Más contenido relacionado

Más de Loay Ghazaleh MBA, BSc Civil Eng.(20)

Developing Facilities Management in a Rapidly Changing Business Environment

  1. Developing Facilities Management in a Rapidly Changing Business Environment Strategic , Operational and Financial pointers to best practice in the Planning and Management of Facilities Sept. 2014
  2. Section Topic I What Is Facility Management? II Planning for Facility Management III The Design of the Work Place IV The Delivery of FM Services V Building Operation and Maintenance VI FM Contract Management VII Measuring Performance (KPI’s) VIII Technology for FM IX FM Evolving Markets X FM Valuations & Stock Price XI Facility Management M&A XII Prospects of the FM Industry
  3. The Facility Management Industry • The profession of facilities management now occupies a prominent position in the real estate sector. This has much to do with the excellent work of the FM organizations, particularly BIFM, FMA, FMA Australia, Global FM, IFMA, and RICS Facilities Management Group. • Facilities management sector is populated by a wide range of professionals from a variety of different backgrounds, many of whom have come to the profession with experience in the construction and servicing of buildings. • What is required of facilities managers is much more than technical skills – it is to understand the productivity effects of working environments on occupiers, work style flexibility, computing and mobile technologies, strategic business planning and, sometimes, the value and marketability of the facilities being managed.
  4. Official Magazine of BIFM The digital Magazine for FM Industry
  5. Some FM Organizations RICS - FMG Royal Institute of Chartered Surveyers – FM Group BIFM British Institute of Facilities Management CIBSE Chartered Institution of Building Services Engineers CIPS Chartered Institute of Purchasing and Supply Euro FM A Europe-wide alliance of FM organization’s FMA Facility Management Association of Australia FMA Facilities Management Association Global FM worldwide facility management organization’s HefmA The Health Estates Facilities Management Association IFMA International Facility Management Association CSSA Cleaning & Support Services Association
  6. So what is FM? There is little unanimity about the definition of facilities management as it can be viewed from different perspectives. RICS Definition; “The effective management of place and space, integrating an organization’s support infrastructure to deliver services to staff and customers at best value whilst enhancing organizational performance”. So facilities management operations will: • Provide flexible, well maintained and serviced accommodation and supportive technology • Enhance customer experience and enable the efficient delivery of products and services; and • Enhance the organization’s brands, image and financial performance.
  7. Core of Facilities Management?
  8. Importance of Facility Management • The majority of organizations operate from buildings, which represent one of their largest corporate assets and after staff, one of the largest cost liabilities. These assets and liabilities need to be managed with the objectives of the organization in mind, so that accommodation and facilities services strategies are aligned with business strategies and plans. • Many operational managers fail to realize the advantages of this alignment and this can be an expensive oversight, almost certainly resulting in increased costs, with reduced productivity and a loss of competitive advantage. • On the other hand; the facilities management industry needs to dispel the impression that facilities contracts are all about minimum price, delivering minimally acceptable quality services and meeting delivery targets. • The future for the sector depends largely upon a shift of focus to quality, fair price and a core business enhancing service to its customers.
  9. Core Competencies in FM • Building And Workplace Management – building maintenance and performance, environmental services, workspace design and management, technology and communications (ICT) • Financial Management – accounting, purchasing and supply, budgets, business cases • Service Delivery – account/customer relationship management, delivery process and systems, contracts, performance metrics • Compliance – legal and regulatory requirements, in particular for the health and safety of users of buildings and staff; and • General Management – communication, leadership, strategy, change management, procurement and risk management.
  10. The Right Organizational FM Culture • The culture and attitude of an organization towards facilities management is a significant factor in the delivery of a successful facilities service. • To be optimally effective, the facilities function should be recognized and supported by management as a service which will enhance organizational performance. • Only then will fully aligned facilities and business plans be produced and the necessary dialogue take place about upcoming operational changes which will need the support of the facilities team. • REMEMBER; the quality of service experienced by customers depends largely on the capabilities and training of the people delivering the service, no matter how good the process and management behind the scenes. So, it is vitally important to source the right people and to train them in a service culture. FM Service Innovation is the second most important!!
  11. Importance of the Human Element Disney Service Model Smile Make Eye contact Respect and welcome all Value the magic Initiate guest contact Creative service solutions End with a “thank you” Deadly Sins of Service - Apathy (no passion) - Brush-off (To ignore ,..) - Coldness - Condescension (disrespect) - Robotics - Rule book - Runaround (evasive)
  12. Importance of Innovation
  13. Facility Team Organizational Location • Of great importance is the correct placement of the facilities team in the corporate structure, enabling the establishment and maintenance of communication links to all parts of the business. • For facilities managers the focus is on both the built and virtual workplace but the balance is ever-changing and supporting the increasingly mobile workforce means an essential partnership between FM, IT and HR managers in order to support staff as, when and where they work. The ‘client side’ facilities manager The client side or in-house facilities manager is a key member of the central business support management team. This ensures that the team is directly aware of the business strategies being followed and the FM services required by each part of the organization. The ‘supply side’ facilities manager The supply side facilities manager has a dual role of delivering designated services to the client while also managing the service company’s ‘bottom line’ to best corporate advantage. Markedly different skills are required for each role.
  14. Organizational FM Performance In order to enhance the organizational performance, the facilities team needs; • To have good links with, or be a member of, the strategy forming group to understand fully the aims and objectives of the whole organization including those of the individual business units. • To be led by a respected facilities manager who has access to all operational business units • A mechanism to ‘unload’ day to day activity to a service provider, so that strategic, corporate focused activities can continue unhindered • A link to financial planning so that project business cases can be ‘tested’ and performance metrics and benchmarking objectively carried through • A good dialogue with the core support teams and, ideally, an agreement that the facilities manager will take a lead role in organization-wide projects; and • The support of the finance and operational teams when the annual planning and budget discussions take place, to ensure mutually supportive strategies and operational plans are developed.
