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Facilities Management - UK - October 2019

“Several recent high profile casualties in the facilities management sector reflect the scale of some contracts and the need to selectively tender in a highly competitive sector where capital investment can be significant. The industry includes labour intensive activities, with margins continually challenged by legislation changes and technology increasingly adopted to add value to clients, protect margins and improve client retention.”
– Terry Leggett, Senior Analyst

This report looks at the following areas:

  • The National Living Wage price war
  • Technology as a differentiator

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
      • Executive Summary

          • The market
            • Underlying growth
              • Figure 1: Potential market for facilities management services, 2015-19
            • Strong further potential
              • Figure 2: Segmentation of the potential market for facilities management, by type of contract, 2015-19
            • A wide variety of services
              • Figure 3: Segmentation of the total facilities management and contracted-out services, by sector of service, 2015-19
            • Margin pressure in soft services
              • Technology and green issues to add value
                • Growth prospects
                  • Figure 4: Forecast segmentation of the potential market for facilities management, 2020-24
                • Companies and brands
                  • Scale – a threat and opportunity
                    • Figure 5: UK facilities management M&A activity by target sector, 2018
                  • Specialisation very different to other corporates
                    • What we think
                    • Issues and Insights

                      • The National Living Wage price war
                        • The facts
                          • The implications
                            • Technology as a differentiator
                              • The facts
                                • The implications
                                • The Market – What You Need to Know

                                  • Limits are few and far between
                                    • Market growth
                                      • Brexit
                                      • Market Size

                                        • Slow growth in opportunity
                                          • Figure 6: Potential market for facilities management services, 2015-19
                                        • The contracted-out market
                                          • Figure 7: Actual outsourced services typically defined as facility management, 2015-19
                                        • Integrated facilities management
                                          • Figure 8: Actual market for integrated facilities management, 2015-19
                                      • Market Segmentation

                                        • Integrated, bundled, single contract and in-house
                                          • Figure 9: Segmentation of the potential market for facilities management, by type of contract, 2015-19
                                          • Figure 10: Comparative growth of integrated facilities management, contracted-out and internal services, 2015-19
                                        • Individual markets
                                          • Figure 11: Segmentation of the total facilities management and contracted-out services, by sector of service, 2015-19
                                      • Market Forecast

                                        • A highly developed market
                                          • The Brexit issue
                                            • The expectation
                                              • Figure 12: Forecast market for integrated facilities management services, 2020-24
                                              • Figure 13: Forecast segmentation of the potential market for facilities management, 2020-24
                                              • Figure 14: Forecast segmentation of the total facilities management and contracted-out services, by sector of service, 2020-24
                                          • The Impact of the Economy

                                            • GDP
                                              • Figure 15: Quarterly GDP development, Q1 2015-Q2 2019
                                              • Figure 16: GDP quarterly development, by sector, 2004-19
                                              • Figure 17: Forecast GDP development, 2019-23
                                          • Market Trends

                                            • Employment costs squeezing margins
                                              • National Minimum Wage and National Living Wage
                                                • Figure 18: The development of the NMW and NLW, 1999-2019 (£s per hour rate)
                                              • Apprenticeship Levy
                                                • Workplace pensions
                                                  • Figure 19: Composition and progression of workplace pension contributions, 2012-19 (% of earnings)
                                                • The outsourcing evolution
                                                  • Moving beyond the cost benefit
                                                    • Sustainability – not just buildings
                                                    • Market Drivers

