by Shane Henson — December 4, 2013—A report released earlier last week by the Middle East Facility Management Association (MEFMA) revealed that an estimated $21.8 billion was spent on facilities management in the Gulf Corporation Council (GCC) region of the Arabian Peninsula in 2012.
For the study and report, GCC FM Briefing 2013, managed by Credo Business Consulting, 35 of the region’s top companies were interviewed to identify current trends in FM in the GCC. The report concluded that total spend on FM is being driven by a combination of the gross domestic product (GDP) and construction expenditure.
The study also revealed that:
- Supplier contract margins are down from a pre-recession high of 15 percent to between five and ten percent.
- Higher margin opportunities are likely to exist in specialized sectors such as healthcare.
- Price remains the most important selection criteria among clients.
- Customers are still apprehensive towards contracts beyond three years.
The research also compared facilities management in the Middle East with more developed markets, and identified four different categories of development to protect margins—Bundling and Total Facilities Management (TFM), Performance and Control (e.g. use of outcomes-based contracts), Contract Length and Investment, and Delivery (e.g. increasing self-delivery and use of technology).
The report found that the degree of progress within these categories provides insight into how mature the market is, and that suppliers in the United Arab Emirates (UAE) have made most progress within Performance and Control and Bundling and TFM to date.
When speaking with customers, awareness of the benefits from these approaches was understood to varying degrees, and most were open to discussing them further with suppliers, says MEFMA. The one exception was regarding Long Term Partnerships and Investment, where customers were apprehensive about the risks from being tied into contracts over three years. As a result, the study expects to see most development in Bundling and TFM, Performance and Control, and Delivery in the short term.
Commenting on the report, Ali Al Suwaidi, MEFMA board member, said, “Our collaboration with Credo has helped MEFMA highlight the value of FM in specialized sectors, the importance of innovation and integration, and the advantages of longer-term contracts. It is now important that we use the insights and continue to promote FM in less-developed markets where the margins are still high.”
