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AMA Research have published the 4th edition of the 'Facilities Management Outsourcing - Health and Education Market Report – UK 2015-2019 Analysis'. The report offers a unique view of the market for outsourced management and delivery of non-core services with a specific focus on the Health & Education sectors.

Key issues covered:

Specific analysis of the FM Outsourcing market within Health & Education – sector sizes & trends, key market influences, government expenditure plans & PFI/PPP, penetration of FM outsourcing, forecasts and potential opportunities.

Review of market structure and leading providers – changing supply structure, diversification of service provision and company profiles for the leading contractors within Health and Education sectors.

Overview of the broader UK FM outsourcing market - size, recent trends and key market influences, forecasts and future prospects.


Key areas of insight include:

Market size of FM Health & Education from 2009 to 2015, with forecasts through to 2019.

Key FM contractors – key players, market position etc.

Mix of in-house, single, bundled TFM service provision in the education and health sectors over the medium term.

Some of the companies included:

Amey Group, Aramark UK, Babcock International Group, Balfour Beatty Workplace, BAM Construct, Bellrock, Bouygues Energies and Services, Carillion Facilities Management, Cofeley, EC Harris, Emcor Facilities Services UK, Eric Wright, G4S Facilities Management, Galliford Try, Gardiner & Theobald, Graham FM, Integral UK, Interserve Support Services, ISS UK, John Laing Integrated Services, Kier Building Maintenance, Kier Facilities Services, MITIE, Norse Group, OCS Group, Parkwood Holdings, Pinnacle PSG, Rentokil Initial Facilities, Robertson Facilities Management, Ryhurst, Serco Group, Skanska Facilities Services, Sodexo Facilities Management, Turner Facilities Management, Vinci Facilities, VolkerFitzpatrick.

Key areas covered in the report include:

FM OUTSOURCING - HEALTH AND EDUCATION SECTORS
Overview of the overall FM Market - market definition in terms of sectors –total market size 2008-18 for bundled FM services – Review of FM Outsourcing market within Health & Education – estimates of market size from 2009-2015, with forecasts for the period from 2016 to 2019.

Key market influences – capital expenditure programmes, penetration of outsourcing, increasing market maturity in the healthcare sector, construction output and developments within the PFI/PPP sector. Future opportunities and threats – impact of ‘Living Wage’ etc.

FM Market mix among Health and Education – recent growth rates and changing market mix.

Penetration of Outsourcing in the Health and Education sectors – level of maturity, services outsourced, trend to TFM and bundled services.

FM IN THE HEALTH SECTOR

Market size from 2009-2015, with forecasts from 2016 – 2019. Key market influences, drivers for growth, future opportunities and threats.

Review of major capital expenditure programmes: PFI/PPP, LIFT, Procure 21, Treatment Centres Programme.

Service provision mix – in-house, singe, bundled, TFM contracts; and mix of services provided through outsourcing - cleaning, catering, building & engineering maintenance, portering, laundry etc.

End Users of Bundled/TFM services – acute, mental health, primary care/GPs etc – mix of service provision within sectors – recent trends, future prospects.

Trends in private sector, dental groups, care homes – leading players by sector

FM IN THE EDUCATION SECTOR

Market size from 2009-2015, with forecasts from 2016 – 2019. Key market influences, factors influencing developing pace of growth. Influences behind anticipated growth levels over the medium term alongside a review of potential threats.

Review of major capital expenditure programmes: PFI/PPP, Priority Schools Building Programme, Higher Education.

Service provision mix – in-house, singe, bundled, TFM contracts; and mix of services provided through outsourcing - cleaning, catering, building & engineering maintenance, grounds maintenance etc.

Facilities Services Costs – by sector. Service costs by education sector (primary, secondary) – cleaning, catering, building maintenance, grounds etc.

Estimation of the mix of end users and the services required in each sector.

CONTRACTOR REVIEW

Key trends – recent acquisitions & mergers, market entrants, business failures, impact of market maturity, expansion and diversification of service provision, market polarisation.

Review of origins of FM companies and Supply Structure.

Market Shares of and company profiles for leading FM providers to Health and Education covering over 40 major providers and niche specialists – outline includes overview of market shares, company size, growth trends, areas of specialization, sector strengths and major contracts.


The potential of facilities management outsourcing in the health and education sectors has been limited since the beginning of the review period, as increasing use of outsourcing was offset by the decline in new large scale projects coming to the market, due to the cancellation of large scale capital expenditure programmes in 2010 and budget cuts introduced in 2012. Healthcare represents the largest sub-sector in this market, while FM outsourcing within the education sector is less well established. The cancellation of Building Schools for the Future (BSF) and concern over the value of some long term PFI service contracts, coupled with the restriction on budgets, has seen new contracts decline and some renegotiation to bring down existing costs.

