| AM74013 |
| AMA RESEARCH : Contract Facilities Management Outsourcing Market Report June 2003. |
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BRIEF DESCRIPTION
| Covering the period 1998-2006, this report provides a general overview of facilities management (FM) outsourcing, with a focus on total FM (TFM), 'bundling', and public/private partnerships and the Private Finance Initiative (PPP/PFI). Key topics addressed include: FM outsourcing market size, trends and key market drivers; trends towards TFM and business process outsourcing (BPO); the impact of PPP/PFI on the FM market and possible growth areas; developments in public sector procurement; market size, forecast growth and market penetration in key end-user markets - the corporate, health care, local authority and central government sectors; a review of FM contracting; and profiles of leading TFM companies. |
| Key areas covered include:- |
| UK FM outsourcing market - size, trends and key market drivers |
| Trends towards Total Facilities Management and Business Process Outsourcing |
| Impact of PPP/PFI on the FM market - identification of possible growth areas e.g. local authority leisure |
| Developments in public sector procurement e.g. Prime Contracting in the MoD |
| Key end-user markets - size, growth forecasts and market penetration of the Corporate, Healthcare, Local Authority and Central Government sectors. |
| Review of FM contracting - consortia, consolidation, new entrants, key acquisitions, profiles of leading TFM companies |
| The multi-£ billion FM outsourcing market has experienced strong growth since the mid-1990s. However, while further growth is expected in the medium term, it is anticipated that the rate will slow down, underpinned by consolidation in public sector procurement, the rise in commercial office vacancy levels and maturity in key end-user markets. The main area of growth opportunity will be the PFI/PPP market, particularly the Design Build Finance Operate sector. Furthermore, in 2002 the number of major acquisitions/mergers and new market entrants was lower than in the previous 3 years, suggesting that the market has now entered a more mature phase of the industry life-cycle. |
| Areas of particular interest:- |
| Market activity levels with forecasts to 2007. |
| Trends in key end-user markets - growth sectors. |
| Impact of PFI, PPP and new procurement initiatives. |
| Competitor analysis - general FM contractors, specialist contractors, new entrants, changing industry structure etc. |
| Key areas of coverage in the report include:- |
| THE MARKET |
| FM Market overview - estimates of total market size from 1998-2002 and forecasts 2003-2007. |
| Overview of total support services outsourcing market - market size, shares, key sectors |
| Key market factors - diversification in service provision, expansion of FM outsourcing in key sectors, development of PPP/PFI, trends towards TFM and 'bundling', 'best value', rise in office vacancy levels, construction output levels. |
| Focus on building and environmental, cleaning/hygiene/waste, catering, office support services sectors etc. |
| Estimates of service mix by type of discipline at overall market level. |
| END-USE SECTORS |
| Analysis of FM market by end-user sector - Corporate, NHS, Local Authority, Central Government. |
| Estimates of market size for each sector from 1998-2002 and forecasts for 2003 - 2007. |
| Estimates of mix in each market between in-house provision & contracted services. |
| 'Corporate sector' - Key trends e.g. business process outsourcing, serviced offices, corporate PFI, impact of recession in TMT & financial services markets. |
| Central Government sectors - identification of growth and mature sectors. Focus on MoD, Police Authorities, Prison Service. Prime Contracting/SLAM in MoD. Identification of key FM operators. |
