The Facilities Management (FM) services industry is highly competitive with few barriers to entry. Companies from all service tiers often compete against one another, with larger companies emphasizing breadth and sophistication of service offerings, and small, owner-operated companies competing on the basis of price or historical relationship.

There are five key competitive factors and company differentiators in the facility services industry:

• Cost Structure and Service Pricing – Competitive cost structures are pursued through purchasing economies, capital equipment economies of scale, and cost saving from labor productivity technologies and techniques.   Small local competitors compete by minimizing non-production overhead costs.
• Service Breadth – As market expectations evolve, the capability to provide a broad range of fully integrated services is becoming increasingly important.  Further, technical innovation and the capability to perform industry specialized services is becoming a strong differentiator.
• Service Quality – Expectations of timeliness, reliability and quality of service are increasing.  Higher value contracts and longer contracting periods are making the ability to establish and maintain satisfactory long-term customer relationships a key competency.
• Geographic Scale of Operations – Competitors for large contracts must have the capability to serve multiple client locations
• Ability to Make Capital Investments – Large, multi-service contracts often require the disposition of client assets.

Facility Services Outsourcing Patterns:

Food services, landscaping/grounds keeping, custodial/janitorial, security, and HVAC/ mechanical are the five areas with the highest level of complete outsourcing.  45% of companies completely outsource their landscaping/grounds keeping, and nearly one-third completely outsource custodial/janitorial, security, and HVAC/mechanical.

The high growth outsourcing areas as a percent of budget change are HVAC/mechanical, energy management, construction/project management, custodial, and environmental services. Twenty-four percent of companies predict more external spending for HVAC/mechanical, 18% predict more external spending for energy management, 14% for custodial, and 13% for environmental services.

Historically, facility managers have approached outsourcing in a fragmented way, with 76% of companies contracting separately for each service. However, facility managers are increasingly outsourcing will consider bundled services like project/construction management, energy management, and real estate/property management services where value is “locked-up” in internal processes.

Facility Management Service Satisfaction:

External real estate and property management satisfaction ratings are 99%.

Food service, security, and custodial have relatively lower satisfaction scores.   The source of the dissatisfaction with these areas is most often related to service levels and the difficulty many providers are having with staff turnover.