  15. What Facilities Managers Do? - Services • Catering, Hospitality, Cafe • Cleaning, Internal and external, Pest control • Documents, Copying, Archiving, Printing, Scanning, Shredding • Front of House, Concierge, Conferencing, Help desk, Reception, Switchboard • Logistics, Vehicles, Consumable supplies • Maintenance, Fabric, Landscaping • M&E, Air con., Fire alarms, Lifts, Lighting, UPS systems • Security, Access control, Alarms, CCTV, Asset tagging, Information security, Security sweeps • Staff welfare, Crèche, Gym, Medical Centre, Sports facilities, Staff shop • Telecoms, Mobiles • Utility supplies, Water treatment • Waste management • Workplace, Space allocation, Churn, desk
  16. What Facilities Managers Do?-Management • Administration, Asset registers, records, archives • Business continuity, Disaster recovery, Crisis management • Compliance, Accreditation, Legislation, Policy, Regulation • Contract Management, Specification, Tenders, Project management • Corporate Social Responsibility, Energy, Carbon, Waste, Work-life balance, Sustainability • Customers, Relationship management, Complaint handling • Finance, Accounts, Budgets, Business cases • FM Team, Management, Training, Recruitment • ICT, BMS, Cable management, CAD, CAFM • Networking, linkage with internal & external customers • Performance management, Staff surveys, Benchmarking • Procurement, Services, Utilities, Supplies • Risk, Business continuity, Environmental, Health and Safety, Insurance • Strategy, Business plan, FM vision, Mission & Objectives • Workplace, Design, Work style, Flexible working, Furniture
  17. What Facilities Managers Do? - Real estate • Occupational and Financial Strategy • Asset Strategy and Management • Transactions • Capital Projects • Business Agility • Leasehold Management • Operating Cost Management
  18. Space Utilization
  19. Space and Services Policies and Plans The space strategy is a high level statement of the overall approach to providing accommodation to meet the organization’s needs. The benefits of establishing a space and facilities services policy include: • The efficient allocation and management of space across the organization • Optimum locations for service delivery • Increasingly sustainable delivery strategies; and • The lowering of operating costs and efficient use of capital Once the space policy is developed, work to develop the organization’s space and facilities services plan can proceed. The facilities management team should be part of this planning process to ensure what is proposed can be maintained, serviced and cleaned in an efficient and effective manner and complies with health and safety and other relevant legislation.
  20. Briefing for Office Accommodation • Business - Corporate culture – image, operation, style, quality, sustainability. Will the design and use be a branding opportunity and if so what image is to be portrayed? The balance must be right – not too flashy, but not too ‘ordinary’. • Building - Quality and style, environmental standards, flexibility in use, condition and maintainability. How many people can be accommodated? What are the timescales and numbers of people in the business over the strategy period? How will the building be serviced, security maintained, and services provided, and are there design problems which need resolution? Are there security issues locally which affect design and access arrangements? Does the building comply with all present legislation? What is the BREEAM rating and what can be done (at what cost) to improve its ‘efficiency in use’. Will the building will be rated from an energy efficiency perspective?, what will its compliance be with the occupier’s sustainability policies?, etc. • Work Space - Numbers to be accommodated and type/quality/space/ environmental requirements. Circulation space, furniture and equipment, IT services, space standards, flexibility of space and use, meeting room and quiet room space. Communal and networking spaces at group, departmental or corporate level. What work group adjacencies are required? Catering and welfare services – will child-care be required/provided? • Work Style - Flexibility of work delivery, desk sharing, breakout space, video conferencing, ‘bring your own device’, paperless office, VOIP technologies, anytime, anyplace policies. • Staff - Do I want to work here – what is needed to get me to work here? Space, furniture, welfare facilities and standards, catering, location, parking, public transport, local shopping and other amenities. Is this location safe? Can I afford to work here – expense of travel, parking, shopping, etc.?
  21. REMEMBER; FACILITY Location! • At the onset, the location security and occupational protection should be considered when occupiers are in the process of assessing the suitability of a building for their operations, these include; • Adjacencies, neighboring or sharing occupiers, stand-off areas, the district and its communications, utility supply diversity and other vulnerabilities. • The specification, quality and durability of the structure as environmental factor like temperature, ventilation, air quality, humidity, acoustics and lighting levels have a direct and measurable effect on the wellbeing and performance of office occupiers.
  23. Purpose And Benefits • The purpose of the accommodation and services strategy and plan and the benefits to the organization. • How the strategy has been developed, the alignment with business strategies. • The plan timescale. There may be more than one end date where a number of change programs are running simultaneously. The Organization’s Vision, Mission And Strategy • A statement of the organization’s goals and objectives and the implication for accommodation. The Financial Context • The overall corporate financial position. • The financial outlook and the implications for accommodation and services decision-making. • An estimate of the budget for accommodation change and ultimate operating and servicing costs.
  24. A Statement Of Goals & Objectives • Setting out at corporate level the policy, goals and objectives that will improve delivery. • The corporate approach to the use of accommodation and the quality of facilities services. • The vision of what accommodation will ‘look like’ through the program and at the end of the plan period. A statement of the quality of space and the standard of services is expected. • The sustainability elements of the plan and the changes made to increase the ‘sustainable focuses. The Accommodation And Services Plan For Each Business Unit • A business unit analysis of the effect of the plan on the accommodation portfolio. • The effect on key locations to be highlighted. This charts the change process to align with business requirements. • In separate appendices, a location by location breakdown to show the detail of each asset and any proposed changes, as well as the type of services planned and the estimated capital and operating costs.
  25. Asset Upgrade Analysis • At high level, the key changes required to deliver the plan and the facility service changes proposed. • An estimate of the likely total costs of the plan’s proposed capital requirement. • Accommodation and services – A statement of goals and objectives Definition Of Service Levels To Be Expected • The quality, capacity, reliability, services and responsiveness of the accommodation is confirmed and priced. This will be a balance between affordability, practicality and service quality; • The level is defined and becomes the baseline for performance measurement. • Operating models and resultant changes in inputs and outputs. Critical Success Factors • Business based outcomes and timescales are noted. • This will form the basis for performance management.
  26. Resource Implication Of The Plan • The effect on accommodation and services as well as finance, IT and HR to be noted and this provides further input to the capital and operating plans. • Revenue budget implications will be outlined. • The broad investment and divestment plan will be outlined, capitals spend and returns to be estimated. • The overall approach to sourcing, outsourcing and procurement to be set out as a strategy to be investigated. Performance Measurement • The agreed performance measures to be used relating to the critical success factors and those of all business units across the organization. • The performance measurement system. • Current performance as a base measure and the anticipated performance review steps as the plan proceeds. Organizational Structure • The senior corporate manager responsible for space and services is identified along with the real estate and facilities structure, roles and responsibilities. • Process for overall space and services structure reviews. • Governance and decision taking. • Data management. • Resourcing allocations and capacity management.
