Not Just Cleaning

FM suppliers are trying to educate the local market that facilities management means more than cleaning and security, and instead includes a host of other critical business services.

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By  Laura Barnes Published  October 8, 2005

|~|serco_m.jpg|~||~|Ask most people in the region what facilities management (FM) means and they will probably mumble something about cleaning and security. However, FM means much more than this, and it is a growing business in the local market. This is particularly true of FM in residential and office developments, but the industrial FM sector is taking off as well. In Dubai alone, the FM sector is already worth around US $218 million a year, and that is just for the buildings that are in use now. Add in major projects currently under-construction, such as Dubailand, the Palms and the Financial City, and the value of the local market will double. However, despite this size, the FM market is still immature, and few organisations truly understand the full breadth of what FM companies can offer, particularly in the industrial sector. “The local market is relatively young in terms of FM for industrial use because there is a general misconception that FM is all about cleaning and plumbing,” says Kevin Brennan, general manager, Serco Gulf. “However, we are trying to bring in the term ‘facilities management’ and explain what [FM] really is. It is not facilities maintenance, and it is not cleaning. It is about managing a total facility, in terms of environmental risk and energy management, for example… For us, it is about defining companies’ business critical systems,” he concluded. A business critical system can be any one of a range of functions that support an organisation’s core activity. A logistics company, for instance, may have an efficient WMS and inventory management system in place. However, in the event of a power failure — like the one that hit Dubai in June — these system will stop working, along with the air conditioning and any refrigeration units in the warehouse. The only way to prevent this is to have a generator and an uninterrupted power supply (UPS) device in place that are capable of supplying the energy needed to support the company’s equipment. “People do not really see computers and back-up power supplies as a business critical system, but they are,” says Brennan. “Indeed, inventory is business critical, but with a UPS in place, the computer system will not go down if the main power supply does. This is all part of FM, but we need to educate the market about this to make it [FM] successful locally,” says Brennan. However, the immature state of the local market from both a customer and supplier perspective is holding back this educational process. At present, there are still only five or six players in the region that are able to provide the complete FM package, which means not just security and cleaning, but also civil and equipment maintenance, as well as more advance consultancy services. The rest of the market is made up of companies that are purely focused on cleaning, and so they have no interest in selling advanced services that are more complex and less profitable for them. “There is simply not as much money to be made in the maintenance of technology s compared to the cleaning side of the [FM] business,” says Brennan. “For example, the value of cleaning the Emirates Towers [in Dubai] is significantly higher than the value of maintaining the Towers, so more and more people are starting up cleaning companies. This is why it is hard to tell the market why facilities management is better,” he adds.||**|||~||~||~|In the local market, FM also bangs up against deep resistance to outsourcing in all forms, which many companies here do not yet fully understand or have faith in. “In industrial facilities management margins are tight, so it is all about educating the clients on the benefits of outsourcing, and the money and time they will save,” says Stuart Thomas, general manager, ServeU. The main target market for FM companies are medium-sized operations upwards, as smaller companies will obviously have less facilities to worry about. Bigger companies, however, will need dedicated resources to look after their properties and perform maintenance. At present though, many of these companies do not see these activities as important or even recognise them as a cost, which means that they do not appreciate that they can do things better and more cost effectively. “The larger, international companies may pay someone full time for being there in case something breaks down,” says Brennan. “However, this is wasting money, as they can outsource to an FM company like ourselves, and then they will only be charged for when something does go wrong, which saves on labour and expenses,” he explains. The scope of work that can be performed by an FM company is shown by Serco Gulf’s relationship with Sharp in Jebel Ali. Serco Gulf’s first work for the consumer electronics-maker was covering civil maintenance, such as repairs to buildings. Later, however, Sharp also outsourced its electrical and air conditioning maintenance and management to Serco as well. The two companies are now in discussions about Serco taking over Sharp’s cleaning, security services and energy management as well. “We offered them something they wanted, but then, after a while, we begin suggesting other services they needed or that would help their business,” adds Brennan. “You cannot just go straight in with a complete FM solution.” “However, Sharp has been with us for a while now, and year after year their contract price has come down,” he adds. “This is