According to the British Institute of Facilities Management, the industry is accountable for more than 8% of the GDP while it employs more than 10% of the workforce present in the country. Further, the UK market is regarded as the most mature and competitive in Europe, with most estimates putting its value in 2017 as high as GBP 120 billion.
New York, Dec. 04, 2020 (GLOBE NEWSWIRE) -- Reportlinker.com announces the release of the report "United Kingdom Facility Management Market - Growth, Trends, Forecasts (2020 - 2025)" - https://www.reportlinker.com/p05993764/?utm_source=GNW
This is expected to rise to an estimated GBP 139 billion by 2021 (source British Institute of Facilities Management). This increase in value is attributed to the number of total FM deals where providers are integrated into their clients’ operating teams.
- The growing trend towards commoditization of facility management (FM) ?drives the market. According to Eurostat, Combined facilities support activities revenue in the United Kingdom is increasing year on year. The expected revenue in the year 2022 is USD 25 billion, where currently, in 2020, it is expected to increase to USD 24.02 billion. A player such as Atkins (expect to see a continuation of the integration between the traditional professions of estates), Carillion (70% to 80% of the service revenues come from the public and regulated sectors), B38 Group (providing services in the commercial property sector), and others, are focused towards providing services based on their expertise to the various sectors such as government and public entities, commercial buildings, etc.
- The renewed emphasis on workplace optimization and productivity is driving the market. Facilities management ensures a cost-effective working process within the business. For instance, carrying on regular ppm preventative maintenance on assets helps to reduce the amount of money spent on large repairs by running essential resources that are available already. Also, clean and safe working environments motivate employees, so they are more productive. Therefore, proper facilities management is important to make the most out of a company with regard to cost-efficiency. B38 Group’s facilities management services include hard and soft FM services that support multi-sector businesses, organizations, and SMEs throughout the UK. Further, B38 Group has been awarded by many certifications, including CHAS, NICEIC, and ISO standards, and their FM services are supported by blue-chip and high profile organizations.
- However, the impact of COVID-19 has slowed down growth. The FM sector was changing prior to the virus outbreak, and organizations were starting to consider different ways to work and operate. Now in this fast-changing context, COVID-19 is testing many businesses and their FMs to the limit. But some player such as Mitie takes its responsibility to maintain the performance and continuity of their customers’ operations. Their Critical Incident Team (CIT) Mitie establishment includes senior management from their Cleaning, Security, Risk, Engineering, Energy and Landscaping operations, along with their internal infrastructure and operations teams for assessing and mitigating the risks associated with the COVID-19 outbreak and formulate contingencies to keep their customer’s business running.
- Further, reduced building occupancy or, indeed, the closure of some buildings due to the Government’s measures to contain the COVID-19 outbreak clearly does not mean maintenance activities can be put on hold as some of these activities, particularly for critical assets, become even more important. The organization can provide hard FM services in healthcare, but also in school environments. B38 Group (one of the prominent leaders in cleaning services) planned to support businesses with their own coronavirus cleaning requirements to reduce the impact of infectious diseases such as the coronavirus. They are dedicated to providing rapid emergency response 24/7 throughout the United Kingdom for existing clients and those under contract.
- However, the escalating employment costs, unstable geopolitical situation due to Brexit, increased regulatory scrutiny over flexible labor models, and ever-more rigorous workplace health and safety regimes are expected to restraint the growth of the market further. Further, more than 60,000 EU nationals work in the English NHS and about 90,000 in adult social care. This led to the Commons Select Committee for Health, stressing the importance of a pragmatic approach to recognizing the professional qualifications of skilled migrant workers and keeping channels for the staff of the EU open.
- The outbreak of COVID-19 has had mixed business impact on facilities management firms, as the restrictions on the movement of people have resulted in a decline in project work and reduced level of activity across many customer sites.
Key Market Trends
Rise in Demand from the Public Sector Witnesses a Significant Growth
- General UK government expenditure on housing and community amenities comprises the following breakdowns: housing development, community development, water supply (provision of water to households and businesses but not sewage systems), street lighting, etc. The public sector contribution to the facility management market in the United Kingdom is higher compared to any other region of Europe. This is predominantly driven by the constrained budgets of the government, leading to the continuous outsourcing of essential facility management services.
- Further, the residential care activities comprise its gross added value weight of approx 51.1% of the public sector and 48.9% of the market sector. Further, bundled services contracts are anticipated to benefit from the public spending cuts, as public sector clients are looking to reduce the suppliers and cut costs.
