9 January 2017 | Tim Hancock
Anyone looking to invest in an FM service provider right now will be reconsidering following recent figures released by two of the bigger players.
Margins are tougher and there are legitimate concerns about the uncertainty following Brexit and the election of Trump in the US.
But the elephant in the room is the accounting procedures used across the sector. The maths used to allow for variables in mobilisation costs, bidding and amortisation is inconsistent. At least, this means for a customer or investor that you are not comparing apples with apples at a tender. At worst, it means there is room for some accounting methods that at positive and optimistic times are referred to as aggressive and when things go less well, are described as dangerous.
Think about Connaught or Rok. Held up by the markets as examples of growth, success and innovation. Arguably undone by accounting procedures and decisions influenced by the figures.
FM needs an international standard accounting procedure. This could be aligned with International Financial Reporting Standards and driven by organisations like BIFM, RICS and IFMA together - putting aside any infighting - to professionalise what we all do for a living.
All service providers would benefit from standardisation of accounting methods. And our customers and their end users will benefit too. We all know what happens when contracts are awarded on price and not value and then unravel, or the two parties discover the bid terms were not what they first appeared. No one can afford to 'buy work'.
A consistent process would foster transparency - and in time might even help us all make better money. No service provider should be ashamed of making a profit. But making a margin will be a lot easier if we are honest about it in the first place.
So, let's be consistent about the numbers, please.
Tim Hancock is CEO of Office & General