  27. Action Milestones • Actions which will be taken over the next 12 months and a timetable agreed for organizational, accommodation and delivery service changes. Review • The success of the accommodation and services plan is measured by the reaction of customers to service delivery and the effect on operating costs. • Reviews against pre-agreed performance metrics to take place regularly and recommendations made about changes to enhance delivery to customers, as well as improvements in facilities services. Risk • An assessment of the risks associated with the accommodation and services plan. • A risk assessment of other resource inputs including financial/budgetary cutbacks and shortage of real estate and/or facilities management expertise, along with the management of all shortfalls. • Business continuity plans. Assumptions And Provisions • The plan will state the base assumptions and any provisos about data integrity, cost estimates, demand forecasts, real estate and services lifespan, and other variables.
  28. Office Layout The adoption of generic open plan office layouts, with even the best workstations and with state of the art technology will not suit every worker. Knowledge workers require a number of different working modes (settings) in order to achieve optimum productivity. These are identified as: • Socializing Work - Team building, corporate identity reinforcement with group delivery of tasks ‘stamped’ with group brand • Collaborative Work - Delivery by working with others, face to face or via video links • Learning and Innovation - Learning from the team and using group power to develop and innovate • Individual Focus Work - Individual, task oriented, work delivery
  29. Notes on the Design of the Workplace • The agility required in most organization’s to bring new products and services to market makes a swift response to workspace layout changes of great importance and an opportunity to gain competitive advantage. • The key to the mobility and productivity for staff is network connectivity for any device and bandwidth availability to support. The adoption of wireless networks in and around physical workplaces adds greatly to employee mobility and connectivity. • The variability of numbers in the workplace and the unpredictability of when staff will be occupying desk space makes the sizing of office space a difficult task. • The use of sensing devices to register occupation densities enables calibration of BAS for energy savings and the frequency of unoccupied office space which may allow release of floor space, thereby saving on overall accommodation costs.
  30. FM Capability Assessment • A decision is made on whether the required facilities management services are likely to be most efficiently provided by in-house resources or through any ‘mix’ of in-house and out- of-house provision up to a total outsourcing solution. • An objective assessment of the capabilities of the in-house team should be carried out as well as a financial analysis of the direct and indirect costs of the various delivery options, so that a decision can be taken on the best value option for the organization. The sourcing of facilities services delivery depends on a large number of circumstances. It may be based on the • Capabilities of the in-house team, • Uniqueness of the services required, • A particular or unusual speed of response requirement, • On the question of overall control or • On the direct and indirect cost of service supply.
  31. Sourcing Options In-house The present facilities team, possibly augmented by agency or full- time staff, runs the delivery of services. In-house with sub- contracting specialists The in-house facilities team, with limited resources, will run some services but will contract with external service providers to cover any skill or resourcing gaps. Establishing a business unit The present facilities team is re-constituted as a separate, free standing services organization, providing services to their organization and with the objective of gaining contracts from other clients. Managing agent In the absence of a sufficiently experienced or qualified facilities team/manager, the appointment of a specialist FM professional to act as the facilities advisor and informed client. This specialist will appoint and manage external suppliers. Contractor/ manager The appointment of an organization to manage all services providers. The appointee is paid a management fee. In some circumstances the appointee is responsible for managing the facilities budget and the payment of all subcontractors. Total FM Total facilities management contracts with a single supplier, taking responsibility to provide all required services.
  32. Notes on IN-HOUSE Versus FM Outsourcing • The in-house team will be familiar with and understand the organization’s operational strategies and different business unit operating imperatives, however • An external supplier might bring innovation and efficiencies that are beyond the scope of the existing team. They will also be more familiar with procedures for help desk, customer relationship management and the handling of change requests. • On the other hand, outsourcing the facilities function will mean a very fundamental change and a possible transfer of staff to an external supplier. • In situations that require specialized servicing, as in, health care, IT, utility or transport such as maintaining the environment and utility supply, security in a data center or acute medical wards require critical environment management (CEM), calling for specialist staff (and training). It is often the case that such facilities service management is retained in-house because it is crucial to the business. • In-house service provision can continue only if it achieves customer satisfaction and best business value to the organization.
  33. Sustainable Property Sustainability and environmental management are important operational criteria for all organization’s and directly affect the corporate social responsibility (CSR) measures which most businesses report on to investors. The main issues relating to buildings and impacting on facilities managers are: • Energy Sources – buying from renewable sources • Energy Usage Reduction - through more efficient heating, lighting and insulation, and building control mechanisms • Construction Materials – buying materials from renewable sources and evaluating materials on the basis of their embodied energy characteristics • Water – recycling and rain water capture • Waste Management – separation and recycling; and • Pollution – more efficient boilers and vehicles. The most effective way to improve environmental performance is to reduce the amount of space occupied. Mixture of real estate, fit-out, distributed workplace and flexible work style strategies will bring reductions in the amount of office floor-space required and at the same time cut the amount of travel by staff to and from office centers.
  34. Building Maintenance • The increasing complexity of buildings and sophistication of plant, machinery and controls means that operation and maintenance manuals are essential information for the facilities management team. For new buildings, the developer’s architect should provide this manual to the owner. • These manuals define the procedures to efficiently operate and maintain buildings and will include detail about the structural specification, mechanical and electrical systems, air conditioning and heating and all other plant and control items, as well as the utility supply capacities and locations. The document should be available both electronically for multiple and remote access and in ‘hard copy’ at the building.
  35. Operating and Maintenance Manual Part 1 - Introduction Contents, use of the manual, emergency information, contacts listing, contractual and service information, utilities suppliers and contacts. Part 2 - Health and safety Confirmation of the legislation applicable. Risk assessments. Waste disposal information. Part 3 - Building description Overall description of the building with outline design and construction parameters. Part 4 - Operating procedures Overview of procedures for operating the building with BMS explanation and set down procedures. Routine inspections. Fault finding and remedial actions. Emergency procedures. Part 5 - Manufacturer’s full listing Full asset register including a complete plant listing, with plant serial numbers linked to supplier information ‘addresses’, including contact listings. Spares listings. Part 6 - Maintenance regime Maintenance procedures for the building and M&E equipment and other mechanical plant. Links to manufacturers’ handbooks/information and to supplier care contacts. Regular maintenance task program listing. Part 7 Full commissioning and certification data. Part 8 Full sets of as built drawings.
