How are GCC's FM firms tackling market challenges?
Economic challenges are encouraging regional FM outfits to pivot their service offerings, skillsets, and supply dynamics towards emerging Middle Eastern markets
As socio-political and economic challenges mount, now more than ever, risk will significantly impact management practices and trends in the Middle East – these hurdles will also shape how future business plans are arranged in the region. For FM professionals, this means greater creativity and discernment in how – and where – their client portfolios are organised.
Youssef Abillama, CEO of MMG Holdings, appears to have struck the balance between these seemingly contrasting factors. MMG has been active in the Middle East’s FM sector for 16 years, with its operations extending into countries such as Syria and Lebanon. Among the company’s most prominent past and ongoing projects include American University of Beirut and Hammoud Hospital University Medical Center in Lebanon, The Pearl in Qatar, and Banque Bemo Saudi Fransi in Syria (BBSF).
While MMG’s portfolio in these countries includes government clients – such as the Council of Ministers in Lebanon and the World Bank – a “majority” of the company’s business is with the private sector, Abillama tells fmME.
“Syria is a very tough market and has been for some time,” he continues.
“We are one of the only FM companies operating there now, as many left when the troubles started. We have worked with its oil and gas, and insurance companies, but our operations are now mainly with banks, including Qatar National Bank and BBSF.”
Meanwhile in Lebanon, MMG is extending its services to the country’s healthcare FM sector, Abillama adds.
“We have taken a conscious decision to focus on the healthcare industry [in Lebanon]. This is a highly specialised area for FM, but few companies do it right. It is not only a challenge to work with medical equipment and medical waste, but the FM works have to be completely unobtrusive so that the patients are not affected by the work at any stage.
“The supply chain is vital in a business like ours. It hasn’t always been easy in Syria, but the key has been to establish a wide range of partnerships with suppliers, and ensuring that we build up stocks wherever and whenever possible.
“Another challenge in Syria is communication. Whilst it is still, thankfully, fairly easy to recruit excellent technical operators, finding English-speaking managers has proved much more difficult. We are extremely lucky that we have a very loyal team, headed by a country manager who has been with MMG since we launched in Lebanon, and because of this, our staff turnover is low.”
Abillama has wise words of advice for clients looking to hire the right FM operators in wider Middle Eastern markets, such as Syria and Lebanon: “Don’t [always] go with the lowest quote – the old saying ‘you get what you pay for’ is very apt for the FM industry.
“It’s important to look at the company’s portfolio – if they haven’t got any healthcare experience, for example, then they may not be the best people to deliver a contract in a hospital. The length of time the company has been operating for, along with a proven track record, is important.”
Clearly, specialised IFM services will remain a key focus in the years to come, especially as clients look to consolidate their operations amid tightening market liquidity. British Institute of Facilities Management (BIFM), I-FM.net, and FM Expo, in a report titled Facilities Management Business Confidence Monitor 2016, found that 40% of their 180 surveyed professionals believe cash flows will pose a challenge for the regional FM sector.
Nevertheless, 59% of the respondents stated they are “slightly or much more confident” about economic growth and business performance in the upcoming year. The drivers of this optimism include improved owner attitudes towards asset life cycle prolongation, better preventive maintenance, and development plans for Dubai Expo 2020. The report, released at FM Expo 2016, stated professionals believe that Abu Dhabi, Dubai, and Qatar are the centres most likely to present fresh opportunities for expansion plans.
While the project pipelines of Dubai Expo 2020 and 2022 FIFA World Cup Qatar have respectively raised the profile of their host countries, Praveer Chakravorty, CEO of Oman-headquartered Bahwan Engineering Group (BEC), expresses optimism about the sultanate’s growth prospects as well.
According to Chakravorty, the evolution of Oman’s property market towards high-profile projects is paving the way for increased FM services to maintain these projects.
“FM has slowly and steadily been growing over the past few years in Oman,” he tells fmME.
“The growth of showcase projects and properties in Oman is [creating] a need for FM that can ensure these valuable properties are handled in the best built environment. Innovation will be the key in the FM sector for the upcoming years. Clients and FM service providers need to work with each other as a team to understand and bridge the gap between service level expectations and deliveries based on the environment, thus enabling optimum pricing levels.”
FM works at BEC are carried out through a special maintenance business unit, and BEC’s refurbishment and hard and soft FM competencies have been contracted for prestigious Omani developments such as Royal Opera House Muscat, Sultan Qaboos Grand Mosque, and Salalah International Airport.
In the future, Chakravorty remarks, tourism and logistics will be among the key growth sectors for FM outfits in the sultanate: “With the number of incoming visitors topping those of previous years and wide media coverage promoting the country’s status as a niche tourism destination, this sector is bound to expand.
