Owners, developers seek balance in facilities management contracts

Dubai: There is nothing like the present as far as facilities management (FM) companies are concerned. Across a swathe of developments in Dubai, owner associations are taking control of property upkeep and in the appointment of FM service providers.

Developers who refuse to see this particular writing on their walls are being given short shrift by the owners. To top it all, the transition process is just getting started.

All of which means there are a lot of FM contracts out there for bidding. If a particular FM provider cannot get the contract for one high-rise, there is always the other one next to it and several more in the immediate neighbourhood.

But many of these contracts are being handed out on how low they can go on the service charges. However, the leading FM companies — as defined by those who emphasise quality of service and not compromise on charges — are still in a position to cherry-pick their contracts.

Ben Churchill, managing director of Emrill, gives his views on how the facilities management industry is shaping up. Emrill's shareholders include Carillion Plc, the Al-Futtaim Group and Emaar Properties. 

Gulf News: There's still no clarity on where FM rates in Dubai are headed at this stage. While owners associations are expected to pull rates towards the lower side, developer appointed FM companies are pulling in the other. Will there be a meeting point? If so, when?

Ben Churchill: Both owners associations and developers in their appointment of FM companies share the objectives of protecting and growing the value of their assets or the assets attached to their brands. An important part of this is the professional buying of FM services on behalf of the residents which, in our experience, developers have been proactively engaged in over recent years.

As the market is maturing, I see recognition and a shift towards the overall cost of ownership of assets. It is widely recognised that the quality services provided enhance property values and rental yields where we operate. 

Do you believe rates will continue to be a decisive factor over the next three to five years?

Beyond just the rates, the decisive factor over three to five years is a combination of the quality of the service, the value-added proposition of the provider and the whole cost of ownership of asset. For example, effectively managing the cost of energy and water consumption for communities and residents does, and increasingly will, have a huge impact on overall costs. 

With your shareholders including major developer-landlords, is there a concern that owners associations might park contracts with FM companies that are seen as "independent"?

Emrill operates completely independently of any developer, tendering and winning work in open competition based on the quality of service delivered and the value offered to the asset owners. 

Since last October, the market was talking up the possibility of owners associations gaining control and deciding on the contract awards for FM companies. That has not exactly gone according to plan. Do you feel the second-half of the year will be a more realistic target for the transition to take place?

October last year was the beginning of the transition. Emrill has seen active involvement with the elected interim boards of owners associations across our portfolio and a well-managed transition.

I see this continuing progressively over the remainder of the year.

Is it the case that sinking charges are now being mobilised of owners with retrospective effect? Is the collection of sinking charges required from the first year itself or do you think some grace period can be offered?

Sinking charges are outside the scope of an FM company. One of the ways Emrill bring value is the extension of life of assets through regular maintenance. 

Yours is a company predominant in Dubai. Are you looking at Abu Dhabi at this stage?

Abu Dhabi is very much part of our portfolio. We currently provide integrated facilities management to Al Bandar, Aldar's prestigious residential development, as well as Manazel Real Estate's Al Reef Villas, for the Al Fahim Group, and a number of other high-profile Abu Dhabi clients. 

Do you feel there's a lot of convincing that needs to be done of owners before the whole issue of FM charges settles down?

Owners and owner's associations appreciate the service and value added by a quality FM provider. With associations taking an increasingly active role and having greater visibility of how the charges are allocated, they will increasingly work collaboratively to enhance and manage the overall cost of their assets.

Support for clients

Emrill has introduced an online portal through which clients can manage their service needs, pay bills and access support.

"People expect to be able to control and monitor their business transactions on-line," said Ben Churchill, managing director of Emrill. "We understand some individuals prefer the conventional payment methods over digital ones. "But I can assure them that we are utilising the same highly secure technologies used by online banking systems to ensure our clients' information is safe at all times."