A Facilities Management Company(FMCO)An Executive Presentation for UAE

Adil AbdallaDubai, 2012

What FM?

‘An integrated approach to operating, maintaining, improving and adapting the buildings and infrastructure of an organization in order to create an environment that strongly supports the primary objectives of that organization’ (Adapted from Barrett and Baldry, 2003)

‘The practice of coordinating the physical workplace with the people and work of the organization. It integrates the principles of business administration, architecture and the behavioral and engineering sciences’ (The British Institute of Facilities Management – BIFM)

‘Management of a vital asset – the organization's facilities.’ (The International Facility Management Association – IFMA)

2

FM within RE?

3

RevenuesLandlord

Premises Leasing

EXECUTION

Contracts

Regulator

Handover

Design Package

Construction Package

OPERATIONSProperty CRM

FM Packages

Regulator

Renovation

Contracts

Facilities Management

Project Management

Value Chain of FM?

4

Strategy& Branding PrequalificationBenchmarking &

Standardization

Facilities Management

Strategy

FacilitiesManagementProcurement

Facilities Management

Modeling

Facilities Management

Operations

Service Optimization

CorporateQuality Manual

FMOperations

Award & Mobilization

OperationsQuality Manual Tendering

FMQuality Manual

Why FM?

Sustainability:The indispensible framework to sustain and

maintain the invested assets in the built environment.Convenience:

The management of occupied habitats to meet demands and expectations of end-users.Growth:

The tools to extend both life cycle and value of the Real Estate products.

Integration:The knowledge and professional applications to integrate systems and preferences of Real Estate.

5

Strategy of FM?

6

20%

35%20%

25%

Market SharePublic Corporates Commercial Private

35%

25%

20%

15%5%

Target QualityTier-1 Tier-2 Tier-3 Tier-4 Tier-5

25%

40%

20%

15%

Marketing ToolsFlayers e-Mart Ads One-to-one

25%

60%

10% 5%

Service ExpectationsConvenience Cheapest Auditability Attire

Corporate of FM?

7

Quality

Corporate

Operation

Administration

Procurement

Contracts

Customer Care

Audit & Improve

Call Center

Service Zones

Service Packages

Service Enabling

Clients

Service Managers

Teams Leaders

Manuals

Templates

Records

Strategy

Biz Development

Communications

How FM?

Baselines: Convenient Scope & Specifications of Service Trained Supervisors & Attendants Adequate Pricing against the Service Customer Relation Management Governance & Key Performance Indicators

Service Packages: Soft Service Engineering Service Health, Safety and Security Service Space Making Management Commercial Service

8

FMCO

FM Corporate Team?

9

The Board

Managing Director

Snr Mgr Hard Service

Snr Mgr Soft Service

Snr MgrAdministration

Quality OfficeFMO

Strategy & Biz Dev

Back of House

Enabling Facilities

Stores & Workshops

Contract

Account Director

Field Team

Contract

Account Director

Field Team

Contract

Account Director

Field Team

Contract

Account Director

Field Team

Snr Mgr HSSE Service

Snr MgrProperty Mgt

Call Center

Outsourced

Staff

EquipmentsSubcontractors

FM Field Team?

10

Account Director(Office 1,000,000 ft2+)

Team Leader Others

Team LeaderHousekeeping

Receptionists

SupervisorEngineering

SupervisorBMS

OfficerClient Relations

Mgr Reception

MgrSoft Service

Mgr Engineering

Mgr HSSEMgr Security Ops

SupervisorCar Parking

OperativeCar Parking

Team Leader BMS

Team LeaderEngineering

TechnicianBMS

TechnicianEngineering

OperativesHousekeeping

OperativesCLN + LSC + FCD

Document Controller

Team LeaderSecurity Ops

GuardsSecurity Ops

Mgr Fit-out

Call Center

When FM?

During Development Planning: Outline convenience of space descriptions Outline convenience of finishing materials

During Design Development: Approve durability and functionality of materials

During Construction: Approve Testing & Commissioning Take over premises and O/M manuals

Post Construction/Asset Management: Property Management & Operations Operations of FM Service

11Target

Roles of FM?

