A STUDY OF USER SATISFACTION WITH OUTSOURCED FACILITIES MANAGEMENT SERVICES IN OIL AND GAS INDUSTRIES IN NIGERIA. (DOWNSTREAM SECTOR)


Content

ABSTRACT

The Oil and Gas industry continues to struggle in finding a balance between rising global demand, diminishing known resources the need to keep and distribution and operating costs within manageable limits. While mergers and consolidations continue, oil and gas management are actively seeking other approaches to recover their base lines. One particular measure is to include business process outsourcing (BPO) in their operational mix. The aim of this study is to assess the effectiveness of such outsourcing management in Nigeria’s oil and gas firms of the downstream sector using user satisfaction indices. The specific objectives are among others; to identify FM services that are most outsourced in Nigeria’s Oil and gas firms; to identify the relative importance of factors that influence users’ satisfaction with outsourced facility management services in the Nigeria Oil and Gas firms; and determine the degree of effectiveness of outsourcing as a means of service delivery in the sampled oil and gas firms. Data for the research work was collected through self administered questionnaires and analyzed using Statistical Package for social scientist (SPSS 17). The respondents were the staff of the Facility management departments of the six major oil and gas downstream industry. They were chosen through purposive sampling technique. Findings revealed key services that are mostly outsourced are transportation and logistics, these were ranked first among others. Findings also revealed that service delivery is paramount among factors that influence users’ satisfaction with outsourced services. On the whole it was found that highly effective with the elements investigated and is reliable for the downstream sector of the oil and gas industry. Users’ expectations of outsourced service are high. The facility manager in the vendor organizations must have experience in Oil and Gas processes  and understand the industry’s needs and services and ensure that their services are structured to meet the industry’s increasing demand. They should also seek technological innovations with more cost effective methods for maintaining equipments and Platforms without compromising safety and environmental concerns.

 

 

 

 

 

TABLE OF CONTENTS

 

TITLE                                                                                                                                    PAGES

 

Title Page                                                                                                                                     i

Certification                                                                                                                                 ii

Declaration                                                                                                                                   iii

Dedication                                                                                                                                   iv

Acknowledgement                                                                                                                       v

Table of Content                                                                                                                          vi

List of Tables                                                                                                                               ix   

List of Figures                                                                                                                              x    

Abstract                                                                                                                                       xi

 

CHAPTER ONE: INTRODUCTION

1.1       Background to the Study                                                                                                  1

1.2       Statement of the Problem                                                                                                  3

1.3       Research Questions                                                                                                            4

1.4       Aim and Objectives of the Study                                                                                      4

1.5       Significance of Study                                                                                                        5

1.6       Scope                                                                                                                                 7

1.7       Definition of Terms                                                                                                           8

 

CHAPTER TWO: LITERATURE REVIEW

2.1       Introduction to Facility Management                                                                                10

            2.1.1    Facility Management in Context                                                                           10

2.2       Outsourcing                                                                                                                       11

            2.2.1    Evolution of Outsourcing                                                                                      11

            2.2.2    Outsourcing in FM                                                                                                 12

            2.2.3    Outsourcing Decisions                                                                                           15

           

 

2.2.4    Risks Associated with Outsourcing                                                                             18

            2.2.5    Identification of risk factors associated with Outsourcing                            18

            2.2.6    Risk Management in Outsourcing                                                                  21

2.3       Frame work for an Effective maintenance Outsourcing Relationship                        23

2.4       Overview of the Oil and Gas Industry                                                                       25

2.5       Outsourcing services in Oil and gas Downstream Sector                                           27

2.6       Concept of Service Quality                                                                                        30

            2.6.1    Performance and Service Quality                                                                   31

            2.6.2    Measuring Service Quality                                                                              34

2.7       The Concept of Users Satisfaction                                                                             40

            2.7.1    Reasons for Assessment of User Satisfaction                                                42

            2.7.2    Factors that Influence User Satisfaction                                                        43

            2.7.3    User Satisfaction and Service Quality                                                            44

2.8       Service Level Requirements of Facility Management Services                                  48

 

CHAPTER THREE: RESEARCH METHODOLOGY

3.1       Introduction                                                                                                                51

