Mitie chairman Derek Mapp has urged industry to properly price risk or the economics of facilities management will become unsustainable.
Such a situation would see further large providers go out of business, though Mapp suggested a “subtle” shift was already underway.
Posting full year results, the firm acknowledged the scale of the challenge facing the business and the broader FM industry.
Mitie is in one year in to a three-year major structural overhaul. Chairman Derek Mapp said “the magnitude of the internal restructuring and the number of things that have needed to be fixed are far more significant than was earlier anticipated.”
However, he suggested “much of the heavy-lifting is now complete”.
For the broader market, and its participants, Mapp said Carillion’s collapse underlines that “wholesale sector recalibration is needed for the economics of FM to continue to be sustainable”.
He said that required “industry-wide correction in the pricing of risk; contracts need to correctly account for price, quality, certainty and timeliness of delivery.”
“We are pleased to see that this is already happening,” Mapp suggested. “As we engage with government, prospective customers and existing clients, the focus is moving subtly away from just cost and towards value.”
Meanwhile, the firm said its investment in smart technology is continuing to pay dividends.
Mitie chief executive Phil Bentley said its smart energy platform has helped bring 29 successful contract bids over the line in the last 12 months, with a 44 further ‘connected workspace’ propositions “in the pipeline”.
For the year to 31 March, adjusted revenue increased 2.8% to £2.2bn although adjusted operating profit before other items dropped to £77.1m from £82.0m.
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CBRE to pick up Carillion’s FM contract with Centrica
Risky business: Carillion’s demise a warning for FM firms
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Why would anybody having more than half a brain presume profitability in so-called FM unless they presumed with it the subsistence offered through taxpayers money through government expenditure?