Inflationary pressure a threat for facilities management​

Inflation and Its Impact on the FM Industry

Globally, inflation rates for services have exceeded those for goods in the past 60 years, except during periods of substantial oil price increases. Against this backdrop, the facilities management (FM) industry has had to adapt to the pressures of managing inflation, containing operating costs, and maintaining healthy growth and profitability.

Facilities management can be an effective tool to help developers, landlords, and property owners rationalize their operating costs. A consolidated FM strategy can safeguard cost alignment while ensuring sustainable service quality standards.

Challenges in the Services Sector

The services sector often bears the brunt of inflation, leading to cost-cutting measures that can negatively impact service quality. As building owners seek to reduce costs, there is a natural tendency to pass on inflationary pressures to FM providers, cutting into industry profitability.

This increases the pressure on FM companies to reduce costs while maintaining competitiveness and transforming properties into income-generating assets. In a market where pricing is a key determinant for success, rising operational expenses make it challenging for FM providers to balance costs while meeting evolving client demands. Competitive pricing requires careful planning to ensure long-term returns.

To navigate these challenges, FM companies must thoroughly understand their largest cost areas and develop sound strategies to manage them effectively.

Key Cost Areas in Facilities Management

1. Human Resources Management

Human resource costs are the biggest challenge in FM, particularly during inflationary periods. To contain these costs, the industry adopts innovative approaches such as:

• Internal Staff Progression: Prioritizing internal promotions over new hires for supervisory and management roles helps reduce hiring expenses.

• Staff Training & Development: Training enhances productivity, supports successful contract delivery, improves employee retention, and reduces turnover.

Beyond employee costs, FM companies must also manage overhead expenses, including transportation, logistics, onboarding, and supply chain consolidation. Consumables, equipment, and uniforms are among the key elements subject to cost rationalization.

2. Service Integration & Cost Efficiency

A critical strategy to combat inflationary pressures is service and role integration, which streamlines service organization. FM companies also leverage benchmarking as a key tool to align baseline budgets and achieve cost comparatives.

3. Operational Efficiency

FM companies must manage not only their internal operating costs but also their clients’ costs to optimize operational efficiency. Inflation continues to push companies toward innovation in service delivery and infrastructure management.

The Role of Technology in Cost Optimization

Technology plays a crucial role in integrating processes based on best practices while boosting productivity. As one of the largest FM companies in the region, Mukamel Facilities Services (MFS) has implemented several cost-rationalization initiatives to help the industry combat inflationary pressures while offering increased value to building owners.

The Future of FM Amid Inflation

The integrated FM industry has emerged as a vital innovation tool for building owners and the sector at large. Several case studies in the region demonstrate that integrated FM support has significantly improved efficiency and financial gains, especially during periods of high inflation and economic uncertainty.

Imran Safdar
CO-Founder & CEO – Mukamel Facilities Services Pvt Ltd