Copyright: David Lawson - published Property Week April 2006
What are facilities? They must be important, as more than 325,000 people are involved in managing a sector estimated at between £10bn and £175bn a year. Yet no-one seems entirely sure what this involves. ‘We are saddled with an awkward name,’ admits Alan White chairman of the RICS facilities management faculty. ‘But people are catching on.’ Not quickly enough for those fed up with the stereotype of boiler suit and mop. More than half of facilities managers handle annual budgets over £1m, according to the i-FM 2006 Trends and Opportunities Report. Almost a third are graduates - some with an MBA.
Yet the fact that only half the professionals polled have ‘facilities’ in their title illustrates the confusion. Responsibility ranges via premises managers to operations directors via a bewildering range of consultants. And less than 15% have FM related qualifications. Somewhere in this motley band are 12,000 surveyors who have opted over the last three years to join the new RICS faculty. White estimates most would previously have been classified under general practice.
What exactly do they do? As so often in the property industry, jargon gets in the way of understanding. To the RICS, facilities management is: ‘An integrated approach to developing and managing an organisation’s buildings, workplaces and infrastructure in order to create an environment which supports its primary objectives and operations.’ The British Institute of Facilities Management is no better with: ‘Integration of multi-disciplinary activities within the built environment and the management of their impact upon people and the workplace.’
Yet FM can be summed up quite simply. Landlords own buildings; tenants occupy them; facilities managers make them work. It might seem boring but someone has to organise the cleaning, catering, security, IT, telecomms and so on.This very ordinariness has often excluded FM from the elite group of property decision makers, but fundamental changes impacting on landlords and tenants are bringing these specialists out of the shadows. Traditional long leases lumped costs onto tenants and bred a let-and-forget attitude. Landlords frankly didn’t care how well buildings worked, and therein lies the difference between property managers and facilities managers.
The former work for landlords, ensuring rents are paid, insurance and service charges are met and no-one breaks lease conditions. Facilities managers tend to work for occupiers. But they, too, have been as laid back because property is traditionally a tiny part of overall business costs, which are dominated by salaries. As long as the lights go on and toilet rolls are changed, everyone is happy. White admits he had little involvement with FM when he oversaw more than a £2bn worth of property at BT in the Nineties. ‘Portfolio strategy and asset value was my main concern, others looked after FM,’ he says.
All this has changed over the last few years. Leases are getting shorter and investors are increasingly drawing in facilities managers to advise on making their buildings more efficient. They have little choice, as potential occupiers are focussing on costs, and property has come under the microscope. Tenants with buildings on long leases are under particular pressure. Many have surplus space buried in the system and are as guilty as investors about neglecting management. But new accounting regulations will bring real costs onto their profit and loss accounts.Even fully utilised space is being re-assessed as staff demand better working conditions. With skilled workers in short supply, occupiers have to respond.
Meanwhile, a raft of new regulations from London and Brussels are imposing higher standards of health, safety, security and sustainability. When the government proposes energy labelling, facilities managers have to ensure the heating and lighting runs efficiently. As disability access becomes mandatory, they have to work out how to implement it. When tougher waste regulations bite, they will be expected to cope.
This is all too much for many tenants. Outsourcing is the buzzword of the new millennium and FM has led the charge. While there is no shortage of boiler suits still toiling away in basements, they are likely to be under the control of specialists like Serco, MITIE, Johnson Controls or George S Hall. A new breed is emerging that is as likely to be wearing pin stripes.White is back advising on strategy after selling off much of BT’s property, helping set up an occupier advice department at DTZ and now working through his own consultancy, Lenborough.
Facilities managers have finally begun to make the breakthrough into property’s decision making hierarchy, sitting next to architects at design boards or helping decide overall property policies. The i-FM report shows 20% now sit on boards of directors or equivalent, an increase of 8% on last year. Another 28% report directly to a board director. The property industry has responded by merging FM and property management. Land Securities Trillium has invested billions. Top consultants like Jones Lang LaSalle, CB Richard Ellis and DTZ are pitching for combined property and FM global contracts. Meanwhile, FM specialists like Johnson Controls and Mowlem are scooping up business by bolting on estate management services or linking with property partners.
[Source: i-FM 2006 Trends and Opportunities Report]
[Source: i-FM 2006 Trends and Opportunities Report]
Compared with 2005
[Source: i-FM 2006 Trends and Opportunities Report]