12

Developer

Facility Manager

Project Manager

Construction Team

Lease Operations

Tenancy Operations

Tenant/Client

< 1985

1990

Developer

Facility Manager

Project Manager

Construction Team

Lease Operations

Tenancy Operations

Tenant/Client

2000

Developer

Facility Manager

Project Manager

Construction Team

Lease Operations

Tenancy Operations

Tenant/Client

Developer

Development Manager

Facility Manager

Project Manager

Construction Team

Lease Operations

Tenancy Operations

Tenant/Client

2005 <

Value of FM?

1:5:20 Theory: Respectively; costs of EPC and FM during the Life Cycle of a Building

4:3:2 Role: Respectively; costs of Manpower, Consumables and Management to provide the FM Service

Service Packages:Tier One, Tier Two, and Tier Three

ROI Framework: Invoicing Cycle of 90:120 days Recovery of Invested Capital in 3:5 years Conservative Profitability 20%

13

Tier SFT ENG HSE

1 31% 59% 10%

2 21% 41% 38%

3 31% 36% 33%

Future of FM?

14

Conventional& Basic FM

Conventional& Basic FM

Environmental& Advanced FM

Environmental& Advanced FM

Futuristic& Innovative FM

Futuristic& Innovative FM

EngineeringHousekeeping

Security

EngineeringHousekeeping

Security

SustainabilityIntelligent BldgCarbon Control

SustainabilityIntelligent BldgCarbon Control

Green BldgEnergy Control

Business Support

Green BldgEnergy Control

Business Support

Facilities MgtFacilities Mgt Community MgtCommunity Mgt Town MgtTown Mgt

HabitatHabitat UrbanUrban MetropolitanMetropolitan

Business DrivenBusiness Driven Socially DrivenSocially Driven Politically DrivenPolitically Driven

1990th 2010th

21st Century

Immature Market Mature MarketTime

Ope

ratin

g M

argi

n +15%

+/- 0%

Single Bundle Service Providers IFM Companies

(GCC $ 900 Billions by 2030)

FM in UAE?

Industry: Regulated by Local Authorities (RERA & EDD) 10-15 Cos. provide Professional FM Service Many Cos. provide independent bundles

Market: MENA Leader of $8 billion; with 11% growth Estimated market value by 2045 at $700 billion

Resources: The only MENA FM Consultant operate in UAE Most MENA FM Professionals work in UAE. MEFMA had been launched in UAE

15

FM Contractors:Serco,Emril,Emcor,Dalkia,Imdad, Serve U, Farnek Avireal, Idama, Obron, and Drake & Scull

FM Consultants:Reliance FM,Mace Macro

Common Packages of FM?

16

HSSEPackages

EngineeringPackages

SoftPackages

Landscape& Gardens

HousekeepingService

Reception& Front Office

Façade Cleaning

Specialized Cleaning

BMSManagement

Engineering Management

Plant Management

ICTManagement

AV SystemsService

HealthManagement

Safety Management

EnvironmentalManagement

Security Management

Pest ControlService

LookLook & Feel Feel

Tier

One

Tier

Tw

o

Tier

Thr

ee

FM in UAE; BD Business Development?

Service Packages: Residential sector needs Basic Tier-1 Commercial sector needs the common Tier-2 High-End & Public needs Tier-3 Independent Permits for Security Services

Target Clients: Generally; Government and Public Sector Corporates and Foreign-owned facilities Educational & Healthcare facilities Residential free-hold properties

17

FM Quality Manuals?

18

FM Ops Manual(FM Operations)

CorporateQuality Manual

FM Quality Manual(FM Baselines)

Specifications

Deliverables

Measures

MethodStatement

Procurement Management

Management & Supervision

The Brand KPIs, Efficiency & Technical Audit

Corporate PerformanceFeasibility

Strategy

Obligations

FM in UAE; SWOT?

Strengths: Hands-on-the-trade with appropriate skills Chances to attract professionals within UAE Strong networking within UAE

Weaknesses: Mature market, with defined pros & cons

Opportunities: Acute demand for reasonable service Growing demand for quality and auditability Diversify markets, Clients and Soft Resources

Threats: High competition on Rates19

FM Client Interfacing?

