Facilities Management Outsourcing - Central and Local Government Sector Report - UK 2015-2019 Analysis
Published: 20/11/2015 / Number of Pages: 66 / Price: £795.00
Introduction and Overview
AMA Research have published the 4th edition of the 'Facilities Management Outsourcing - Central & Local Government Sector Report - UK 2015-2019 Analysis'. The report offers a unique view of this substantial market, focusing on the outsourced management and delivery of non-core services within central and local government, as well as the social housing sector. Incorporating original input and primary research, this report focuses on the provision of 'bundled' services.
Key issues covered:
- FM Outsourcing across the central and local government market - market size, recent trends, key market influences, forecasts for 2016-19 and future trends.
- Sector analysis: central government, local government and social housing - performance by sector, penetration, key trends and potential opportunities.
- Review of market structure and leading providers - changing supply structure, diversification of service provision and company profiles for the leading contractors within the central & local government and social housing sectors.
- Overview of the wider FM outsourcing market - overall bundled facilities management market size with forecasts to 2019, key market influences etc.
Particular areas of insight include:
- Increasing market polarisation towards large contractors offering a comprehensive array of services and niche sector specialists.
- Market activity within the central and local Government sector from 2009 to 2015, with forecasts through to 2019.
- Impact of Compulsory Living Wage on the overall FM market and on the Corporate FM market in particular.
- Impact of the skills shortages in certain, more highly skilled sectors may constrain growth.
Some of the companies included:
Amey Business Services, Aramark UK, Babcock International Group, Balfour Beatty Workplace, BAM Construct, Bouygues Energies and Services, Carillion Facilities Management, EC Harris, Emcor Facilities Services UK, Europa Support Services, G4S Facilities Management, Gardiner & Theobald, Hochtief Facility Management, Integral UK, Interserve Support Services, ISS UK John Laing Integrated Services Kier Facilities Services, Leisure Connection, Mapeley,MITIE, Morrison Facilities Services, Mouchel, Norland, Norse Group, OCS Group, Parkwood Holdings, Pinnacle PSG, Rentokil Initial Facilities Services, Serco Group, Skanska Facilities Services, Sodexo Facilities Management, Turner Facilities Management, Vinci Facilities, VolkerFitzpatrick.
FM Outsourcing - Central & Local Government Sectors
- Sectors included - Central Government, Local Government and Social Housing. Excluded are the health and education sectors which are subject to separate analysis.
- Review of Central / Local Government and Social Housing FM Outsourcing market - estimates of market size from 2009-2015, with forecasts for the period from 2016 to 2019.
- Growth rates and opportunities per sector, mix by sector, mix by service, indications of market maturity.
- Key market influences - macroeconomic factors, construction output, and legislation. Market maturity in some end use sectors, future opportunities, greater client integration, greater emphasis on added-value FM contracts, tighter budgetary control in most sectors etc. Future opportunities and threats.
- Key market changes - legislation changes, compulsory Living Wage, diversification of service provision, increasing maturity in a number of end use sectors, trend towards TFM and 'bundling'.
- Future prospects for FM Market covering macro-economic influences, outlook by end use sector, key potential growth areas, trends in service provision, impact of market maturity and challenging market conditions over the short to medium term, legislation and other key influences.
Key Central & Local Government End Use Sectors
- Central Government FM Market size, trends and key influencing factors and estate estimations and operational costs, including focus on the Ministry of Justice, Department of Work and Pensions, HM Revenue and Customs and Business, Skills & Innovation.
- Local Government FM Market size, trends including impact of government funding cuts, and key influencing factors. Focus on the police service, Leisure and Cultural Facilities, and Fire and Rescue Services.
- Social Housing FM Market Size, funding, trends and key influencing factors.
- Review of origins of FM companies and Supply Structure. Share groupings of the major companies across the FM industry.
- Key trends - large number of recent acquisitions & mergers, market entrants, impact of market maturity, expansion and diversification of service provision, market consolidation.
- Market profiles for leading FM providers to central and local Government application areas, covering over 40 major providers and niche specialists - outline includes company size, growth trends, areas of specialisation, some sector strengths and major contracts.
