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UK Integrated Facilities Management: market insight report

  • ID: 2202637
  • Report
  • August 2012
  • Region: United Kingdom, Great Britain
  • 65 Pages
  • Apex Insight
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  • Amey UK plc
  • BAM Construct (FM Ltd)
  • Compass UK & Ireland
  • Integral UK Ltd
  • Kellogg Brown & Root Ltd
  • OCS Group UK Ltd
  • MORE
In this report Apex Insight reviews the UK integrated facilities management (IFM) industry. The report quantifies the market size and historical growth rates while reviewing key factors behind these figures and exploring drivers of profitability.

The report also carries out an in-depth analysis of the relevant drivers of industry growth – including relevant macroeconomic indicators such as GDP growth and employment levels, and other specific factors, like construction spending, PFI projects and numbers of people in schools and hospitals, which determine demand for IFM – setting out historical trends and forecasts.

While many reports on the industry contain data and description, a critical objective in writing this report has been to prioritise our insights and conclusions.

Why is it useful?

The FM industry has been one of the leaders in the UK's outsourcing revolution but its prospects have been clouded by recent, less certain, economic conditions. In order for those involved in the market to make the best decisions in this complex and changing environment, they need to have access to the best information and understanding of the trends and drivers. The aim of this report is to provide this.

It is intended for facilities management service providers themselves as well as investors, banks, analysts, consultants and other parties with interests in the sector.

What are the sources and methodology?

This report is based on:

– Publicly available data including company annual reports, websites, press releases and government statistics
– Interviews with senior-level contacts in the market
– In-depth analysis of the macroeconomic environment and other relevant market drivers

Information from these sources has been synthesised and presented clearly and concisely with extensive use of charts and tables to illuminate points and support conclusions.

The IFM market

Integrated facilities management (IFM) has developed as an important industry in the UK over the last couple of decades.

We estimate its size to be in excess of £8bn meaning it now accounts for around a third of the total outsourced FM services market.
– Its significantly higher growth rate means this proportion has increased through time and we expect it to continue to do so. The UK markets – both for IFM and outsourced FM services – are significantly more mature than elsewhere in Europe.
– Evidence suggests that, relative to GDP, the UK market is at least twice as large as the next most developed markets: Sweden and the Netherlands.
– Other markets offer higher growth and that, rather than a major switch to international buying, has led many leading UK operators to focus on overseas markets.

Competitive landscape

The market remains fragmented. In our research we have analysed the performance of 33 of the largest UK FM service providers with IFM capability but the list is not exhaustive.

The market has consolidated and we expect it to do so further in future. This is being driven both by
– Acquisition – with the leading groups such as MITIE, Compass, Carillion, Capita, Vinci and Imtech buying up single service providers to extend their capabilities and bolster their IFM credentials while also gaining entry to new customers
– Organically, as the increasing size of IFM contracts means that fewer providers have the necessary scale to service them.

Smaller single-service providers face the threat of being forced to accept second-tier supplier status where they are vulnerable to the bulk-buying power of the leading IFMs.

Despite the recession, industry margins have held up very well as providers have been able to achieve inflationary price increases while increasing productivity and, in many cases, imposing wage freezes on their workforces.
– To an extent, the shift from single service to IFM explains this, with a price premium for greater value added and potential gains from sharing costs between multiple services performed for the same client.
– Nevertheless, as IFM itself matures as a service, margin pressure may increase.


In the current economic environment with little or no economic growth, delayed recovery and decreasing construction spending, demand from the private sector appears flat.
Despite uncertainty surrounding PFI, there is more optimism regarding the public sector
– Positive demand fundamentals such as the demand for schools places and hospital / care home beds
– Bold outsourcing strategies are currently considered by many observers to be necessary for government spending reductions to be achieved.