  36. Business Continuity Planning • Business Continuity Management (BCM) is the process by which an organization plans to deal with emergency incidents which might otherwise prevent it from achieving its operational objectives. • The purpose of the BCM process is the identification of potentially disruptive incidents and the planning of measures to reduce the likely impact. BCM should be implemented in all organizations as a management system. • A key step in the planning is the preparation of the Business Impact Analysis (BIA), which determines recovery priorities based on an assessment of the effect on the organization of the cessation of one or more of its operations.
  37. Business Continuity Plan Template Process Content and actions Preparation of an Incident Response Schedule Consisting of notification and escalation arrangements, outline procedures for dealing with the most common incidents, contact and check lists. Business Impact Analysis (BIA) The BIA will determine priorities for recovery and recovery objectives based on likely impacts of a cessation of all or some operations over varying timescales. BCM strategies Analysis of a range of recovery strategies taking account of pre-existing resilience and the importance of different products and services in priority for restoration. Recovery procedures The plan made up of the emergency response, incident management and recovery processes. Continuing processes Plan testing, maintenance, audit and reviews on a regular sequence to ensure the plan remains relevant and up to date. BCM becomes a normal business process Education of all staff and senior management team as well as suppliers, and as necessary, customers.
  38. Business Impact Analysis (BIA) • Identification of operations which support key products and services • Assessing the impact over time of stopping any one operation • Estimating the maximum allowable period of disruption after which the organization’s viability is threatened. • Determining the maximum period within which ceased activities must be resumed • Establishing the time required to resume all normal operational levels • Prioritizing of recovery plans to focus on critical activities and services; • Identifying imperatives / external resources to enable recovery of priorities Some of the areas that can be checked include; network and system resilience, cyber espionage and server security, power security and an overall systems risk analysis. Emergencies can include; loss of power, loss of a building, failure of the ICT system, etc. The FM team should prepare plans in great detail to ensure that they know exactly what is expected of each facilities team member from replacement accommodation, ICT set up, replacement furniture, stock, equipment, and temporary catering, as well as, plans to transport staff to replacement locations.
  39. Implementation of BCP • THE INITIAL RESPONSE (The Emergency Phase) - Deals with the immediate actions taken to limit damage and/or safeguard life. The responses relies on the initial incident response schedule of key contacts and the contact ‘tree’ which will run through the BCP. • CONSOLIDATION (Incident Management Phase) - Concerned with limiting organizational damage, managing business impact and planning for recovery • RECOVERY PHASES - The capability to recover by allocating resources and restoring an acceptable level of service • COMMUNICATION (Done Throughout) – Announcements are made as soon as the emergency occurs, followed by regular updates to ensure awareness of the emergency and the plans to return to normality. The messages are communicated by senior managers to principal customers and down the management line to other customers and suppliers and staff.
  40. AACS Automated access control systems AEC Architecture, engineering and construction CTM Counter terrorism measures DCFM Data center facilities management IDS Intruder detection system PIDS Perimeter intruder detection system UPS Uninterrupted power supply system Common Terminology in BCP / FM
  41. Information and Data Management Facilities management information and data handling systems are changing the way buildings and accommodation are designed and managed. Facilities management information systems provide the FM team with two main information flows. • The First, relates to the day to day management of the accommodation and associated assets, which enable the ‘in the field’ teams to carry out their tasks. • The Second, provides analytical information to regularly report progress on the management of the accommodation portfolio. The management information system generates reports on at least two levels: • HIGH LEVEL REPORTS - for senior managers demonstrating the added value to the business of the facilities management operation relating to the objectives of the organization and highlighting where FM has added value. • OPERATIONAL REPORTS - comparing performance against agreed budget, performance targets and showing occupier feedback relating to satisfaction with services delivery. The reporting provides performance trends over time or in the case of external providers of services, during the life of their contract to give the client and occupier a view of supplier performance.
  42. Service Levels Agreements Service specifications and service level agreements [SLAs] are essential documents in the management of facilities. They set the output-driven guidelines for customers and service providers and are used whether the services are supplied in-house or by external service providers. These documents establish: • The essential customer service requirements and minimum acceptable standards • The service quality and performance (the outputs) expected by the customer • Performance measures for the services; and • The agreement for the supply and acceptance of the services. • Conformance with legislative and regulatory framework • Effective maintenance programs help to ensure a safe working environment. Regular forum meetings should enable the FM team, suppliers and customers (occupiers) to decide if new outsourcing arrangements should be tested and/or whether the supply contracts should be re-tendered.
  43. Legislative and Regulatory Framework It is essential for the facilities team whether in-house or external suppliers to be aware of and be fully conversant with all current local regulations and regulatory regimes which governs the operation of real estate and the employment of staff in each of their operational regions and countries like; • Health and safety regulations of staff, visitors and customers • Employment, equality, waste disposal, • Anti-bribery and money laundering • Construction / fit-out related issues like; • Hazardous materials such as asbestos • Pathogenic like airborne bacteria (Legionella), • hazardous dust created during fit-out works • Fire safety, evacuation plans, etc. • Emergency exits, emergency lighting, etc. Regular reports on health and safety performance should be provided by contractors and by the facilities team to senior management.
  44. Facilities Managers Need to be Aware of! • Corporate and, potentially, personal legal consequences of deficiencies in process or personal performance with health and safety-related processes. • Companies and organizations can be found guilty of corporate manslaughter as a result of serious management failures resulting in a gross breach of a duty of care.
  45. Notes on Measuring Performance The methodology of delivery and the effectiveness of contractors and/ or in-house teams should be reviewed periodically in accordance with actual or assumed contractual periods and controlled changes made especially; • Where a performance related payments are included in the contract, as additional payments need to be made to the supplier if performance targets are exceeded. • Where service continuity is key contract condition and failures will result in deductions. These reviews should be on an objective basis and be subject to stringent business case analysis so that there are visible business-led reasons for making any changes. FM Delivery profile matrix is sometimes used to measure facilities management practice and identify the capacity and capability of the operation. Each assessment area is broken down into a number of sub- sets and scored individually. Action plans can then be drawn up to ‘plug the gaps’ and show where additional training and support may be needed.