20

Clients

FM Provider

Landlord

CR Mgt

Call Center

Planning

Operations

Operations

Satisfaction

KPIs

CAX

Quality Manual

FM in UAE; Business Plan ?

Corporate Targets: To be among Top Ten FM Co. within 5 years To be among Top Ten Market Leader in I-FM To evolve into T-FM by 2020 To develop a parallel FM Training Service

Commercial Targets: To serve 30 million ft2 within 5 years To be main service provider for the Government

Financial Targets: To turn from Debt into Profit in 2 years Growth rate will be directed by the Board

21

Budgeting of FM?

22

Total Year-1 Year-2 Year-3 Year-4 Year-5INFLOWS

SALES 35,100,000.00 2,400,000.00 8,850,000.00 7,950,000.00 7,950,000.00 7,950,000.00 OUTFLOWS

PROJECT COST (12,994,800.00) (1,365,000.00) (3,276,000.00) (2,784,600.00) (2,784,600.00) (2,784,600.00)OPEX (1,148,250.00) (205,050.00) (235,800.00) (235,800.00) (235,800.00) (235,800.00)

SALARY (9,062,000.00) (1,449,200.00) (1,903,200.00) (1,903,200.00) (1,903,200.00) (1,903,200.00)CAPEX (75,000.00) (75,000.00)

NET COMPANY CASH FLOW 11,819,950.00 (694,250.00) 3,435,000.00 3,026,400.00 3,026,400.00 3,026,400.00 EQUITY INJECTION (694,250.00)DIVIDENDS (50%) 50.00% (1,370,375.00) (1,513,200.00) (1,513,200.00) (1,513,200.00)

CUMULATIVE CASH FLOW TO THE COMPANY (1,388,500.00) 2,064,625.00 1,513,200.00 1,513,200.00 1,513,200.00

CASHFLOW TO EQUITY INVESTORS (694,250.00) 1,370,375.00 1,513,200.00 1,513,200.00 1,513,200.00 Weighted Average Cost Of Capital (WACC) 10.00%

COMPANY NET PRESENT VALUE (NPV) 8,427,713.94 COMPANY INTERNAL RATE OF RETURN (IRR) 484.33%

Equity NPV 3,611,408.62 Equity IRR 201.58%

PROFIT & LOSS ACCOUNTSALES 2,400,000.00 8,850,000.00 7,950,000.00 7,950,000.00 7,950,000.00 COST OF GOODS SOLD (1,365,000.00) (3,276,000.00) (2,784,600.00) (2,784,600.00) (2,784,600.00)GROSS PROFIT/(LOSS) 1,035,000.00 5,574,000.00 5,165,400.00 5,165,400.00 5,165,400.00 EXPENSES

OPEX (205,050.00) (235,800.00) (235,800.00) (235,800.00) (235,800.00)

Salary (1,449,200.00) (1,903,200.00) (1,903,200.00) (1,903,200.00) (1,903,200.00)

Depreciation (15,000.00) (15,000.00) (15,000.00) (15,000.00) (15,000.00)

EARNINGS BEFORE INTERST AND TAXES EBIT (634,250.00) 3,420,000.00 3,011,400.00 3,011,400.00 3,011,400.00

FM in UAE; Next Steps?

23

Action Item Target Deadline

Proposal Negotiation & Approval 0 Day

MOU on Engagement and Article of Association 10th Day

Launch Corporate Analysis and Planning 10th Day

Acquisition of Corporate Station 15th Day

Legal Formation of FMCO 15th Day

Launch Resources Planning, Allocation and Appointment 20th Day

Launch Marketing and Business Development 20th Day

Sign off the 1st FM Contract 75th Day

Kick off the FM Service of 1st Contract 100th Day

FM in UAE; Timeline ?

24

Implementations

Phase-3Verification & Improvement

Phase FourProjects Operations & Development

Phase-2Identification

Phase-1 Realization

Sign Off AOA

Y1M2Y1M1 Y1 M4-6 Y2Y1M2 Y1 M6-12

Sign Off

FMCO

Corporate Planning

Prop

osal

Sustainable Contracts & Projects

Corporate Planning

CorporateFormation

Corporate Expansion

Resources Planning

Mobilize

Sign Off

CONT-1

Y3