| NHS sector - impact of PFI and DBFO contracting. Identification of larger projects & FM providers. Key market factors e.g. standardisation in procurement, hospital newbuild programme, LIFT initiative. Identification of leading FM providers. |
| Local Authority sector - focus on education, courts, leisure services. Impact of 'Best Value', growth in PPP/PFI. Identification of major projects & FM providers. Key influencing factors/future trends. Identification of leading players in main sub-sectors. |
| REVIEW OF CONTRACTING SECTOR |
| Review of origins of FM companies. |
| Structure of supply - TFM providers, facilities services companies. |
| Key trends - new entrants, company re-organisation, market consolidation & polarisation, market re-positioning, Special Purpose Vehicles. |
| Review of leading 37 contractors - includes Amey Business Services, Carillion Services, Chesterton Workplace Management, Emcor Facilities Services, Ecovert FM, Equion FM, Group 4 Managed Services, Haden Building Management, Interservefm, ISS UK, Jarvis Accommodation Services, Johnson IFM, Land Securities Trillium, Maclellan, MITIE Managed Services, Mowlem Aqumen, OCS, Serco, Sodexho FM, WS Atkins FM. |
| 7. END USE SECTORS 77 |
| 7.1 CONSTRUCTION MARKET 77 |
| 7.1.1 Construction Market - Total Size and Recent Performance 78 |
| 7.1.2 New House Build 84 |
| 7.2 THE FURNITURE MARKET 86 |
| 7.2.1 UK Domestic Furniture Market - Definition and Size 86 |
| 7.2.2 Contract Furniture Market 91 |
| 7.2.3 Office Furniture 93 |
| 7.3 THE SHOPFITTING MARKET 96 |
| 7.3.1 Definition 96 |
| 7.3.2 Market Size 98 |
| 8. FUTURE PROSPECTS 100 |
EXECUTIVE SUMMARY
| Covering the period 1998-2006, this report provides a general overview of facilities management (FM) outsourcing, with a focus on total FM (TFM), 'bundling', and public/private partnerships and the Private Finance Initiative (PPP/PFI). Key topics addressed include: FM outsourcing market size, trends and key market drivers; trends towards TFM and business process outsourcing (BPO); the impact of PPP/PFI on the FM market and possible growth areas; developments in public sector procurement; market size, forecast growth and market penetration in key end-user markets - the corporate, health care, local authority and central government sectors; a review of FM contracting; and profiles of leading TFM companies. |
| Key areas covered include:- |
| UK FM outsourcing market - size, trends and key market drivers |
| Trends towards Total Facilities Management and Business Process Outsourcing |
| Impact of PPP/PFI on the FM market - identification of possible growth areas e.g. local authority leisure |
| Developments in public sector procurement e.g. Prime Contracting in the MoD |
| Key end-user markets - size, growth forecasts and market penetration of the Corporate, Healthcare, Local Authority and Central Government sectors. |
| Review of FM contracting - consortia, consolidation, new entrants, key acquisitions, profiles of leading TFM companies |
| The multi-£ billion FM outsourcing market has experienced strong growth since the mid-1990s. However, while further growth is expected in the medium term, it is anticipated that the rate will slow down, underpinned by consolidation in public sector procurement, the rise in commercial office vacancy levels and maturity in key end-user markets. The main area of growth opportunity will be the PFI/PPP market, particularly the Design Build Finance Operate sector. Furthermore, in 2002 the number of major acquisitions/mergers and new market entrants was lower than in the previous 3 years, suggesting that the market has now entered a more mature phase of the industry life-cycle. |
| Areas of particular interest:- |
| Market activity levels with forecasts to 2007. |