3.2       The Study Population                                                                                                 51

3.3       Research Design                                                                                                         51

3.4       Sampling                                                                                                                     52

            3.4.1    Sample Frame                                                                                                 53

            3.4.2    Sample Size                                                                                                     53

3.5       Data Collection                                                                                                           54

            3.5.1    Data Collection Instrument                                                                            54

            3.5.2    Data Collection Procedure                                                                              56

3.6       Reliability and Validity                                                                                              56

            3.6.1    Reliability                                                                                                        56

            3.6.2    Validity                                                                                                           56

            3.6.3    Pilot Study                                                                                                      57

 

 

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1       Introduction                                                                                                                59

4.2       Analysis of Data from the Sampled Oil and Gas Industries                                      60

4.2.1    General Information of Organization                                                             60

4.2.2    Identification of the most Outsourced Facilities Management Activities in Nigeria Oil and Gas Downstream Sector                                                                            64

            4.2.3    Ranking of Service Quality Indicators for FM Services                                67

            4.2.4    The Relative Importance of Factors that Influence Users

                        Satisfaction with Outsourced Facility Management Services in

                        Nigeria Oil and Gas Downstream Sector                                                       71

            4.2.5    Expected Outsourcing Benefits in the Oil and gas Downstream Sector        73

            4.2.6    The degree of Effectiveness of Outsourcing as a means of Service

Delivery in the Oil and Gas Downstream Sector                                           74

                       

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1       Summary of Findings                                                                                                 76

5.2       Conclusion                                                                                                                  78

5.3       Recommendation                                                                                                        79

 

REFERENCES                                                                                                                      80

Appendix                                                                                                                                84

 

 

                                                           

 

 

 

 

 

 

 

 

 

LIST OF TABLES

 

Table 2.1         Essential Systems and Elements of an Outsourced Maintenance                  Relationship                                                                                                                25

                                                                                               

Table 2.2         Determinants of Service Quality                                                                    37

 

Table 2.3         Nine Dimensions of Service Quality                                                              38

 

Table 4.1         Name of Company of Respondents                                                               60

 

Table 4.2         Gender Distribution of the Respondents                                                        61

 

Table 4.3         Age Distribution of the Respondents                                                             61

 

Table 4.4         Location of the Respondents                                                                          62

 

Table 4.5         Highest Educational Qualification                                                                 62

 

Table 4.6         Position in your Organization                                                                         63

 

Table 4.7         FM Services in Sampled Oil and Gas Industries                                            64

                       

Table 4.8         Users Ranting of Plant Maintenance Service and their Personnel                  67

 

Table 4.9         Landscaping Maintenance and Cleaning Services and their Personnel          68

 

Table 4.10       Security Services and their Personnel                                                             68

 

Table 4.11       Waste and Environment Management Services and Personnel                      69

 

Table 4.12       Warehousing and Storage Services and their Personnel                                 70

 

Table 4.13       Logistics and Distribution Services and their Personnel                                70

 

Table 4.14       Factors influencing Users Satisfaction in the selected Oil and Gas Downstream

                        Companies                                                                                                      71

 

Table 4.15       Expected Benefits of Outsourcing                                                                 73

 

Table 4.16       Elements of Effective Outsourcing Services                                                  74                  

 

 

 

 

LIST OF FIGURES

 

Figure 1           Outsourcing Process                                                                                       14

 

Figure 2           Top Ten Reason Companies Outsource                                                          17

 

Figure 3           Outsourced Maintenance Relationship Management Framework                  24

 

Figure 4           Support services of the Oil and Gas Industry                                                27

 

Figure 5           Downstream Challenges                                                                                 28

 

Figure 6           Transformation Process Model                                                                       33

 

 

 

 


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:

  1. What are the services that are most outsourced in Nigeria’s Oil and gas firms?
  2. What is the relative importance of factors that influence users’ satisfaction with outsourced facility management services in the Nigeria Oil and Gas firms?
  3. 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: -

  1. identify FM services that are most outsourced in Nigeria’s Oil and gas firms.
  2. identify the relative importance of factors that influence users’ satisfaction with outsourced facility management services in the Nigeria Oil and Gas firms.
  3. 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 practice by 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

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