The underlying trend towards outsourcing an increasing array of services, including a gradual shift towards ‘bundled service’ and TFM contracts, has been a positive influence on growth, adding to contract values. This should continue as efficiencies are sought in order to operate within ever tightening budgets, prompted further by Government focus on private sector involvement and greater levels of co-operation across regions and departments. There has continued to be merger and acquisition activity amongst FM providers, as well as business failures and market withdrawals. This has been influenced by market maturity, changes in procurement practices and moves by larger providers to expand services and geographic coverage. This trend towards consolidation is likely to continue over the medium term.

The outlook for the FM outsourcing market within healthcare and education is considered to be relatively positive over the short to medium term, reflecting government focus on private sector involvement and the need to work within restricted budgets. Focus on ‘Value for money’ continues to support the market in terms of outsourcing penetration, although it can limit individual contract values. The National Living Wage, due to become compulsory from 2016, but already starting to be implemented by some of the larger organisations, is likely to impact on margins and contract prices in such a labour intensive sector.

The public health sector has undergone a period of restructuring which limited the development of the FM market in this area. Changes came into effect in April 2013 and the market should have started to normalise from these effects. The education sector, which had been expected to represent one of the most dynamic end use sectors for FM outsourcing, is likely to be limited following the cancellation of BSF. Nevertheless, the scope for increased penetration remains a positive influence, supported by the Government’s encouragement of more cross-regional co-operation in procurement. Energy conservation is also likely to remain a key driving factor within the FM market.