because we have been able to impose our plan maintenance system, which means that equipment breaks down less often and that our men do not have to go in for recovery as often.” Some of the biggest users of FM companies in the local market at present are the region’s major free zones. Serco Gulf, for instance, has a FM contract with Dubai Ports Authority, covering Jebel Ali and Port Rashid. ServeU, meanwhile, which is part of Union Properties, controls the management of Dubai Investment Park (DIP). However, while these companies provide FM services for the free zone authorities, themselves, competitors are able to bid for contracts from other companies operating within free zones. “We do not have a monopoly over the whole of the Investments Park, it is a competitive market,” comments Thomas. “Inevitably, some companies may choose us as we have a satellite office and a permanent base [at DIP], but we have to really negotiate for these contracts.”||**|||~||~||~|However, although there is a free market within the free zones for FM services, the company servicing the free zone, itself, clearly has a huge advantage. This is partly because of the greater visibility they have, but also because they have staff based at the free zone already. As such, they can offer better response and call out times than the competition, which is a vital factor in any FM outsourcing decision. “Because we have the site contract, we are based here [at Jebel Ali] and our vehicles and staff are regularly seen, so this does help,” comments Brennan. “We are also able to provide better SLAs [service level agreements], as our response time can be as quick as 10 minutes due to our office being based here,” he continues. The SLA is a vital part of any FM contract. It essentially spells out what the client company wants from its FM provider, with an emphasis on response time, as well as operational costs. “We design a package at the start of the contract and then we go about delivering it,” explains Dilip Khartwani, chief executive, Reliance Facilities Management. “Response time is the most basic component [of an SLA], but it also includes the limitations of costs, agreeing the standards that are on offer and also what the client requests,” he adds. An SLA puts in writing what the FM company will deliver, and it is also how payment is calculated. However, unlike in other industries, an SLA in FM is more of a two-way deal, as the client also has to take on some responsibilities as well. This could, for instance, include taking some responsibility for faulty and old equipment, which cannot always be serviced and maintained by the FM provider. As such, while there are key performance indicators (KPIs) in an SLA in FM, the overall contract and actions that need to be taken are more negotiable than in other industries. “A KPI is when the client says that you have to complete a 90% success rate on call out times, for example, whereas an SLA is where we say that ‘we will ensure your machinery will not break down more than three times, and if it does, we will review the machinery and from there look at the options’,” Brennan explains. “This is much more of a partnership approach and it is this approach that really makes the difference to the successful management of the building and a successful SLA,” he adds. Looking ahead, the global FM industry is also aiming to take on a role in designing building as well, rather than just getting involved after the facility has been open. This so-called ‘futuristic approach’ means that the FM company works with the client before the facility is built, so as to ensure that the most efficient design is used. “There is a small minority of [local] companies using the futuristic approach,” comments Khartwani. “This is when the facilities management company becomes a consultant and they are involved right from the drawing board stage, working alongside the architects and construction companies to ensure the best FM solution for the building before it is built,” he explains. The advantage of the futuristic approach is that it ensures that someone is thinking about the building as a place that will need to be cleaned and maintained, rather than as just a piece of architecture, during the design stage. As such, potential maintenance problems can be solved even before the building work begins. “In Dubai, there are many architecturally wonderful buildings, but on some of them there is no access to windows on the roof, or pressure vessels and generators are placed inside the cavity and then the roof is placed on top of them, for example,” notes Brennan. “Then, in order to change or maintain the generator, you have to take the roof off the building… this may need doing after five years, so it is just not practical,” he warns. A key part of this futuristic approach therefore is for the FM company to be involved in the entire lifecycle of the building — design, construction, handover and then on-going maintenance throughout the life of the contract. This long-term view can dramatically cut the life cost of a building, as maintenance and the management of the building are considered from the beginning. This message is starting to get through locally, and the FM suppliers are also ramping up their offerings to be able to support this goal. As such, local players are hopeful that the Middle East will soon realise that FM does mean more than just cleaning and security services. “FM [here] is probably 15 years behind Europe and the USA, but it is catching up quickly and perhaps in five years time it will be on an equal level with Europe,” says Thomas. “That is how quick it is advancing.”||**||

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