Facilities Management Services Procurement Intelligence Report, 2023 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)Report

Facilities Management Services Procurement Intelligence Report, 2023 - 2030 (Revenue Forecast, Supplier Ranking & Matrix, Emerging Technologies, Pricing Models, Cost Structure, Engagement & Operating Model, Competitive Landscape)

  • Published Date: Dec, 2023
  • Base Year for Estimate: 2022
  • Report ID: GVR-P-10569
  • Format: Electronic (PDF)
  • Historical Data: 2020 - 2021
  • Number of Pages: 60

The pricing and cost analysis helps in deriving and forecasting the actual cost of products or services over the forecast period. It considers all the cost components and provides a competitive edge during supplier negotiations. Moreover, the outcome helps procurement leaders understand detailed and fact-based cost drivers for the category.

In this facilities management services procurement intelligence report, we have estimated the total cost of ownership which is divided into five major segments. These are reactive maintenance, energy, capital projects, technology and oversight, and preventive and recurring maintenance. Reactive maintenance can account for between 30 - 35% of the TCO share. Under this TCO, the main cost elements can be further broken down and simplified as - labor, materials and supplies, energy, taxes and government policies, purchase, delivery and installation, training, maintenance, water, health and safety, and disposal.

The cost of materials has increased significantly from 2020. Because of shortages of labor that have interrupted supply chains, demand for some commodities has outpaced producers' capacity to produce and distribute supplies. Facilities management is also facing more challenges as a result of the rapidly rising cost of energy. For instance, the price of crude oil increased by more than 30% at the end of September 2023 from July 2023. The production cuts initially announced by Russia and Saudi Arabia in July 2023 caused a sharp spike in international crude prices. This in turn put additional pressure on the world economy through inflation. As a result, oil prices spiked to USD 97 - 100 per barrel in September 2023.

According to the CBRE 2022 report, the cost of natural gas (commercial) has increased by 42% in the last two years, which has negatively impacted many operators' and facilities managers' bottom lines. The price of commercial electricity had risen dramatically and was up by 15% in 2022 over the previous two years. Overall energy prices skyrocketed especially in H2 2022. In the U.K., for instance, in 2023, the average cost of a business electricity unit is approximately around 29 - 31.3 pence per kWh.

Every organization and its procurement team look forward to negotiating the best deal while procuring a set of products or subscribing to services. Rate benchmarking involves price/cost comparison of more than one set of products/services to analyze the most efficient combination that can potentially help the procurement team in getting the optimum rate.

The geographical location, scale of business, type of business, and industry served play a vital factor in analyzing the rate benchmarking of the facilities management services category.

Geographical location considerations can have a significant impact on the rates of services. In emerging markets such as Brazil, India, and Mexico, the cost of labor is significantly lower than the developed countries like Germany, Japan, Canada, the U.S., etc. For instance, the annual salary of a facility manager in Germany ranges between USD 105,000 and 120,000. In Canada, it is around USD 100,000 - 110,000 annually. Compared to these, FM Managers in India earn USD 15,000 - 20,000 annually. Salaries again can differ based on factors such as skill, years of experience, domain expertise, etc.

With a turnover of more than USD 75 - 85 billion annually, Germany is regarded as the largest facility management market in Europe. Most of the largest FM companies are based in this country. A few examples include the Köberl Group, M+W Group, etc. The salaries for facility managers in Germany are very high compared to the rest of the countries. This is because companies need to adhere to strict European FM standards, health and safety guidelines, and ESG regulations which force the companies to make high investments in this sector.

On the other hand, recent studies in 2022 have shown that there is an increased offshoring to India, particularly for FM services to take advantage of the lower labor costs and better-integrated services. Indian companies are looking into integrating facilities management with allied services like energy, real estate, and personnel services. By providing a thorough overview of all services, this integrated approach facilitates decision-making and improves management effectiveness. 

To gain a comprehensive understanding of other aspects of rate benchmarking, please subscribe to our services and get access to the complete report.

Labor cost is one of the key components of the total incurred costs while offering a product or service. Therefore, an organization must decide on whether the focus category should be retained in-house or outsourced if the organization is providing its products or services at competitive prices. If the organization decides in favor of outsourcing, it must understand the difference in the salary structures of suppliers before selecting a supplier and formulating a negotiation strategy.

According to our research, facilities managers at JLL, Sodexo, and Cushman & Wakefield receive an 18 - 20% higher base salary compared to the salary received by facilities managers working in companies such as ISS A/S and Compass Group. However, the year-on-year increment rate in all these companies majorly depends on the Key Result Areas (KRAs).

Organizations may find it cumbersome to continuously track all the latest developments in their supplier landscape. Outsourcing the activities related to gathering intelligence allows organizations to focus on their core offerings. At this juncture, our newsletter service can help organizations stay updated with the latest developments and innovations and subsequently assist in preventing disruptions in the supply chain. We have identified the following developments within the facilities management services category over the last two years:

  • In September 2023, ISS A/S announced a strategic partnership with Watershed. As part of carbon reduction endeavors, this deal will enable ISS’s clients to obtain data-driven insights by optimizing global calculations and measurement models. The Watershed platform will receive the relevant data after it has been centrally collected by ISS's proprietary IT "ecosystem" from both its local and global systems, for further processing and analysis.

  • In September 2023, ISS A/S partnered with ToolSense to make its asset operations digital. The deal will utilize IoT and be integrated into ISS’s assets of movable machines. There are more than 500,000 transportable machines like kitchen tools, medical devices/equipment, and vacuum appliances across 30 countries globally operated by ISS. ToolSense’s asset operations platform in combination with IoT solutions and QR codes will be used to track, use, and maintain ISS’s global assets.

  • In June 2023, A.H. Management was acquired by Sodexo to expand the latter's convenience retail service business line, InReach. The former will complement and expand Sodexo's InReach food offerings in the North American market - targeting mainly Mid-West, Northern Illinois, Chicago, Southern Wisconsin, and Milwaukee metro regions. The multichannel expansion will target micro-markets, water, vending, office coffee, catering, pantry, fresh food, and on-site food service.

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Add-on Services

Should Cost Analysis

Component wise cost break down for better negotiation for the client, highlights the key cost drivers in the market with future price fluctuation for different materials (e.g.: steel, aluminum, etc.) used in the production process

Rate Benchmarking

Offering cost transparency for different products / services procured by the client. A typical report involves 2-3 case scenarios helping clients to select the best suited engagement with the supplier

Salary Benchmarking

Determining and forecasting salaries for specific skill set labor to make decision on outsourcing vs in-house.

Supplier Newsletter

A typical newsletter study by capturing latest information for specific suppliers related to: M&As, technological innovations, expansion, litigations, bankruptcy etc.

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