Employers across the world face dynamic facilities management challenges. Inflation is driving up the costs of energy and materials. Demand for workers continues to outpace the supply of qualified candidates. This is especially true for skilled facilities management positions such as electrical, plumbing, and HVAC jobs. However, competition for soft services like janitorial and security is also strong, contributing to rapidly increasing labour costs.
In this rapidly evolving landscape, compiling and analysing facilities' data spending to gain actionable insights to facilitate strategic planning can prove difficult. ServiceChannel’s Facilities Spend Index™ provides insights into facilities spending to facilitate early discussions with budget decision makers and to enable informed data-driven decisions regarding facilities costs. The Facilities Spend Index monitors commercial trade service costs and spending patterns based on $45 billion dollars in services delivered to 540,000 locations on the ServiceChannel Platform.
Exploring the Latest Spend and Cost Trends
What is the Facilities Spend Index™?
The Facilities Spend Index™ is the key to understanding spending related to facility operations, including maintenance, repairs, and capital investments. Derived from a dataset encompassing $45 billion in services provided across more than 540,000 locations on the ServiceChannel Platform since 2018, the Index provides a compass to help navigate the tumultuous seas of facility spending.
The related Service Cost Index™ measures the invoice cost for services delivered, where total facilities spend is the product of invoice cost and invoice volume.
Here's what you can do with the Facilities Spend Index™
There are many ways to leverage the data and insights from the Facilities Spend Index, including:
Monitor Your Budget Growth: Assess whether your budgets are expanding faster than the industry average.
Analyse Invoice Cost Trends: Compare your invoice costs with the Service Cost Index.
Explore Different Markets: Dive into distinct markets by selecting various trades and regions to see how your organisation compares.
Key Trends from the Facilities Spend Index™
“Data is the foundation for peak facilities performance. We use hundreds of metrics to optimise our clients’ locations and assets in real-time. Being data-driven also accelerates progress. By benchmarking every brand and provider on our platform, we are driving continuous improvement and innovation across the industry.”
– Noam Reininger, President, ServiceChannel
- Facilities Spending Reaches New Highs: Spending on facilities across all trades surged by 17% year-over-year (YoY) in second quarter of 2023, reaching an all-time high. After the first two quarters in 2023, spending has outpaced 2022 by 15%.
- Inflation Drives Service Costs Up: Service costs have been on an upward trajectory for nearly two years, escalating by 13% YoY in the second quarter of 2023. Analysing invoice costs further, labour costs increased by 8%, while material costs saw a 5% uptick. The rise in labour costs is primarily attributable to a boost in hours worked, which were up by 11%, as opposed to an increase in hourly rates, which saw a 5% increase.
- Plumbing Spending is on the Rise: Plumbing expenditures soared by 17% YoY in second quarter of 2023. This increase is a continuation of a trend of robust annual growth since 2019, averaging 9%.
Facilities Spend Index™ Insights by Trade
All Trades
Spending increased across all trades on the ServiceChannel platform, up 34% in the first half of 2023 from 2019. Several factors have contributed to this significant increase. Two of the largest contributors are higher inflation and labour shortages, which helped push service costs to an all-time high in the second quarter of 2023.
Some other causes include higher facilities and invoice costs. Facilities spending rose by 17% YoY in the second quarter of 2023, while invoice costs increased by more than 5% annually from 2019. Some of the factors that have contributed to increased invoice costs include a 6% rise in labour time, a 4% increase in labour rates, and a 6% increase in material costs each year. The rise in labour time per work order is likely correlated with a turnover of experienced technicians, many of whom left the industry during the Great Resignation. New, less-experienced workers are simply taking longer to complete tasks.
As we cast our nets wider, we find insights from the Facilities Spend Index™ that span across all trades:
HVAC Trade
HVAC spending varies by season, peaking during the summer months when air conditioning systems face increased stress due to rising temperatures and school-age children being at home. During the 12-month period between the second quarter of 2022 and the second quarter of 2023, HVAC spending increased by 5%. Rising invoice costs are largely responsible, increasing 6% per year since 2019 and 18% YoY in the second quarter of 2023. This is largely attributable to a 3% increase in labour rates and a nearly 8% increase in material costs.
It is worth noting that HVAC costs, as well as performance, vary significantly across the industry. The top 25% performing HVAC providers cost 62% less than the bottom 25% and provide faster service – arriving onsite 4 days earlier.
Janitorial Trade
Janitorial spending was up 30% in 2023 from 2019. Yet, janitorial service costs have regressed to pre-2019 levels, with the typical invoice cost being 1% lower than in 2019. Moreover, the typical janitorial invoice was 20% smaller in 2023 than 2022 but has begun to stabilise over several quarters. The industry continues to face budget cuts, with the budget allocated to janitorial work decreasing by 5% since 2022.
Budget cuts have largely been driven by the effects of the pandemic on building usage. In the first quarter of 2023, office vacancy rates across Europe sat at 10.4%. This represents a 20% increase in the vacancy rate year-over-year. The addition of 203,240 square metres of new stock in 2022 has contributed to post-pandemic vacancy issues, with supply continuing to outpace leasing demand.
Plumbing Trade
Plumbing costs have continued to rise sharply, up 46% since 2019 and 17% YoY in the second quarter of 2023. Rising labour rates and material costs have contributed to the increase. Labour rates have experienced an annual increase of 3% since 2019, while material costs have increased by 7%.
Like the HVAC industry, costs and performance vary greatly among providers. The top-performing plumbing providers cost 38% less than the bottom 25% and achieve first-visit issue resolution 5x more frequently.
Electrical Trade
Electrical spending has continued to increase since 2019, rising by 12% each year. This growth has translated into a budget increase of 6% YoY. Electrical service costs increased by 5% YoY in the second quarter of 2023. Among electrical providers, the top-performing 25% cost 37% less than the bottom 25% and arrive onsite more than 4 days earlier.
Accruent and ServiceChannel: Leading the Way
ServiceChannel is a best-in-class Facilities Management Platform designed for retailers operating large location portfolios. This comprehensive CMMS software provides data-driven management solutions tailored to unique business needs, helping organisations transform their operations with efficiency and cost-effectiveness.
Click Here to learn more about how ServiceChannel can transform your facilities management processes.