                                                      • Repair and maintenance activity
                                                        • Figure 20: Housing repair and maintenance expenditure by sector, 2014-18 actual and 2019-24 forecast
                                                        • Figure 21: Infrastructure repair and maintenance expenditure, 2014-18 actual and 2019-24 forecast
                                                        • Figure 22: Private industrial and commercial repair and maintenance expenditure, 2014-18 actual and 2019-24 forecast
                                                        • Figure 23: Public non-residential repair and maintenance expenditure, 2014-18 actual and 2019-24 forecast
                                                      • Mechanical and electrical contracting
                                                          • Figure 24: M&E contracting market, 2014-18 actual and 2019-24 forecast
                                                        • Distribution of workplaces
                                                          • Figure 25: Number of PAYE/VAT-registered business establishments, by industry, 2015-19 (000s)
                                                          • Figure 26: Number of PAYE/VAT –registered business establishments, by industry and turnover with a turnover over £2 million, 2019
                                                        • PFI and PF2 projects
                                                            • Figure 27: Capital costs of current PPP projects, 2018
                                                            • Figure 28: Unitary payments of current PPPs, 1997-2050
                                                          • Contract catering
                                                              • Figure 29: Contract catering market, 2014-18 actual and 2019-23 forecast
                                                          • Companies and Brands – What You Need to Know

                                                            • Specialisation
                                                              • The margin issue
                                                                • The scale issue
                                                                  • Technology to provide value added
                                                                  • Industry Structure

                                                                    • Wide range of services
                                                                        • Figure 30: Development of the facilities management sector, 2015-19
                                                                        • Figure 31: Size of facilities management sites, 2019 (number)
                                                                        • Figure 32: Turnover analysis of the facilities management sector, 2019 (number)
                                                                      • M&A driven by variety of services
                                                                        • Fragmented and competitive
                                                                        • Competitive Strategies

                                                                          • Few common themes
                                                                            • Technology to drive sustainable margins
                                                                              • Sector consolidation and M&A
                                                                                • Figure 33: UK facilities management M&A activity by target sector, 2018
                                                                            • Company Profiles

                                                                              • CBRE GWS
                                                                                • Activity
                                                                                  • Performance
                                                                                    • Figure 34: Financial summary of CBRE GWS in the UK, 2013-17 (£ million)
                                                                                  • Strategy
                                                                                    • Compass Group
                                                                                      • Activity
                                                                                        • Performance
                                                                                          • Figure 35: Financial summary of Compass Group, 2014-18 (£ million)
                                                                                        • Strategy
                                                                                          • G4S
                                                                                            • Activity
                                                                                              • Performance
                                                                                                • Figure 36: Financial summary of G4S, 2014-18 (£ million)
                                                                                              • Strategy
                                                                                                • ISS Facility Services
                                                                                                  • Activity
                                                                                                    • Performance
                                                                                                      • Figure 37: Financial summary of ISS Facility Services, 2014-18 (£ million)
                                                                                                    • Strategy
                                                                                                      • Interserve Group
                                                                                                        • Activity
                                                                                                          • Performance
                                                                                                            • Figure 38: Financial summary of Interserve Group, 2014-18 (£ million)
                                                                                                          • Strategy
                                                                                                            • Mitie
                                                                                                              • Activity
                                                                                                                • Performance
                                                                                                                  • Figure 39: Financial summary of Mitie, 2015-19 (£ million)
                                                                                                                  • Figure 40: Turnover segmentation of Mitie, 2019 (£ million)
                                                                                                                • Strategy
                                                                                                                  • Serco Group
                                                                                                                    • Activity
                                                                                                                      • Performance
                                                                                                                        • Figure 41: Financial summary of Serco Group, 2014-18 (£ million)
                                                                                                                        • Figure 42: Geographic turnover analysis of Serco Group, 2018 (£ million)
                                                                                                                        • Figure 43: Service turnover analysis of Serco Group, 2018 (£ million)
                                                                                                                      • Strategy
                                                                                                                        • Sodexo
                                                                                                                          • Activity
                                                                                                                            • Performance
                                                                                                                              • Figure 44: Financial summary of Sodexo, 2014-18 (£ million)
                                                                                                                            • Strategy
                                                                                                                            • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                • Abbreviations
                                                                                                                                  • Methodology
                                                                                                                                  • Further Sources and Contacts

                                                                                                                                    • Trade associations
                                                                                                                                      • Trade magazines

                                                                                                                                      Facilities Management - UK - October 2019

                                                                                                                                      £995.00 (Excl.Tax)