  46. KPI’s Examples • The first popular measure is the cost/efficiency especially for office portfolios. Related metrics in common use are cost per sq.ft/meter of space, real estate cost and space occupied per employee, cost per workstation. • The second most popular performance measure looks at service levels achieved especially for other portfolios. This is a ‘softer’ measure which tracks response times, maintenance issues resolved, workplace environment and the like. • Employee satisfaction is the third most popular; presumably sourced from occupying customers, however, the effectiveness or productivity of the accommodation and services on the efficiency of the workforce is rarely considered. • Recently a growing use of corporate social responsibility and environment-related measures such as carbon ton per employee are employed.
  47. Scorecard Approach Objectives Operational measurement areas for accommodation and services Measurement methodology Strategic Assisting in achieving organization’s objectives Improving quality of services and accommodation; increasing efficiency of space Metrics associated with space efficiency and satisfaction with accommodation and services Customers & stakeholders Satisfied customers, staff and stakeholders Talking to customers/staff at all levels about the accommodation and services Survey of customers; stakeholder surveys; stakeholder interviews Operational Excellence Effective and efficient operations Better space promotes improved ‘quality of life’ and increased productivity; flexible working; efficiency in space Satisfaction with accommodation; space quality; servicing standards; occupational levels; availability of flexible working ‘tools’ Financials Value for money; budget adherence Financial metrics Operating costs; capital budget Improving & Learning Best practice captured and new ideas continually trialed Performance compared to other organization’s; research about new ways of working/delivery of services Benchmarking performance and learning groups; measurement of performance in research trials
  48. EXAMPLE1 – STRATEGY A Selection Of The Questions Might Look Like: • Are accommodation and facilities management services considered as part of the strategic planning discussions for the organization and its operating units? • Does this extend to detailed discussions about right place, right space, right services, and right cost for each operation? • Has the organization considered a number of solutions to the supply of facilities services – outsourcing in part or in total. • Have all options been systematically and objectively analyzed? • Is there a system for regular reviews of the services supply strategy, to ensure that changes in operations are reflected in accommodation and service supply changes?
  49. EXAMPLE2 – PERFORMANCE MANAGEMENT A selection of the questions might look like: • What arrangements are in place to measure the performance of the facilities team? • What arrangements process exist for reacting to these performance assessments • In relation to service delivery, what methods are used to check the quality of services delivered to customers? • How objectively are these results analyzed and what process is adopted to address shortfalls in performance? • How does the facilities operation assess its performance compared to other similar operations in the sector and against the performance of external service providers? • Is this achieved by benchmarking with other sector organizations, using information that comes from services provided by both in-house and external facilities teams?
  50. Technologies Avalable for Facilites Managers These technologies benefit the facilities manager by providing predictive tools against which to measure the building in operation, enabling the infrastructure to be benchmarked against its virtual model, as servicing, maintenance and refits are carried out. New Platforms / Hardware • Cloud Computing which enables access to corporate information / software from any place, particularly applications like web based CAD delivered as a service over the Internet • Digital Camera Technology assists with, for example, remote security and remote maintenance inspections. • RFID (Radio Frequency Identification) will track assets, enabling immediate inventory updates, asset valuations and improved asset security.
  51. The facilities sector will need to decide how technologies can be used to enable the more efficient management of buildings and thereby add value to the organization’s
  52. New Software in FM • FM teams are used to CAFM (Computer Aided Facilities Management) and IWMS (Integrated Workplace Management System), which are useful in facilitating the delivery of services which support operations. • BIM (Building Information Modeling) will lead to improved design, servicing capability, more efficient workspaces and energy savings through pre-delivery modeling, with 5D BIM technologies offer the interoperability of CAFM and BIM systems with time and cost data, to produce the prospect of real time or predictive management of space, equipment, utilities and working environments. • More recent developments have seen a further advance of BIM: 6D BIM which adds the Operating and Maintenance Phase (that is facilities management) to the BIM process.
  53. IT IS ENVISAGED THAT; • In the workplace, the impact of gestural interfaces such as Kinect will change the way occupiers operate. Kinect is a motion sensing input device by Microsoft based on a webcam-style device. It enables users to control and interact with hardware without the need to touch screen or keyboard, through an interface using gestures and spoken commands. • Nanotechnology will eventually have a profound effect on materials, servicing products, energy consumption and much more. Nano technology is the engineering of functional systems at the molecular scale. Constructing or reconstructing building materials opens up the prospect of new materials with longer maintenance free lifecycles. • Motes will provide un paralleled technology for remote sensing of, among other things, workplace environments by providing remote information retrieval for the facilities manager who may then respond by adjusting building management systems to save energy or improve working environments. Motes form an integral part of wireless sensor networks (WSN), consisting of spatially distributed autonomous devices which use sensors to co-operatively monitor physical and/or environmental conditions – temperature, sound, vibration, pressure, motion or pollutants, at different locations
  54. The Trend For Interoperability The trend is for the interoperability of pre-existing systems with GIS (Geospatial Information Systems), RFID (Radio Frequency Identification), building control, security and other systems to enable the facilities manager to remotely manage a facility. Interoperability can be seen in; • BIM Storm is a Cloud computing collaborative process that leverages web- based BIM capabilities to enable data sharing among multiple software programs including BIM software, GIS systems, Google Earth, Excel and other sources, and even hand drawings. These online ‘data swaps’ allow large amounts of business processes to be substantially reduced in duration while improving accuracy by not recreating data at each step. • SharePoint uses the ‘cloud’ to store, synchronize and share important content with teams. This may vary from FM building/service information to team management/HR information. The system gathers information from various locations and priorities work tasks intuitively. • Newforma Project Centre software is the building and infrastructure industry’s most integrated and comprehensive solution for managing all forms of project information, whether at the office, from the cloud, or on the move. It has web access and seamless connectivity with other companies. • HOWEVER: the traditional property management programs and accounting systems do not link seamlessly with the facilities-focused systems.
