Facilities managers well positioned to add value in GCC

27 April 2016 Consultancy.uk 5 min. read
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Saving energy, and reducing GHG emissions, has become a priority for countries across the globe. In the UAE, a range of policy initiatives have been introduced, including a bill to reduce new large building energy consumption by up to 30% by 2030. Facilities managers are well positioned to support commercial and residential towers with improving their energy efficiencies, finds a new report, yet, they are not fully cognisant of their potential in the area, suggesting that considerable value may inadvertently be lost.

The global agreement to cut greenhouse gas emissions (CHG) at COP21 last year has started to impact a wide range of governments across the globe. One area in which considerable GHG savings can be realised is by improving the energy efficiency of buildings. Such improvements tend to require low capital investments while creating side benefits such as reductions in operating costs.

One area that has energy abundance as well as a climate that requires considerable energy input, is the region of Gulf Cooperation Council (GCC) member states. One of the emirates in the region is the United Arab Emirates (UAE). The small kingdom has a population of around 2.4 million and has a diversified economy with less than 5% of revenues from oil. To meet its long term climate goals, and to reduce its dependence on dwindling domestic energy supplies, the country introduced the Clean Energy Strategy 2050 (CES). The strategy seeks to reduce carbon emissions by 16% by 2021 and have 75% of the country’s energy mix generated from sustainable sources by 2050. In addition, the emirate launched its Energy Demand Management Strategy (EDMS) which will reduce energy demand by 30% by 2030.

Changing growth
The EDMS, as part of the wider CES, will see the per capita energy expenditure – in kg to oil equivalent – fall from 8,300 to 5,800 by 2030. The target is below that of the US’ consumption in 2013, although somewhat above that of the UK. As part of the EDMS the country has instantiated a range of green building codes, which aim to reduce the energy demand of the future stock of buildings being developed in the kingdom. Over the coming eight years, the total stock is expected to 21% over that of 2016. Many of these buildings will be fully up-to-date. The current stock of buildings, however, is still relatively wasteful in terms of their respective energy efficiency.

Total savings
In a new report, titled ‘Energy Management – Can FM capture a share of the GCC prize?’, London based management consultancy Credo was commissioned by the ‘Middle East Facility Management Association’ to explore the role that facilities managers may have in supporting improved energy management of buildings in Dubai. According to the report, there are significant gains to be made through energy savings measures, with up to $2 billion in the UAE and around $3.5 billion across the region in total.

Capex investments
The report highlights that savings can often be made by no or low levels of capital expenditures (capex). Measures that require no capex include behavioural changes, such as turning off lights and optimising A/C temp, as well as better managing maintenance schedules. Small capex investment operations may include improved building management systems as well as improved lighting systems. Higher capex improvements include utilising smart materials and installing renewable energy sources.

The report highlights that FM players are generally well positioned to support commercial and residential towers implement efficient energy use. FM, with feet on the ground in buildings, is well placed to offer these to clients with no and low capital cost provisions. FM is also well placed to manage mid-high capex projects by integrating them into building operations, and ensuring they do not disrupt facilities when they are installed.

Cost savings
The energy savings from the various projects are relatively substantial. Currently, the average 40-storey commercial tower spends around $9.6 million per year on FM, $12 million on energy and $2.4 million on other costs. No capex cost reductions, implemented by FM providers, would see energy cost fall by $1.5 million, while FM costs would increase $0.5 million – saving a total of a million per year. Further low capex cost reductions could add an additional $4.6 million in savings within 6-12 month, while medium-high capex projects would see an additional $2.1 million shaved off the total costs – resulting in a total saving of up to $7.7 million per year, realised within 12-14 months.

Adding to the mix
The role of FM in the mix of different players within the wider energy efficiency development of a large building is predominantly within operations. FM have the resources to oversee the installation of new equipment and enforce changes in operating behaviours. They may also be able to support landlords develop ways of generating saving for themselves, rather than merely for their tenants, when it comes to efficiency improvements – increasing the likelihood that they invest in improving the efficiency of older buildings.

The report finds that many FM players within the region are not capitalising on the opportunities, many landlords noting that they had not received any initiatives in this area from their FM suppliers. The report suggests that “FM is in a good position to capture a share of this market but will need to team with technology suppliers and finance providers to create a compelling proposition for the landlords. The industry will also need to accept the independent auditing of performance targets and baselines.”