BIFM Facilities Management Industry in Ireland 4 th March, 2005 Martin McMahon BIFM.
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Transcript of BIFM Facilities Management Industry in Ireland 4 th March, 2005 Martin McMahon BIFM.
![Page 1: BIFM Facilities Management Industry in Ireland 4 th March, 2005 Martin McMahon BIFM.](https://reader034.fdocuments.in/reader034/viewer/2022050819/56649e045503460f94af0daf/html5/thumbnails/1.jpg)
BIFM
Facilities Management
Industry in Ireland
4th March, 2005Martin McMahon
BIFM
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BIFM
Introduction
• Martin McMahon
• Vector Workplace & Facility Management
• Founder & managing director
• 00 353 1 864 5292
• 00 353 86 820 6770
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BIFM
Economic Environment in Ireland
• In the last 10 years, economic growth has been rapid
• 2000-2003, GNP increased by 20.6%, GDP by 24.5%
in Republic of Ireland
• Economic activity in NI increase by approximately
15% over the same period
• Manufacturing output increased by 27.5%
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BIFM
Economic Environment in Ireland
£16,000
£18,000
£20,000
£22,000
£24,000
2000 2001 2002 2003
GDP - per capita GNP - per capita
CSO Data
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BIFM
• Fueled a dramatic rise in building stock
• Oversupply ensued
• Vacancy rates of 12-15%
• isolated pockets over 70%3
Economic Environment in Ireland
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BIFM
Background to Industry
• Origin in 1990’s in Property Management
• Rapid growth in key market sectors – ICT, Financial Services and Healthcare
• Drivers came from the private sector in ROI, with NI and UK drivers being Govt & Public Sectors
• In 10 years, PFI accounted for £40 billion of projects, in Ireland still in its infancy
• ROI market driven by MNC’s and indigenous corporates
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BIFM
MARKET ESTIMATES
BIFM
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BIFM
Market Sizing
• 10-15% of potential market currently being addressed, compared to c.35% in the UK
• Market sizing is highly subjective, with widely differing estimates – conservatively market size is £1.1 billion per annum
• 40% of the market is currently addressable - £409 m
• Top 15 companies account for £103 m, equating to an existing market size of £154 m
• Less than 50% of market opportunity being exploited
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BIFM
Market Sizing
Business Type No of Companies
Annual Revenues
Average Revenue
Property/Real Estate/FM
1,375 £ 347 m £ 252,000
Technical Services 2,724 £ 1,200 m £ 440,000
Cleaning & Security 594 £ 389 m £ 655,000
Total 4,693 £ 1,936 m £ 413,000
CSO Data, 2001
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BIFM
Structural Changes – in ROI
• In 2000, 70% of top 10 FM Companies were indigenous companies
• In 2005, 2 of the 7 are still independently operated
• 3 acquisitions by European companies
• 1 acquisition by UK based operator
• 2 of the companies merged
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BIFM
M&A Activity
• Indicative of both a maturing and an attractive market
• Buy vs build decision needed by potential market entrants
• Barriers to entry are local customs, practices and relationships
• Low level of corporate activity in FM sector in NI
• High level of M&A activities among focused service providers, in both NI & ROI
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BIFM
INDUSTRY DRIVERS
BIFM
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BIFM
Drivers
• Despite attempts to differentiate, cost has become the primary motivator
• In the last 18 months, 4 major MNC’s have undertaken Reverse Internet Auctions, with contract values in excess of £30 million
• Typically will result in reductions of 10-15% in cost but with may result issues in quality & service delivery
• Ignores the intangibles of a service industry
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BIFM
Dynamics in Northern Ireland
• Market driven by public sector
• High profile contracts include
– Equality Commission Court Services
– CSA PSNI
• PPP/PFI important to the NI FM Market
• DBO contracts with 20+ year contracts
• FM companies origins in the construction industry
• Less emphasis on cost, with wider range of criteria
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BIFM
Public Sector in Ireland
• Low level of outsourcing in ROI
• OPW has led the way in a number of pilot projects
• In general, have examined discreet packages of single focused services, rather than integrated systems
• Outsourcing has strong political and social issues, with less emphasis on cost motivations
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BIFM
International Trends
• Trend by MNC’s towards international contracts
• Ireland, both North & South get incorporated to larger UK and European regional contracts