  55. BIM for Facilities Managers The speed with which BIM is developing suggests that it will soon become a vital part of the facilities management portfolio of aids. BIM facilitates better management of building life-cycle and space management requirements by: • SIMPLIFIED PROJECT DELIVERY. The use of BIM templates greatly simplifies project delivery, for example, where buildings are refitted with similarly specified finishes on all floors or a retailer is refitting a portfolio of stores in a similar manner. • EFFICIENT PROJECT DELIVERY. The availability of project information on line with the tracking of design changes and delivery will increase the efficiency of project management, improving completion times and reducing delays. • SPACE MANAGEMENT. The 3D BIM formats make the planning and subsequent management of space much more efficient. • VISUALIZATION. The powerful 3D capabilities of BIM and its capability to display potential and actual changes over time (4D BIM) will facilitate work scheduling, the tracing of design ‘clashes’, change tracking and the training of facilities and engineering personnel. • THE MANAGEMENT OF SECURITY AND EMERGENCIES. BIM will assist with the analyzing and planning for emergency management, escape routes and capacities, blast zones and setbacks and the management of CCTV zones, scope and viewing. • COLLECTION, ANALYSIS AND DISPLAY OF DATA. BIM can be used to collect, analyze and manage static and real time data about how a building is operating, what parts are occupied and enable the better management of space, energy and facilities team resources.
  56. The FM-BIM Vision
  57. Project Stages Change Effects
  58. The Impact of M&A on FM Models Regional FM markets around the world are at different stages of development. The UK is generally accepted to be the most mature market with Western Europe and the US following close behind. Wave 1 – Single Service FM Wave 2 – Multi Service FM Wave 3 – Local TFM Wave 4 – Multi National TFM
  59. The Evolution of FM Models There are four distinct phases or ‘waves’ of development as a market moves from the early stage use of dedicated single service providers, up to the use of global cross- border TFM providers. M&A plays key role in enabling an FM provider to move through each wave; DIVISIONS ATRE SOME TIMES BULLRED WITHIN A MARKET! • Wave 1: Fragmented Immature Market - Single-Service Offerings Wave 1 is populated with predominantly local single service suppliers offering a single support service such as cleaning , catering, manned security, etc. Acquiring same service businesses to create economy of scale • Wave 2: Maturing High Growth Market - Multi-Service Offerings This wave is characterized by single service providers moving to two or more discrete FM services. Market begins to polarize with larger FMs competing with multinationals for outsourced contracts. Companies acquiring additional services • Wave 3: Consolidating Mature Market – Local TFM Suppliers In third wave few large TFM suppliers dominate, providing all FM services, self-delivered or subcontracted, through one contract as a one stop shop. Acquisitions done to consolidate markets • Wave 4: Expanding Mature Market – Out Bound Multinational TFM In wave 4 multinational TFM providers are present looking to deliver high quality services for multinational clients and local customers expecting western quality services. Acquisitions in developing markets are done in line with multinational growth and coverage strategies seeking new geographies.
  60. Mature Markets - Outbound M&A and Consolidation UK & France Tier - Outbound M&A • UK- The world’s most mature FM market and home to some of the largest FM players with considerable outbound M&A activity by large and mid-market players. • France - France is close behind the UK in terms of development with several world class FMs engaged in fourth wave M&A around the world. Large corporate customers are very sophisticated, below this level customers are still cost conscious and wary of full outsourcing. North America Tier – Domestic Market Focus • Very sophisticated at the large corporate level; a huge market comprising many regional sub-markets. There are few fourth wave participants as most providers are focused on their domestic markets which still offer consolidation opportunities and strong growth potential. Japan Tier - Domestic Market Focus • Although a developed market, M&A activity has been focused on domestic targets. Aeon Delight, Japan’s largest FM by revenue, has strengthened its market position by making a number of strategic mid-market acquisitions including A-Z Service and Kankyo Seibi.
  61. Fragmented Markets – Local Consolidation Netherlands, Germany & Spain Tier – Local Consolidation M&A • Netherlands - A number of prominent global FMs are domiciled in the Netherlands including BAM Group, Facilicom and Imtech. Most M&A activity is confined to European consolidation. • Germany - Germany’s FM market is still relatively fragmented with the top 10 FMs accounting for only 10% of the total market. • Spain - The Spanish market is populated with strong infrastructure and construction companies. The FM market remains fragmented and less mature despite the presence of leading players such as Eulen and Clece. Russia Tier - A Split City Third Wave & Regional Second Wave Market • Large and polarized market with the rich major cities embracing FM services, yet the poor regional markets relying on mainly single service operations. Inbound M&A has been limited; nonetheless some high profile global players already operate in Russia – for example Sodexo, Facilicom, Colliers and ISS.
  62. Immature Markets – Inbound M&A China – Strong Domestic FMS Present Rapidly maturing market dominated by cheap labor yet with significant potential. Inbound fourth wave activity and the emergence of strong domestic FMs are evident. ISS, entered the market by acquiring three market-leading businesses (catering, property management and cleaning). The growth in the property and industrial markets is significant yet procurers of FM services remain relatively unsophisticated. This will change as standards improve and infrastructure becomes more complex. The three largest foreign FMs are Jones Lang LaSalle, ISS and Johnson Controls. India - Weak Domestic FMS Total facilities management providers in India are scarce with a lack of local FM companies offering hard FM services as well as soft. In 2012 OCS (with a strong presence in Thailand, China, and Singapore) acquired Indian FM business Absotherm Facility Management Services (one of the few domestic pan- India TFM companies) and subsequently acquired Mumbai based Radiant Hospitality as part of entry plan into the region. South America Tier - Immature FM market key target for fourth wave acquisitions by the leading multinational FMs. There have been notable fourth wave deals across South America in the security segment. Securitas and G4S in particular have been expanding aggressively into the region. Brazil is the most developed M&A market. Sodexo, for example, acquired Puras do Brazil (catering and FM provider) for US$740m in 2011. South Africa Tier - Inbound M&A – Partnering International interest has been rising. Multinationals have tended to enter the market with local partners as a way of accessing large government contracts. Compass has made several acquisitions in the South African market since 2008. Middle East Tier - Pockets of Strength - Partnering The region as a whole is immature though there are pockets of strength particularly in UAE and with lesser extent in Qatar. The country with the largest potential is Saudi Arabia. Fourth wave M&A has been limited in the region with most foreign FMs electing to partner or form JVs with local firms to enter what is a relationship-driven market. Interesting features of the market include a modern property infrastructure which is only just beginning to need serious maintenance, and a high proportion of domestic property needing FM services for shared areas.