However, we believe there is considerable execution risk involved in such a significant change as many in the industry envisage.
– There are signs of dissatisfaction from existing customers with the IFM model and evidence of intentions on the part of some to bring certain services, where the IFM provider is not seen to be adding sufficient value to justify its margin, back in house.
Note: Product cover images may vary from those shown
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3 of 6


  • Amey UK plc
  • BAM Construct (FM Ltd)
  • Compass UK & Ireland
  • Integral UK Ltd
  • Kellogg Brown & Root Ltd
  • OCS Group UK Ltd
  • MORE
The Integrated FM Services Market 6
Definitions of the market
International comparisons

Market size and growth 15
Market size & growth
Market price and productivity trends

Market drivers 21
Discussion of market drivers
Drivers and their impact

Competitive landscape 29
Market characteristics
Main operators
Value drivers
Profiles of the leading operators

Forecasts 52
Key drivers forecast
Market forecast

Appendix – financials for other service providers 59

List of Figures

2012 FM contracts awarded by type of service
2012 FM contracts awarded: single vs. multi-service
2012 FM contracts awarded by sector
Density of residential starts in England / dwellings per hectare
IFM market size as a % of GDP
IFM market value / £bn.
Revenue of leading UK FM providers
ONS facilities management services categories: single and multi service / £bn.
Outsourced FM service market / £bn, IFM as a percentage of the market
Gross and pre-tax margins for the set of leading operators / %
Leading FM service providers: revenue per employee / £'000
Have you achieved a salary increase over the past 12 months?
UK GDP in current prices (money GDP), inflation (GDP deflator) and real GDP / % annual changes
UK Inflation: Consumer price index and GDP deflator / % annual change
UK employment / annual % change
UK construction spending by type / £bn.
Number of PFI projects closed by year
Pupils in state-funded schools / '000 and % change from previous year
UK students in higher education / '000
Hospital beds occupied / '000 and % change from previous year
UK residential care beds / '000
Contract length /years
2012 contracts won by FM service provider
Historical performance of leading UK FM service providers with IFM capability
SERCO Group plc. summary financials for UK divisions
Compass UK & Ireland Ltd summary financials
MITIE Group PLC summary financials
Amey UK plc. summary financials
Vinci Construction UK Limited summary financials
Sodexo Ltd summary financials
Babcock International Group (support services division) summary financials
ISS Facility Services Limited summary financials
Imtech UK Ltd. summary financials
OCS Group UK Limited summary financials
Balfour Beatty Workplace summary financials
Interserve plc. summary financials
Aramark Ltd summary financials
SPIE Matthew Hall Limited summary financials
Emcor UK Facilities Services (EFS) summary financials
Integral UK Limited summary financials
Capita Symonds Ltd. summary financials
G4s Integrated Services (UK) Limited summary financials
UK GDP in current prices, inflation (GDP deflator) and real GDP / % annual changes. Historical and forecast
UK Consumer Price Index and GDP deflator / % annual change. Historical and OBR Autumn 2011 forecast
UK employment / annual % change
UK construction spending: historical and forecast / £bn.
Pupils in state-funded schools / '000 and % change from previous year
Hospital beds occupied / '000 and % change from previous year
UK residential care beds / '000
Outsourced FM market /£bn. + forecasts until 2016
IFM market overall and as a % of outsourced FM + forecasts until 2016
Carillion Services Ltd summary financials
Johnson Controls Limited summary financials
Skanska Rashleigh Weatherfoil Limited summary financials
Morrison Facilities Services summary financials
Kellogg Brown & Root Limited summary financials
Resource Services Group Limited summary financials
Norse Group summary financials
Kier Facilities Services Limited summary financials
Seddon Property Services summary financials
Turner Facilities Management summary financials
Pinnacle PSG summary financials
SGP Property and Facilities Management summary financials
BAM Construct (FM Limited) summary financials
Robertson Facilities Management summary financials
Initial Facilities Management summary financials
Note: Product cover images may vary from those shown
4 of 6


  • Amey UK plc
  • BAM Construct (FM Ltd)
  • Compass UK & Ireland
  • Integral UK Ltd
  • Kellogg Brown & Root Ltd
  • OCS Group UK Ltd
  • MORE
New Research Reveals Challenges Facing UK Parcels Carriers

New research into the outlook for the UK express parcels industry has been released which identifies market challenges and offers an insight into the potential for future growth.

