
The Kingdom of Saudi Arabia’s economy is projected to be one of the fastest-growing economies in the world in 2022. The International Monetary Fund has credited the implementation of the Vision 2030 policies for the economic growth that is helping to diversify and liberalize the economy. A major part of Vision 2030 is building a future-ready country that is open to businesses from across the globe while creating an economy that is not dependent on oil. Pedro Ribeiro, CBRE MENA’s General Manager is optimistic about the country’s growth. He said, “Saudi Arabia’s economy is one of the fastest-growing markets in the world. We still have two months to go before the close of 2022 but the growth forecasts say the economy will grow at 7.5% - the fastest in the world. Our goal is hence to enhance our growth through our service lines throughout this market in a way that we grow as the market is growing.”
As infrastructure projects mushroom across the country’s landscape, so have Integrated Facilities Management businesses which have followed the build-up of the supply chain of the built environment. The Integrated Facilities Management Industry is estimated to grow to USD $87,216 million by 2030 from the current size of USD $31,264 million, according to Prescient & Strategic Intelligence market report. The report projects a CAGR of 11.1% for the IFM industry in Saudi Arabia for the coming decade.
After the lean years of the pandemic, a double-digit growth rate projection is good news for the industry. Vijayshankar Kavasseri, Operations Director at Musanadah Facilities Management said, “With the Saudi Arabian facility management market growth rate expected to continue at 11.1% (CAGR), we are expecting our integrated facilities management services, such as soft and hard services, will continue to grow at over double this pace over the coming 8 years while the full effects of Vision 2030 are felt. This month, it was reported that Saudi Arabia Vision 2030 real estate, infrastructure projects hit $1.1 trillion in value, spread across 15 giga projects in various phases of construction around the kingdom. This provides enormous opportunities for FM providers. At Musanadah we are already managing a number of completed Vision 2030 projects, such as AlUla and Diriyah Gate.”
The facilities management industry is not only contributing to the numbers in the overall GDP but also being recognised for its contribution in nation-building. Mike Moore, Vice President of Al Bawani International said, “Prior to Covid-19, facilities management was one of those industries which was in the background. People didn't give it any thought, it just happened. But through the efforts of the FM industry, to keep people safe, keep places hygienic, and additional service into air conditioning filters, HEPA filters, all these services really put the FM industry on the map in Saudi Arabia. People started to understand what we do and accept that it is actually a critical function. And I think Covid-19 has forced a change of mindset in many, many ways. Whether it's the approach we take moving from an O&M (operations and maintenance) approach to an FM approach, whether it's the way we meet an interface, our working patterns, all of these sort of green shoots, to my mind, are changes for the better.”
Adding another perspective to the analysis of the development of the FM sector in Saudi Arabia is Stephen Moore, General Manager for Dussmann, Ajlan & Bros’ KSA market. According to Moore, the launch of mega and giga infrastructure projects across Saudi Arabia have allowed for FM consultancy services to come into focus. He said, “I think all the giga projects, and the mega projects that they have got around the kingdom is obviously having a big impact at the moment. More so on the FM consultancy side of business as opposed to service delivery. Work has started on the likes of Neom, Diriyah Gate, and the Line is now starting. So there's a huge demand for FM consultancy. That's something that we do and we're starting to build as opposed to just traditional FM service provision. His Highness the Crown Prince Mohammad bin Salman announced just yesterday about new procurement frameworks to try and drive those things through. I, hence think that the tourism side of Saudi will completely change the landscape in the next year or two when they start opening these projects.”
