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Facilities Management Outsourcing – Central and Local Government Sector Report – UK 2017-2021 Analysis

Published: 14/11/2017 / Number of Pages: 66 / Price: £795.00

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Introduction and Overview

The 5th edition of 'Facilities Management Outsourcing - Central and Local Government Markets - UK 2017-2021' incorporates original input and primary research and represents an up to date and comprehensive review on the provision of Facilities Management and 'bundled' services in these sectors. The report offers a unique review of this substantial market, focusing on the outsourced management and delivery of non-core services within central and local Government, and social housing sectors.

Key Issues analysed include:

  • FM Outsourcing across the Central and Local Government Market - Size, recent trends and key market influences, forecasts and future trends.
  • Analysis of three sectors - Central Government, Local Government and Social Housing - performance by sector, penetration, 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.

Areas of particular interest include:

  • 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 2012 to 2016, with forecasts through to 2021.
  • Reduction of the Government Estate on the Central & Local Government FM market, and move towards fewer, larger properties.
  • Greater cooperation and collaboration between central and local authorities, and the impact upon FM services contracts and delivery.
  • Detailed market data and insight on the facilities management market by AMA Research, a leading UK provider of construction market intelligence.

Some of the companies included:

Amey Group, Apleona HSG, Aramark, Arcadis, Babcock International Group, BAM Facilities Management, Bellrock, Bouygues Energies & Services, Carillion, CBRE Group, Compass Group, Emcor UK, Engie UK, Eric Wright Group, G4S Facilities Management, Galliford Try, Gardiner & Theobald, Integral UK, Interserve, ISS UK, Keepmoat Homes, Kier Group, Mapeley, Mears Group, Mitie, Morgan Sindall Property Services, NG Bailey, Parkwood Group, Pinnacle PSG, Places for People Leisure, Robertson Facilities Management, Serco Group, Servest, Skanska Facilities Services, Sodexo Group, The Capita Group, The OCS Group UK, Turner Facilities Management, Vinci Facilities,


FM Outsourcing within the Central & Local Government Sector

  • Sectors included - Central Government, Local Government and Social Housing. Health and education sectors are excluded as they are subject to separate analysis.
  • Review of Central / Local Government and Social Housing FM Outsourcing market - estimates of market size from 2012-2016, with forecasts for the period from 2017 to 2021.
  • 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, greater diversification of service provision, increasing rationalisation of government estate, trend towards TFM and 'bundling'.
  • Prospects for the FM Market - covering macro-economic influences, outlook by end use sector, key potential growth areas, trends in service provision, impact of technological changes 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, with a focus on the Ministry of Justice, Department of Work and Pensions, HM Revenue & 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.

Contractors Review

  • Review of origins of FM companies and Supply Structure. Share groupings of the major companies across the FM industry.
  • Key trends -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 - outlines include 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 2012-2016, with forecasts for the period from 2017 to 2021.
  • Key market influences and prospects - macroeconomic factors, diversification in service provision, impact of technological changes, trend towards TFM and 'bundling' and legislative influences.

Report Summary

The market for facilities management outsourcing within the central and local government sector saw a substantial value reduction in 2016 compared with 2015. This has been caused by a variety of factors including political and economic uncertainty caused by Brexit and the General Election, the ongoing pressure over budgets, and ongoing rationalisation of the estate and/or assets. This reduction in follows several years of fluctuation within the sector meaning that market value is still higher than it was in 2014.

The market continues to benefit from a shift away from single service contracts towards bundled and TFM packages. The trend for clients to outsource an increasing number of FM services, as well as to reduce procurement costs through seeking 'one-stop-shop' solutions is expected to continue, favouring larger FM providers able to supply the full range of services required. In another market trend, FM providers have been developing additional skills and knowledge to ensure they can offer added value services. Examples include knowledge on latest health and safety issues, environmental issues and, in some cases, employment law. As such, many are diversifying into wider back office areas beyond the scope of this report.

A factor supporting future growth is the continued penetration of outsourcing in both Central and Local Government, especially in the latter sector where the potential for further development is thought to be good. Growth is also likely to be supported by the greater range of services being outsourced. Energy management has become a key offering for many FM providers, for example, given the environmental and sustainability concerns affecting much of how public organisations are run

Going forward, the market is forecast to experience steady growth from 2017 up to 2021, with the market stabilising after several years of fluctuation. This stabilisation is set to occur as the UK's political and economic situation becomes clearer, with government agencies being better able to plan ahead. Much of the predicted growth is expected to be driven by improvements within the social housing sector, as housing associations and local authorities enhance their operational efficiencies and more funding is made available for maintenance of properties.


