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Great expectations

Cathy Hayward, Magenta Associates

Cathy Hayward, speaks to a number of experts about their hopes and expectations for 2013 in an extract from FMJ January 2013 issue

Buoyed by a hugely successful 2012, which included the London Olympics and Diamond Jubilee, the British FM community begins the New Year with confidence and an acute sense that this is the perfect time to capitalise on progress made. Cathy Hayward speaks to a number of experts about their hopes and expectations for 2013.

A new year is often a time of reflection and resolutions, of strategy and planning. It’s the chance for a fresh start. But with 2012 bearing witness to so many triumphs for the FM community – from the chance to showcase the best the UK has to offer through the Diamond Jubilee and London 2012 to FM’s debut on the small screen and the focus on the skills agenda through the introduction of the Higher Level Apprenticeships – most in the FM sector are hoping that 2013 will build on those achievements rather than represent a new beginning.

“2012 has been a standout year for the facilities management sector with the Olympics and the Diamond Jubilee,” declares Gareth Tancred, chief executive officer of the British Institute of Facilities Management (BIFM). “Both demonstrated the pivotal role FM plays in delivering successful, inspirational and memorable global events on a world stage. All the FMs involved throughout the country – and particularly the team led by Gary Johnston from LOCOG who won the Judges Special Recognition Award at the BIFM Awards 2012 in acknowledgment of their work – are rightly proud of their achievements.”

For others the Olympics made a more personal impact. Fiona Rassell, the front-of-house and transformation trainer at bespoke hospitality business Bennett Hay, was a Gamesmaker like many others in the FM sector. She has been able to carry forward some of the motivational training techniques that were so successful at the games into Bennett Hay.

24_image_201301The Olympics were also a major boost to the concept of agile and flexible working, says Andrew Mawson, managing director of agile working consultancy Advanced Workplace Associates. “There is no doubt that the Olympics have played their part in enabling people to practise agile working, and the experiences (particularly in government) have given rise to a new confidence in pushing forward with agile working. We are seeing that where a lease is expiring, boards are seeking where possible to either avoid taking on more fixed cost commitment or taking less space on more flexible terms.”

There was a huge optimism around the Olympics and the FM sector must retain that in 2013, urges Gary Watkins, managing director of integrated workplace management system provider, Service Works Group. “If we retain the optimism that the Olympics helped to harness, our confidence will grow and success can be accomplished.”

More for less

Many feel that the profession is more confident as we enter 2013. Tancred references an industry “buoyed by the success of the Olympics and Diamond Jubilee celebrations”. But there are also significant concerns around the continual focus on cost. FM suppliers are focused on taking out costs regardless of the consequences, says Mawson. “Suppliers seem to have been amenable to doing this, but I wonder how this will impact on their profitability in the medium term.”

Martin Gammon, managing director of international total facilities management firm OCS Group UK and Europe, agrees. In 2012 we saw a further hardening of the market with customers continuing the trend of recent years in driving down price yet without wanting a commensurate reduction in quality, he says. “In addition to the lowering of costs, we are also seeing attention focused on hitherto sacrosanct areas such as contract terms. I have recently been asked to sign off contracts with unlimited liability and TUPE indemnity clauses, and there is more often than not, these days, no contractual right for the contractor to exit but without this being reciprocated by the client. Some contracts are now being awarded 100% on price criteria without factors such as quality, cultural fit or compliance being taken into account. This is bound to lead to more suppliers walking away from deals and it will take that sort of action if we are to see the correction in the market which I believe is inevitable.”

In one recent indication of this market correction, glazing contractor Dortech announced that it will no longer work for construction giant Balfour Beatty after the firm regularly took 200 days to pay. In doing so, it is sacrificing £5 million of work.

Gammon believes that a bi-product of this will be the likelihood of more consolidation within the supply side of the facilities management market over the next 12-18 months. “If you further reduce supply side capacity, price pressure will ease and this will eventually lead to an upturn in the current trend of margin deterioration. How long this will take is the question facing all of us in the market but most FM firms’ strategies these days are attempting to answer it.”

Rob Legge, group chief executive of facilities services provider Servest Multi Service Group, agrees. “We will see more consolidation of facilities services. A key driver is cost savings and that’s been true for the last 18 months to two years. People have already looked at other aspects of their business and now they are wanting to consolidate their supply chain in order to find further efficiencies. There is a growing trend of single service providers being bought by multi-service companies.”

