The growing importance of the facilities management sector could affect the construction and real estate industry as a whole. Experts say that the neglected sector now has a chance to be an industry leader if it makes the right decisions about technological advancement and innovation. Lorraine Bangera writes
The FM Expo 2015 took place at the Dubai World Trade Centre from May 18 to 21 and brought together industry professionals from the facilities management (FM) sector under one roof. During the four-day event, research papers and the FM Congress highlighted some of the major developments in the sector and key drawbacks as well.
British Institute of Facilities Management (BIFM) commissioned a white paper in association with FM Expo and ifm.net, which shows a positive outlook within the FM market in terms of expectations for growth in business turnover and opportunity for future training and qualifications. The paper, ‘The Middle East FM Business Confidence Monitor,’ indicated the confidence of FM employees in the region of a pay rise and expansion of workforce. It found almost 51% of the employees were confident of an increase in salary in the next 12 months, and 61% who believed that their workforce will increase during the same period. The study also revealed key opportunities for training and professional qualifications, enabling FM companies to meet the demand for professional workforce and at the same time help address business challenges of recruiting and training staff.
Jaafar Shubber, Senior Project Manager of FM Expo says that the report shows a high confidence in the region’s FM services where 41% were positive about the current FM business environment and 57% believed that their FM budget will increase in the next one year. “This highlights how important FM Expo, brings the industry together to talk about how to capitalise on this growing industry.”
Gareth Tancred, CEO of BIFM, says: “The story emerging from this report is a positive one for the FM industry in the region; it’s a picture that we have seen in the UK version of this study. What is clear though is that there is going to be an increasing demand for talent to take advantage of the many opportunities and it will be the organisations that take a long term, strategic approach to the recruitment and development of their FM talent that will reap the rewards.”
The FM industry has witnessed a boom in recent times as the industry is being estimated at AED20 billion per annum by 2016. The rise stems from an AED155 billion turnover in the construction sector for the year of 2015 owing to the thriving construction, hospitality and aviation sectors in Dubai. Rapid construction developments, building infrastructure for airports, roadways, parking, ports and railways have resulted in never-before demand for the FM and its allied industries.
Even though there has been an increased interest in FM, it is not enough to get the attention of the developers and policymakers who are responsible for operating costs that affect the service providers.
Elie Matar, Head of Electricity at Dubai Regulatory and Supervisory Bureau, says that FM managers understand the working of a building better than anyone else. He says that policymakers and government entities have a satellite view of a building, they don’t understand the working of a building entirely. While developers or property owners have a helicopter view where they can see and understand a building better. Facilities managers, however, have a ground view of a building. He says that they understand the actual working of the building and its lifecycle.
As the construction industry moves to a more sustainability oriented direction, the FM industry Matar says needs to leave its conventional methods and catch up. He says if an FM company decides to make a change they can not only be successful but also lead the way in the industry.
Hayen Sayed, CEO of ETA, says: “FM is a young industry in the Middle East, even though in the last 20 to 25 years there has been a quick growth.” According to him, it is important to move with the technological advancement in similar industries. He explains that as new technology comes into the market, FM companies must learn about them. Though he agrees that FM companies are showing signs of change and investments are being made in technology.
Linda Engstrom-Condon, Associate Director and Head of Assets & Facilities Management Consultancy of AECOM Middle East, says: “Technology and innovation go hand in hand. It is a big part of innovation. In terms of innovation, what gets lost is our impact in the industry.”
She says that the industry has a certain social responsibility because FM professionals work in spaces people work and live in. But in order to improve FM services and invest in better technology, FM providers need better budgets. The developer needs to increase capital investment by 10 to 15%. Engstrom-Condon says that it is tough to get the client to invest more towards operating cost especially because they want to start saving on cost by the time the building has been built.
Setting a standard in the industry could help but Engstrom-Condon thinks that standards are only as good as the company. “Sometimes a standard could be a barrier to innovation because you tend to stick to thinking inside the box.”
However she praises the region as opposed to the competitive market in the UK. She says that here people are more open and willing to share best practices and innovative solutions as opposed to mature markets in the West. She admits that this region is going through a transition which is a really good spot to be in. She says: “With the theme of the World Expo 2020 being innovation, it makes Dubai the hub for everything innovative. Even though it is a young industry, given a few years it will be at the forefront.”
Her advice to FM professionals who wish to evolve with the market is to “be curious, try new things and don’t stick to the box.”
Case study – Saudi Arabia
A research paper released this May by Credo Business Consulting and Middle East Facilities Management Association (MEFMA) reveals that facilities management (FM) in Saudi Arabia represents 55% of the FM market in the GCC, and will be worth US$29.1 by 2017. Alistair Stranack, Partner at Credo Business Consulting, says that trends in the private and public sector suggests that the FM industry must realise its higher potential and shed its low-cost quality image.
Currently the industry is worth $20.1 billion, according to Credo and MEFMA, and it has also forecasted a growth based on new infrastructure projects coming on board as well as noting the consequences of a government initiative launched to improve the standards of FM. If predictions are right, the 13% annual growth of FM in Saudi Arabia would make it the largest market in the Middle East.
Stranack says: “The fundamental economic drivers, coupled with government’s ambitious regulatory plans suggest to us that after many years of failing to deliver on its potential, the Saudi market is about to emerge into the giant it has always promised to be.”
He says that this region has one of the highest margins in terms of budgeting. “UAE has budgets up to 15 to 30% which is a dream come true for the UK where it is only 10 to 15%.”
When comparing the UAE with Saudi Arabia, he says that the UAE is developing quickly whereas Saudi Arabia is still right at the beginning phase. Though UAE and Saudi Arabia combine account for 80% of the industry in the GCC and have strong potential to grow over the next five years.
However, there are challenges to be overcome during development. Cost driven customers award contracts to the lowest priced contractors which creates a false economy and diminishes the value FM could add to the building’s life cycle.
Talent acquisition and training were also cited as barriers holding back industry development, as was a lack of regulation. Stranack says: “Saudi Arabia’s market remains unsophisticated with much of the market being served by labour supply companies.” One of the main reasons this is true, according to him, is that training in the country isn’t existing especially in FM and operations. He says that most Saudis would like to work in key positions but FM is looked at as an unattractive career option. Nevertheless, Stranack says that this could change through two key trends; firstly through the massive increase in infrastructure development in Saudi Arabia; and secondly the government are taking an active role in promoting FM.
However, Mohammed Al Duraibi, the CEO of Da’em Real Estate Investment Company and a MEFMA board member says this will change. He says that whilst current regulation has been a barrier to growth it can become a catalyst for development following a Saudi Government initiative to upgrade the quality of FM across its estate. “Set up by Royal Decree, NCLOM will introduce international best practice in operations, cost control, monitoring and measurement and supplier accreditation.”