Disclaimer : Contracts data is based on public available information. Due to Covid19, many of the contracts could be extended or re-procured.
The Facility Management market in the UK is one the most developed and the largest in Europe with high degree of competition among the service providers. The market post pandemic times, even though the disease is yet to see its last is going through a transformation driven by technology and innovation. The outbreak of Covid-19 has had a mixed business impact on facilities management companies as the restrictions on the movement of people resulted in a reduced level of activity across many customer sites. The Service Providers are coming out with new service offerings backed by altered business models and emerging value propositions.
Through this data based article from our contracts database, we will look at how the mid term future pans out for FM Suppliers:
Facts : A total of £1.3 Billion annual value worth of contracts will come up for renewal in the period between 2023 to 2025 from the public sector buyers.
Insights: The incumbents will have an edge to retain these contracts if they have performed well on the deliverables, however, a robust bid proposal backed by performance in similar projects will give a fair chance to new bidders as well.
Around 45% of this business will be available in the first year of this period in 2023 when £593 Million annual worth of contracts will come up for renewal.
The year 2021 saw a boost in FM outsourcing as contracts related to managing Covid-19 testing sites from the government authorities fetched the industry an additional £1.3 billion worth of contracts.
The post pandemic scenario is also expected to open more business prospects primarily technology driven opportunities as the businesses remodel and adjust to new normal which is expected to result in new outsourcing opportunities for the FM Industry in the coming years.
~Looking at the graph, the business scenario for the three year period from the public sector buyers shows steady business flow across all the Quarters with some spikes in Q1 of 2023 & 25 for the FM Industry. A total of 1,087 contracts will come up for renewal during this period.
Top Public Sector entities with large offerings during 2023-25:
Facts: Top ten Buyers will command 48% of the renewal share in value terms between 2023-25 (£643 Million out of £1.3 Billion)
Insights: Most of these large projects have been outsourced by Central Government authorities, hence a close tab on tender alerts will be necessary for the prospect bidders. The tendering process starts much in advance ranging between three to six months from the end date of the current contract.
The Ministry of Justice with around 15 Contracts worth £173 Million annual value will offer the largest chunk of business deals for the FM service providers during 2023-25.
The Department of Work and Pensions will also offer contracts worth £130 Million annual value during this period as the term of these contracts comes to a close.
The Ministry of defence will offer at least seven contracts worth £67 Million of annual value mostly during 2023 post the end of term of the running contracts.
~The top ten will offer more than 70 contracts from just renewals, additional business deals could add up to this number as outsourcing picks pace.
Category wise spread for FM opportunities for 2023-25:
Facts: The central government will be the largest category with more than 150 Contracts and an annual value of £603 Million followed by local government with more than 350 contracts and an annual value of £417 Million.
Insights: The FM providers need to watch out for framework agreements as some of these may go through Crown Commercial Services which acts as a common platform for public sector buying in addition to individual tendering process.
The Education Sector will offer a significant 345 contracts worth £156 Million annual value during the three year period with more than 75% of these constituting soft services like cleaning and catering.
The outsourcing of non-core activities will continue to gain popularity with the businesses given the inherent benefits in terms of high installation cost of inhouse facility management teams and the complex task of managing multiple services. Organizations are evaluating their operating models to maximize value creation. There is a high pressure on companies to offer value to their customers, compelling them to constantly innovate and expand their core services to deliver improved customer services. As a result, there is often a reduction in their non-core facility management budget, as employees and clients expect better workplace experiences. These factors are projected to make outsourcing an attractive proposition in the coming years.
If you are an incumbent looking to renew or challenger looking to displace the contract then drop me a line – baskar@baachu.com to discuss your sales growth opportunities, goto market and renewal bid strategies