- This is also primarily driven by the fact that public sector bodies are continually putting efforts to simplify the operations. The shift for Total Facilities Management (TFM) continues to grow as public sector organizations are increasingly outsourcing all ‘non-core’ business activities to one service provider, enabling greater focus on core business.
- In October 2019, Maxim FM (provider of cleaning and facilities management services to public sector clients) secured two major local authority contracts and had signed a four-year partnership agreement with Lancashire County Council for delivering a range of services across the UK. Its Sunderland-headquartered business has also been provided a framework agreement contract with Liverpool City Council.
- Over the last year, Maxim has grown its presence in South West England following its acquisition of the cleaning division of Swindon-based Gillsbrook FM in June 2018 and increased its workforce by around 100 people to 1,300 employees, 500 of whom are based in the North East.
- However, as the public sector has started to demand longer-term contracts from financial management suppliers, but lack of certainty over future labor costs and materials is making them riskier propositions, and this could act as a major restraint in the participation of players in the bidding for long term contracts.
Highway Construction Accounts to Hold a Significant Share in Government Entities
- UK’s road building and maintenance contractors have emerged to be in robust health in the business, and it comprises under bundled FM. Companies are developing a comprehensive, long-term category strategy to incorporate all facilities management trends. A sequencing exercise is helping companies to prioritize initiatives. Since technologies will continue to evolve, facilities management leaders are establishing a regular strategy review process of all categories to refine and hone their vision.
- In October 2019, Atkins secured GBP 49 million UK highways improvement contract. Atkins, a part of SNC-Lavalin, has been appointed by Highways England as principal designer for highways improvement schemes in the East of England. The latest contract increases their presence in the East of England, giving them the opportunity to improve the region’s roads through innovative design and the application of the latest technology.
- A player such as Skanska UK Plc has been provided with the flagship contract of the M25 improvement program, which is one of the world’s busiest motorways. Currently, the project team is now delivering a GBP 321 million upgrade to the M25. Across the UK, they currently maintain over 10,500 miles of carriageways, 5,500 miles of footways, and 9,000 structures.
- Much of highways England’s budget is dedicated to maintenance, which includes repair and resurfacing work, installation of safety fencing, drainage repairs, junction improvements, environmental work, adding crossings, and clearing sightlines. Mott MacDonald is managing, maintaining, and improving England’s highways through several contracts, helping infrastructure owners and operators achieve their strategic objectives.
- The company is responsible for major projects on some of the busiest parts of the Highways England network for over 20 years, including Area 2 (south-west), Area 4 (south-east), and Area 10 (north-west). They have been carrying out the detailed design for small, but still vital, renewal and improvement schemes across Areas 6 and 8, covering the whole of the east of England – more than 19,000km2.
- Further, UK infrastructure and civil engineering have a productive future ahead, courtesy of the government’s recent Road Investment Strategy (RIS), such as GBP 64.5 million improvements to Junction 10 of the M6 and the GBP 189.5 million East-West Link Road which was commissioned by the Lancashire County Council. As well as this, there is a GBP 1 billion project in place to convert single-lane sections of the A66 northern trans-Pennine route into dual carriageway segments and a further GBP 1.4 billion investment to improve the Black Cat roundabout between Milton Keynes and Cambridge. These instances further support the growth of the facility management market.
The UK Facility Management is moving towards fragmented as it is a highly competitive market with the presence of several players of different sizes. This market is expected to experience a number of mergers, acquisitions, and partnerships as companies continue to invest in offsetting the present slowdowns that they are experiencing strategically. Key players are CBRE Group, Inc., Mitie Group PLC, etc. Recent developments in the market are -
- October 2020 - ENGIE launched a new zero carbon home retrofit model. With UK households accounting for more than a quarter of the entire UK CO2 emissions, and half the market achieving a EPC rating of D or less, radical steps are required if the United Kingdom is to achieve a mass reduction in greenhouse gas emissions by 2050. The new offer utilizes the savings generated from the improvement works together with existing revenue streams and government incentives including Energy Companies Obligation (ECO), Renewable Heat Incentive (RHI) and Grid Balancing Agreements to help finance the upfront costs of the works.
- March 2020 - Amey, as part of its GEOAmey joint venture, won a contract worth GBP 632 million providing Prisoner Escort and Custody Services (PECS) for ‘The North.’ The agreement (awarded by The Ministry of Justice (MOJ)), spans a 10-year period commencing August 2020. The contract will see GEOAmey transport approximately 250,000 people across the criminal justice system in Wales, the Midlands and the North of England each year.
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