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Mon 6 Sep 2010 04:00 AM

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Time for change?

Imdaad business development manager Farid Halabi predicts how facilities managers will adapt to modifications in the industry.

Time for change?

As I set out to write my MBA thesis, the idea that came to me seemed ingenious. I decided to centre it on the changing environment of the FM market in Dubai and the UAE.  Not only was it a topic of interest to me, but the timing couldn't have been better.

Before the release of RERA's latest JOP [Jointly-Owned Property law] regulations, the price war reached comical levels, some developers became self-proclaimed community managers, and unofficial owners' associations (OAs) were starting to try their hand at tendering facilities management services to replace their existing FM service provider, with or without the blessing of the developer. The freehold FM market was a snake pit at times.

Meanwhile, RERA was putting the final touches on its revised JOP regulations and the market was finally going to be regulated for the benefit of all involved.

So what were the likely outcomes of these changes and how will facilities managers adapt to this new environment?

One theory is that these OAs are the end users. Consequently, the people who invested their money in these homes would induce a shift in the selection criteria of FM companies. Instead of thinking about price, they will require quality services and better energy and resource management. Personally, I have faith in some of the OAs and their ability to make the correct decisions.

The other and more worrying theory is that OAs will come onboard, and then the first thing on their agenda will be to reduce service charges.

I have personally had a discussion with a certain OA member who was claiming that he is set out to prove that the budgeted figures for the coming years' fees were inflated and the developer must be pocketing the difference. After a lengthy review, I came to realise that the developer has actually done a pretty decent job; nothing seemed odd or out of the ordinary. This lead me to believe that there is a very strong feeling of mistrust towards developers. This is worrying, and I urge OAs to initially have a non-biased look at all records before making a judgment, and preferably consult with an expert.

A friend, who is a facility manager with one of the developers, has told me that some OAs discussed wanting to negotiate reductions in services charges in the region of AED6 to AED7 per ft2. And he raised the possibility of OAs reaching these charges and reducing the operations to the watchman and breakdown attendance model.

This will obviously lead to poor quality of buildings, deteriorating assets, and a reduction in the lifespan of these facilities - outcomes which will inevitably cost end users far more in the long-run than any savings they can make in the short-run.

Eventually, professional integrated FM companies will turn their backs on the regulated market and focus on non-freehold projects, leaving the OAs in the hands of the community managers and small-scale maintenance contractors.

In the coming months there will be close to 3500 registered OAs. But are there enough accountants, lawyers, or community managers to attend these OA meetings? Some will see this as an opportunity to go into community management. This raises deeper questions: are there enough community managers qualified to prepare community rules, deal with insurers and auditors, budget and manage service charges, manage sinking funds, perform FM tendering and, more importantly, audit the maintenance operations to ensure the asset lifecycle is not jeopardised?

These coming months will surely bring some interesting developments. For the future of this industry, however, this period is as worrying as it is exciting.

Halabi has been working in various areas of the FM industry, from consultancy and CAFM system implementation, to operations and business development, for nearly 10 years. He holds a diploma in FM from FMH in South Africa, a B.Sc. in Civil Engineering and a MBA from the US. Halabi is also an IFMA certified facility management professional.

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