You're in reliable hands" is a reassuring slogan for a fledgling facilities management (FM) firm, seeking to tap new business from building owners and asset managers in Dubai. A recently launched subsidiary of the bellwether Belhasa Group, Inaya Facilities Management is not only leveraging the conglomerate's extensive supply chains in the construction business but also counting on the rich experience of its management to establish a firm market foothold. With the Jointly Owned Property Law (JOPL) doing away with the monopoly of developer-appointed FM providers, there are several service contracts up for grabs — an opportune time for an FM firm to enter the fray.
In a discussion with Property, Nishant Ravindran, general manager of Inaya, talks at length about how prudent FM supervision can optimise building value, the challenges plaguing the industry and much more.
What are the challenges and benefits of being a start-up FM firm?
There are about 500 FM companies registered in Dubai. A majority of them operate in the lower spectrum (commodities business that sell maintenance and manpower) while others deal in a knowledge-oriented business (offer integrated FM, value-adds.) We intend to operate in the top end of the spectrum where there are big players. This is a challenge as we need to establish our credentials. Although the people who are a part of Inaya have exceptional experience, when we pre-qualify for a bid, customers ask for Inaya's experience. Finding clients is difficult for a new entrant as people prefer to work with an established FM operator. Being associated with the Belhasa brand definitely helps. Being a young team, we also bring a fresh perspective to our strategies. Our vision is to become the most reliable FM company in the market. When we take a FM contract, we want to retain it throughout its entire life cycle.
How is Inaya leveraging the extensive supply chain network of the Belhasa Group?
The Belhasa Group is diversified and its subsidiaries have been working in the real estate vertical for 30-odd years. They have existing supply chain networks. Inaya is a strategic move since it extends Belhasa's service offering to the real estate value chain. Belhasa's real estate business was primarily into construction; with Inaya's foray, it can now operate and manage assets as well. Because of Belhasa's market presence, it has relationships with people from where you buy materials, spare parts, etc. That's great for an FM company because we can source great value from its supply chain. You have the bargaining power of the group to secure materials and special services cheaper than other FM companies. That helps us to pass on cost savings.
Do you believe the Real Estate Regulatory Agency's (Rera) outsourcing curbs on FM firms will benefit home owners?
The JOPL specifically says that FM firms cannot outsource services. This has many disadvantages. Owners' associations (OAs) will have to enter into multiple service contracts because there aren't any companies in the market that offer all services in-house. You must leave certain services to a specialist such as vertical transport (mobility products in the elevator and lift categories), fire systems, etc. The OAs will now have to administer all these different contracts and this involves a cost.
You're also not transferring risks to your FM provider. There is a cost associated with the retention of risk. OAs will end up paying more than what they would have owed to an IFM (integrated facilities management) provider. Or, the OAs may remain oblivious to these risks (manage sinking funds, life cycle costs, etc.) and may procure services from the commodities market, looking to lower the bottom line. This will, in turn, lower the owners' equity in the property.
The outsourcing curbs are not in the owners' interest. Value-adds only come in an IFM model. Association managers have the skill sets to set up an association, conduct association meetings, administer collection of service charges, etc. Some of them have the expertise to manage FM contracts. Even if they do, it comes at a cost.
In a Western market, most asset owners prefer an IFM model as it's a value-added service and cost-effective as well. Here, people perceive IFM as more expensive because they claim we add costs and impose margins. That's not the case. In an IFM model, your supervision and management costs are apportioned. There are also value-added benefits of sustainability and resource efficiency management that will produce bottom line benefits.
What is Inaya's target clientele? How different is it to render FM services to residential and commercial domains?
Ours is primarily a commercial and residential portfolio. We also target government-owned portfolios, institutional investors who have an asset portfolio, offices, banks, etc. Residential clients are generally more demanding. Both segments have their unique challenges, depending on client expectations. It depends on what portfolio you manage under each category. It's extremely challenging to manage a building in say, Internet City, compared to a tower outside. In terms of managing a residential building, you are affecting the personal lives of your clients, so clients tend to be more demanding. Institutional investors deal with FM providers at a professional level; you have SLAs (service level agreements), contract deliverables and KPIs (key performance indicators.) This is where FM moves from a commodity segment to a more knowledge and performance-based segment. That's the segment Inaya targets because that's where our expertise lies.
