Has The FM Sector Now Become A ‘Race To The Bottom’?

Across UK, industry as a whole over the last 12- 18 months has seen seismic developments which did not seem possible prior to the outbreak of Covid-19. Businesses have had to adapt to the constant changing landscape they operate in with most employers taking advantage of furlough, or the Coronavirus Job Retention Scheme, in an attempt to prevent redundancies and keep staff on the payroll whilst hoping to get through the turbulence as unscathed as possible. Microsoft Teams and Zoom have become the new medium for holding both internal company and client meetings and perhaps opened executive eyes in how communications can still remain open and effective between staff and clients alike, whilst travel has been restricted. Industry however has suffered that there can be no doubt, with the hospitality sector still largely dormant and one of the last to pick up the pieces from the devastation of Lockdown.

The Facilities Management sector has also experienced changes that were not forecast with remote staff management becoming a necessity along with the challenges imposed logistically to ensure site staff are fully compliant from a PPE perspective. There have, of course, been some winners and losers in this sector yet the retail sector has perhaps been the biggest loser with numbers only recently returning to parks and shopping centres of which were experienced pre-lockdown. Managing agents have had to work tirelessly with both landlords and tenants alike in an attempt to understand both occupier requirements and occupancy costs. The role of ‘middle man’ has had to be played, at times, with diplomatic aplomb so as to extend support to occupiers in outlining the financial support available through CBILS and other government backed schemes along with lobbying Business Improvement Districts (BIDS). Rent concessions, service-charge mitigation and payment plans have had to be skilfully negotiated to satisfy the need of both landlord and occupier.

Despite all this and the heroic efforts by some managing agents to keep centres from looking like ghost towns and the fact that we now appear, at least, to be coming out of the woods with the clearing in sight, has there been a shift in procurement strategy in relation to contractor services with cost being the main driver over quality of service delivery? Cost will and has always been a significant driver in the procurement process for any organisation, but given the challenges experienced over the last 18 months, is this now the significant factor when it comes to procuring management services?

Iain Warburton, Business Development Manager at AEJ Management who have for a number of years specialised in providing soft service facilities management into the retail and shopping centre space, makes some interesting observations. ‘The last 12 months in particular have been quite fascinating for this sector. We have noticed clients putting greater emphasis on cost cutting measures whilst still expecting, to a large degree, the same level of quality of service delivery and reporting. A number of regional facilities managers that I have spoken to across the country over the last 12 months have all sited cost cutting requirements in their site procurement needs yet have remarked, also, that AEJ have consistently delivered on their service delivery and reporting promise to ensure quality of operational delivery, despite the constant challenges the sector has had to overcome’.

It does beg the question, has Covid been a ‘bad news Friday’ moment for the FM sector with procurement teams using this as a reason to look solely at the bottom line at the expense of quality, innovation and effective operational reporting? Iain continues, ‘We’ve certainly seen instances of clients suggesting an emphasis on quality, added value and innovation requirements at the bid stage, yet at the contract award stage seemingly motivated by the bottom line only, sometimes, at the expense of outstanding site service delivery’.

It’ll be interesting to note, post July 19^th, whether there are to be further significant changes that impact on this sector but one thing is for sure, companies are going to have to be on the balls of their feet when making decisions in compiling their costings during the bid stage in an even more, ever changing marketplace than usual whilst perhaps having to second guess the client’s train of thought, when looking to win contracts.