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Facilities Management - UK - October 2015

“The facilities management industry has grown strongly both in times of recession and economic growth. The development of the market has continued in the public and private sectors, which are now demonstrating key differences in growth. However, the contracting out of non-core activities continues and generally realises greater benefits than perceived at the time of commissioning.”
– Terry Leggett, Senior B2B Analyst

This report answers the following key questions:

  • What effect will increases in the minimum wage have on the facilities management sector?
  • How is public sector demand for facilities management being affected by reduced public sector expenditure and legislative changes?
  • Will the industry continue its rapid development?
  • 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 next few years?

Demand for actual facilities management continued to expand in the recession, driven primarily by the private sector looking to improve efficiency and productivity in difficult times, and the then buoyancy of the public sector. As the recession developed into flat economic conditions, the facilities management sector continued to achieve modest growth, with the private sector continuing to strive for greater productivity and efficiency, while the public sector started to be placed under intense spending restrictions. As the economy has moved to growth, the political agenda has continued to restrict public spending, while the private sector has developed.

However, alongside the total facilities management market, the industry is also involved in a more restricted set of individual contracts, which means it can be expanded to include other contracted-out services. There also remains considerable further potential in the services that are still undertaken in-house.

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, which 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
  • in-house 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

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Table of contents

  1. Executive Summary

      • The market
        • Figure 1: Actual market for facilities management services in the UK, 2010-14
        • Figure 2: Segmentation of the potential market for facilities management services in the UK, by type of contract, 2010-14
        • Figure 3: Adoption techniques of contracted out service users, by mix of contracts, 2014
        • Figure 4: Segmentation of the market for total facilities management and contracted out facilities management, by type of service, 2014
        • Figure 5: Forecast segmentation of the potential market for facilities management services, by type of contract, 2015-19
      • Market factors
        • Figure 6: Motivations for outsourcing, 2014
        • Figure 7: Motivational versus realised objectives for outsourcing, 2014
      • Companies
        • Figure 8: Analysis of the changes in the structure of the combined facilities support activities industry, 2011-15
      • What we think
      • Key Issues

          • How will the FM sector be affected by the recently announced minimum wage increases?
            • Is the decision to outsource services driven by financial considerations?
              • What are the most common services provided through a facilities management contract?
                • Is the industry highly concentrated?
                • Introduction

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

                                • Overview
                                  • Figure 9: UK GDP quarterly development, 2003-15
                                  • Figure 10: UK GDP in economic downturns and recoveries since 1979
                                • Inflation
                                  • Interest rates
                                    • House prices
                                      • Consumer spending
                                        • Manufacturing
                                          • Business investment
                                            • Figure 11: UK GFCF 2003-15
                                          • Imports
                                            • Exports
                                            • Market Factors

                                              • The economic and political environment
                                                • A long-term outsourcing trend
                                                  • Figure 12: Motivations for outsourcing, 2014
                                                  • Figure 13: Top three objectives for outsourcing, 2014
                                                  • Figure 14: Motivational versus realised objectives for outsourcing, 2014
                                                  • Figure 15: Objectives for outsourcing, by company size, 2014
                                                • Impact of legislation
                                                • Market Size

                                                  • Chapter summary
                                                    • The market
                                                      • Figure 16: Potential market for facilities management services in the UK, 2010-14
                                                      • Figure 17: Actual market for facilities management services in the UK, 2010-14
                                                      • Figure 18: Comparison of the actual market for facilities management services compared with the potential market in the UK, 2010-14
                                                  • Market Segmentation

                                                    • Chapter summary
                                                      • Market segmentation
                                                        • Figure 19: Segmentation of the potential market for facilities management services in the UK, by type of contract, 2010-14
                                                        • Figure 20: Segmentation of the potential market for facilities management services in the UK, by type of contract, 2014
                                                        • Figure 21: Adoption techniques of contracted out service users, by mix of contracts, 2014
                                                        • Figure 22: Types of services included in an FM contract, 2014
                                                        • Figure 23: Segmentation of the market for TFM and contracted out facilities management, by type of service, 2010-14
                                                    • Market Trends

                                                      • Chapter summary
                                                        • Market trends
                                                          • Minimum wage increases impacting costs
                                                            • Figure 24: The UK National Minimum Wage, 2009-15
                                                            • Figure 25: The impact of the UK National Minimum Wage rising in 2020, by industry
                                                          • TUPE changes reducing costs
                                                            • New central government contracting model for facilities management
                                                              • EU directive encouraging opportunities for SMEs in public sector provision
                                                                • Continued growth in bundled service contracts and total facilities management (TFM)
                                                                  • Motivation developments
                                                                    • Regional bias of suppliers moves away from London
                                                                      • Figure 26: Regional distribution of companies in the combined facilities support industry, 2009-15
                                                                      • Figure 27: Regional distribution of private business establishments in the UK, 2009 and 2015
                                                                  • Industry Structure

                                                                    • Chapter summary
                                                                      • Industry development
                                                                          • Figure 28: Analysis of the changes in the structure of the combined facilities support activities industry, 2011-15
                                                                        • Structure by employment
                                                                          • Figure 29: Analysis of the employment structure of the combined facilities support activities industry, 2014 and 2015
                                                                        • Structure by turnover
                                                                          • Figure 30: Analysis of the financial structure of the combined facilities support industry, 2014 and 2015
                                                                      • Company Profiles

                                                                        • Amey UK

                                                                              • Figure 31: Financial analysis of Amey UK, 2010-14
                                                                            • Company strategy
                                                                            • Aramark

                                                                                  • Figure 32: Financial analysis of Aramark, 2010-14
                                                                                • Company strategy
                                                                                • Berendsen

