Facilities management companies - the unsung heroes
The built environment has now become a bedrock in supporting critical roles, from health and social care to transport and utilities, as the UK accelerates its health response. The industry has actively come together as a community to maximise its resources and now plays a pivotal role in tackling the spread of the virus.
As an example, the Do Some Good campaign has facilities management organisations actively volunteering their support to provide space and accommodation, medical supplies, and operational support. Companies are establishing safe and compliant workspaces to key workers by repurposing vacant properties, such as the united effort in transforming the ExCel London exhibition centre into a temporary NHS Nightingale hospital.
Organisations and employees are protecting our national wellbeing by elevating the critical nature of the services delivered by facilities management firms to keep the UK safe and operational. We're happy to see this contribution being recognised.
Mixed business impact on facilities management firms
Despite the ongoing demand for critical service provision, companies are facing a reduced level of activity across many customer sites and a decline in project work. As a result of the government effectively shutting down the hospitality, retail and leisure market and enforcing non-key employees to work from home, most workplaces have become dormant. This has led to customers across the UK seeking to suspend contracts and equally preserve cash in a bid to enhance financial resilience during the challenging months ahead.
The European facilities management services conglomerate, ISS reported that, while its operating margins are supported by contract clauses and a flexible cost structure, it is facing a reduced level of activity across many customer sites. The group has decided to withdraw the proposed ordinary dividend ahead of their annual general meeting in April, and we expect other listed competitors to follow suit.
Our view on the sector remains mixed, as the continuation of essential services has led to a demand in responsive facilities management, however we expected a deferral in discretionary project work and non-essential maintenance spend to minimise this upside. As a result of a reduction in client demand, companies will need to assess and re-deploy resource across sectors and disciplines and start considering long-term preparations.
Pooling labour resource
There has been a logical up-tick in demand for soft services within the public sector, finance and food environments, with companies such as Mitie expecting little to no impact in demand because of COVID-19. To manage resource capacity and reduce potential bottlenecks across the sector, the government is considering the creation of a ‘clearing house’ to enable furloughed employees of one service provider to be redeployed on a contract managed by another.
The goal is to ensure continuity of service delivery in anticipation of high levels of absenteeism as contract staff may be hit by the illness and self-isolation. More than ever, the sector will need to work collaboratively and share best practice to keep the UK operational during these unprecedented times.
Mitigating measures
Businesses need to assess the situation as the state of the nation evolves, ensuring they are actively monitoring daily guidance and following government guidelines. Read more information on the available government support.
We've distilled our focus points into six key areas for companies to consider:
|
Areas of consideration
|
Initiatives
|
People
Keeping them safe, motivated and enabled to do their jobs
|
As staff-focused organisations, the greatest asset of facilities management providers is their people
Companies should ensure high engagement to keep their people motivated and re-assured
Review immediate impacts and strategic resource
|
Statutory Sick Pay rebate
Self-Employed Income Support Scheme
Key-worker status
Sector-wide ‘clearing house’
|
Liquidity, contingency and claims
Ensuring your stability for the future
|
Understanding future cash flow and the implications for solvency and continued trading
Daily cash-flow forecasting
Approaching existing and new lenders about funding needs and liquidity
|
Coronavirus Business Interruption Loan Scheme
Time To Pay
VAT deferral
|
Technology
Managing your stability and digital risk
|
Stabilising services across networks amid pressure on local broadband infrastructure
Managing communications to stakeholders
|
Implementing and enforcing a formal remote-working policy
Conducting external reconnaissance of your digital presence, and penetration testing
|
Regulatory changes
Stay compliant now and in the future
|
Keeping up to date with the regulatory environment
Daily government announcements, changing guidance and new legislation
|
Disclose readiness of a percentage of workforce to be away from work (>20%)
Reschedule audit dates and filing deadlines
|
Customers and suppliers
Keeping them informed, secure and prepared for change
|
Establishing effective methods of cash collection and adjusting terms of payment
Forecasting and mitigating supplier risk around financial and operational failure
|
Accelerating customer settlements
Short-term cash flow forecasting (customer payments & receipts)
|
Operations
Meeting customer demands effectively and efficiently
|
Mitigating risks to business continuity
Adapting to the circumstances, while trying to create a greater certainty of demand and supply
|
Training a multi-disciplinary operative base
Allocation and redeployment of labour resources
Defer non-essential and uncommitted capital expenditure
|
The market outlook for facilities management firms
Although the outlook remains unclear, we can be encouraged by the solidarity shown by the sector to address the pandemic. Initiatives such as repurposing vacant properties and pooling scarce resource, underpin a pro-active approach set by facilities management companies to prioritise national health and subsequently maintain a degree of productivity witnessed before the outbreak.
We expect the facilities management sector to bounce back resiliently once normality resumes, and a heightened focus for cleanliness and well-being in the workplace to be prioritised on the public and corporate agenda. The perception of facilities management will change, to the benefit of the sector, and companies should embrace collaborative initiatives that unlock productivity synergies and improve operational performance, together with a cohesive tech-enabled approach that optimises maintenance regimes remotely.
![]()