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UK Bundled FM Outsourcing Market within the Healthcare
and Education Sectors at Current Prices 2007 – 2013
The Facilities Management market has shown good
growth since the early 1990’s, influenced by the desire to control
operational efficiencies and costs, as well as more recently a
trend within the private sector for companies to refocus their
business in order to concentrate on core competencies. Further
growth since the turn of the millennium was influenced by the
buoyant state of the economy, as well as public sector developments
funded through the Private Finance Initiative (PFI)/ Public Private
Partnerships (PPP). This has contributed to an overall market value
for outsourced ‘bundled’ services and TFM of almost £14.5bn in
2008.
This report is specifically focussed upon the Healthcare
and Education application sectors, representing some of the most dynamic
end use sectors for outsourced FM services over the last decade.
Accounting for an estimated 18% of the overall market, the market for
outsourced ‘bundled’ services within the Healthcare and Education sectors
is valued at around £2.6bn in 2008, with the development of this market
between 2007 and 2013 illustrated in the chart left:
The UK economy is currently forecast to remain weak over
the short to medium term, with the potential for a slow return to growth
from 2010 at the earliest. While the downturn in the economy is expected
to have a negative impact on the growth of the overall FM market, the
Healthcare and Education sector is due to receive a boost over the short
to medium term from the Government’s decision to bring forward £3bn of
capital spending to 2009-10 from 2010-11 in order to provide some impetus
to the economy. However, this measure will result in lower departmental
capital expenditure limits in 2010-11, resulting in more moderate growth
in the sector in the medium to longer term even though the overall
economy is expected to slowly recover in that period.
The penetration of FM outsourcing within the Healthcare
sector is estimated at around 40-50%, with outsourcing generally higher
for ‘soft’ rather than ‘hard’ services. The healthcare sector is largely
approaching maturity, with limited potential for growth particularly in
the acute hospital sector, although there remain opportunities in the
primary care sector. In contrast the education sector is less mature with
outsourcing accounting for around 21% of overall FM provision by value,
leaving considerable potential for growth. Historically outsourcing has
often taken the form of single service contracts, although TFM provision
is increasing, with a boost likely to arise as a result of the BSF
programme.
As the market has continued to mature over the last few
years, the number of new market entrants has slowed significantly.
Indeed, the FM market has recently experienced an unprecedented number of
mergers and acquisitions, as well as number of business failures and
market withdrawals. The level of acquisitions has been largely influenced
by market maturity, as well as changes in procurement practices, with end
users seeking to reduce procurement costs by using fewer suppliers each
of whom provide multiple services. |
