Gulf facilities management: Keeping up appearances

Dubai’s developers are past masters at throwing up high-spec towers, higher, faster, flashier than anywhere else in the world. But surprisingly, it’s only recently that the concept of properly managing those buildings has caught on.

Until about five years ago, facilities management was an alien concept. Some of the most advanced buildings in the world would have only a nightwatchman who would call for repairs if, say, the lift broke down. But now, the FM sector is maturing at the region’s usual breakneck speed, as the national developers import experts from Europe, Asia and Australia, and new firms pile into the market to try their luck. So what are you waiting for?

1 Don’t worry about the numbers

One thing there is a shortage of in Dubai is proper business information. It’s hard to get a handle on the size of the potential market, but FM experts typically estimate that 65-80% of the cost of a building lies in the maintenance phase. One estimate produced in 2006 suggested the UAE’s FM market alone would be worth $1.4bn a year for the next 25 years, just for buildings coming to market by 2011. However accurate that turns out to be, it's fair to say the market is huge and growing. To date, Dubai has been the epicentre of the FM boom, but markets such as Abu Dhabi and Bahrain are catching up fast.

Firms working in the region aren’t bothered about tying it down more precisely. “The market is such that I don’t really care,” says the manager of one. “There’s just so much, I don’t need to know the market potential. There is enough work out here for everybody.”

Mace’s Macro FM offshoot, for example, has been operating in the Gulf since 2003, and now has half a dozen contracts in Dubai, Abu Dhabi and Saudi Arabia. That may not sound many, but the projects are typically vast, covering tens of millions of square feet. “It’s different to the UK market – you’re getting involved in whole communities with a mix of leisure, retail, commercial and residential,” says chairman and managing director Bill Heath.

2 Get in quick

If you’re hesitating, heed the words of one of the largest FM clients in the region, Mick Dalton, senior director of asset management at Emaar: “Every week, we see a different FM company come to Dubai. For any companies not here in the next 12 months, it’s not worth coming out. The market is being tied up and they’ll be struggling to get business.”

Many foreign contractors are already offering FM services in the Gulf, including Johnson Controls, Ecovert and Dalkia so the market is already crowded – though not every firm calling itself a facilities manager offers the same kind of service. There are three tiers to the market. First the FM arms of the big national developers, which charge and pay the most, such as Emaar’s Emrill and Imdaad, part of the Dubai World group with Nakheel, run by imported staff who have brought the most advanced procurement and monitoring techniques.

Next in the pecking order are the independent foreign firms, and at the bottom, local firms that call themselves facilities managers but may offer only basic services such as cleaning or security. The big property management firms such as Jones Lang Lasalle or CBRE are not yet offering FM services, but they are already well established in advising on investment.

3 Make friends

Networking is of course an important part of winning work in the Gulf, though it may be more difficult to meet like-minded colleagues than elsewhere. Trade associations are illegal in Dubai – they’re lumped in with the government ban on trade unions – but there is an informal networking group of about 80 FM professionals, run by Dalton, a past chairman of the British Institute of Facilities Management.

He says that the best way to get a foothold in the market is to partner with a developer on one of their schemes. “For an FM company to start up, it’s very expensive because of transport, accommodation, and so on. But if you’re a management company and you can partner with local companies already here, you haven’t got all the expense and can add management expertise, which is sought after in this market.”

There are often very unrealistic mobilisation periods. You need 600 people for a contract, which takes two months, and you get three or four weeks

Ivan Brinkley, Emrill

Because sites are so large, there is often room for several companies. The 500-acre Downtown Burj Dubai site, for example, is split between Emaar-offshoot Emrill, Multiplex FM, Mace Macro and Mab. “We currently work with four different companies in developing that particular product,” explains Dalton. “It’s for capacity, competition, benchmarking and comparing who’s better out of the four.”

4 Prepare for some staffing troubles

Recruitment is the greatest challenge for newcomers to the market. Unless you employ cheaper labourers from India, Asia and the Lebanon, you won’t be competitive in the marketplace, but that means you’re fishing in the same pool as the booming hospitality and construction industries. Professional staff are equally in demand. Macro employed 15 people in April; by the end of the year, Heath expects that to double.

Clients, however, are not prepared to wait around. Several contractors complain that contracts will be negotiated in fine detail late into the night, but once they’re signed, there’s no time to spare. “There are often very unrealistic mobilisation periods – that’s one big area that’s still not totally understood,” says Ivan Brinkley, operations director of Emrill, which directly employs 3,500 people. “You need 600 people for a contract, which takes two months to source, recruit, check, get visas, and you get three or four weeks. It puts a lot of pressure on the beginning of contracts – everything is go, go.”

5. Keep up to speed

Though FM is a new concept in the Gulf, it’s moving fast. “The market is evolving at a very rapid rate,” says Sasha Doran, a senior FM consultant with Gleeds who joined its Middle East arm in January to develop its FM services. “Clients look at buildings now as long-term investments, with life-cycle costings and maintenance, very much as it would be done in Europe or the States.”

Brinkley thinks contractors are the ones playing catch-up now. “In the early days, proposals were set by the industry, not the client. Now clients are setting standards beforehand and then going to the market. We’re starting to see very high quality tenders following the international model, with service level agreements, key performance indicators … all the things you take for granted in Europe and Asia are now coming here.”

Faithful + Gould’s FM consultancy division, meanwhile, has just finished designing output specifications for King Abdullah University in Saudi Arabia, a 36 million m2 development. This is a more advanced method of procuring FM services, where the client specifies the standard of service rather than the specific tasks to be completed. “It’s more cost-effective,” explains resident director Nigel Sale. “The management of risk is where it belongs, with the contractor. It allows the building owner to get on with the business and not worry about the maintenance of the building. Contractors can use the latest methods, and you don’t have to define that to them.”

Where progress is patchy is in involving FM from the start of a project. On one hand, Doran believes “people are very much picking up the fact that if they’re going to have a project manager and an architect and other experts involved at the start, it makes sense financially and for the security of their investment to involve a facilities manager at the front-end as well”.

But Brinkley says the traditional building model still prevails. “When they go through the disciplines and allocate the fees, they don’t tend to include FM. It’s always a hard sell, but it is changing.”

And however sophisticated procurement methods may be, old habits persist. Expats mutter darkly that the playing field is far from level, and that sometimes onerous tender processes result in contracts being awarded to developers’ own subsidiaries ahead of more competitively priced newcomers.

Others are resigned to the way things work. “The Middle East is the Middle East,” shrugs Brinkley. “On one hand it’s changing very rapidly, on the other, very slowly. The whole place is built on trading. That’s not to say it’s not a very professional market, but sometimes the old ways come to the surface.”