Globalisation

FM challenges seem to vary by business sector, says Bennett. For banking, there are huge challenges around cost reduction and heightened regulation. For legal, the race against time is on, as the industry becomes more commoditised and therefore it is a big year for M&A within the medium-sized firms. For business services, there is an increased focus on emerging markets and global presence. “What this has meant for the FM sector with larger international clients is global deals,” concludes Bennett. Gammon agrees: “Next year will see the trend towards globalisation continuing and this will lead to more FM contracts being awarded on a pan-European or pan-world basis. It’s a huge opportunity for the supply side to grasp, particularly in the emerging markets like Asia.”

To the office

Closer to home, Bennett sees the continuation of the movement of workforces out of London to regional offices, something that Mawson is also witnessing. “The issue for more sophisticated occupiers is how to drive down the amount of space they use, particularly in expensive locations. Both of these have been giving rise to an increased interest in agile working and potentially relocating functions that don’t need to be in London to other provincial centres in the UK or where possible, putting more resources offshore.”

But Roy Parrish, managing director of Ranne Creative Interiors believes that next year will see businesses start to focus back on the office. “In the past few years we’ve talked about people working outside of the office, either at home or in third spaces. But in 2013, as Generation Y starts to rise up the office hierarchy, that will change. Generation Yers are big fans of the office. Unlike the veterans, the Baby Boomers and even Generation X, they may not have plush, comfy homes to work from. They’ll often be in house-shares, perhaps with people working different shifts to them, and therefore they consider work to take place in an office (with perhaps a bit of catching up in between times on the great technology they embrace). They also go to work to make new friends and have influenced an increasing socialisation of the workplace – Generation Y has literally broken down barriers with the removal of individual offices and increasing use of collaborative spaces. So we’ll see more organisations start to revisit how well their office works for their businesses.”

This will, he adds, mean an increase in refurbishments as businesses choose to stay put and make the best use of the space they have, rather than have the hassle, and expense, of moving.

Compliance

Last year saw the introduction of a raft of new legislation affecting facilities professionals, including the HSE intervention fee, asbestos regulations, consultation around RIDDOR, changes to tyre labelling and changes to the national minimum wage and employment laws. But one piece of legislation – the new squatting laws, introduced in September 2012, which saw squatting in residential properties become a criminal offence – is having a negative impact on facilities management professionals. Many have experienced a sharp increase of squatting in empty commercial buildings now that squatting in residential properties is a criminal offence. A recent survey by vacant property expert SitexOrbis revealed that 30% of the FM professionals expect an increase in squatters targeting their properties, with 27% saying that they had been targeted by squatters over the past two years. London (37%), the South East (22%) and the Midlands (19%) are the most targeted areas by squatters.

Mark Cosh, director of SitexOrbis, argues that with The Advisory Service for Squatters estimating that there are now 22,000 squatters in England and Wales, and an estimated five squatters per property, more than 4,000 commercial properties are needed to accommodate those currently in residential buildings. “It is now more important than ever that owners and managers of vacant property review and where necessary upgrade their security.”

Crystal ball gazing

There is a general consensus that the economic austerity will be protracted and impact on next year, which will increase the pressures on budgets, on outsourcing arrangements and supplier relationships. But 2013 will also bear witness to an increased focus on skills, says the BIFM’s Tancred. “Employers are seriously investing in staff development and talent management programmes to ensure they have the skill set in their business to compete and prepare for the future. For the profession more widely, it is essential that we develop and nurture new talent.” The year 2012 saw the government investing in FM skills development through the Higher Level Apprenticeships project, of which the BIFM qualifications form a key part.

Building Information Modelling (BIM) and Soft Landings are also high on the agenda with the encroaching 2016 deadline. “This new methodology offers massive potential for FM but it does need facilities professionals to take an active lead to ensure they deliver to their full potential,” adds Tancred. Service Works’s Watkins agrees: “The FM industry is still trying to understand how to assimilate BIM into the FM environment. Other countries, such as the US, are considerably more advanced in BIM than the UK.”

But elsewhere Watkins is more positive. The new PF2 model, with a streamlined delivery model resulting in shorter time to market, combined with greater flexibility, will be beneficial to the FM sector, he says. “The major elements of hard FM will remain core to the PF2 model, but removing the soft services element (other than where exceptional integration benefits exist, which are essential to achieving project outcomes) will reduce some of the contractual complexity and procurement costs, which will hopefully lead to some positive press for PF2 contracts.”

Tancred too is positive about FM in 2013. “This year has shown that the UK has professional standards in FM of which it should be proud. We must keep up the tempo if we are to retain our position at the leading edge of international FM. We must not rest on our laurels.”

 

 

Extract FMJ January 2013

 

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