Structural equation model for analysing critical risks associated with facilities management outsourcing and its impact on firm performance

Purpose – This study aimed to develop and empirically test a structural equation model for investigating risk factors associated with outsourcing of facilities management (FM) services and its impact on firm performance (FP). Design/methodology/approach – Using data derived from an earlier study, a conceptual model was hypothesized and empirically tested to clarify causal relationships between risk variables and how they influence FP. Findings – Supported by empirical evidence, the study established that only vendor risk variables have marginal impact on FP. There were however significant positive relationship between vendor risks factors and relationship risk factors, client based factors (CBF) and relationship risk factors, client based risks and vendor related risks, and contract risks factors and relationship risk. Practical implications – The final structural equation model has revealed key risk components that would require standard mitigation measures in order to achieve outsourcing success in the FM sector. It is a sector that is thriving in Nigeria and requires every effort to make it an international recognised market. Originality/value – This paper provides a greater understanding of the interactions between key elements of outsourcing risks associated with FM provision as well as the degree of relationship between them.