Facilities management (FM) companies are now faced with more challenges than ever before. Buildings are getting bigger and more complex, while customers and tenants are continuously demanding better services with a limited budget. Even though organizations are increasingly outsourcing as a strategy to increase profitability, access new skill sets, re-focus on their core business and improve competitiveness, various surveys show that cost reduction remains on the top of the agenda. Cost savings continue to be the most important reason for outsourcing decisions. Companies need innovative tools and solutions that help them make operational decisions and ultimately show savings for their clients.
There was a time when facility management was stereotyped by many as an additional cost to a building’s maintenance. However, this notion is changing as more people are effectively managing the maintenance budgets. Showcasing savings to clients has become a prime focus for any FM company.
Most businesses tend to focus on the bottom line, with no consideration about what’s going to happen further down the road. This rush to the bottom line of price can pose to be a huge challenge. It prevents both parties from understanding the other’s needs and inhibits their ability to create a partnership that produces value for the retailer and a lasting relationship for all involved.
This ongoing challenge can be tackled by FM companies by using the minimum resources with maximum effort.
Here are a few strategies that can help achieve savings for your clients:
Activity Based Costing (ABC)
As per recent studies, through successful implementation of FM service delivery and innovative contract models, most stakeholders have been able to achieve significant savings and an upgrade to service standards. The integrated model can be reduced by a third of costs as FM frameworks work in coordination to improve efficiencies and bring in cost transparency. This is critical for stakeholders searching for cost rationalization.
Despite the fact that allocating indirect costs is very important for FM companies– it is also difficult. A popular and robust method is Activity Based Costing (ABC), which allows an organization to gather data about its operating costs and assign them to each activity.
Activity Based Costing can be used in various ways, but the simpler time-driven ABC method may be the best as it requires only two inputs: cost per time unit to supply resources to this activity and how much time each activity takes.
Sometimes overlooked, preventive maintenance is an essential component of successful facility management and maintenance, as it prevents the risk of system or component failure. Preventive maintenance tasks are performed on a regular schedule or frequency and consist of many checkpoint activities on equipment.
Reap benefit from technology
Technology and automation of equipment are creating new levels of cost optimization and benefit all stakeholders. Hence, it is something the FM market cannot ignore and should invest in to receive better savings. It is also important to reduce energy costs. Total utilities, including electricity, chilled water, steam, and natural gas comprises approximately 25% of Total Operating Costs, according to the Institute of Real Estate Management (IREM). Facility managers can achieve operating cost reductions of 3% to 6% from energy usage reduction projects. Furthermore, installing energy effective equipment in the building for smooth functioning is highly recommended.
Early adoption of facilities management
Considering facilities management at the early design stage could potentially reduce the efforts for maintenance during the operational phase of facilities. Few efforts in construction industry have involved facility managers into the design phase. It was suggested that early adoption of facilities management will contribute to reducing the needs for major repairs and alternations that will otherwise occur at the operational phase. There should be an integrated data source providing information support for the building lifecycle. The results show that early adoption of FM in design stage can significantly reduce life cycle costs.
While these are some of the points that can help one show some savings, a key most important thing to remember is that going cheap and only focusing on price typically does not end well, even though it might seem like a good idea right now.
Naiju Anselam is the General Manager at Awtad FM.