| Trends in key end-user markets - growth sectors. |
| Impact of PFI, PPP and new procurement initiatives. |
| Competitor analysis - general FM contractors, specialist contractors, new entrants, changing industry structure etc. |
| Key areas of coverage in the report include:- |
| THE MARKET |
| FM Market overview - estimates of total market size from 1998-2002 and forecasts 2003-2007. |
| Overview of total support services outsourcing market - market size, shares, key sectors |
| Key market factors - diversification in service provision, expansion of FM outsourcing in key sectors, development of PPP/PFI, trends towards TFM and 'bundling', 'best value', rise in office vacancy levels, construction output levels. |
| Focus on building and environmental, cleaning/hygiene/waste, catering, office support services sectors etc. |
| Estimates of service mix by type of discipline at overall market level. |
| END-USE SECTORS |
| Analysis of FM market by end-user sector - Corporate, NHS, Local Authority, Central Government. |
| Estimates of market size for each sector from 1998-2002 and forecasts for 2003 - 2007. |
| Estimates of mix in each market between in-house provision & contracted services. |
| 'Corporate sector' - Key trends e.g. business process outsourcing, serviced offices, corporate PFI, impact of recession in TMT & financial services markets. |
| Central Government sectors - identification of growth and mature sectors. Focus on MoD, Police Authorities, Prison Service. Prime Contracting/SLAM in MoD. Identification of key FM operators. |
| NHS sector - impact of PFI and DBFO contracting. Identification of larger projects & FM providers. Key market factors e.g. standardisation in procurement, hospital newbuild programme, LIFT initiative. Identification of leading FM providers. |
| Local Authority sector - focus on education, courts, leisure services. Impact of 'Best Value', growth in PPP/PFI. Identification of major projects & FM providers. Key influencing factors/future trends. Identification of leading players in main sub-sectors. |
| REVIEW OF CONTRACTING SECTOR |
| Review of origins of FM companies. |
| Structure of supply - TFM providers, facilities services companies. |
| Key trends - new entrants, company re-organisation, market consolidation & polarisation, market re-positioning, Special Purpose Vehicles. |
| Review of leading 37 contractors - includes Amey Business Services, Carillion Services, Chesterton Workplace Management, Emcor Facilities Services, Ecovert FM, Equion FM, Group 4 Managed Services, Haden Building Management, Interservefm, ISS UK, Jarvis Accommodation Services, Johnson IFM, Land Securities Trillium, Maclellan, MITIE Managed Services, Mowlem Aqumen, OCS, Serco, Sodexho FM, WS Atkins FM. |
| 7. END USE SECTORS 77 |
| 7.1 CONSTRUCTION MARKET 77 |
| 7.1.1 Construction Market - Total Size and Recent Performance 78 |
| 7.1.2 New House Build 84 |
| 7.2 THE FURNITURE MARKET 86 |
| 7.2.1 UK Domestic Furniture Market - Definition and Size 86 |
| 7.2.2 Contract Furniture Market 91 |
| 7.2.3 Office Furniture 93 |
| 7.3 THE SHOPFITTING MARKET 96 |
| 7.3.1 Definition 96 |
| 7.3.2 Market Size 98 |
| 8. FUTURE PROSPECTS 100 |
COMPANIES COVERED
Amey Business Services, Serco, Jarvis Workspace FM, Carillion Services, Mowlem Aqumen, Johnson Controls, Emcor Facilities Services, Group 4 Managed Services, Haden Building Management, Chesterton Workplace Management, Maclellan Group and WS Atkins FM.TABLE OF CONTENTS
| 1. INTRODUCTION 6 |
| 2. SUMMARY 7 |
| 3. ECONOMIC ENVIRONMENT 10 |
| 3.1 GDP 10 |
| 3.2 INFLATION & INTEREST RATES 12 |
| 3.3 UNEMPLOYMENT 13 |
| 3.4 HOUSEHOLD CONSUMPTION 13 |
| 3.5 CONSTRUCTION 14 |
| 3.6 STERLING 14 |
| 3.7 CONCLUSIONS 15 |
| 4. FACILITIES MANAGEMENT OUTSOURCING MARKET 16 |