  63. Multi Nationals in FM Emerging Markets • The fourth wave of M&A activity in the FM market sees larger players becoming increasingly global, turning to the immature, high growth markets of South America, MENA and Asia to compensate for their competitive and low growth domestic markets. • This development is an investment in the long term as emerging markets are risky and growth can be elusive due to the lack of sophistication of local customers. • The drivers of this activity are two fold: pressure to grow shareholder value and demand from an increasingly multinational customer base for cross-border provision of FM services. Customers want reliability, quality and administrative ease, as well as the cost savings that come from using a single global FM supplier. • Corporate social responsibility (CSR) continues to be a priority for customers’ agendas and working with trusted suppliers mitigates the potential negatives of encountering corruption or poor working practices that are common in emerging economies. • Market entry strategies differ. Some FMs have followed their multinational customers and then seeded domestic customers around these larger contracts. Others have acquired local delivery capability, established joint ventures, or taken the low risk approach of operating a white collar managed service offering.
  64. Evolving FM Delivery Models • Strategic push by domestically-focused players to consolidate the market – especially to combine hard FM services (utilities , M&E , maintenance and fit out subsectors) and soft services in order to compete for the larger multi-service bundled contracts. • FMs continue to bundle services in response to pressure from customers wanting cost savings by procuring from fewer suppliers. Customers perceive self-delivered services to be better value for money and increasingly expect FMs to self-deliver core services. • The TFM model of delivery continues to grow its share of the larger contracts market, putting pressure on growing FMs to invest in high caliber people and systems to be able to manage a single source contract across large or multi-site customers. • FMs continue to look to move up the value chain of services, seeking to add niche services in energy and green sectors. Customers perceive these services as adding value rather than just a necessary cost. • Sustained economic pressure is forcing FMs to cut pricing or risk losing customers. Competition has increased and FMs need to work harder and become more efficient. • In order to protect margins, some FMs are targeting more resilient end markets, such as the defense and pharmaceutical sectors. Customers in these sectors are less focused on short term cost reduction initiatives and more on avoiding business disruption.
  65. Targeting Multi Service Bundled Contracts • Seeking opportunities to create major economies of scale is important in the current environment. For example, the very largest groups like Compass, Serco and G4S are driving much of their growth from international operations. • Targeting international growth markets requires major investment and is risky. Instead, the big strategic driver for more domestically focused players is to consolidate in order to position for bigger, bundled local authority contracts. • On the local authority’s side, agencies are looking to focus their spending on fewer outsourcers in order to achieve the budget cuts. • Also the trend in the private B2B segment towards multiservice bundled contracts and access to integrated services is clear. Example, the UK MITIE group securing its largest ever £775 million contract to supply integrated FM services to Lloyds Banking Group over five years. • However, some public & private sector buyers argue against bundled services due to increased risk with one bundled contract and a feeling that multi-service providers can't live up to the quality delivered by more specialist single-service contractors.
  66. Changing FM Landscape & Blurring Boundaries • Likely, the FM industry is going to result in a sector where fewer, larger players are geared towards chasing a smaller number of more significant contracts. In this sort of environment, winning the big, headline-grabbing contracts will need to become a more regular event as failure to capture them could have a significant impact on investor sentiment. • The other clear trend that is likely to continue as the market consolidates further is the drift in core service offerings, which is seeing some hard FM specialists become more capable in soft FM areas and others going the other way. Inevitably this will continue to blur the boundaries between the two areas of the market.
  67. FM’s Valuations - Influenced By The Heritage! • Construction/Engineering-Led FMs (5x-7x EBITDA multiple) These FM’s are predominantly maintenance focused businesses with a project completion culture with some cyclical price trends. The lower multiple is due to reliance on blue collar workforce and the lack of visibility of earnings from project-based revenues. • Support Services FMs (7x-9x EBITDA multiple) The support services FM’s culture is focused on delivering against service level targets and are the most resilient over hard times as increased outsourcing and a desire to save costs in a recessionary market balance increasing downwards margin pressure from customers. The mid-range multiple is influenced by the increasing trend of outsourced facilities services, the visibility of earnings from long-term contracts and the increasing provision of technical services. • Property Services FMs (9x-11x EBITDA multiple) These FM’s are excellent in systems and the provision of a wide range of bundled services that keeps margins high. The higher multiples are due to the provision of higher margin supported with a diverse white collar range of consultancy and transactional services across the life cycle of a property, however, cyclical trends are there as a result of the greater proportion of transactional revenues. Note on the Valuation of FM Labor Intensive Services Services such as cleaning , catering and security services are now commoditized and there is strong downward pressure on margins. Large businesses reliant on these activities will have to acquire to maintain growth. Sellers of these businesses should not expect high valuations as most large players are content to use third party providers.
  68. FM EBITDA Multiples - Source: Capital IQ
  69. FM Share Price Performance • The strong run of M&A activity in the Facilities Management sector continued into 2014, although the pace of investment has slowed a little but it has been upward since 2009. • However, following a number of broadly positive quarters for the businesses, (FTSE All Share versus FTSE Support Services), share price performance is faltering ...in the face of wider market jitters but, the longer term trend is somewhat more robust with macroeconomic headwinds in Europe • All the indications are that the underperformance of the shares are more to do with broader market jitters than they are of any negative shift in FM sector sentiment. • Overall, it seems more likely that the share price issues are more a result of contagion from other sectors which have been hit by fears over slowing growth in China and the potential for the Fed and other national banks to scale fiscal stimulus strategies.
  70. FM Composite Share Index
  71. PE Investments in FM Markets • A slowdown in trade buyer activity, coupled with renewed growth prospects and improved financing conditions is creating a more fertile climate for PE investments. • Private equity firms have been attracted to the sector because of the high level of recurring revenues, and due to the fragmented nature of the services market which lends itself to a strategy of creating scale by acquisition, and investors can expect multiple arbitrages on exit if business plans are successfully implemented. • A main factor behind a likely reappearance of PE investors in the sector is boosted by the rapid growth in the availability of leverage. This, driven by new alternative debt funds and returning appetite among the main lenders.
