Description

This study provides an update to a similar study published in 2020. Since 2019, the cost of FM services in Singapore has increased. In 2021, FM vendors anticipate higher inflation rates for all services.

Manpower cost is the main reason for price increase in FM services in 2020. For cleaning and security services, the increase in manpower costs is associated to Singapore’s progressive wage model (PWM). Price increase in FM services is also attributed to improvements of other fringe benefits, such as bonus pay-out.

COVID-19 constraint will be an emerging reason for increased inflation rates in 2020 for all services across all buildings types. Other cited reasons for possible price reduction are bundled contracts, change of contractors and contracts (from conventional to performance-based), price war or competition, and use of technologies that replace manpower.

In particular, cleaning cost has increased in 2020, and it is expected to experience the same trend in 2021. This is due to more cleaning demand from new buildings, compliance to PWM, increased salaries of manpower, local qualifying salary increase by $100 from $1,300 to $1,400 as per Singapore’s Ministry of Manpower (MOM) regulations, and additional work scope due to COVID-19 prevention.

Repair and maintenance (RM) is one of the highest FM cost for all end-users in the Singaporean FM market. Service price has also increased due to salary adjustments for compliance to PWM and bonuses, and increase in spare part prices. Due to COVID-19, maintenance of indoor air and ventilation systems have gathered higher demand in 2020 and this trend may continue in 2021.

Overall, the Singaporean outsourced FM market revenue is expected to expand with a CAGR below 2% from 2020 to 2024. In 2021, the market growth rate is expected to register minimal growth at less than 1% due to lower demand from new buildings as construction projects continue to experience delay. Strong growth opportunities will be present from existing FM contracts, and it is imperative that FM providers introduce value propositions that enhance service efficiency, such as use of technologies and promotion of outcome-based contracts. Contract type may also need to be revisited as it may have influenced FM cost. Service-level agreement may need to be optimized in each contract type, such as comprehensive or non-comprehensive, multi-site or single-site, and integrated services or single service, for mutually beneficial cost optimization for both service providers and customers in the market.

Author: Janice Wung