Face-to-face: Ian Harfield, CEO, CBFM
Cofely Besix FM has a strong focus on where it wants to go, and how it approaches its growth plans with a supportive board
Over the last few months Cofely Besix Facility Management (CBFM) has undergone a raft of changes from a strategic standpoint, with the appointment of a new C-level suite. Meanwhile growth in business has showed no signs of slowing down. “We always want to be in a position where we are going from strength to strength, and 25% to 30% year-on-year growth in revenues [indicates that],” says Ian Harfield, CEO, Cofely Besix Facility Management.
But revenues alone don’t tell the full story, and while a YoY growth is a “fantastic achievement” Harfied says success is determined by profit margins and CBFM’s profits are diminishing YoY, but that relates to market maturity Harfield reveals. “Today customers are commercially more astute and FM operators are trying to match the pricing to what they want.”
As part of the new layer of C-level appointments, CBFM recruited a CFO, COO and a CBDO with an eye on the future of its Middle East business. Harfield explains the idea behind the move. “Service providers in the region tend to staff up for today. But we have taken that leap of faith and invested in this business, and we want it to grow astronomically.”
Backed by its shareholders — Cofely Besix and Engie — Harfield enjoys the support of a board that’s ready to sustains the business and not just chart growth plans. In a way, the strategic move has come as a result of CBFM’s growth not just in the number of clients and contracts, but the quality and prowess of the assets it manages.
CBFM is looking at digging its heels setting itself up for the long haul in the Middle East thanks to the reputation it has built for itself in hard services. The firm is developing— in Harfield’s term — ‘a Middle East model’. “I think it’s irrelevant to align a Middle East business to a European or US model. We are developing a Middle East model best suited to working in this region and it all boils down to having the right personnel who can communicate with our clients about operatives,” he says.
“The Middle East model is one that is based on relationships, which is different from other parts of the world. Here it’s about forging a relationship and building on them with your reputation. CBFM has built a strong reputation as a hard services company based on which we have built those relationships. In essence, that’s the secret to doing business in the region.”
According to Harfield the lack of understanding regional business practices has led to the downfall of several international companies. Even in the FM industry, he says, “substantially well-known companies” have arrived with a particular mind set and perished after a point. “Meanwhile the ones that have survived have either morphed themselves into the way of working in the region or have a product that people have an immediate need for,” he reveals.
He adds that the Middle East is a dynamic market in comparison to the US, Europe and Australia, and while structure is imminent, service providers have to be dynamic and nimble. “This is only possible if your management teams are empowered and trustworthy. There’s no point in having a general manager who has no authority or if he gets bogged down with bureaucracy,” Harfield says.
CBFM has recently expanded its regional operations having entered the Omani market. Harfield says the expansion is strategic and matches the company’s plans given the Omani market is “mature”. “Oman has strong underlying values around Omanisation and business in Oman, albeit slower [compared to other markets in the GCC], is a lot more structured and progressive,” he says.
In terms of contract lengths, CBFM is looking at changing the current market practice where service providers are generally offered a three-year contract. “We try and explain to our clients the benefits of a having a five or 10 year contract instead of the industry norm of three years. And it’s through the longevity of contracts that hard services and energy performance can come together to truly drive down costs and add genuine value to an asset. For example, we have a long-term contract with RTA where we are working to drive down operational costs in coordination with them,” Harfield notes.
He also says CBFM is renowned for its quality in providing hard services and the firm remains committed to its promise. He hopes that the evolution of hard services has a bearing on statutory compliance, energy management and all sorts of efficiencies that come from it. Combined with the firm’s ability to develop an energy services model, CBFM’s goal is to offer more ways of looking after buildings.
“For instance, we are interested in replacing a chiller system for a building owner after its 15 year lifecycle and work with them for five to 10 years. The long term contract will help depreciate the value of the chiller which will help customers with limited budgets to get over those problems. That’s the sector that’s more interesting to us because it’s about long term relationships that build long term asset value,” Harfield reveals.
The ‘specialists in hard service’ tag isn’t something that worries him too much either. “We do offer the IFM / TFM model but we have firm roots in the technical side and to suddenly think we can do cleaning... it isn’t our core.”
From the four major sectors in the real estate market — residential, commercial, industrial and infrastructure — Harfield says the residential sector is the most challenging. “The community sector is in a race to the bottom because of the dynamic that’s involved in the sector — the direct relationship between the cost of the service and landlords having to pay for it. So they want the best price for maintenance but you have no intrinsic relationship between price and quality,” Harfield says.
The situation is different in the infrastructure sector since it is critical and so the service element is not tampered with when it comes to price. It’s an informed customer that’s buying against a critical availability matrix. Meanwhile, the commercial and leisure sector is on its way up, following a reasonable correction thanks to the sector’s better understanding of performance-based contracts. “Businesses have now matured, and they understand the importance of performance specification and rather than input based, and the value behind it,” he adds.
Meanwhile it’s not all doom and gloom for the residential sector, and Harfield offers a silver lining even though he says it will always remain challenging. He says: “RERA has done a fine job in controlling the service charges but collecting service fees is always going to be a challenge. If service charges are set at AED100 per ft2 then owners will simply have to pay it.”
To counter cash-flow issues, owners’ associations are perennially on the lookout for the cheapest available FM service provider. And all too often operators end up undercutting to take jobs on a lower contract value. But Harfield isn’t too concerned about companies that create this market scenario. He explains: “You will go through a phase where people drive the price down, which directly affects the service. At some point in that cycle the asset starts getting dilapidated. The service provider then gets terminated or doesn’t have its contract renewed, and when its re-tendered they re-bid at a higher price. So the price will start to drive back up again.
“An ‘A-grade community’ that’s willing to pay the service charge will have ‘A-grade’ suppliers. And as you work your way down the food chain, you have smaller independent suppliers that do reactive maintenance. But the true problem will come in 10 years to 15 years when you end up with a legacy of maintenance issues that need to be resolved.
Harfield believes every company has a place in the FM food chain, it doesn’t mean any one company is better than the other, it comes down to their levels of technical competence. “There comes a point in an asset’s life where a fault arises that is beyond the capability of the people you have, and then it’s a case of whether you have a system in place to bring someone in at a higher level, who understands the complexities of the system. That’s when they call the likes of a CBFM to find a solution for larger assets.”
As for the future, CBFM is looking at entering new markets — Saudi Arabia and the other Gulf countries remain natural extensions for the business. “They are huge markets, especially Saudi Arabia. We have expansion plans but we will only do so when we are confident of building a legacy,” Harfield concludes.