The Overall FM Outsourcing Market
- Overview of the overall bundled Facilities Management Market - estimates of total market size from 2009-2015, with forecasts for the period from 2016 to 2019.
- Key market influences and future prospects - macroeconomic factors, diversification in service provision, increasing maturity in a number of end use sectors, trend towards TFM and 'bundling' and legislative influences.
The outsourced, bundled Facilities Management market in central and local government was estimated to have grown by around 3% in 2015, compared to the market value in 2014. Having experienced good growth through to 2011 reflecting the move towards greater levels of outsourcing of a wider range of services and a high level of investment in facilities, the market declined in 2012 as government spending fell and the central and local government estate underwent consolidation in order to manage national debt and improve carbon emissions. This slow growth continued into 2014.
Factors supporting the market include increasing penetration within central and local government, a move towards a greater array of services being outsourced, and the need for government departments to achieve significant cost savings to meet tighter budget restraints, with the government encouraging greater use of the private sector partners to help achieve this. Nevertheless there remain sustained pressure on margins, reflecting consolidation in the market and greater numbers of larger FM contractors who are intent on ensuring they win enough business to fill their capacity. In addition the Government's ongoing activity to reduce the size of their Estate has continued to impact on contract opportunities both in the central Government sector and the local Government sector.
Social housing remains the largest end-use sector, accounting for around 44% of market value, followed by central government, with local government the smallest sector in this market. Service development is currently focused on niche areas such as energy management and sustainability as well as diversification into wider back office areas outside the scope of this report. These services tend to be high cost, although they will provide long term savings and strict government targets on cost, carbon reduction commitments etc. encourage development in this area.
The market for FM in the central and local government sectors is expected to improve and grow by 3% in 2015 and remain positive through to 2019. This will be driven by improvement in the social housing sector, as housing associations and local authorities intend to improve their operational efficiencies and as decent home standards need to be maintained. There are also expected inflationary pressures from the introduction of a compulsory Living Wage in 2016, perhaps squeezing the contractor margins, particularly in the public sector where budgets remain under pressure. However, public sector cuts continue with cross-collaboration across departments and/or regions, also collaboration between central and local departments likely to impact on opportunities for FM contracting in this sector.
List of Report Contents
- Contents Listing
- 1. INTRODUCTION 6
- 1.1 BACKGROUND 6
- 1.2 SOURCES OF INFORMATION 6
- 2. SUMMARY & FUTURE PROSPECTS 8
- 2.1 EXECUTIVE SUMMARY 8
