BCIS forecasts for the FM sector - 1Q22

Over the forecast period (1Q22 to 1Q27) the market for maintenance and other facilities management services will be affected by the general slowdown in the economy and pressures on resource costs particularly labour.

Maintenance costs will rise 14.5%: annual inflation of 2.2% in the year to 1Q2022, increasing slightly to 2.4% in the following year and at around 3.0% per annum over the rest of the forecast period (to 1Q2027).

Cleaning costs will rise 28.8%: there will be demand pressures as workplaces are adapted to the post covid requirements and pressure on wages from shortages of labour and increases in the National Living Wage (NLW). Costs are expected to rise 6.8% in the year to 1Q2023 slowing to 3.3% in the year to 1Q2027.

Energy costs are currently very volatile and have been rising sharply, they are expected to rise by 4.2% over the forecast period, with large rises in oil and gas prices through to the end of 2022. Energy costs are predicted to decline over the rest of the period as the markets stabilise.

R&M annual output is forecast to decline around -4.4% from 2021 to 2026. It is expected to rise around 9.7% between 2021 and 2022 as pent-up demand and alterations required by a new working environment push up demand. The recladding of flats in the aftermath of the Grenfell fire, as well as initiatives to cut carbon emissions from housing, will be accounted for in the R&M output numbers; a provision has been made for this in the forecast.

The Facilities Management forecast is based on information available up to 24 May 2022.

Economic uncertainty bought about by the disruption to the global supply chains, steeply rising oil prices and the Ukraine war, may well affect both the demand for maintenance and other facilities management services and the cost of supplying them. The shortages in some materials and labour resources are expected to continue for at least the next year but may last longer.