| 4.1 DEFINITION 16 |
| 4.2 TERMS AND ABBREVIATIONS 18 |
| 4.3 FM MARKET TRENDS 19 |
| 4.3.1 Market Size 19 |
| 4.3.2 Macro-Economic Trends 22 |
| 4.3.3 Construction Contractors Output 22 |
| 4.3.4 Office Vacancy Levels 24 |
| 4.3.5 Growth In Outsourcing And Diversification 26 |
| 4.3.6 Partnerships and the Transfer of Capital 28 |
| 4.4 FUTURE PROSPECTS 29 |
| 5. MARKET STRUCTURE 31 |
| 5.1 OVERVIEW 31 |
| 5.2 MIX BY SERVICE TYPE 32 |
| 5.3 MIX BY END USER MARKET 36 |
| 5.3.1 Corporate Sector 36 |
| 5.3.2 Central Government 43 |
| 5.3.3 NHS Trusts 52 |
| 5.3.4 Local Authority 61 |
| 6. CONTRACTORS REVIEW 76 |
| 6.1 ORIGINS 76 |
| 6.2 SUPPLY STRUCTURE 80 |
| 6.3 KEY TRENDS 82 |
| 6.4 FM CONTRACTORS 85 |
| 6.4.1 Leading FM Companies 86 |
| 6.4.2 Other FM Companies 118 |
DIAGRAMS
| CHART 1 UK CONTRACT FM MARKET AT CURRENT PRICES 1998 - 2006 7 |
| TABLE 2 GDP PERCENTAGE CHANGE PER ANNUM 1980-2005 11 |
| CHART 3 INTEREST RATES AND INFLATION (RPI) FROM 1995-2005 12 |
| CHART 4 PDI & SAVINGS RATIO 1980-2005 14 |
| TABLE 5 EXCHANGE RATE FLUCTUATIONS 1997-2003 - DOLLARS, AND THE ECU TO THE POUND STERLING, SPOT RATES 15 |
| TABLE 6 UK CONTRACT FM MARKET 1998 -2006 (AT CURRENT PRICES) 20 |
| TABLE 7 CONTRACTORS OUTPUT - NEW WORK AND RMI NON HOUSING - CURRENT PRICES (£ MILLION) 1995-2004 23 |
| CHART 8 CITY OF LONDON OCCUPIED OFFICE SPACE - BY SERVICE SECTOR 25 |
| CHART 9 UK NON-CORE SERVICES MARKET BY TYPE OF OPERATION 31 |
| TABLE 10 TOTAL OUTSOURCED SERVICES MARKET - SHARE MAJOR SECTOR 2002 33 |
| TABLE 11 UK FACILITIES MANAGEMENT CONTRACTORS MARKET BY END-USER SECTOR % 2002 36 |
| TABLE 12 UK CORPORATE FM OUTSOURCING MARKET 1998-2006 (AT CURRENT PRICES) 37 |
| CHART 13 UK CORPORATE FM SERVICES MARKET SHARE BY VALUE 38 |
| TABLE 14 UK CENTRAL GOVERNMENT FM MARKET (AT CURRENT PRICES) 1998-2007 43 |
| TABLE 15 MAJOR MOD SUPPORT SERVICES CONTRACTS - SIGNED & PREFERRED BIDDER 46 |
| TABLE 16 KEY DBFO PRISON AND DETENTION CENTRE PROJECTS - SIGNED & PREFERRED BIDDER 48 |
| TABLE 17 KEY POLICE FM PROJECTS - SIGNED & PREFERRED BIDDER STAGE 50 |
| TABLE 18 OTHER GOVERNMENT DEPARTMENTS - MAJOR FM CONTRACTS SIGNED & PREFERRED BIDDER 51 |
| TABLE 19 UK HEALTHCARE MARKET FOR NON-CLINICAL SUPPORT SERVICES (AT CURRENT PRICES) 1998-2006 53 |
| TABLE 20 DOH PFI SCHEMES - MIX BY RANGES OF CAPITAL VALUES & PROJECT NUMBERS 54 |
| TABLE 21 SUPERSEDED PFI PROCUREMENT MODEL 55 |
| TABLE 22 NEW PFI PROCUREMENT MODEL 55 |
| TABLE 23 NHS MAJOR HOSPITAL PFI/PPP PROJECTS STATUS AS OF APRIL 2003. 56 |
| CHART 24 UK HEALTHCARE MARKET FOR NON-CLINICAL SUPPORT SERVICES BY NUMBER OF CONTRACTS 2002 58 |
| TABLE 25 MIX IN KEY NON-CLINICAL SERVICES PROVISION AT EXISTING NHS TRUST FACILITIES BY VOLUME 59 |
| TABLE 26 MAJOR* PFI NHS HOSPITAL PROJECTS - SIGNED & PREFERRED BIDDER STAGE 60 |
| TABLE 27 UK LOCAL AUTHORITY FM OUTSOURCING MARKET (AT CURRENT PRICES) 1998-2006 62 |
| TABLE 28 LOCAL GOVERNMENT FINANCE - STANDARD SPENDING ASSESSMENTS £BN 2002-03 TO 2005-06 64 |
| CHART 29 UK LOCAL AUTHORITY FM MARKET - SERVICE PROVISION BY MIX BY VOLUME 2002 65 |
| TABLE 30 STATUS OF THE SCHOOLS PFI PROGRAMME IN ENGLAND AND WALES AS OF APRIL 2003 67 |
| TABLE 31 MAJOR SCHOOLS PFI DBFO PROJECTS - SIGNED & PREFERRED BIDDER STAGE 69 |
| TABLE 32 LORD CHANCELLORS DEPARTMENT COURTS PFI/PPP PROJECTS SIGNED & PREFERRED BIDDER STATUS - CAPITAL VALUE £M 72 |
| TABLE 33 LEADING FM COMPANIES WITH ORIGINS IN CONSTRUCTION OR REFURBISHMENT 77 |
| TABLE 34 LEADING FM COMPANIES WITH ORIGINS IN THE ENGINEERING & ENGINEERING CONSULTANCY SECTORS 78 |
| TABLE 35 LEADING FM COMPANIES WITH ORIGINS IN THE SUPPORT SERVICES SECTOR 79 |
| TABLE 36 LEADING FM COMPANIES WITH ORIGINS IN PROPERTY SERVICES 80 |
Text © 2003 AMA Research
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Last updated by Amanda Porteous February 2004
