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Can FM overtake construction?

With developers looking to protect their investments, the facilities management market is set to enter a period of major growth. But can it really be considered a serious rival to construction as one of the most profitable industries in the Middle East? Tim Wood discovers that FM experts are keen to put their case forward.

Facilities management (FM) firms in Dubai have been banging the drum loud and clear over the past couple of months, culminating in a bold prediction: FM will outstrip the booming construction industry by the end of the decade.

Now local developers are actively implementing improved FM strategies — in response to demand from tenants, and to achieve improved whole-life cost savings on their investments.

Described as the “‘contracting out’ of key services to external service providers”, the label does the industry a huge disservice — FM practitioners not only oversee the management of a building from its inception, they also provide a range of services including property strategy, maintenance and operations, and the management of space, energy and communications infrastructure.

Next month sees the debut of FM Expo in Dubai, reflecting the emergence of the industry in the region. And any new FM firms attending will be hoping that they can match the success of two Dubai-based companies that are together responsible for many of the ongoing FM contracts in the emirate.

Reliance FM claims that it is responsible for overseeing 1.2 million m2 of property and provides FM support to commercial and residential buildings, clubs and hospitals — it was formed just three years ago.

And Drake & Scull Facilities Management now has 220 staff at offices in Dubai, Abu Dhabi and Qatar — new ones are due to open in Bahrain and Kuwait this year — while operations are also planned in Oman and Saudi Arabia in 2007.

“There will be huge growth in the sector over the coming years as Middle East developers seek to protect their investments,” says Dilip Khatwani, chief executive of
Reliance FM.

“Developers are now learning that they can optimise their
investment through effective facilities management. The maintenance of new buildings will cost trillions of dollars and FM will play a major role.”

It seems clear that the developers of master-planned communities are now increasingly investing in FM infrastructure, such as Emaar’s latest move to establish a state-of-the-art Command Control Centre (CCC) that will offer remote monitoring of all its properties.

Information will be channelled from each building into the CCC — a central point where any alarms or faults will be detected and addressed immediately.

It will also allow the developer to analyse response times as alarm times are time stamped and will form part of the company’s aggressive energy conservation programme.

“The Command Control Centre is designed to proactively deal with facilities management needs as soon as they are detected and will provide a complete service to our customers and help ensure that customers receive the maximum from their facility manager,” said Ahmad Al Matrooshi, UAE managing director of Emaar Properties.

But has the seemingly sudden growth of the FM industry in the region been too rapid? Edward Sanders, head of FM consultancy at Drake & Scull Facilities Management, has mixed feelings.

“With such rapid growth some companies are bound to lose quality assurance in their solutions delivery, so in this sense the industry is moving too fast,” he says. “But truly integrated and professional companies have global corporate infrastructure, procedures and policies and consequently have a strong position in meeting marketing needs.”

With the explosion of commercial and residential towers showing no signs of slowing down, are there enough FM companies to cope? “A big concern is that less qualified companies are now claiming to have full FM capability, which is simply not the case,” says Sanders. “Instead they flood the market place, deliver poor services and damage the understanding and market value of FM.”

Sanders also warns against construction professionals leaving their industry believing there is now more money in FM. “Some personnel are being drawn from construction, but again, this needs to be a measured migration as a construction professional is a totally different animal from a professional FM.”

So were the developers themselves prepared? Originally, developers may have considered that their costs and involvement stopped at construction completion; as the buildings are new and made from concrete, ongoing costs would be minimal.

But Sanders warns that Dubai has to start looking at the long-term picture, and part of that business evolution is to consider facilities whole life cycle. “They [developers] are painfully realising facilities require continued maintenance, management and operational tasks performed which all have costs attatched.”

Some developers now place a service charge subsidy in the original sale price of the property to off-set annual costs so they can promote their service charges as lower.

Although there has been a great miscalculation and mismanagement of service charges in Dubai, as is already well documented, the market appears to be learning and benefits are already being seen. But Sanders says it is important that home owner groups do not allow service charges to soar year-on-year.

“Although they are still much lower in Dubai in comparison to the rest of the world, developers must spend the time and money at planning stage to have the specific service charges calculated.”

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