Assessing the current status, trends and future of the facilities management services market in the UAE.
The overall value of the U AE Facilities Management (FM) services market has been revised by relevant authorities to a current figure of AED 20 billion per annum with a rising trend to AED 25-30 billion by 2022. Although there are over 3,500 registered companies in the FM service sector in Dubai and an estimated 8,000 plus in the UAE, the market share in major contracting works is being invested into and advanced by mainly three market players - semigovernment FM service entities, development-contractor companies diversifying into FM services and JV companies between the UAE and international FM services companies with the experience and technology.
These entities have targeted with major investment, the growing and long-term sustainable market of the FM services sector. A shift in strategies from sub-contracting out soft services is also taking effect, with many former FM management companies now diversifying by incorporating the soft services requirement into their own operational profile to enhance their value/profitability, control of operations and the market’s growing requirement of one controlling, reporting entity for all their company support service requirements.
The current market for labour in the UAE is developing into a volatile scenario, with employees becoming more aware of their worth. In general terms, being directly approached by rival companies, the awareness and ability to change employment of staff (after 2 years on labour visa or 1 month on immigration visa) for increase in salary or better conditions of employment and lifestyle has increased. In addition, in the client base, there is a growing awareness of contracted workers’ conditions and salaries, with many now incorporating minimum salary levels and conditions into their tender-contracting processes.
The general market trend in available business opportunities in the FM sector is upwards, with new properties and developments completing and entering into the overall market across the UAE. However, there are major stumbling blocks in certain areas, namely rising general cost, cash flow, labour recruitment availability, coupled with salary levels, and a major reluctance by client and government entities to accept the price/cost increase in the contract marketlace (more prevalent in Dubai than in Abu Dhabi and other Emirates). The trend towards 3-5 year fixed price contract works is concerning since inflation costs, workforce retention with annual salary increments are not being accepted into negotiations for these term contracts, which is unrealistic in terms of maintaining the standards and viability of the overall contract market.
There is a growing realism in business economics that governments, which invariably issue the major contracted works into the FM service sector, play a major part in the liquidity cash flow requirement of the sector and their chain supplier. This in turn - with the FM sector being a major employer and business generator - has an effect on the countries’ overall economic sustainability and outlook. Many now bring into formal law and structure compulsory payment within 30 days of invoices for government works, thereby infusing the supply chain and general economy with liquidity and sustainability, with the added advantage of realistic cost savings in their contracted works.
Future factors in the FM Services sector
The requirement for the services sector companies to have ISO standards certification is an industry norm for pre-tender qualifications, and these ISO requirements are being expanded into the individual services field along with customer services, health and safety, environment, etc.
The new ISO 41000 standard for FM companies has also been introduced, and it would be a natural step for the FM sector companies to become mandatory members of MEFMA (Middle East Facilities Management Association) in the future to ensure the sector’s training and operating standards.
Health and safety
A growing requirement for companies in the sector is for qualified H&S officers to ensure compliance, covering all operations and to provide risk assessments of these operations and operational working areas to clients. This will allow market clients to become more aware of the litigation aspect of employees and public safety issues in their premises, potential financial consequences, and the blurring of distension between their own and contracted staff.
The requirement for eco-friendly chemicals and equipment is also becoming a factor in client requirements across the board, with waste treatment, collection, etc., being a requirement relative to the client and public awareness of the environment in Dubai and the UAE.
Labour recruitment and retention
This area is causing the maximum concern in the general market since without it the sector is not sustainable enough to meet demands. Moreover, many major entities are calling for changes in the laws regarding imposition of minimum wage requirements, changes in employment visa periods and types of employment visa, i.e. Immigration-Labour Ministries. (Some of which have been actioned in the security services)
Recruitment from the usual sources in the Asian sub-continent has become increasingly difficult due to their growing internal economies, increased by their governments’ control over the native labour force and the imposition of minimum wage and conditions for external recruitment from their countries.
The increasing standard requirement from the market is also becoming a major influencing factor in costs as minimum acceptance levels are now the norm. This includes the ability to read and speak English for basic staff, skills training requirements to international standards i.e. BICSc (British Institute of Cleaning Certification) and the levels of living conditions provided for employees. With the market activity moving away from the previous norm of just providing labour, the structure of retained, qualified and career-oriented personnel at all levels of employees is required. Market clients are considering the contracted service sectors’ employees as part of their own workforces and brand promotion.
This has already been mentioned in terms of labour recruitment and retention, with BICS qualification for all levels in the cleaning operations becoming a norm requirement, which requires the sector companies to expand their training facilities and employee opportunities to comply with the demand in all operational area of the FM sectors.
A major factor coming into play relative to costs and control is the expanding of AAM and CAFM computer systems, which is a major investment requirement for the FM services sector in the immediate future. This allows companies to control and monitor the contract standards, KPI requirements including staff, equipment mobility and utilisation cost factors.
The sector’s investment input into technology requires streamlining of employees, timecard, salary payment, visa ID, recruitment requirements, which are a must given the UAE government departments’ advancement in e-government as well as the sector’s cost-saving measures.
This investment development also involves accounting and e-billing/ invoicing systems related to cost saving, transparency, efficiency and cash flow for the sector’s future sustainability requirements.
As the outsourcing of business support services continues to develop and the requirement criteria expands, FM companies will be required to develop their expertise and diversification in their operational areas to meet those requirements. These are being generated by new government laws and instructions issued by various authorities covering health and safety, hygiene, environmental, technological, material advancement and availability of the workforce employed. The market clients continue to strive for cost savings with their compaction and concentration directed into their core business activities; the creation of ongoing opportunities for additional outsourced services is continuous.