Business intelligence organisation Apex Insight, whose clients include UPS, FedEx and DHL; has based the research and forecasts on its long experience of working in the sector, current industry trends, customer needs and the impact of macroeconomic factors.

Frank Proud, director of Apex Insight, says: “Like many UK industries, the express parcels sector is potentially facing ever bigger challenges. Research based on a realistic market forecast will prove vital to many carriers who need to plan effectively in an environment where the past may not be the best guide to the future.”

The report shows that although the parcels industry, now valued at around £7bn, showed a return to profit in 2010, it once again experienced an overall loss in 2011 with carriers placing increasing dependence on home delivery to offset the decline in business parcel volumes since 2008. With intense price competition and low levels of customer loyalty, many carriers have responded by attempting to cut costs through reduced staffing levels.

UK online shopping sales in the first six months of 2012 were almost 18% up on 2011 levels, suggesting total sales for this year will approach £30bn. But, unfortunately, Apex Insight does not foresee relief on the horizon for the B2B segment, with 2012 GDP growth forecasts being slashed, the intensifying Eurozone crisis and the impact of government austerity policies meaning the B2B segment has decreased from two thirds of market value a few years ago, to just 57% today, while the average revenue per parcel is 10% below 2007-08 levels.

UK manufacturing continues to suffer in the face of global competition; a banking sector which, even the government proclaims, is not inclined to invest in it, and ongoing trends for the physical item in a parcel to have less value relative to intellectual property aspects such as patents and brands.

Given these market conditions, it is likely that B2B carriers including UPS, DHL, UKMail, City Link and GeoPost will increasingly concentrate on developing services which will provide added value and customer satisfaction to home shopping organisations, e-tailers and online shoppers, rather than sticking to the higher margin B2B segment.

Currently, the biggest complaints among consumers arise from delivery slots which are at best vague and failures which occur in the ‘last mile’ of the delivery. Many retailers now make full use of carriers’ tracking systems to keep customers informed, and there have been some other well received improvements, such as GeoPost’s one hour delivery window, Royal Mail’s ‘Delivery to Neighbour’ initiatives and Packstation-type locker solutions. However, the issue of the last mile remains a challenge to be addressed by the industry as a whole – and quickly.

“Although the express parcels industry has been substantially affected by the economic downturn, opportunities certainly remain”, says Proud. “Our research shows that although B2B deliveries are and will remain the largest segment; the consumer delivery segment, which has very different needs, is where the growth is. Traditional carriers must focus on the specific needs of home delivery. We expect to see continued innovations in service as carriers embrace these challenges and adapt their strategies, operations and marketing to make sure they share in the growth segment while retaining a viable premium B2B model”.
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- Amey UK plc
- Aramark Ltd
- BAM Construct (FM Ltd)
- Babcock International Group
- Balfour Beatty Workplace
- Capita Symonds Ltd
- Carillion Services Ltd
- Compass UK & Ireland
- Emcor Group (UK) Plc
- G4s Integrated Services (UK) Ltd
- ISS Facility Services Ltd
- Imtech UK Ltd
- Initial Facilities Management
- Integral UK Ltd
- Interserve (Facilities Management) Ltd
- Johnson Controls Ltd
- Kellogg Brown & Root Ltd
- Kier Facilities Services Ltd
- MITIE Group plc
- Morrison Facilities Services
- Norse Group
- OCS Group UK Ltd
- Pinnacle PSG
- Resource Services Group Ltd
- Robertson Facilities Management
- SGP Property and Facilities Management
- SPIE Matthew Hall Ltd
- Seddon Property Services
- Serco
- Skanska Rashleigh Weatherfoil Ltd
- Sodexo Ltd
- Turner Facilities Management
- Vinci Construction UK Ltd
Note: Product cover images may vary from those shown
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Note: Product cover images may vary from those shown