One way to protect yourself from the vagaries of the construction market is to offer owners your services under operations and maintenance (O&M) contracts. Not only do they help to diversify your company, but they also provide a natural progression for contractors interested in providing added value to their customers.

Experts estimate the volume of O&M contracts to be approximately $60 billion annually for both the public and private sectors. Three factors are contributing to this figure:

1. A proliferation of construction that’s adding thousands of facilities, all of which need operations and maintenance support.
   
2. Deregulation of the electric, gas, and telecommunications industries.
   
3. Increasing reliance on outsourcing operational functions that aren’t part of a facility’s core competencies.

Over the past 30 years O&M contracts have evolved from mostly custodial to every conceivable service designed to operate and maintain every type of facility from buildings to manufacturing plants to highways. (See the chart on page two.) Contractors have come late to the party, however, only providing O&M services for the past decade.

What Can You Offer Owners?
Contractors can offer a wide array of O&M services — solid waste disposal; fuel management; electrical and mechanical system maintenance; and facility operation, maintenance, and management — for a variety of structures. To be successful you must anticipate owners’ needs and then find a cost-effective way to fulfill them. The types of O&M contracts you offer are limited only by your imagination.

The O&M market is a competitive one. Aggressive architecture and engineering firms are looking to grab their share of this large pie. It’s important to recognize your core competencies and limitations. Align yourself strategically with larger companies in areas in which you’re weak. This way you will gain the resources you need to successfully sell your services to owners. When you think of yourself as a business person first and a contractor second it won’t be difficult to convince owners to let you provide services that can solve their problems.

Benefits of Selling O&M Contracts

• Diversify construction business
  
• Generate higher profits
  
• Generate long-term income stream to offset peaks and valleys of typical construction
  
• Leverage existing client relationships
  
• Build new client relationships

O&M Market Trends -1970s
Limited Contracted Services

• Custodial

1980s -Contracted Services

• Custodial
  
• Security
  
• Food services
  
• Roads and grounds
  
• Technical building maintenance

1990s - Outsourcing

• Technical services
  
• Environmental services
  
• Custodial
  
• Security
  
• Food Services
  
• Roads and grounds
  
• Technical building maintenance
  
• Fleet maintenance
  
• Administrative
  
• Electrical
  
• Mechanical

2000s - Integrated Facilities Management

• Real estate services
  
• Design and construction
  
• Facilities management
  
• Site support services
  
• Energy management
  
• Financial management and reporting
  
• Information technology
  
• Vendor management and purchasing
  
• Technical and environmental support
  
• Human resources
  
• Custodial
  
• Security
  
• Food services
  
• Roads and grounds
  
• Technical building maintenance
  
• Fleet maintenance
  
• Administrative
  
• Electrical
  
• Mechanical