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UK Bundled FM Outsourcing Market within Central and Local
Government at Current Prices 2008 – 2012
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This report focuses on the provision of
multi-service or integrated contracts within the Central and Local
Government sectors, in the context of which we estimate a market
size of just over £4bn. The market has seen steady performance in
recent years, and is likely to continue to maintain value around
the £4 billion mark, although there will be some loss as social
housing activity slows.
In the 1990s, rapid growth was experienced in the
FM market as corporations and public sector organisations began to
outsource non-core services. Since the turn of the millennium, the
trend towards outsourcing continued aided by good economic
conditions and high levels of construction.
Uncertainty in the global financial market has
hit business and consumer confidence in recent years. This has
resulted in some slowdown in the outsourcing of FM, with fewer
opportunities available for market expansion.
The central and local government market is
estimated to have grown just 1% in 2010 as, following the formation
of the coalition government, the focus of government policy shifted
away from government spending to stimulate the economy towards
significant public sector expenditure cuts as the coalition seek to
eliminate the structural deficit.
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There is hope that the budget
cuts will see departments, particularly in local authorities where FM
penetration is lower, moving towards greater levels of outsourcing and
bundling of services in order to meet efficiency savings, with larger
contracts becoming available and boosting both these end use markets.
Social Housing is the largest
end user within the central and local government FM outsourcing market.
FM Outsourcing within Social Housing is well established and is generally
considered to be mature, dominated by a number of large, specialist
providers such as Mears, Keepmoat and the Apollo Group.
The local government sector
is widely thought to be the sector with the greatest potential. With
relatively low penetration of facilities services outsourcing and large
budget cuts to be made without reducing front line services, it is
thought likely that outsourcing will increase and more efficient bundling
could gain ground from single service contracts.
Companies offering TFM tend
to focus on a specific end user group in order to be able to offer a
comprehensive range of products. The larger companies may focus on a
wider end user base, offering services to the private and public sectors,
but will usually have a stronger history of working in one or the other.
The public sector, in particular, is dominated by these larger companies
due to the large contracts on offer, particularly within PFI/PPP.
Following a quick expansion
in the late 1990s, early 2000s, the market has started to mature and new
entrants to the market have slowed as it nears saturation point. The
trend to consolidate and focus on core services, rather than diversify
into new operations has added to the slow down, as have the worsening
trading conditions, making entry into a new arena difficult. The area
where entrants are most common is in niche, specialist sectors such as
those supporting the local authority leisure sector.
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