Patrick Dominy, partner responsible for the South African operation of EC Harris, says this trend is being driven by the entry into the facilities management industry of service providers and property managers, among others, who offer limited facilities management services linked to existing services like cleaning and security.

In the process the industry is becoming "fragmented, reactive, non-strategic and lacking in innovation", says Dominy.

"Facilities management companies will have to adopt far more strategic approaches to their service offerings to remain relevant in today's tough business environment."

EC Harris offers global clients business support services during the planning, creation and operational stages of their assets.

The group has invested in SA, specifically in the facilities management operational area

Dominy says facilities management companies need to deliver a specific property-focused business plan or solution that can deliver value to a business, for example by reducing operational costs.

"We regard property as a key enabler in delivering competitive advantage to the core business, something often ignored to the detriment of other areas."

Dominy says that traditionally local operators have "merely inherited non-core functions and rearranged an existing supply chain".

He says value can be achieved only by offering a property strategy that delivers against the business's need and if applicable - by either reengineering an in-house unit or outsourcing key elements.

"Although this strategic facilities management or property approach is limited in SA at present, we believe it represents the future growth route."

In the field of public-private partnerships (PPPs), Dominy says that given the type and complexity of deals concluded to date, the facilities management industry has been slow to organise and structure itself to gear up to the challenge of PPPs.

The numerous barriers to entry facing new facilities management companies can only be removed by allowing smaller PPP deals to be released to the market, he says.

Given that a key objective in PPP bids is black economic empowerment "the only way emerging business can access this market is through partnering with larger firms, or cutting their teeth on more appropriately-sized deals".

"Large equity and performance bonds required from the PPP sector tie up available capital for corporate growth. Those that have structured PPP deals may now be experiencing further demands on their shareholders' capital merely to maintain their market share.

"The facilities management operator must take an active role in both design and construction, and not accept the current norm," Dominy says.

Business Day