Facilities Management Outsourcing Market Report–UK 2012-2016 Analysis

The Facilities Management market has exhibited good levels of growth for much of the last twenty years, influenced by company/organisational desires to control operational efficiencies and costs, as well as a trend within the private sector for companies to refocus their business in order to concentrate on core competencies.

The deterioration in the UK economy from mid to late 2008 has had a negative impact on the development of the FM market, with reduced opportunities in the corporate sector.

This was moderated in 2009/10 by the influence of public sector contracts arising from long-term projects coming ‘on stream’ and government attempts to stimulate the economy through increased public sector expenditure. These combined factors have resulted in marginal deterioration in growth in the FM market to 2011.

Following the formation of the Coalition Government in 2010, focus shifted to public sector cuts, with the corporate sector unable to support the decline in public sector FM expenditure, therefore some decline is expected in 2012 and 2013 as work in this area slows. The market is forecast to stabilise from 2014 and reach £18.5bn by 2016.

Factors influencing the development of the FM market in recent years include the trend to outsource an increasing array of services, with a gradual shift towards ‘bundled service’ and TFM contracts and global contracts, adding to contract values.

The market is now considered to be relatively mature across a wide range of sectors such as corporate offices, retail and most Central Government Departments. As a result there is relatively limited potential for growth through increased penetration making the FM market increasingly subject to economic trends. The recent downturn has heightened price competition in the market, with end users looking for better value for money at the time of tendering for contracts. This has had a negative impact on contract prices and has resulted in lower margins for FM providers.

The corporate sector remains the largest end use sector, accounting for around 56% of the market, with the central and local government market accounting for 25%. Healthcare & Education has been the most rapidly growing sector in recent years to account for a share of around 19%.

FM outsourcing has increased in both the public and private sectors over the last decade to account for around 65% of overall non-core service provision, although single service provision accounts for a significant part of this.

Despite this there remain a number of niche sectors where outsourcing is less well established and potential for growth remains, these include Local Authorities, Schools, Leisure, and Manufacturing. The last few years have seen significant consolidation in the supply structure of the FM market, with a number of mergers, acquisitions, business failures and market withdrawals. Maturity in the FM market makes it heavily dependent upon the economic climate, through its influence on the prospects for organic growth in key end use sectors such as commercial offices, retail and leisure.

The government is committed to reducing the level of public sector debt over the next five years, resulting in reduced levels of expenditure across virtually all government departments. Bearing in mind the influence of public sector applications on the FM market, this will have a significant dampening effect on growth prospects over the medium term.

AMA Research’s report “Facilities Management Outsourcing Market Report – UK 2012-2016 Analysis” is available in hard copy or electronic format for £795 and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.

Find out more about AMA Research by viewing their company profile, here.

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