Every organization depends on a number of functions and services to provide the support essential to its core business operations. Ensuring that this support is available in the right form, at the right quality and for the right cost is the task of the facilities management industry. FM is a vital function in offices, retail centers, industrial buildings, schools and hospitals.
FM can be difficult to define, but essentially it's about taking control of non-core services, freeing organizations to do what they do best while the facilities managers take care of the rest. Colliers Facilities Management, a major South African outsourcing company, calls it ‘managing your needs, so you can manage your business’: supplying sustained working environments for its clients by managing a wide range of the services critical to each company's infrastructure.
In recent years most organizations have started to think in strategic terms about these critical services. Home grown companies and institutions have taken the in-house model but as overseas companies move in, reluctant to burden their payroll with support staff, FM has emerged as a key business discipline throughout Africa.
Cliff Hocking, President of the South African Facilities Management Association (SAFMA), says his industry has grown more slowly than anticipated over the last three years. “There was fairly large growth from the late 1990s which has not maintained itself among large corporates and more especially government institutions. I think that is where the real opportunities and challenges for the future lie,” he says.
The perception that outsourcing is synonymous with job losses has not endeared the process to the unions or the politically hypersensitive. This perception may have been behind two large stalled projects in the last decade, the Postal Service’s proposal to outsource its facilities nationwide and national power supplier Eskom’s to contract out a large proportion of its portfolio in Gauteng: both were abandoned at the eleventh hour.
But it’s not all bad news. Absa Bank has recently outsourced management of its entire estate, and Colliers CEO Bill Ward thinks the financial sector represents the biggest opportunity currently. “We believe that perhaps 80 percent of the current South African market is untapped. They either do their own FM work or they don’t do it at all! So there’s huge scope locally.”
Ward also sees some signs that large corporates and government bodies are getting over their suspicion of the FM business model. “I think there is greater recognition from those institutions that the outsourced route is potentially better because it generates synergies and savings by using a single FM supplier rather than simply outsourcing many small facets to different companies then having to manage that in-house.”
SAFMA is keen to get the message across that efficiency savings are as important as headcount reduction when it comes to taking the decision to outsource. “Savings are generated by applying better practices, not putting the screw on the service providers to the industry,” says Hocking.
The market is opening up wherever you look, says Ward. “Larger government institutions, schools and hospitals are where we see potential growth in the future. The government is showing itself more willing to get involved in healthcare and education PPPs, and these projects routinely include FM in the package.”
Though the mining and petrochemical industries so important to most African economies are highly specialized in their operations, the former has its above-ground facilities, the latter its portfolio of retail outlets, often with convenience stores, he adds: “Running remote retail locations, making sure they are well stocked, clean and in working order is not core business for the likes of Shell or Total. This is one area where there is quick and easy growth, especially outside of South Africa.”
Here is a reminder that South Africa’s well established FM industry is looked to by other nations in Africa. WSP Facilities Management has identified Nigeria as the single biggest market outside of South Africa. The most populous country in Africa, one of the fastest growing economies in the world and a key player in the international oil industry, Nigeria has seen enormous growth, with a rapidly evolving telecommunications market and a highly developed financial services sector, all with premises in the major centers.
Meanwhile there’s the World Cup. Hocking says its effect may have been to slow down FM activity rather than boost it. “Interestingly, organizations seem to be putting things on hold. The FM issues round the new stadia will probably come to the fore after the tournament when the challenge will be to make them sustainable and find ways of utilizing them for different events like conferencing, music or hospitality”.