Breakfast Club

Paul Collett , May 4th, 2009

Born through the lack of any dedicated Middle East association or body for facilities managers to work from and with to implement industry best practice, the fmME Breakfast Club gathered passionate industry thinkers and knowledge sharers to discuss hot topics and the way forward for the community as a whole. Read on and find out just what the industry is thinking...

State of the nation: so where is facilities management at in the Middle East?

Scott Wilson (SW), managing director Development, Emcor Facilities Services Group

The big issue and challenge in the UAE is the current economic climate and whether this is perceived as a threat or an opportunity. Undoubtedly cost justification and the value proposition of facilities management has come to the fore with FMs now having to prove how they add real value and are not simply considered as an additional cost by developers.

Yet innovation is born from adversity and the economic contraction has forced everybody’s hand in so much as measurement, regulation and transparency are now the buzz words in the industry. That said, we are somewhat limited as to how regulated, and therefore transparent, we can be due to the lack of any regulation and standardisation concerning, for example, service charges and energy consumption, and also the delay in strata law implementation.

Regulations need to be implemented and billing cleaned up. Full disclosure is needed.
  
Peter Crogan (PC), CEO BCS Strata Management Services

Yes, the contraction has hit the real estate sector pretty hard. We’re seeing a mortgage default rate of 30 percent, which is horrendous. However, the service provision arm of the real estate sector (FM) has largely been unaffected by the market’s collapse.

Why? Because of the need to maintain existing real estate assets, and the fact there is a legal responsibility to do so through strata law. It is in all of our interests to work together with the Real Estate Regulatory Authority (RERA) to deliver strata law and standardise management fees per square foot with a service charge model. Owners associations are starting to demand such transparency, they want to see where their money is being spent.

Operations and maintenance budgets are also a new concept in the UAE. The sinking fund model – whereby residents put money into a fund in the eventuality of major works – can take up to 10 years to settle, even in developed markets.

The UAEs’ is not a developed market and such funds will take time to be accepted and settle in before eventually becoming an asset in the event of major works or when an owner comes to sell further down the line.



Louisa Theobald (LT), group exhibitions director SMG FM Expo

Yes, let’s not forget the end-users here. The owners associations are the people who pay the bills and have the power to award FM contracts. But how will they know the difference between a service contract and a full management contract and the costings involved? They could be left with a decaying asset because they went for the cheapest option available.

Stephen Barker (SB), general manager ServeU

The downturn has also impacted developers. The days of a 10 year life span for buildings are gone; developers are having to factor in 10 times that now in some cases. And developers and investors have to take into account return on investment. That’s not just good for FMs and lifecycle management, it’s good for length of contract and, of course, the environmental impact of continuous construction.

Now that developers and building owners have to get a handle on what a full service FM provider can tangibly bring to the table in terms of asset managment and their bottom line, the proliferation of so called ‘FM companies’ that were no more than a cleaning outfit, are being found out to an extent because they can’t deliver.

So I perceive the contraction as an opportunity – a calm period in which we have time to implement best practice standards and realign.

Bill Heath (BH), managing director Mace Macro

We are facing a lot of issues here in the Middle East because of its rapid development, especially in Dubai.

Facilities managers need a body to work from and with to tackle the issues everybody in this room, and the industry as a whole, is talking about.

Personally I think we need to coordinate on the definition of our services, actual service charges and define service levels in accordance with best practice guidelines that I feel we should set ourselves. Dubai offers a massive opportunity to lead the way and set the bar, which other GCC countries can then follow.

Gemma Davies (GD), principle consultant FM, Now Careers Middle East (image due on Wednesday)  

From a recruitment perspective we are obviously seeing more candidates due to the current economic climate. That has also revealed some inconsistencies in UAE labour law and contributed to the migration of expatriate workers due to inflexible visa restrictions.

The government should look to make it a straight forward process to change jobs and secure a new one if someone has been made redundant. The workforce needs to be fluid, and it’s in the UAEs’ best interests to keep expatriate talent here on a number of socioeconomic levels.   

We are finding businesses are still hiring though, contrary to media reports and uninformed gossip. But for us the business model has shifted to one of strategic alliances with companies and personnel. Employers are more focused on what they are looking for from a candidate on specific projects, usually a broad FM skill set at middle management level, so we have to match scrupulously.