As the FM service providers scale up to meet the challenges of a growing economy which is also in transition, businesses are looking at growth beyond the bottom-line approach. Contributing to Saudi Arabia’s growth through societal development is a strategy for Muheel Facilities Management services says the FM provider’s managing director Maher Al Aghbar. Aghbar is a veteran of the FM industry in the Middle East. He describes his journey to becoming a part of Muheel’s leadership team while explaining the strategy he has deployed for the growth of the company. “What attracted me to Muheel is that it is a joint venture between the Al Muhaidib and Abdul Latif Jameel groups. This company is the joining of hands of two brands by prominent leaders in their industry within not only Saudi Arabia, but the region. And this venture allows Muheel to look at the integrated asset management field in order to add value to the market. I took the job on the basis of three factors. First, the strength of the job’s scope. Second is the board’s vision in the market. They are not here only to add to their business bottom line, but to add value to the people. Third is the perspective of looking at Saudi Arabia as a unique market and not comparing it to any other to say which is better”, said Maher Al Aghbar. He added, “At Muheel, the objective is to bring the company to the next level of delivering facilities management. While we do this, we also have a mandate to identify and accommodate the young talent in Saudi Arabia. Saudi Arabia’s young population is a huge resource who are eager to learn. And we are building a culture of learning and deploying.”
While the Facilities Management industry is growing in double digits, it is also being buffeted by external factors that is forcing rapid change. The industry is seeing generational changes due to technology such as the deployment of Building Management Systems, Artificial Intelligence, and Energy Management Systems to name a few. However, the spectrum of technological interventions in Saudi Arabia’s FM industry differs from one firm to the other says Bawani's Moore. “The industry here and the FM market is immature in many ways. The market sector, my competitors, are O&M companies, not FM companies. We are ten years behind what you take for granted today in Dubai or Abu Dhabi. So the technology will come for sure. But unfortunately, it is a bit of a slow process here. In my company, we have a technology expert who is part of the FM vertical, because we recognize that change has to come. We recognize that technology is going to shape the future even of the FM industry, which over the years has been a labour-dominated industry. And we are working hard to identify technology-based, FM solutions, which will help me keep my company at the head of the pack.”
Dussmann’s Stephen Moore says that while his business has the option to deploy innovation and technology-availability from the German family business’ various international arms, he is also working to train and deploy local staff through the Saudization programme. He said, “The aim is to self-deliver within the IT environment rather than going out to third-party vendors for support. And that seems to be a far better solution for us, especially with the government’s push for Saudization. Focusing on creating our own local talent pool is good for the local staff and the population. And again, as Saudization is a huge part of business here in Saudi Arabia compared to the UAE and other places and depending on what our licenses allow, it could be anywhere from 20% up to 40%. We have to work at getting that balance right in the local market.”
Aghbar’s take on the pace of technological adoption in Saudi Arabia’s FM industry is optimistic yet pragmatic. He said, “Saudi is a big market and it was historically driven by O&M contracts. Over the last few years, this trend has changed. The gap is being closed off but it will take time. This transition also depends on how fast the asset owner is educated into the shift from O&M into the FM and AM. While, asset management has become completely remote the shift from basic maintenance, to FM, then into an IFM, where you have got integrated facilities, total facilities, will take some time.”
He explains, “While the technology exists, adoption is also a challenge. People are hesitant for two reasons. Number one, they think it's expensive, so they're not intent to spending money on it. Number two, getting cheap labour is also efficient in terms of immediate service delivery. Training workforce to completely new technology systems takes time. I know for a fact that Saudi Arabia already has the full range of technology you see in other countries from essentials monitoring to energy management, but because of the sheer size of the country, and because of the pace of adaptation from the asset owner end who are still moving at their own pace, you see differences in the technologies deployed”.
Musanadah says the technologies deployed by them are already being used to reduce costs while improving their service deliver. Kavasseri provides examples of technological adoption and deployment which is aiding operational efficiency. “At Musanadah, we have already deployed an advanced Mobile App for managing cleaning schedules and monitoring remote locations. Furthermore, GPS and Geo Fencing are currently available and highly effective for vehicle tracking and employee monitoring. Of course, as with any business, there is always an objective to reduce manpower costs wherever realistically possible and this is demonstrated in the way in which we are pivoting from planned preventative maintenance (PPM) to predictive preventative management. We have systems and processes in place to support this transition. We are also seeing the increased usage of more AI tools for common tasks which is streamlining our operations”, he said.
