Over the last few years, the potential for facilities management (FM) outsourcing within the healthcare and education industries has been limited, largely due to factors such as political and economic uncertainty, as well as cuts in many public-sector budgets and closure of facilities in both industries. Growth within the market for outsourced integrated services and TFM in health and education has therefore been on the modest side. In 2017, the market value was estimated to be 2% lower than in the previous year.
Market growth has been hampered by a decline in the number of large-scale projects undertaken – within the education sector, for example, the cancellation of the Building Schools for the Future (BSF) programme in 2010 had a serious impact upon demand for outsourced FM services. Although healthcare and education represent two of the largest Government departments in terms of PFI/PF2 activity at present, the number of schemes being signed off on a year-by-year basis is also declining due in part to the difficulty in obtaining finance from both private and public sources.
The healthcare and education sectors have experienced a gradual trend towards bundled service and TFM contracts, largely at the expense of single-service varieties. That said, single service contracts remain prevalent within certain market sectors, e.g. catering in primary and secondary schools. The growing adoption of bundled and TFM contracts has had a positive effect upon market value, since these tend to be higher priced.
The outlook for the FM outsourcing market within healthcare and education is considered moderately positive over the short to medium term. Although growth within both sectors is likely to depend upon the prevailing political and economic situation, Government encouragement of greater private sector involvement is expected to continue.