- 2.2 FUTURE PROSPECTS 10
- 3. ECONOMIC ENVIRONMENT 11
- 3.1 GDP 11
- 3.2 INFLATION & INTEREST RATES 12
- 3.3 UNEMPLOYMENT 13
- 3.4 HOUSEHOLD CONSUMPTION 14
- 3.5 HOUSING & CONSTRUCTION 14
- 3.6 STERLING 15
- 3.7 POPULATION PROFILE 16
- 3.8 CONCLUSIONS 16
- 4. FM IN THE CENTRAL & LOCAL GOVERNMENT SECTORS 18
- 4.1 FACILITIES MANAGEMENT OUTSOURCING MARKET 18
- 4.1.1 Definition 18
- 4.1.2 FM Market Size and Trends 18
- 4.2 CENTRAL & LOCAL GOVERNMENT FM MARKET DEFINITION 21
- 4.3 CENTRAL & LOCAL GOVERNMENT FM MARKET SIZE AND TRENDS 22
- 4.4 KEY MARKET INFLUENCES 26
- 4.4.1 Public Sector Construction Output 26
- 4.4.2 Public Private Partnerships 27
- 4.4.3 Legislation 31
- 5. KEY END USE SECTORS WITHIN CENTRAL & LOCAL GOVERNMENT 33
- 5.1 END USER MIX 33
- 5.2 SOCIAL HOUSING FM OUTSOURCING MARKET 33
- 5.3 CENTRAL GOVERNMENT FM OUTSOURCING MARKET 37
- 5.3.1 Holdings and Operating Costs 37
- 5.3.2 Department of Work and Pensions 44
- 5.3.3 Ministry of Justice 44
- 5.3.4 Department for Business, Innovation & Skills 45
- 5.3.5 HM Revenue and Customs 45
- 5.4 LOCAL GOVERNMENT FM OUTSOURCING MARKET 46
- 5.4.1 The Police Service 47
- 5.4.2 Leisure & Cultural Facilities 47
- 5.4.3 Fire and Rescue Services 48
- 6. CONTRACTORS' REVIEW 49
- 6.1 ORIGINS & SUPPLY STRUCTURE 49
- 6.2 MARKET SHARES 51
- 6.3 COMPANY PROFILES 52
- 6.3.1 Leading Contractors in Central & Local Government 52
- 6.3.2 Other Large Companies in the FM Market 61
- Tables & Charts
- CHART 1 UK MARKET FOR OUTSOURCED FM IN CENTRAL AND LOCAL GOVERNMENT 2009-2019 BY VALUE (£M) 8
- TABLE 2 GDP DATA - 2012-2015 - KEY CONSTITUENT ELEMENTS 11
- CHART 3 INTEREST RATES AND INFLATION (CPI) FROM 2000-2019 13
- CHART 4 PDI & SAVINGS RATIO AT CURRENT PRICES 2000-2019 14
- TABLE 5 EXCHANGE RATE FLUCTUATIONS 2010-2016 - STERLING TO THE DOLLAR, AND THE EURO, SPOT RATES 16
- CHART 6 UK BUNDLED FM OUTSOURCING MARKET AT CURRENT PRICES 2009-2019 (£ MILLION) 19
- TABLE 7 UK CENTRAL & LOCAL GOVERNMENT FM MARKET 2009-2019 (CURRENT PRICES) 23
- TABLE 8 PUBLIC SECTOR CONSTRUCTION NEW WORK OUTPUT 2009-2019 (£BN) AT CURRENT PRICES RESIDENTIAL, NON RESIDENTIAL 26
- CHART 9 PUBLIC SECTOR NEW WORK BY END USER 2015 BY VALUE (%) 27
- TABLE 10 CURRENT PFI PROJECTS ACROSS GOVERNMENT BY DEPARTMENT 2014 28
- CHART 11 NUMBER AND COMBINED CAPITAL VALUE OF PFI PROJECTS SIGNED ANNUALLY 2000 TO MARCH 2014 29
- TABLE 12 PROJECTED SERVICE PAYMENTS UNDER PFI CONTRACTS - 2008/2009 TO 2029/2030 30
- CHART 13 MIX OF FM END USER MARKET BY VALUE 2014 (%) 33
- TABLE 14 DWELLING STOCK - BY TENURE, UK THOUSANDS OF DWELLINGS 2009-2015 35
- TABLE 15 SELECTED EXPENDITURE ON HOUSING ASSOCIATION PROPERTIES, VALUE ESTIMATES 2012-14 £M. 36
- TABLE 16 MANAGEMENT AND MAINTENANCE COSTS ON LOCAL AUTHORITY PROPERTIES, VALUE ESTIMATES 2012-16 £M. 37
- CHART 17 CENTRAL GOVERNMENT ESTATES STRUCTURE 38
- TABLE 18 TOTAL AREA OF THE MANDATED ESTATE AT JANUARY 2014 AND CHANGE SINCE 2013 AND 2009 (M2, % CHANGE) BY DEPARTMENT 39
- TABLE 19 TOTAL REPORTED ANNUAL RUNNING COST 2013/14 BY GOVERNMENTAL DEPARTMENT 41
- TABLE 20 COST PER SQUARE METRE 2013/14 BY MAJOR GOVERNMENTAL DEPARTMENT 42
- TABLE 21 PROPERTY COST AND OCCUPIED SPACE PER FULL TIME EMPLOYEE* 43
- TABLE 22 TOP 20 FM SUPPORT SERVICES COMPANIES IN THE UK 51
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