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.