Table Of Contents

Facilities Management Outsourcing - Health and Education Market Report - UK 2015-2019 Analysis
1. INTRODUCTION 7
1.1 BACKGROUND 7
1.2 SOURCES OF INFORMATION 7
2. SUMMARY AND FUTURE PROSPECTS 9
2.1 EXECUTIVE SUMMARY 9
2.2 FUTURE PROSPECTS 10
3. ECONOMIC ENVIRONMENT 12
3.1 GDP 12
3.2 INFLATION and INTEREST RATES 13
3.3 UNEMPLOYMENT 14
3.4 HOUSEHOLD CONSUMPTION 15
3.5 HOUSING and CONSTRUCTION 15
3.6 STERLING 16
3.7 POPULATION PROFILE 17
3.8 CONCLUSIONS 18
4. FM IN THE HEALTH and EDUCATION SECTORS 19
4.1 FACILITIES MANAGEMENT OUTSOURCING MARKET 19
4.1.1 Definition 19
4.1.2 FM Market Size and Trends 19
4.2 HEALTH and EDUCATION FM MARKET DEFINITION 22
4.3 HEALTH and EDUCATION FM MARKET SIZE AND TRENDS 23
4.4 HEALTH and EDUCATION FM MARKET MIX 24
4.5 KEY MARKET INFLUENCES 25
4.5.1 Healthcare and Education Construction Output 25
4.5.2 Public Private Partnerships 28
4.5.3 Legislation 31
5. FM IN THE HEALTH SECTOR 34
5.1 HEALTHCARE FM MARKET SIZE AND TRENDS 34
5.2 SERVICES AND SERVICE PROVISION 38
5.3 END USERS 40
5.3.1 Acute Trusts 41
5.3.2 Primary Care 42
5.3.3 Mental Health and Learning Trusts 44
5.3.4 Other Trusts 45
5.3.5 Private Sector 47
6. FM IN THE EDUCATION SECTOR 53
6.1 EDUCATION FM MARKET SIZE AND TRENDS 53
6.2 SERVICES AND SERVICE PROVISION 56
6.3 END USERS 57
6.3.1 Primary Education 58
6.3.2 Secondary Education 59
6.3.3 Tertiary Education 60
7. CONTRACTORS REVIEW 61
7.1 ORIGINS AND SUPPLY STRUCTURE 61
7.2 MARKET SHARES 63
7.3 COMPANY PROFILES 64
7.3.1 Leading Contractors in Health and Education 64
7.3.2 Other Leading Companies in the FM Market 71
CHART 1 UK FM OUTSOURCING MARKET SIZE AND FORECASTS - HEALTH AND EDUCATION 2009 - 2019 (£BN) 8
TABLE 2 GDP DATA - 2012-2015 - KEY CONSTITUENT ELEMENTS 11
CHART 3 INTEREST RATES AND INFLATION (CPI) FROM 2000-2019 13
CHART 4 PDI and SAVINGS RATIO AT CURRENT PRICES 2000-2019 14
TABLE 5 EXCHANGE RATE FLUCTUATIONS 2010-2015 - STERLING TO THE DOLLAR, AND THE EURO, SPOT RATES 16
CHART 6 UK BUNDLED FM OUTSOURCING MARKET AT CURRENT PRICES 2008-2018 (£ BILLION) 19
TABLE 7 UK EDUCATION AND HEALTHCARE BUNDLED FM OUTSOURCING MARKET SIZE AND FORECASTS 2009-2019 (£M) 22
CHART 8 HEALTHCARE AND EDUCATION FM MARKET MIX BY VALUE 2015 (%) 23
TABLE 9 CONSTRUCTION NEW WORK OUTPUT 2009 - 2014 (£M CURRENT PRICES) - HEALTH AND EDUCATION 25
CHART 10 NEW WORK OUTPUT FORECASTS 2015-2019 (£BN) AT CURRENT PRICES - HEALTH and EDUCATION 26
TABLE 11 CURRENT PFI PROJECTS ACROSS GOVERNMENT BY DEPARTMENT 2014 27
CHART 12 NUMBER AND COMBINED CAPITAL VALUE OF PFI PROJECTS SIGNED ANNUALLY 2000 TO MARCH 2014 28
TABLE 13 PROJECTED SERVICE PAYMENTS UNDER PFI CONTRACTS - 2008/2009 TO 2029/2030 29
TABLE 14 UK HEALTHCARE MARKET SIZE AND FORECASTS FOR BUNDLED FM OUTSOURCING 2009-2019 (CURRENT PRICES) 33
TABLE 15 SIZE OF NHS ESTATE BY FUNCTION (SQ. M.) 2010-11 TO 2013-14 (GIFA, OCCUPIED/UNUSED, ETC) 34
TABLE 16 ESTIMATED SERVICE MIX IN OUTSOURCED FM IN THE HEALTH SECTOR (CLEANING, BLDG and ENG, CATERING ETC) 2013/14 37
CHART 17 SERVICE PROVISION MIX (IN HOUSE, BUNDLED, SINGLE ETC) BY VALUE 2013/14 (%) 38
CHART 18 END USERS OF BUNDLED and TFM OUTSOURCING (ACUTE, MENTAL HEALTH, GPS ETC) MIX BY VALUE 2013/14 (%) 39
CHART 19 ACUTE TRUSTS - MIX OF SITES BY VOLUME (SUPPORT, GENERAL ACUTE, TREATMENT CENTRES, SPECIALIST, ETC) 2013/14 40
CHART 20 ACUTE TRUSTS - MIX OF SERVICE PROVISION BY VALUE (IN HOUSE, SINGLE SERVICE, BUNDLED, TFM) 2013/14 41
CHART 21 PRIMARY CARE - MIX OF SITES BY VOLUME (GPS, HOSPITALS, NURSING ETC) 2013/14 42
CHART 22 GPS - MIX OF SERVICE PROVISION BY VALUE (IN HOUSE, SINGLE SERVICE, BUNDLED, TFM) 2013/14 42
CHART 23 MENTAL HEALTH and LEARNING - MIX OF SITES BY VOLUME (TREATMENT CENTRES, GP, HOSPITALS, SUPPORT) 2013/14 43
CHART 24 MENTAL HEALTH and LEARNING TRUSTS - MIX OF SERVICE PROVISION BY VALUE (IN HOUSE, SINGLE SERVICE, BUNDLED, TFM) 2013/14 44
CHART 25 OTHER TRUSTS - MIX OF SITES BY VOLUME (TREATMENT CENTRES, GP, HOSPITALS, SUPPORT) 2013/14 45
CHART 26 ‘OTHER' TRUSTS - MIX OF SERVICE PROVISION BY VALUE (IN HOUSE, SINGLE SERVICE, BUNDLED, TFM) 2013/14 45
CHART 27 PRIVATE ACUTE HEALTHCARE MARKET SIZE - % BY SECTOR (ACUTE HOSPITALS, NHS COMMISSIONING, MENTAL HEALTH - (£BN) 2013-14 46
TABLE 28 LEADING UK PRIVATE HOSPITAL PROVIDERS 2014 - MARKET SHARES, NO. OF ACUTE HOSPITALS, BEDS 48
TABLE 29 MAJOR DENTAL COMPANIES IN THE UK BY NUMBER OF PRACTICES IN 2012 AND 2015 49
TABLE 30 LEADING 10 PRIVATE PROVIDERS OF LONG-TERM CARE - NUMBER OF HOMES - 2015 51
TABLE 31 UK EDUCATION BUNDLED FM OUTSOURCING MARKET 2009-2019 (£M) 52
TABLE 32 FM SERVICE MIX IN EDUCATION (CATERING, BLDG and MAINTENANCE, CLEANING, GROUNDS MAINTENANCE ETC) BY VALUE 2014 56
CHART 33 FACILITIES SERVICES COSTS IN EDUCATION (SECONDARY, PRIMARY, TERTIARY ETC) BY VALUE 2013/14 57
CHART 34 FACILITIES SERVICES COSTS WITHIN PRIMARY SCHOOLS BY VALUE (CATERING, CLERICAL, BMI, CLEANING, GROUNDS ETC) 2013/14 58
CHART 35 FACILITIES SERVICES COSTS WITHIN SECONDARY SCHOOLS BY VALUE (CATERING, CLERICAL, BMI, CLEANING, GROUNDS ETC) 2013/14 59
TABLE 36 TOP 20 FM SUPPORT SERVICES COMPANIES IN THE UK 62

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