The 5S Performance Model
At 8Fusion, we believe that Outcome-Based Contracting (OBC) and Performance-Based Contracting (PBC) are foundational to win/win alliances in FM.
They represent a shift away from transactional, zero-sum relationships and towards a model where buyers and suppliers create shared value, trust, and performance that compounds over time.
But we also recognise that most organisations are on a journey. Few can leap straight to sophisticated outcome-based models. The reality is that procurement, when done well, can act as a multiplier effect at every stage of that journey.
This is where the 5S Methodology comes in. It provides a clear, structured pathway to help organisations move from input-based, transactional procurement to outcome-based, trust-driven partnerships where performance is central.
The 5S Methodology is designed to move organisations step by step from transactional, input-based procurement to outcome-based, trust-driven partnerships. Each stage builds on the one before it.
The five steps are simple, but powerful:
1. Stakeholders
Procurement needs to capture who the real customers are and what success means for each of them. This means understanding the full stakeholder ecosystem (finance, operations, compliance, end-users, suppliers). It also means mapping priorities, incentives, and potential conflicts.
Without an understanding of who the true customer(s) are/is, and taking the time to build alignment around shared goals, specifications risk being written in a vacuum, disconnected from the needs of users and the strategic objectives of the business.
You cannot define meaningful specifications until you understand who you are serving and what they value.
2. Specification Development
A strong specification in facilities is a commercial and operational roadmap as well as a technical document. If you can capture the non-negotiables (compliance, safety) as well as the strategic success factors (resilience, ESG, innovation), you can build a clear guide to begin assessing sourcing options. Without this, suppliers default to delivering the cheapest interpretation of the brief, and value leakage occurs.
Two key points at this stage are:
The type of specifications developed will naturally lead to a specific commercial and relationship format later on. For example, prescriptive, input-focused specs will yield a price-focused, transactional relationship by necessity at the sourcing stage. On the other hand, output (or even outcome) specifications will lead to a more performance-focused (though not necessarily higher cost), win/win approach to contracting.
Make sure success factors are clear up front: what will make this contract a success? Is it uptime, compliance, cost efficiency, carbon reduction, user satisfaction? If suppliers know this from day one, they can better align proposals to reflect the true, underlying stakeholder requirements.
You can’t source effectively without first clarifying what outcomes matter most.
3. Sourcing
This primarily includes:
Market engagement (including ASL/PSLs where relevant) and supplier prequalification (PQQs).
Supplier selection based on capability, culture, and alignment with success factors—not just cost.
The use of weighted evaluation models to reward innovation, reliability, and track record.
The goal to create competitive tension whislt avoiding a ‘race to the bottom’.
Once you have the what, the next step is to understand who is truly capable of delivering outcomes. That means not only looking beyond unit rates into capacity, resilience, financial stability, cultural fit, and innovation pipelines, but also understanding that certain suppliers represent more suitable partners for different relationship types.
Being a customer of choice (whilst avoiding over-concentration or dependency) and ensuring that the contract fosters innovation means that it is more likely to be both TCO-reducing for the client and margin-enhancing for the supplier; the definition of win/win.
The right supplier can only be chosen against the backdrop of well-defined success criteria.
4. Schedule Development
Translate agreed outcomes into contracts, ideally with a significant performance-linked component. Contracts must be designed to engineer trust and align incentives.
Contracts must capture how outcomes will be measured, rewarded, and enforced. Without trust engineering, contracts default to adversarial risk-shifting. With it, they become frameworks for collaboration, innovation, and long-term value creation.
Build in Trust Engineering™, to build the fundamental components of trust (TQ):
Credibility: specify transparent KPIs.
Reliability: align incentives with consistent delivery, and give suppliers ‘skin in the game’.
Intimacy: create joint governance forums and regular dialogue; ensure that the personal aspect of trust is nurtured.
Low self-orientation: design gain-share/risk-share models that balance interests. Ensure the focus is always on the achievement of contractual success (which feeds the success of the relationship), and foster a culture that encourages early risk identification.
Contracts can only be written once stakeholders are aligned, success factors clarified, and the right supplier selected. Otherwise, they reinforce misaligned expectations and adversarial behaviour; the opposite of trust engineering.
5. Supervision
Controversial opinion: supplier selection is not nearly as important in facilities management as harnessing the power of the relationship and exploiting the power of the supply chain.
Facilities management is a team sport.
Embed continuous performance management and innovation.
Key elements at this stage:
Active contract performance management (dashboards, scorecards, KPIs).
Regular supplier relationship management (SRM) reviews.
Continuous improvement initiatives (innovation pilots, digital tools, ESG reporting).
Escalation and remediation pathways to deal with underperformance.
Procurement must capture real-time performance data and evidence of value delivered (as defined in the contract). This prevents value leakage and ensures suppliers are held accountable. Equally, it creates a platform for recognising and scaling supplier-led innovation.
Supervision is the final step that closes the loop. It ensures that what was promised is delivered, and that partnerships deepen rather than decay over time.
Summary
The 5S Methodology is deliberately sequential. Miss a step, and the structure collapses. Follow them in sequence, and procurement evolves from a transactional function into a performance multiplier that compounds trust and value across the enterprise.