While advancement in technology is on every FM provider’s radar, the industry has traditionally relied on manpower to execute operations at scale. However, Covid-19 and the post-pandemic era has seen this traditional dynamic upended. Labour-shortage is a common refrain across countries and across industries. Mike Moore of Al Bawani says that a lack of available labour is one of the biggest challenges he faces today in the Saudi market. “Whether it is skilled labour, unskilled labour, management level, it is very, very difficult to get a good workforce. I think it's a global phenomenon, really, to be honest. There was a mass exodus of skill, mass exodus of human resource due to the pandemic, and it is now very difficult to find these people”. He says that taking cue from the government of Saudi Arabia, the FM industry is hoping to increase the participation of local Saudi workers however, that poses multiple challenges as well. “The main challenge is getting the staff. The second largest challenge is keeping the staff because it is very much a sort of worker-led market at the moment. So the supply and demand is allowing the workforce to demand terms. I talked earlier on about us being a Saudi company and we are, and we want to employ Saudis, but one of the other challenges we face is that FM is just not an attractive industry. It is not an industry that attracts many people, full stop. And it is certainly not an industry that seems to be particularly attractive to young Saudi talent who want to work in more exciting industries.”
Maher Al Aghbar says Muheel is looking at developing its workforce through training and education. The FM provider is working with Saudi Arabia’s Ministry of Human Resources to implement the Saudization programme. He said, “At Muheel, we are looking at bringing in a young workforce and adapting them to our culture. All companies are sourcing the labour-force from similar markets so what will make one different from the other – my experience has taught me that when you give them time and training to adapt to your company culture you will create a differentiator. And once this settling in has occurred, we start adapting the culture to grow it. While you are also growing, you have to look at workforce retention. It does not make sense to loose people you have trained. And that is why we are also looking at hiring local talent – to train them, grow the company with them, help them grow, and the business grows”.
Musanadah is working on a similar strategy of growth which involves and ensures the absorption of local talent while evolving to meet modern FM needs. Kavasseri says, “Increasing Saudization is having an impact on our recruitment and training processes as we welcome more Saudi nationals into our workforce. Musanadah has successfully implemented a project called ‘Hemmah’ for increased Saudization and has a pipeline of talents and capable candidates for the future. We are also focusing on ensuring our management team provides sufficient training and mentoring to support Saudization and an increasing number of new talents entering the business as the company grows. While this is an internal process, we are seeing a trend towards KPI and SLA models away from solely manpower supply models. Framework Agreements, which are less prescriptive and more based on a long-term partnership model with mutual goals becoming more common for managing post-delivery operations on Vision 2030 projects.”
For facilities management companies the macro-economic drivers are the giga-projects that today dot the country’s landscape. However, their projection for the future takes into account the challenges posed by climate-change and competition from peers that at times forces a race to the bottom.
Moore explains the detailed way Dussman is tracking its carbon footprint across its businesses. He revealed that, “At Dussmann, carbon footprint is a huge consideration. All of the carbon footprint of our business is measured within the office environment and then indeed, at client level. There was even a case recently where we were commissioned in the UAE market for one of the big environmental cities in the UAE to do the FM carbon footprint. Measuring the carbon footprint of the products we buy and then how we use those products, how we use those products at a contract level is all tracked. This actually shows the sustainability of your service delivery in a factual number based per square meter, which I think is a first for the industry. We then have to report our carbon footprint to Germany. And that happens worldwide for the organization. So sustainability, especially with the German partner, is foremost in many of the things that we do.”
Aghbar summarises the drivers of the IFM industry as the three Cs – Client, Competition, and Climate. He says that while FM providers commit to delivering measured sustainability goals, they are competing in a market which differentiates on the basis of price rather than service delivery while dealing with climate-change.
Mike Moore Vice President Al Bawani International Stephen Moore General Manager Dussmann Ajlan & Bros KSA market FM consultancy services Maher Al Aghbar Facilities Management industry Musanadah Diriyah gate Neom The Line