The value of long-term building maintenance contracts will pass £2bn a year by 2003, a new report has predicted.
The study by the Building Services Research and Information Association confirms the trend for contractors to switch from construction to support services in search of lucrative maintenance deals.

This change is widening the gap between traditional M&E companies and large facilities management companies, such as Amey and Jarvis.

BSRIA predicts that the value of long-term contracts, which stood at £1.5bn in 1999, will grow at 14% a year. BSRIA also found that the length of maintenance contracts was increasing, with 42% lasting three years or more in 1999, compared with just 8% in 1993.

David Taylor, an analyst with stockbroker Teather & Greenwood, said the research highlighted why so many traditional contractors had made the switch to support services. He said: "The companies see it as guaranteed revenue flows, which is attractive to them and the institutions in the City." The report's author, Thomas Parry, said partnering deals, which are growing at 26% a year, were outstripping single-service contracts (growing at 10%). This was attributed to the increasing influence of major FM companies and the growth of PFI contracts.

He said: "The traditional blue collar image of the industry is fading. Anecdotal information suggests that the market is beginning to polarise between traditional M&E maintenance companies and strategic FM companies." Parry said the only cloud on the horizon was the threat of a skills shortage. He warned that the shortage might hit contract quality and companies' ability to fulfil them.

But he said the shift to long-term contracts would help solve the problem because the promise of guaranteed income over a number of years gave firms time and the motivation to invest in recruitment.