Energy consumption is a major issue. What are you finding on the ground?

Terry John-Baptiste (TB), FM director Omniyat

As well as the pricing issues raised earlier, we have problems with the accuracy of the utilities figures from Dubai Electricity and Water Authority (DEWA). District cooling plants are inefficient – consumption is huge meaning the end-user pays 30 – 40 percent of the total operating costs. Each residence should have a meter.

SW: Some developers are taking advantage of the absence of metering and deliberately manipulating the market. Have you ever heard of a ‘chilled water connection charge’? No, well it exists on certain developments and basically it’s an additional, hidden, utilities charge. In Bahrain and Oman the service charges are factored in as a percentage of the rent.

Stephen Marney (SM), managing director PSDI

Buildings are the single highest contributor to greenhouse gases, so it’s not only residential units and metering in question when we’re looking at the issue of the UAE’s massive carbon footprint, it’s the control systems too.

Building management control systems (BMS) should play a critical role in cutting energy and water consumption and general operating efficiencies. Unfortunately, about 90 percent of BMS don’t work in the region because they’re not matched or integrated.

On the legislative front, we have found the lack of industry software standards means we physically have to demonstrate control system capability. 

Has development quality on handover improved?

SW: No. the quality of some developments on handover is disgraceful; they are simply not fit for purpose.

Ali Hassan Al Suwaidi (AS), executive director operations Imdaad

The FM inherits an unfinished building, be that a hotel, shopping mall or residential complex because some developers need to claw their investment back as quickly as possible because they are spreading themselves too thinly.

As to the health, safety and security issues that arise when a building is handed over and occupied before it is finished? Well, we have seen that a lot with soft openings of shopping malls and hotels that, in some cases, are little more than construction sites in places. How can an FM draw up health, safety and security procedures for such a hazardous environment?

There needs to be a graded, single plan for risk assessments and legislation in place stipulating that a development cannot be handed over until it meets the requirements and has been signed off as fit for purpose. The FM can then get on with the job of managing and maintaining the asset, rather than finishing it.     

What actions can the industry take?

LT: Education and communication. It seems to me the various elements of the construction industry, energy suppliers and legislative bodies are either not talking, or listening, to each other.

These elements need to meet regularly to discuss and implement legislation. If service charge costings, energy consumption metering and billing were calculated on agreed measurables everyone would know where they stood and what costs what.

That said, exhibitor levels are up for this year’s FM Expo. There’s a trend toward international FM companies and product and service providers coming to the UAE; with the amount of property coming on stream it’s very attractive.
And it’s a great opportunity to knowledge share and educate.

TB: We haven’t had time to touch on the issues of tendering and the poor standard in the region. We have built a tendering template that includes procurement, hard and soft services, insurance, manpower, training, management and the like. My point is that we have self regulated to standardise and implement best practice. We can do this together to combat the problems we’re all facing. This is a great opportunity to benchmark the region using these gathering as the foundations.

SB: It felt like being slapped on both sides at the end of last year. It was a bad climate and certainly damaging, so to get together like this is a breath of fresh air. The fall out though of the realignment is a more focused industry that now recognises the need for policing and change.

This wouldn’t have happened if the exponential growth had continued apace. It’s a wake up call certainly – and one that in my eyes was well overdue – the region had to wake up to the notion of competition at some stage.

The need for education and regulation is obvious and pressing, and I feel that it will have to come from within and from the Breakfast Club platform.

There is obviously the passion to drive the industry forward in this room, and in the industry at large, and take ownership of the FM industry in the Middle East.  



The guests

Scott Wilson (SW), managing director Development Emcor Facilities Services

Peter Crogan (PC), CEO BCS Strata Management Services

Louisa Theobald (LT), group exhibitions director SMG FM Expo

Stephen Barker (SB), general manager ServeU

Bill Heath (BH), managing director Mace Macro

Gemma Davies (GD), principle consultant FM Now Careers Middle East

Terry John-Baptiste (TB), FM director Omniyat

Stephen Marney (SM), managing director PSDI

Ali Hassan Al Suwaidi (AS), executive director operations Imdaad