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Facilities Management (Industrial Report) - UK - June 2014

“The industry is anticipating a bright year in 2014, with the economic recovery looking increasingly secure. The outlook for construction is positive and major infrastructure projects are expected to offer new soft and hard service opportunities.”

– Ben Harris, Industrial Analyst

This report addresses the following key questions facing facilities management operators in the UK:

  • How is technology impacting the facilities management industry and what effect will it have over the coming years?
  • To what extent is public sector demand for facilities management likely to be affected by reduced public sector expenditure and legislative changes in 2014?
  • Will the level of merger and acquisition activity seen in recent years be repeated in 2014 and 2015?
  • Will growth in total facilities management contracts grow ahead of single or other multiple service bundles over the next five years?
  • What sectors are likely to generate the greatest demand for facilities management services in the short term?

For the purpose of this report, the potential facilities management market includes work that is contracted to third parties, including total facilities management (TFM) contracts, and the value of projects undertaken in-house.

The market is segmented into the following sectors:

  • TFM, where the full responsibility for undertaking and organising facilities management services is contracted to a third party company who undertakes the work or sub-contracts the work to other companies
  • Contracted out projects, where ancillary services are contracted out to third party companies on an individual contract basis. This allows the client company to retain strategic control over facilities management and budgeting. The value for contracted out services stated in this report includes contracts by single service providers and facilities management companies
  • Internal projects, where ancillary services are undertaken by in-house staff. These non-core activities represent the remainder of the potential market for facilities management companies

The value of the market includes manpower costs, operational management and strategic management including services, consultancy and training.

The sector includes a broad range of ancillary services provided by single service contractors and facilities management companies. These can be split into soft facilities management and hard facilities management services. The former group include activities that support the operation of a facility, such as:

  • Security services
  • Cleaning services
  • Catering services
  • Postal services
  • Secretarial services

Hard facilities management services refer to activities that support the maintenance of a facility, such as:

  • Gardening and landscaping
  • Building fabric maintenance
  • Lift and escalator maintenance
  • Lighting
  • Building design
  • Plant replacement
  • Construction management
  • Energy and environmental management

With such a high level of industry fragmentation it is not possible to review all the companies in a report of this type. This report is not a directory of industry participants and the company profiles provide a synopsis of some of the operators. They are selected as being representative of a cross sample of operator rather than necessarily the largest industry participants.

Liqueurs - UK - January 2012

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Table of contents

  1. Executive Summary

      • The market
        • Figure 1: Total facilities management market in the UK, 2009-13
        • Figure 2: Segmentation of the potential market for facilities management services in the UK, by type of contract, 2013
        • Figure 3: Forecast potential market for facilities management services in the UK, 2014-18
      • Market factors
        • New contracting model for public procurement in 2014
          • Minimum wage increases create upward pressure on costs
            • Figure 4: The UK National Minimum Wage, 2000-13
          • Private Finance Initiative (PFI) project pipeline slows in 2013
            • Companies
              • Capita continues aggressive acquisition trail
                • Cofely WorkPlace takeover gives GDF SUEZ footprint in UK market
                  • What we think
                  • Introduction

                    • Definitions
                      • Methodology
                        • Abbreviations
                          • Issues in the market
                            • Market positioning
                              • The supplier
                                • The customer
                                • UK Economy

                                    • Inflation
                                      • Interest rates
                                        • Business investment
                                          • Imports
                                            • Exports
                                              • House prices
                                                • Manufacturing
                                                • Market Factors

                                                  • The economic environment
                                                    • Outsourcing trends
                                                      • Impact of legislation
                                                      • Market Size

                                                        • Key points
                                                          • Potential market size
                                                            • Market performance
                                                                • Figure 5: Potential market for facilities management services in the UK, 2009-13
                                                            • Market Segmentation

                                                              • Key points
                                                                • Market segmentation
                                                                  • TFM contracts increase at expense of smaller service bundles
                                                                      • Figure 6: Segmentation of the potential market for facilities management services in the UK, by type of contract, 2009-13
                                                                      • Figure 7: Segmentation of the potential market for facilities management services in the UK, by type of contract, 2013
                                                                    • Revenues from PFI rise while cleaning and landscaping sectors decline
                                                                      • Figure 8: Segmentation of the market for TFM and contracted out facilities management, by type of service, 2009-13
                                                                  • Market Trends

