The nature of the business environment today forces all business owners to do more with less and incur no reduction in the level of facility productivity while still pushing to increase the bottom line. If you are the typical business person, you measure your employees’ performance to assure yourself you are obtaining value for that investment and then take the necessary corrective actions when results fall outside pre-established norms.
But what about measuring your building’s performance and productivity? Do you know that by managing your facility costs, you will have a direct positive impact on your overall operational costs? Yes – because facility costs are the second highest operational costs in of all of a company’s operational expenses.
Does the physical environment of the office impact employee productivity?
It is often troubling to hear employees complain about things like the office is too cold or too hot, or complain about the lighting levels, and other physical office features, including the cleanliness of a building. No matter what the nature of employees’ complaints is, you have to understand that the physical office environment has a large impact on employee productivity. Whenever employees complain to each other about facility issues, productivity levels are directly impacted negatively. Therefore, the physical office environment and facility costs are inter-linked.
Businesses are increasingly becoming aware of the negative financial impact to the bottom line of an underperforming building. However, there is an increasing need for most businesses to better understand what is included in facility costs. Additionally, the business community is learning that managing facility costs is a relatively painless way to improve a company’s bottom line without just implementing an arbitrary budget reduction as a means to “do something”.
What is included in facility costs?
Here’s a list which makes up the typical facility costs for most facilities. If you don’t have all of these costs in your facility, consider it as one less headache that has to be managed and accounted for:
When one combines these facility services areas together and totals the costs, one can see how facility costs are the second highest operational expense a business will have.
Are you measuring your facility costs?
Have you watched a football game without an announcer talking about the average “yards per carry” or number of “number of yards after a catch”? Players’ salaries are based on the aggregate sum of these very measures. Without these facts, one would only have opinions and how far would professional football player salary negotiations proceed based solely on opinions?
The same logic applies to facilities. Most companies receive the bill for the various facility related items, pay the bill and never look for ways to better manage those items. They do not compare these costs to the previous month’s cost, let alone the same month the previous year to look for trends. Cost savings opportunities are lost without this type of review. Businesses need to stop regarding facility costs as “necessary evils” and begin to measure and manage them.
Increase you bottom line by controlling facility costs.
Managing facility costs is critical if you want to improve your bottom line. For each dollar reduction in your facility costs is a dollar increase in your bottom line. Do you still want to continue to operate your business with your second largest operation cost not being managed? If your answer is yes, good luck. If it is no, then start measuring your facility costs. First establish a facility costs baseline and over time begin to look at trends as measured against the costs baseline established from that point forward.
It’s time to run your facilities as a business. You conduct performance reviews to measure your employees. You have financial statements to manage your cash. What do you have in place to measure and manage your facilities?
Five ways to organize and manage facility costs
Running a facility can be a very costly venture; especially if measures have not been put into place to identify areas where costs can be managed. As an organization that wants to offer the right atmosphere for productivity and profitability, it is imperative to look at any aspect of the business that may be cutting into this mission. In order to make sure that these financially draining areas are taken into account; here are some ways to organize and manage facility costs.
1. Energy Conservation Programs
Utility expenses can have a major impact on how to manage facility costs. By reviewing the HVAC and lighting in the building and replacing any old outdated systems with new energy savings ones, the cost will be drastically reduced. Even something as simple as changing out the lighting to fluorescent bulbs throughout the facility can limit expenditures.
2. Routine Maintenance
Regularly inspecting the interior and exterior as well as completing routine system checks of any facility should be common sense. However, many companies forget the importance of this simple task. To manage facility costs is extremely difficult if the building is not being maintained properly because problems will constantly come up making costs unpredictable. By doing daily routine and monthly maintenance inspections.
3. Facility Appearance
According to a survey conducted by the Bradley Corporation, a bathroom furnishing manufacturer; 31 percent of the consumers surveyed said that once they encountered a filthy bathroom in a facility, they never visited the location again. This puts a spot light on the importance of cleanliness and how you manage facility costs. Something as seemingly insignificant as a dirty restroom can make a big difference in how consumers view a business. If one area of a facility is filthy, what does it say about the rest of the place? By keeping the building looking its best; consumers believe they are working with professionals that care about their reputation and will take care of them as customers.
4. Eliminate Wasted Space
Some facilities are just too large for the operations being run within. By leasing out the space to other entities, extra revenue is generated and overall expenses are shared. This helps to cut the costs of all expenditures involved with running the business. If this is not an option, downsizing the spaces used can help manage facility costs. Any space not being used requires less maintenance and less utility usage; thereby trimming overall costs and helps in effectively manage facility costs.
5. Cut expenditures
The most important way to manage facility costs is by reviewing all spending within the business. By reviewing all services involved with running the facility and streamlining as many as possible, financial output will be lessened. The use of a computerized maintenance system can be key in cutting your expenditures. Asking for feedback from the employees can also bring to light areas where money is being wasted; those working in the facility will see factors that could be reduced or eliminated to manage facility costs.
Companies are always looking at the best ways to manage facility costs. By implementing energy conservation programs, conducting routing maintenance, keeping the appearance of the facility immaculate, eliminating wasted space and cutting expenditures cost will become more predictable. Businesses owe it to themselves to make every effort to offer a great environment for the consumer to patronize. These steps will make sure longevity and continued success, which is what all organizations strive for. Companies that begin making the necessary changes today will help manage facility costs in the future.
Wayne Washington Founder and CEO of FME Inc