Commercial property: global FM

A new frontier

 6 October 2014

The massive expansion of property development in China means that opportunities for facilities managers are growing

What does the facilities management industry look like in China? The short answer is that it is not a known sector to clients, practitioners and subcontractors.

In China, all professional services are regulated by government. A typical professional service industry would be governed by a ministry with assistance from a professional association with relevant licences and regulatory regime, and supported by major universities. But in respect of FM, there is only the property management industry. The top qualification a professional can earn is the certified property manager (CPM) which represents only one part of the FM role.

Although FM is poorly defined, China is arguably the largest FM market in the world owing to its vast manufacturing sector, huge population and rapid urbanisation process. There is already an insufficient labour force in FM to meet the existing demand and the war for talent will be intensified as the dozens of new airports, hundreds of railway and subway stations, thousands of infrastructural facilities and millions of commercial occupiers in the pipeline all require servicing by professional facilities managers.

The notion of strategic facilities management is very new to China, even in the first tier cities such as Shanghai and Beijing, but it is slowly becoming the requirement of global clients

According to Peter Smyth, Managing Director of CBRE Asia Facilities Management, employees are currently recruited from a range of sectors and the CBRE academy will offer in-house training to equip them with the customer service skills, the technical knowledge and the proper mindset in becoming a facility manager. Other service providers such as DTZ, JLL and Savills are all facing similar challenges. There is a genuine worry because there is no industry standard, no universally accepted qualification framework, no recognised training, and no service delivery metrics. In lieu of a value proposition, the FM service has become commoditised by the corporate real estates; 'cost per square metre' is perhaps the most common form of metrics in benchmarking FM service.

FM knowledge

The lack of proper FM knowledge in China has prompted organisations such as Building Owners and Managers Association and the International Facility Management Association to offer their version of FM training products. Local training institutions are also selling preparatory courses for people looking to earn the CPM qualification. Many of these products focus on the operational side of facilities management such as cleaning, security, maintenance and repair.

The notion of strategic facilities management is very new to China, even in the first tier cities such as Shanghai and Beijing, but it is slowly becoming the requirement of global clients. Some companies have already abandoned the traditional request for proposal procurement mechanism, where the tender document lists precisely the type of services required. Instead of looking for the lowest bid for a list of commoditised FM services, they are asking bidders to demonstrate a clear understanding of their operations, their people and more importantly their culture. While making the tender process more complex and time consuming, it is becoming the trend as organisations become more globalised.

Facilities managers who are able to think and act strategically will be able to move away from cost reduction to value creation. China is already a huge market for FM service providers. It will only get bigger and RICS is best placed to educate clients and practitioners about the value of strategic FM, so that our professionalism will be understood and recognised by all stakeholders, including regulators and end users.

KK Wong is Chairman of the RICS Asia FM Board

Influencing strategy

According to statistics from the China Property Management Association, 300bn RMB of annual revenue is generated from the roughly 3,000 property management companies across China. However, 80% of companies have faced significant challenges in generating profits in recent years. Severe weather and fatal accidents make the situation even worse. In July 2012, for example, heavy rain in Beijing led to 79 deaths due to the poor city drainage system management, while an escalator accident on the Beijing Railway in July 2011 caused one death and 28 injuries.

Severe accidents have resulted from poor facilities management, a reality that put the property management industry in a poor light but also created tremendous opportunity for FM to improve and develop. In recent years, pioneers in FM have experimented with different ways to enhance the image of the practice in mainland China, and their endeavours have brought hope to the industry.

Maintenance best practice

Good FM practice is necessary to gain the understanding and support of customers and for industry benchmarking. The most significant challenge facing Chinese operators is that most of them do not even know where to start.

The maintenance of equipment and parts, repairs, breakdowns, and improvements demonstrate an FM manager's expertise and professionalism

When I took over the position of general manager of CNOOC Tower in 2006, I launched a preventative maintenance campaign for the equipment. As years passed, we accumulated large amounts of data about best practices, easily implemented in China. The result was that the CNOOC Tower was named the best managed building in Beijing in 2008 and the best managed in all of mainland China in 2009. The cost curve after the implementation shows that a thorough FM strategy and life cycle maintenance benefits not only the operators but also the customers in the long run.

The maintenance of equipment and parts, repairs, breakdowns, and improvements demonstrate an FM manager's expertise and professionalism. We keep records of all maintenance and maintain statistics on even the smallest parts replaced, and have gathered detailed maintenance practice data. For example, the breakdown rate of elevators for CNOOC Tower and other CNOOC buildings has improved from the industry acceptable rate of one for 60,000 operating cycles to the current one for every 180,000. The glass burst rate of glass curtain walls at CNOOC Tower averages only 0.3% per year.

As for energy saving, the electricity consumption is 110 kWh/m2/year and the water consumption is at 0.64 tonne/m2/year, far below the industry average. In 2013 and 2014, smog and air contamination have become a great concern for all Chinese people. However, at CNOOC Tower even during a particular heavy PM2.5 (fine particles) period, the indoor air quality was delivered at level of PM2.5 of 95, in the 'good' range of air quality.

The aim is to exceed the client expectation in the long run, rather than on a yearly basis or even shorter period. The client expects the pursuit of best quality service at lower cost, therefore an evolving 5-year plan for FM may lead them to support investment more readily. Always sharing information with clients is beneficial, because they feel that everyone is in the same boat.

Budgeting and manuals

Upward budgeting will encourage workers to participate in daily operations and to offer their ideas and initiatives. A transparent budget will not only show the confidence of management but will also be a very persuasive tool to garner even more support from clients.

FM manuals are also very important for the execution of FM best practices. At CNOOC we go even further and have created a picture FM manual to demonstrate best practices that stipulates the yearly, quarterly, monthly, and weekly maintenance tasks, the requirements, the way of operating, and the supervision and performance appraisal to ensure that even the lowest performing employees (albeit still required to be qualified) can produce ideal results.

There is still a long way to go to convince the government, investors, the owners and the society that early and well-planned investment in the FM management is beneficial to them. But for the future, this also creates opportunity for cooperation between the local Chinese companies and Western property management companies to raise standards and achieve great results.

Hou Guoqiang is a Senior RICS Member in FM area and Vice President of CNOOC Enterprises Corporation