                                                                    • Key points
                                                                      • Minimum wage increases and living wage adoption drives costs upwards
                                                                        • Figure 9: The UK National Minimum Wage, 2000-13
                                                                        • Figure 10: The UK Living Wage and London Living Wage, 2003-13
                                                                      • TUPE changes expected to reduce costs for firms
                                                                        • New central government contracting model for facilities management in 2014
                                                                          • EU directive encourages growth of small suppliers in public sector provision
                                                                            • Continued growth in bundled service contracts and total facilities management (TFM)
                                                                              • Regional bias of suppliers moves away from London
                                                                                • Figure 11: Regional distribution of companies in the combined facilities support industry, 2009-12
                                                                                • Figure 12: Regional distribution of private business establishments in the UK, 2009 and 2013
                                                                            • Industry Structure

                                                                              • Key points
                                                                                • Industry development
                                                                                  • M&A activity consolidates industry
                                                                                    • International interest in UK market rises
                                                                                      • Types of operator
                                                                                        • Influx of companies into facilities support industry slows in 2013
                                                                                          • Figure 13: Analysis of the changes in the structure of the combined facilities support activities industry, 2009-13
                                                                                        • Structure by employment
                                                                                          • Figure 14: Analysis of the employment structure of the combined facilities support activities industry, 2012 and 2013
                                                                                        • Structure by turnover
                                                                                          • Figure 15: Analysis of the financial structure of the combined facilities support industry, 2012 and 2013
                                                                                      • Amey

                                                                                          • Recent company activity
                                                                                              • Figure 16: Financial analysis of Amey UK, 2009-13
                                                                                            • Built Environment division performance
                                                                                              • Figure 17: Financial analysis of Amey UK Built Environment division, 2009-13
                                                                                          • Aramark

                                                                                              • Recent company activity
                                                                                                • Figure 18: Financial analysis of Aramark, 2008-12
                                                                                            • Berendsen

                                                                                                • Recent company activity
                                                                                                  • Figure 19: Financial analysis of Berendsen, 2009-13
                                                                                              • Capita

                                                                                                  • Recent company activity
                                                                                                    • Figure 20: Financial analysis of Capita, 2009-13
                                                                                                  • Property and Infrastructure division performance
                                                                                                    • Figure 21: Financial analysis of Capita Property and Infrastructure division, 2009-13
                                                                                                • Carillion Services

                                                                                                    • Recent company activity
                                                                                                      • Figure 22: Financial analysis of Carillion Services, 2008-12
                                                                                                  • Cofely WorkPlace/Balfour Beatty WorkPlace

                                                                                                      • Recent company activity
                                                                                                        • Figure 23: Financial analysis of Cofely WorkPlace/Balfour Beatty WorkPlace, 2008-12
                                                                                                    • Emcor Group (UK)

                                                                                                        • Recent company activity
                                                                                                          • Figure 24: Financial analysis of EMCOR Group (UK), 2008-12
                                                                                                      • G4S Integrated Services

                                                                                                          • Recent company activity
                                                                                                            • Figure 25: Financial analysis of G4S Integrated Services, 2008-12
                                                                                                        • Integral UK

                                                                                                            • Recent company activity
                                                                                                              • Figure 26: Financial analysis of Integral UK, 2008-12
                                                                                                          • Interserve (Facilities Management)

                                                                                                              • Recent company activity
                                                                                                                • Figure 27: Financial analysis of Interserve (Facilities Management), 2008-12
                                                                                                            • ISS Facility Services

                                                                                                                • Recent company activity
                                                                                                                    • Figure 28: Financial analysis of ISS Facility Services, 2008-12
                                                                                                                • Mitie Group

                                                                                                                    • Recent company activity
                                                                                                                      • Figure 29: Financial analysis of MITIE Group, 2009-13
                                                                                                                      • Figure 30: Financial analysis of MITIE Group, revenue by segment, 2013
                                                                                                                  • OCS Group