  72. Regional Consolidation Examples As has been for some time, rising activity with FM players consolidating their maturing domestic markets – mainly in the smaller and midmarket segments – as companies seek to build scale through consolidation or plug gaps in their skill sets and to move towards the next wave of development; This is evident in the US market with the potential for further consolidation is huge; • ABM expanded its geographical reach with its US$300 million acquisition of the Linc Group in 2011. The acquisition also allowed ABM to enter the growing green construction and energy efficiency segments. • EMCOR’s US$225 million acquisition of USM Inc in 2011 created a more integrated offering for large multi-site clients due to the complementary activities of the two businesses. In signs of consolidation in UK market, 3 stand-out deals in 2013; • The £221 million merger in the domestic hard FM market between construction and support services group Kier and road maintenance provider May Gurney. (Earlier Costain failed in its own bid to buy May Gurney in an attempt to balance out its soft and hard FM offerings). • The £385 million acquisition of Enterprise Group by Ferrovial's UK arm Amey plc. • Amey Plc., part of the large Spanish contractor Ferrovial, paid £385 million to acquire utilities infrastructure maintenance business Enterprise Group Holdings from 3i.
  73. Selected FM M&A Deals
  74. Fourth Wave Deals Cross-border deals accounted for 20% of FM deals from 2008 to 2012 with the balance being mainly domestic infill of additional services. This trend continued well into 2014 symbolizing the ‘Fourth Wave’ deals by large strategic acquirers from targeting new verticals to aggressive international expansion. The maturity of the UK and West European FM markets has driven large players continue to look at emerging markets for growth opportunities. This is aligned with the globalization of the large FM’s client base which is pushing for the cross-border provision of FM services.
  75. Fourth Wave Deals Examples • Two US buyers – Centerplate Inc. and Ameresco Inc. – were among the buyers of UK FM businesses in 2013. • GDF Suez in an effort to boost its energy services and facilities operations in the UK acquired in 2013 UK Balfour Beatty's Workplace subsidiary for around £190 million (earlier large-cap US private equity group Clayton Dubilier & Rice, tried to combine Balfour Workplace and Rentokil FM, two relatively high turnover, lower margin businesses without success) • Large international groups such as Schneider Electric, Bouygues Bâtiments and PGGM have been active buyers in the UK market recently as non-UK businesses seek to tap into the expertise of the UK's highly developed FM players. • PE-backed FM giant ISS’s successful entry to the Chinese market was through acquisitions of leading Chinese catering, property management and cleaning businesses. • Privately owned UK-based OCS Group made a number of small FM acquisitions in India as it attempts to become one of the first providers with Indian national coverage. In April 2012 it acquired Absotherm Facility Management Services and a month later acquired integrated FM specialist Radiant Hospitality Services. • UK-listed catering and FM business Compass Group demonstrated its commitment to globalization by accelerating its acquisitions in the emerging economies. Acquisitions included India-based Vipul Facility Management and Turkish catering/FM group Sofra Yemek Üretim Ve Hizmet.
  76. Private Equity M&A Activity - Examples PE investment in the sector on the average is responsible for nearly 10% of all multi-service global facilities management deals since 2008 with clear preference towards higher margin FM models. Notable PE houses with investments in the sector include GS Capital Partners, EQT, CCMP, Charterhouse, 3i plc, Mercapital and Cinven. Recent deals include the buyouts of Veritek, Nigel Frank and York Mailing, among others; • Jordan Company high profile acquisition of VT Services from Babcock for US$98 million. VT Services, which provides FM services to the US military, will be built up organically and through acquisitions. • Pacific Equity Partners completed its US$720 million acquisition of Australia-based Spotless Group in what will be one of the largest FM deals of the past four years. Spotless had previously rejected a US$657 million offer from the Blackstone Group however shareholder pressure forced the board to accept the latest deal. There have been few exits in recent years, like Apax managing to generate significant value through its sale of pan-European Faceo to Vinci, however, there have been several high profile failed exits, such as Charterhouse pulling the sale of PHS in the UK, and G4S shareholders failing to ratify a merger with ISS.
  77. FM Trends 2012 – 2014 • FM deal volumes have been rising since the low of 2009. Second and third wave domestic consolidation accounts for most deal activity, but cross-border M&A is increasing particularly in emerging markets. • Technical services such as mechanical & electrical (M&E) engineering and energy management are the most targeted segment of the FM market as multinational seek integrated cross-border FM services with local delivery capabilities being essential. • A significant increase in PE investment across a broad size range within the mid-market with focus on niche operators in the wider business support services area as in the security, catering, landscaping and document management spaces • The earlier economic pressures has delayed the exit plans of several large private equity-backed FMs; most notably, GS Capital Partners and EQT failed to exit their investment in ISS as G4S shareholders voted against a merger. • The large listed FMs have performed well compared to global stock markets with the exception of those with high exposure to the construction market. Typical trading multiples have remained at 6x-10x EBITDA. • Customers are driving evolution in FM business models while FMs are more focused on building long term relationships with customers
  78. Prospects for M&A and the FM Industry • Although the trend to outsource facilities services continues, the uncertain economic environment and the desire to cut costs in non-core areas means organic growth rates will remain low in the medium term. FMs consider M&A and partnering a fundamental part of any growth strategy. • M&A activity levels may slow as many businesses that have been active in the M&A markets over the past years need time to digest their acquisitions, however, these consolidation have altered the competitive landscape in the larger FM space. • Companies with non-core assets to off-load have few potential buyers to target as many will not be keen to sell to competitors with the possible exception of overseas bidders looking for strategic foothold in the market. • Valuations in emerging markets are likely to continue to rise as economic conditions begin to improve and demand for the highest quality assets becomes higher as buyers seek to increase the number of value-added services to clients. • The second and third wave markets are likely to continue to consolidate regionally through infill acquisitions of new services and gaining fuller geographic coverage. • Private equity investors can face difficulties to exit some of the current FM businesses while other PE can be expected to return as M&A markets become more positive and leverage improves.
  79. Sources; • Royal Institute of Chartered Surveys (RICS) - Strategic Facilities Management guide 1st Edition 2013. • www.mergers-alliance.com • Grant Thornton Media Centre News - Insights Into Facilities Management
  80. ADDRESS: P.O. box 5 Ministry of Works Bahrain PHONE: +97336711547 EMAIL: Loay.ghz@gmail.com The content of this presentation is intended to provide a general guide to the subject matter. Specialist advice should be sought about specific circumstances.
  81. THANK YOU FOR ATTENDING Request a copy of our presentations at www.big5kuwait.com/presentations PLEASE DON’T FORGET TO COLLECT YOUR ATTENDANCE CERTIFICATE