Does Inaya provide integrated and individual FM services? How sustainable is the IFM model in the wake of the new legislation?
We do both, but we promote the integrated FM model as that's where we can add value. Under the new law, IFM is not workable unless a firm can offer all the services in-house. If there are any bids from the OA portfolio, they're in the form of multi-disciplinary contracts. In the leasehold market, there are many IFM tenders. The OA is an evolving concept and only 200-plus have been registered. Only when they become legal entities can they enter into contracts. Until then they are the developers' captive market. We are treading cautiously into that segment.
What is the scope of FM services offered by Inaya? Is there more demand for integrated or specialised FM services?
We offer all end-to-end services. We have participated in integrated FM bids and multi-disciplinary tenders.
How does Inaya integrate sustainable practices into its FM model? Doesn't this erode the cost-effectiveness of your model?
Sustainability is a fundamental part of our corporate ethos. We are constantly looking to reduce water and energy consumption, and recycling initiatives. Even if our clients don't demand it, it's fundamental to what we do. A developer perceives sustainability as expensive while putting in green technology. But, this is cost-effective in the long run. When we come into a built environment, we look to reduce utility consumption through no-cost or low-cost initiatives. So, there are no investments involved in the beginning.
When we do maintenance, we track air conditioning running at full demand in unwanted areas, lights turned on during the daytime, etc., with the explicit aim of reducing consumption. I have not seen many tenders that primarily require us to do it, with a few exceptions. This is a value-added service since we endeavour to deliver triple bottom-line benefits. If Inaya is able to save a landlord's utility costs, he can use those savings to spend more on the building's FM. It helps to cut the environmental impact of buildings and this is also part of Inaya's corporate social responsibility.
Are most OAs looking to cut charges and opt for the most cost-effective FM models? Is this causing building value to depreciate faster than usual?
Most clients are looking to cut costs by opting for the cheapest FM provider. If a maintenance provider who has no knowledge of sustainability offers to lower costs by 20 per cent, he bags the deal. It is difficult for clients to see the difference. On the other hand, there are also a handful of clients who seek triple bottom-line benefits and who opt for sustainable FM solutions. If clients look at short-term cost savings and overlook building life cycle management, it will certainly depreciate their asset.
What are some of the challenges faced by the local FM industry?
Clients do not understand the long-term benefits of opting for good FM providers. The lack of long-term contracts is another drawback. One of Inaya's value-adds is our partnering approach. We partner with our clients to tailor-make products. It's a process of learning and that requires long-term contracts. You need time for a supplier to learn your business and try to evolve. If you have long-term contracts, you can invest in more people and resources. Most tenders are single-year contracts.
Are there various FM contracts available in freehold areas as interim OAs are taking over control? Is competition intense during the tendering stage?
The monopolistic market has now opened up and there are different contracts up for grabs. OAs have more choice now. Competition is intense and there are a lot of players in the market. It can, however, be difficult for people to differentiate between FM providers who sell commodities and those who provide knowledge-based services (such as value-addition, sustainability, and risk management.) People are yet to see the real benefits of FM.
Company's timeline
- Inaya Facilities Management was set up in December 2010. The start-up team joined in the first quarter, during which time the focus was to build the business processes and systems.
- In February 2011, Inaya entered the Dubai FM market. The website was launched, Inaya started its marketing campaign, pre-qualified for bids, etc.
- Inaya secured its first contract in May 2011.
- While the technical experts in Inaya have vast FM experience, support staff have been called in from diverse industries such as hospitality and telecommunications to bring a fresh perspective to corporate strategies.
- Inaya FM offers maintenance of mechanical, electrical and plumbing assets, landscaping, pest control, cleaning, security services, sustainability solutions, and more.