                                                                                      • Figure 33: Financial analysis of Berendsen, 2010-14
                                                                                    • Company strategy
                                                                                    • Capita

                                                                                          • Figure 34: Financial analysis of Capita, 2010-14
                                                                                        • Company strategy
                                                                                        • Carillion Services

                                                                                              • Figure 35: Financial analysis of Carillion Services, 2010-14
                                                                                            • Company strategy
                                                                                            • Cofely WorkPlace

                                                                                                  • Figure 36: Financial analysis of Cofely WorkPlace/Balfour Beatty WorkPlace, 2009-13
                                                                                                • Company strategy
                                                                                                • EMCOR Group (UK)

                                                                                                      • Figure 37: Financial analysis of EMCOR Group (UK), 2010-14
                                                                                                    • Company strategy
                                                                                                    • G4S

                                                                                                        • Figure 38: Financial analysis of G4S, 2010-14
                                                                                                        • Figure 39: Geographic analysis of G4S turnover, 2014
                                                                                                        • Figure 40: Sector analysis of G4S turnover, 2014
                                                                                                      • Company strategy
                                                                                                      • Integral UK

                                                                                                            • Figure 41: Financial analysis of Integral UK, 2010-14
                                                                                                          • Company strategy
                                                                                                          • Interserve

                                                                                                              • Figure 42: Financial analysis of Interserve, 2010-14
                                                                                                              • Figure 43: Turnover analysis of Interserve, 2014
                                                                                                            • Company strategy
                                                                                                            • ISS Facility Services

                                                                                                                  • Figure 44: Financial analysis of ISS Facility Services, 2010-14
                                                                                                                • Company strategy
                                                                                                                • Mitie Group

                                                                                                                      • Figure 45: Financial analysis of Mitie Group, 2011-15
                                                                                                                      • Figure 46: Financial analysis of MITIE Group, revenue by segment, 2015
                                                                                                                    • Company strategy
                                                                                                                    • OCS Group

                                                                                                                          • Figure 47: Financial analysis of the OCS Group, 2010-14
                                                                                                                        • Company strategy
                                                                                                                        • Rentokil

                                                                                                                            • Figure 48: Financial analysis of Rentokil Initial, 2010-14
                                                                                                                          • Company strategy
                                                                                                                          • Serco Group

                                                                                                                                • Figure 49: Financial analysis of Serco Group, 2010-14
                                                                                                                                • Figure 50: Turnover analysis of Serco Group, 2014
                                                                                                                              • Company strategy
                                                                                                                              • Skanska Rashleigh Weatherfoil

                                                                                                                                    • Figure 51: Financial analysis of Skanska Rashleigh Weatherfoil, 201014
                                                                                                                                  • Company strategy
                                                                                                                                  • Sodexo

                                                                                                                                        • Figure 52: Financial analysis of Sodexo, 2010-14
                                                                                                                                      • Company strategy
                                                                                                                                      • WS Atkins

                                                                                                                                            • Figure 53: Financial analysis of WS Atkins, 2011-15
                                                                                                                                          • Company strategy
                                                                                                                                          • Demand Structure

                                                                                                                                            • Chapter summary
                                                                                                                                              • Construction output
                                                                                                                                                • Figure 54: Analysis of construction output in Great Britain, by type, 201014
                                                                                                                                              • Repair and maintenance
                                                                                                                                                • Figure 55: Segmentation of the R&M activity in Great Britain, 2014
                                                                                                                                              • Public housing
                                                                                                                                                  • Figure 56: Analysis of Decent Homes backlog programme allocations, 2012-15
                                                                                                                                                  • Figure 57: Analysis of repair & maintenance output in the public housing sector in Great Britain, 2010-14
                                                                                                                                                • Private housing
                                                                                                                                                    • Figure 58: Analysis of repair & maintenance output in the private housing sector in Great Britain, 2010-14
                                                                                                                                                  • Public non-residential
                                                                                                                                                    • Figure 59: Analysis of repair & maintenance output in the public non-residential sector in Great Britain, 2010-14
                                                                                                                                                  • Private non-residential
                                                                                                                                                    • Figure 60: Analysis of repair & maintenance output in the private nonresidential sector in Great Britain, 2010-14
                                                                                                                                                  • Infrastructure
                                                                                                                                                    • Figure 61: Analysis of repair & maintenance output on infrastructure in Great Britain, 2010-14
                                                                                                                                                  • PFI & PF2
                                                                                                                                                      • Figure 62: Summary of PFI projects, 2011-2014
                                                                                                                                                      • Figure 63: Capital costs of current UK PFI projects, by department, 2012-14
                                                                                                                                                      • Figure 64: Estimated nominal payments under current PFI contracts, 201550
                                                                                                                                                    • Distribution of workplaces
                                                                                                                                                      • Figure 65: Number of UK PAYE/VAT-registered business establishments by industry and employee levels by public and private sectors, 2014
                                                                                                                                                  • Forecast

                                                                                                                                                    • Chapter summary
                                                                                                                                                      • Potential market size
                                                                                                                                                        • Figure 66: Forecast actual market for facilities management services in the UK, 2015-19
                                                                                                                                                      • Market segmentation
                                                                                                                                                        • Figure 67: Forecast segmentation of the potential market for facilities management services, by type of contract, 2015-19
                                                                                                                                                        • Figure 68: Forecast segmentation of the market for TFM and contracted out facilities management, by type of service, 2015-19
                                                                                                                                                      • Industry
                                                                                                                                                          • Figure 69: Length of outsourced facilities service contracts
                                                                                                                                                      • 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 - UK - October 2015

                                                                                                                                                          £995.00 (Excl.Tax)