood in the high rises to a flood in the Quad" without a truck, he asked. Bean said officials are aware of workers' difficulties with moving equipment and are looking to see what they can change. "It's frustrating for them because they can't get their work done because they're not getting around campus," he said. But Nursing School Facilities Manager Helene Lee said the problems have not affected her school because of its location in the Health System zone -- the only zone that has workers and equipment on site, yielding faster response times. Despite some setbacks with facilities, Trammell Crow has been successful with cost-effective changes in the its higher-levels departments. The company has streamlined several important facilities systems, all the while emphasizing that quality does not need to decline with cost. "Some of it is just better bang for the buck," Blaik explained. The company merged its operations control center and customer service into one centrally located system -- an effort made to minimize the response time for facility requests. Trammell Crow also renegotiated many of the University's service contracts and purchasing strategies, using competitive bid processes to its advantage to get better deals. In addition, the company implemented serious savings by re-engineering the way construction projects are approved and carried out, guaranteeing that project costs stay close to their budgets. For example, the 30,000-ton water chilling plant on Murphy Field that would have cost $90 million under the old program structure was phased in such a way that it cost only $65 million, Blaik said. Understaffed? While officials say the problems Facilities has experienced can be attributed to Trammell Crow's adjustment period, some administrators and workers feel that understaffing issues lay at the heart of the kinks in the company's performance. "We've lost people and they brought in twice as many management," one housekeeper said, adding that Trammell Crow has only recently begun filling the vacant positions. "It takes you two years to replace somebody?" the worker asked. Lee, the Nursing School official, said housekeeping, which has been run by UNICCO -- a Boston-based housekeeping management corporation which reports directly to Trammell Crow -- since last May, is suffering from a lack of employees. "I just believe the management being given by UNICCO is very, very poor," Lee said. "The buildings look really, really terrible. I don't think they have enough manpower to manage the housekeepers." Spruce College House Graduate Associate Josh Lavrinc, a first year Law student, said Quad housekeeping is inconsistent and that sometimes the hallways and bathrooms in his building are not well maintained. "I had over a week where they didn't clean my bathroom," Lavrinc said. Although Fry admitted that housekeeping is still experiencing some problems, he pointed out that UNICCO is working hard to repair a very troubled department. "I think we made absolutely the right choice" in hiring the company, he said. Workers said the problem of understaffing is not unique to UNICCO. One long-time employee estimated that the trades division of Facilities was alone about 30 workers short. And according to the electrician, his department is 10 people short -- a vacancy that meant his whole section worked overtime "for three months straight." Bean said Trammell Crow is aware of staffing difficulties in different departments and is currently experimenting with staffing levels.

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