                                                                                                                      • Recent company activity
                                                                                                                        • Figure 31: Financial analysis of the OCS Group, 2009-13
                                                                                                                    • Rentokil Initial

                                                                                                                        • Recent company activity
                                                                                                                          • Figure 32: Financial analysis of Rentokil Initial, 2008-12
                                                                                                                          • Figure 33: Financial analysis of Rentokil Initial, revenue by business segment, 2012
                                                                                                                      • Serco

                                                                                                                          • Recent company activity
                                                                                                                            • Figure 34: Financial analysis of Serco, 2008-12
                                                                                                                        • Skanska Rashleigh Weatherfoil

                                                                                                                            • Recent company activity
                                                                                                                              • Figure 35: Financial analysis of Skanska Rashleigh Weatherfoil, 2008-12
                                                                                                                          • Sodexo

                                                                                                                              • Recent company activity
                                                                                                                                  • Figure 36: Financial analysis of Sodexo, 2008-12
                                                                                                                              • WS Atkins

                                                                                                                                  • Recent company activity
                                                                                                                                    • Figure 37: Financial analysis of WS Atkins, 2009-13
                                                                                                                                • Demand Structure

                                                                                                                                  • Key points
                                                                                                                                    • Construction output
                                                                                                                                      • Figure 38: Analysis of construction output in Great Britain, by type, 2009-13
                                                                                                                                    • Repair and maintenance
                                                                                                                                      • Figure 39: Analysis of repair & maintenance output in Great Britain, by type, 2009-13
                                                                                                                                    • Public housing repair and maintenance
                                                                                                                                        • Figure 40: Analysis of repair and maintenance output in the public housing sector in Great Britain, 2009-13
                                                                                                                                      • Private housing repair and maintenance
                                                                                                                                          • Figure 41: Analysis of repair and maintenance output in the private housing sector in Great Britain, 2009-13
                                                                                                                                        • Public non-residential repair and maintenance
                                                                                                                                          • Figure 42: Analysis of repair & maintenance output in the public non-residential sector in Great Britain, 2009-13
                                                                                                                                        • Private non-residential repair and maintenance
                                                                                                                                          • Figure 43: Analysis of repair & maintenance output in the private nonresidential sector in Great Britain, 2009-13
                                                                                                                                        • PFI
                                                                                                                                          • Billion pound project savings to hit FM sector
                                                                                                                                            • Project pipeline slowdown
                                                                                                                                              • Figure 43: Capital costs of current UK PFI projects, by department, 2012 and 2013
                                                                                                                                            • PF2 reforms to favour smaller, single service providers
                                                                                                                                                • Figure 44: Estimated unitary charge payments under current PFI contracts, 2013-18
                                                                                                                                              • First PF2 awards issued at the start of 2014
                                                                                                                                                • Distribution of workplaces
                                                                                                                                                    • Figure 45: Number of UK PAYE/VAT-registered business establishments, by industry, 2009-13
                                                                                                                                                • Forecast

                                                                                                                                                  • Key points
                                                                                                                                                    • Potential market size
                                                                                                                                                      • Growth of 3% forecast for 2014
                                                                                                                                                        • Figure 46: Forecast potential market for facilities management services in the UK, 2014-18
                                                                                                                                                      • Market segmentation
                                                                                                                                                        • Figure 47: Forecast segmentation of the potential market for facilities management services, by type of contract, 2014-18
                                                                                                                                                        • Figure 48: Forecast segmentation of the market for TFM and contracted out facilities management, by type of service, 2014-18
                                                                                                                                                      • Industry
                                                                                                                                                        • Will M&A activity continue at the same pace?
                                                                                                                                                          • Use of technology to pervade further into facilities management
                                                                                                                                                          • Further Sources and Contacts

                                                                                                                                                            • Trade associations
                                                                                                                                                              • Trade magazines

                                                                                                                                                              Companies Covered

                                                                                                                                                              To learn more about the companies covered in this report please contact us.

                                                                                                                                                              Facilities Management (Industrial Report) - UK - June 2014

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