Corporate America is concluding that outsourcing is the smart way to cut costs, increase productivity, and focus on revenue-generating core competencies. Third-party management (TPM) of facilities - also known as integrated facilities management (I-FM) services - is attracting large corporations and property owners seeking to cut operating costs. I-FM companies can offer their clients savings of 15 to 20 percent on operation and occupancy costs. The high levels of expertise of facility service providers ensure demand from clients to deal with sophisticated heating, ventilation, air-conditioning, electrical, and data communications systems. Service providers are also likely to enjoy strong demand from constant replacement cycles of aging mechanical and electrical systems.

This new research from Frost & Sullivan analyzes the North American I-FM services market, segmented as follows: property management, mechanical and electrical services, janitorial services, and other services. This research provides strategic analysis and forecasts, discusses drivers and restraints, competitive environment, and industry trends.

Negotiating I-FM Services Contracts Poses a Challenge to Both Service Providers and Clients

Companies are increasingly embracing I-FM services as an effective way of minimizing enterprise resources toward the operation and maintenance of critical building systems. Negotiating a good I-FM services agreement, however, presents many challenges to both service providers as well as clients.

For instance, one of the most important contractual issues involves reaching common ground on disclaimers of consequential damage and limitations of liability. "Strong and mutually satisfactory resolution of such issues is necessary at the contract negotiation stage to avoid potential bitter experiences and unsatisfied customers," says the analyst.

Alliances, Mergers and Acquisitions Create Companies with Multi-service Capabilities

The North American I-FM services market is witnessing a sea change with companies acquiring competitors that offer the same or different set of services. This adds to their existing suite of services and helps such companies acquire true multi-service capabilities, and in some cases, a global presence. "Consolidation can not only help I-FM service companies meet the needs of their customers better, but also provide a significant cost advantage in a competitive, thin-margin business," says the analyst.

Providing a bundled solution individually or through alliances is likely to be a major competitive factor. As companies pursue growth opportunities in international markets, the need for global real estate and I-FM services such as corporate property management and tenant representation is increasing, creating demand for service providers that can provide such global services. The "single-sourcing" trend is also stimulating demand for companies that can provide comprehensive services, best practices management, and consistent engineering standards.