• C&W, Hewlett-Packard, IBM, Ericsson
• Can be both a threat & opportunity to firms
• Local companies need to create alliances and JV’s with companies in other geographical zones to compete
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BIFM
ALIGNMENT & DEVELOPMENT
BIFM
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BIFM
• Corporate goals must be supported by a companies business goals
• Award criteria should reflect this objective
• Where appropriate cost should be criteria, but should vary for different business cycles and sectors
• Inclusion of the Intelligent Client Function
• Outsourcing should never include responsibility and strategy
Alignment
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BIFM
• Lack of strategic vision within the industry
• Position and perception of FM’s both within client and supplier organisations is low
• Trend now developing towards improving education for the sector
• Degree level, MSc, MBA, CPD all now available
Education
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BIFM
OUTSOURCING CRITERIA
BIFM
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BIFM
Service Positioning
L
High
Co
mp
lex
ity
Customer Business Risk
Cleaning
Catering
Security
ITTelecom
Energy
PM
Maintenance
CAFM
Space Mgt
Landscaping
Acquisitions
HighLow
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BIFM
In House
Outsource
Redefining the Core Business
High
Co
mp
lex
ity
Customer Business Risk
HighLow
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BIFM
• Outsourcing and integrating services, including the management of the services and systems
• Out tasking of services, and retaining the service management within the client organisation
• Demise of the managing agent business model
• Perception of control is illusory
• Efficiencies & quality typically improved with the use of a quality integrated service provider
Outsourcing of Activities
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BIFM
PPP/PFI PROJECTS
BIFM
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BIFM
PPP/PFI
• Ireland’s first PPP project in 1816 – follow up was slow !
• In ROI there are currently 69 projects underway
Roads and Transport
Water & Waste Treatment
Education & Health
Others
20 % 68 % 7 % 5%
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BIFM
• 3 main FM contracts in Republic of Ireland
• Schools project – 5 no schools in Cork, Monaghan, Clare & Sligo
• National Maritime College
• Cork School of Music
• Feedback on those in the operational phase has been positive
PPP/PFI – in South
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BIFM
• Market place more sophisticated & mature
• Wider range of projects
– Drumglass High School
– Wellington College
– Balmoral School
– Belfast City Hospital
• Quality, deliverables, environment and most importantly the customer output has all improved
PPP/PFI – in North
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BIFM
• Level of adoption and expenditure far higher in the UK
• FM element for the School of Music estimated at £1 m per annum, over 30 years
• Maritime College + 5 Schools has a combined value of £75 m
• In North Lanarkshire, R&M contract was valued at £300 m over 10 years, which won an award for best practice in an FM PPP Initiative
• Norwich City council, FM contract for £300m, again over 10 years
Contracts Between Ireland & UK
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BIFM
• UK Market is substantially more mature than the Irish market
• Irish local authorities substantially more fragmented, with lower population densities
• Housing stock in North Lanarkshire – 143 local authority dwellings per 1,000 population, in Ireland, the comparative figure is 21
• Again political and social environment mitigates against service outsourcing and PPP unlikely ever to be adopted to the same level as in the UK
Contracts Between Ireland & UK
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BIFM
Market Dynamics for LA Outsourcing
Area No of Dwellings Population Average per1000
Ireland (ROI)* 107,253 3,917,000 27.4
North Lanarkshire 46,000 321,000 143.3
*CSO Data, 2002
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BIFM
THE FUTURE
BIFM
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BIFM
• High level of mergers & acquisitions taking place, reducing the number of competitors in the market
• FM Providers vertically integrating along the value chain
• Need to provide a full range of services to the customer
End Result
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BIFM
• Continual erosion in margins for suppliers, coupled with increases in quality demands
• Improvement in public perception of the role of Facilities Management Professionals
• Increased competition for construction looking for recurring income streams
The Future
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BIFM
THANK YOU
BIFM