Facilities management has great prospects...
Friday 18 March 2011 7:25 AM
In the UAE, projects that will be handed over in the next five years will help push the estimated value of the facilities management (FM) industry to around $1.4 billion (Dh5.14 billion) each year over the next 25 years. These are compelling stats that prove the industry's strong long-term prospects.
Despite the positives, the industry is not without its challenges, particularly in view of the evolving needs of customers. One of the most pressing is the lack of a region-wide awareness about the benefits of these services.
While most multinationals operating in the region — and representing the bulk of customers of most FM companies — are already familiar with the benefits, a huge chunk comprising end-users and SMEs continue to shy away from investing because they remain unaware or perhaps unconvinced of such long-term incentives.
Most of the industry's target audiences are not aware that management and maintenance costs, including energy, represent up to 80 per cent of the total building life cycle cost, and those related to development accounting for just 20 per cent.
Putting these figures in proper context, a study by the Middle East Strategy Advisors (Mesa) estimates the value of the FM market in the UAE, Saudi Arabia and Qatar to reach $892 billion in the next 25 years, based on the more than $220 billion worth of projects under way and being planned over the next five years.
This figure certainly represents a huge savings potential for property owners and developers who have the foresight to invest in long-term FM solutions. For FM companies, we can't really expect to capture the entire market, but the Mesa study suggests that tapping even a modest 5 per cent of this would translate to total revenues exceeding $44 billion in 25 years, with the UAE alone accounting for up to $1.4 billion based on the number of projects being released within the next five years.
There are a number of growth inhibitors that FM companies should watch out, including having to deal with the effects of inflation, which seriously affects revenue margins. This scenario presents the perfect opportunity for property owners to benefit, especially if they enter into long-term contracts with FM companies.
More value
Long-term contracts will naturally allow property owners to get more value and allow them to pass on any inflationary pressure to the FM provider.
Another key area of concern for the industry is to ensure all FM companies are able to implement best practices. Regulations laid down by the Real Estate Regulatory Agency in collaboration with Middle East Facilities Management Association (MEFMA) have been an important step towards promoting quality and excellence among all players.
Our experience also tells us that it is important to continue to expand the core services on offer. For instance, Imdaad made significant investments to strengthen our waste management division, which allowed us to open a fresh revenue source and created added value to our existing services.
The market response had been very encouraging, and this has motivated us to be a lot more proactive. I would also like to point out FM is not just about proper maintenance and management of buildings and facilities. It is equally a major challenge for us to ensure that tenants and occupants ultimately benefit from our services.
Outsourced facilities management services will certainly continue to enjoy exciting prospects and it is up to FM companies to seize the opportunity by acting proactively and anticipating the needs of customers.
The writer is the CEO of Imdaad, a facilities management company.
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