“Port and logistics operations will also certainly be an area which FM companies will be looked at to provide professional services in the near future. The development of a national railway network and modernisation of airports also gives good opportunities to FM companies.”
However, Chakravorty is quick to point out that these emerging industries will require a certain level of specialised knowledge: “Facilities managers could face special challenges in these sectors, as they are critical areas of operation. Recent concerns about oil prices and their stability are also being watched carefully by the country’s growing FM segment.”
Nevertheless, the performance of QBG Facilities Management (QBG FM) is proof that Oman’s retail sector is driving the growth of tourism-oriented services in the country. This May, the company announced it has secured four long-term contracts in the sultanate – with Oman Avenues Mall, Muscat Grand Mall, Oasis Mall, and the InterContinental Muscat – within a span of eight months.
Speaking to fmME, Sara Momtaz, the firm’s director of commercial and business development, outlines its plans for the years to come: “The phenomenal progress of business opportunities is a result of the rapid increase in infrastructure within the region, particularly in Qatar and Saudi.
“We believe that Qatar and Saudi Arabia have enormous opportunities for FM growth, but we also foresee a significant push in Oman for more sophisticated FM service solutions.
“Technology plays a key role in development, and with the unquestionable need for refined service delivery, we have seen the Oman market start to take a slow but steady shift towards sustainable asset management, in which FM plays a vital role when maximising and extending life expectancy of assets.
“We also believe that FM consultancies will be a pivotal inclusion throughout the region, from the building design stage all the way through to the actual operation and maintenance. The growth potential of consultancy services will also increase in less FM-established markets such as Saudi, Oman, Qatar, and Kuwait.
“Qatar and Saudi’s ongoing delivery of commercial and residential buildings and destination attractions, accompanied with increasing demand for high levels of service provision, will result in healthy growth in the FM industry in the coming decade and beyond.
“The scope for specialist FM providers does exist for certain industry sectors – however the same need is also evident throughout other GCC countries, and is prominently recognised in more established markets such as the UAE.
“We need to acknowledge the importance of developing a strategy [to] utilise and maintain such developments in the long term, as opposed to focusing on short-term outcomes,” she adds.
Momtaz says the company’s array of security services will also thrive in Saudi: “Our plan is to translate our expertise into the new markets we enter. The market in Saudi has certain restrictions and compliance measures that we have considered and taken into account within our development strategy, and of course, all our plans coincide and comply with the applicable laws and regulations.
“Qatar has recently shifted its focus to introduce IFM and TFM providers that are able to self-deliver and self-perform services as opposed to managing a series of single service providers,” she adds.
“The acknowledgement of the value gained by driving FM operations through CAFM has modernised the methodical approach. Now, the industry trend is to deploy TFM providers under an integrated single contract with longer contractual periods rather than single services providers under short contract periods.
“This is due to clients increasingly becoming aware that not adopting this model may compromise the quality of service standards and the future sustainability of their asset value,” Momtaz adds.
Deepak Murthy, operations and admin manager at Al Doha Maintenance and Services (ADMSC), says that while the 2022 FIFA World Cup has indeed bolstered Qatar’s FM sector, its opportunities lie in the long-term vision of the country’s leadership.
Murthy says that Qatari FM is currently in a growth phase: “Qatar’s FM industry is currently experiencing a phase of rapid growth, and will seek to consolidate that in the next eight to 10 years. The country is highly optimistic about growth in the field of education and sports as well.”
Murthy agrees that the Qatari market too, much like any other in the region, faces challenges in recruitment and maintaining cost-effectiveness. Recent budget cuts implemented by the government have also, he says, driven FM companies in a “totally new direction”. However, these challenges are offset against the opportunities offered by Qatar’s current and future development plans. Additionally, certain government initiatives have also helped the country’s supply chain dynamics.
“Qatar’s supply chain is undergoing a huge restructuring programme to meet the current needs of the market,” he adds.
“Until recently, the market was hugely dependent on UAE and Saudi Arabia. This was a substantial challenge for most service providers, due to lead time and cost effectiveness. Since 2014, the Qatari government has taken significant steps in this direction. Recent developments such as the abolition of supply monopolies and implementation of a single-window clearance system in customs will change the future of supply chain management in Qatar.
“If we consider the standard benchmark of 30% as a project’s construction cost, then the remaining 70% is for the facility’s maintenance throughout its life cycle. This provides immense opportunity for service providers specialised in FM services for both, hospitality and sports sectors,” Murthy concludes.
“The next five years are going to dramatically change the FM sector in Qatar. It might be challenging, but is highly promising at the same time.”