List of Contents

Contents Listing

  1. 1. INTRODUCTION 6
  2. 1.1 BACKGROUND 6
  3. 1.2 SOURCES OF INFORMATION 6
  4. 2. SUMMARY & MARKET PROSPECTS 8
  5. 2.1 EXECUTIVE SUMMARY 8
  6. 2.2 MARKET PROSPECTS 9
  7. 3. ECONOMIC ENVIRONMENT 11
  8. 3.1 GDP 11
  9. 3.2 INFLATION & INTEREST RATES 12
  10. 3.3 UNEMPLOYMENT 13
  11. 3.4 HOUSEHOLD CONSUMPTION 14
  12. 3.5 HOUSING & CONSTRUCTION 14
  13. 3.6 STERLING 15
  14. 3.7 POPULATION PROFILE 16
  15. 3.8 CONCLUSIONS 16
  16. 4. FM IN THE CENTRAL & LOCAL GOVERNMENT SECTORS 18
  17. 4.1 FACILITIES MANAGEMENT OUTSOURCING MARKET 18
  18. 4.1.1 Definition 18
  19. 4.1.2 FM Market Size and Trends 18
  20. 4.2 CENTRAL & LOCAL GOVERNMENT FM MARKET DEFINITION 21
  21. 4.3 CENTRAL & LOCAL GOVERNMENT FM MARKET SIZE AND TRENDS 22
  22. 4.4 KEY MARKET INFLUENCES 25
  23. 4.4.1 Public Sector Construction Output 25
  24. 4.4.2 Public Private Partnerships 27
  25. 4.4.3 Legislation 30
  26. 5. END USE SECTORS WITHIN CENTRAL & LOCAL GOVERNMENT 33
  27. 5.1 END USER MIX 33
  28. 5.2 SOCIAL HOUSING FM OUTSOURCING MARKET 33
  29. 5.3 CENTRAL GOVERNMENT FM OUTSOURCING MARKET 37
  30. 5.3.1 Holdings and Operating Costs 37
  31. 5.3.2 Department of Work and Pensions 44
  32. 5.3.3 Ministry of Justice 45
  33. 5.3.4 Department for Business, Innovation & Skills 45
  34. 5.3.5 HM Revenue and Customs 45
  35. 5.4 LOCAL GOVERNMENT FM OUTSOURCING MARKET 46
  36. 5.4.1 The Police Service 48
  37. 5.4.2 Leisure & Cultural Facilities 48
  38. 5.4.3 Fire and Rescue Services 49
  39. 6. CONTRACTORS' REVIEW 50
  40. 6.1 ORIGINS & SUPPLY STRUCTURE 50
  41. 6.2 MARKET SHARES 51
  42. 6.3 COMPANY PROFILES 52
  43. 6.3.1 Leading Contractors in Central & Local Government 52
  44. 6.3.2 Other Large Companies in the FM Market 61

Tables and Charts

  1. CHART 1: UK MARKET FOR OUTSOURCED FM IN CENTRAL AND LOCAL GOVERNMENT 2012-2021 BY VALUE (£M) 8
  2. TABLE 2: GDP DATA - 2015-2017 - KEY CONSTITUENT ELEMENTS 11
  3. CHART 3: INTEREST RATES AND INFLATION (CPI) FROM 2000-2021 13
  4. CHART 4: PDI & SAVINGS RATIO AT CURRENT PRICES 2000-2021 14
  5. TABLE 5: EXCHANGE RATE FLUCTUATIONS 2013-2019 - STERLING TO THE DOLLAR, AND THE EURO, SPOT RATES 16
  6. CHART 6: UK BUNDLED FM OUTSOURCING MARKET AT CURRENT PRICES 2011-2021 (£ MILLION) 19
  7. TABLE 7: UK CENTRAL & LOCAL GOVERNMENT FM MARKET 2012-2021 (CURRENT PRICES) 22
  8. TABLE 8: PUBLIC SECTOR CONSTRUCTION NEW WORK OUTPUT 2012-2021 (£BN) AT CURRENT PRICES RESIDENTIAL, NON-RESIDENTIAL 25
  9. CHART 9: PUBLIC SECTOR NEW WORK BY END USER 2016 BY VALUE (%) 26
  10. TABLE 10: CURRENT PFI/PF2 PROJECTS ACROSS GOVERNMENT BY DEPARTMENT 2016 27
  11. CHART 11: NUMBER AND COMBINED CAPITAL VALUE OF PFI PROJECTS SIGNED ANNUALLY 2005 TO MARCH 2014 28
  12. TABLE 12: PROJECTED SERVICE PAYMENTS UNDER PFI/PF2 CONTRACTS - 2010/2011 TO 2020/2021 29
  13. CHART 13: MIX OF FM END USERS BY VALUE 2016 (%) 33
  14. TABLE 14: DWELLING STOCK: BY TENURE, UK THOUSANDS OF DWELLINGS 2012-2017 35
  15. TABLE 15: SELECTED EXPENDITURE ON HOUSING ASSOCIATION PROPERTIES, VALUE ESTIMATES 2014-16 £M 36
  16. TABLE 16: MANAGEMENT AND MAINTENANCE COSTS ON LOCAL AUTHORITY PROPERTIES, VALUE ESTIMATES 2013-17 £M. 37
  17. CHART 17: CENTRAL GOVERNMENT ESTATES STRUCTURE 38
  18. TABLE 18: TOTAL AREA OF THE MANDATED ESTATE AT JANUARY 2016 AND CHANGE SINCE 2015 AND 2012 (M2, % CHANGE) BY DEPARTMENT 39
  19. TABLE 19: TOTAL REPORTED ANNUAL RUNNING COST 2015/16 BY GOVERNMENTAL DEPARTMENT 41
  20. TABLE 20: COST PER SQUARE METRE 2015/16 BY MAJOR GOVERNMENTAL DEPARTMENT 42
  21. TABLE 21: PROPERTY COST AND OCCUPIED SPACE PER FULL TIME EMPLOYEE 2016 43
  22. TABLE 22: TOP 20 FM SUPPORT SERVICES COMPANIES IN THE UK 52

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