State of the Industry 2011-2012

Blood, sweat and tears have gone into an industry predicted to be worth more than $4bn over 2012.

Challenges such as the recession, JOP law and dealing with a new new market have toughened FMs up and they’re ready to taking on a bigger fight

The FM market is still taking baby steps and it will be a while before it is mature enough to stand on its own two feet say FMs. In this part of the world, what appear to be huge obstacles face the industry, yet countries with established industries aren’t phased by them.

One of the biggest wounds the industry is still recovering from is the recession. The gloom and doom meant people demanded low prices and are still demanding low prices now. This expectation has been a challenge for service providers and, it is believed, the challenge will continue over the course of 2012 as the industry slowly matures.

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“Here in Dubai, a lot of buildings are becoming older. It takes more effort to maintain them, yet the expectation from customers and the owners association is to reduce service fees,” said Markus Oberlin, GM Farnek Avirreal. “Cash management is a huge issue as not all pay on time.”

He was supported by Duserve FM’s Jennifer Peltenburg, who said the gradual implementation of jointly owned property law, meant the debt cycle was a lot longer.
“If things aren’t getting done, people don’t pay. The sense of urgency is there, but because people aren’t paying their service charges, other suppliers aren’t getting paid.”

But the price war was could be seen as advantageous, said Emcor Facilities Services’ Hayan Sayed, senior GM, regional operations, as it pushed the industry to work smarter.
“It pushed us to work to reduce costs and find ways to improve productivity.”

And there was evidence that as the industry matured, understanding surrounding price and cost was improving.

“We’re dealing with interim owners associations. Many want to cut the service cost straight away or may not have funds to pay straight away. It’s about encouraging a certain level of understanding. We are finding that IOAs who’ve been around for a little longer are looking for longer term contracts and more value for their services,” said Khidmah’s senior services manager, Ryan Darnell.

The other problem is that all FM companies are viewed as the same he said. “We’ll go along to tenders and someone will pay half the price for a technician or half the price for a cleaner. But the companies aren’t as transparent in showing whether they pay for the cleaner’s housing. It is therefore difficult sometimes when the client has the same expectations of the output of the service.”

There was confidence that 2012 would see price become less of an issue, and quality would become more important.

“There is maturation in the client base, which is now beginning to understand quality service and what it brings in terms of value,” said Churchill.

“There is also a tie in between construction quality and maintenance quality and how much a property can yield in the rental market. Just look at the quality developments in Dubai which are very difficult to rent properties in and everybody is telling us there’s lots of empty properties within Dubai so people must be voting with their feet. It’s interesting that developers see the value in that, and are willing to work with FMs to ensure reputations are maintained.”

There was also a resounding feeling that the industry will be very people focused during 2012. Most FM companies are investing in recruitment and training.MEFMA, through its training programs, is a key strength in boosting the credibility of the industry, said the group.

Technology would also make a big statement. With companies like EFS recently investing in ERP systems to improve service offering, it is evident FMs will take advantage of ways to help them streamline businesses and slash costs.

“Khidmah is only two years old. We’ve seen clients starting to adapt as we do. When we first introduced actions using technology, for example, GPS tracking, we might’ve only had one or two clients who had the foresight to use it,” explained Darnell. “Now we see clients really getting behind it and taking the next step, asking how else they can use the services on the platform and integrate it with a shared service, which is a welcome change.”