Facility budget management is among the most complex processes today’s Facilities Managers face. It is much more than an annual review of needs and allocation of funds. Depending on company size, managing the budget can be the sole responsibility of dozens of employees, and any deviation from the budget could have catastrophic consequences. Instead of buying into the fear of modern budgets and putting things on the backburner, Facilities Managers should understand a few things about the basics of successful budgeting.
Poor Budgeting Leads to Higher Reactive Maintenance and Increases TCO
Poor budgeting may not seem like a major problem. The worst outcome is deferred maintenance. However, deferred maintenance can have serious financial repercussions.
For example, failure to address maintenance needs in a timely manner will result in the increase in total cost of repair that is equal to the squared cost of the original repair, like a $100 repair becoming a $10000 repair in the future.
Poor budgeting consequences do not there; shareholders hold Facilities Managers to a higher standard of justification for funding. Therefore, any problem will result in setbacks in obtaining funding in the future, asserts FM Link. It becomes a self-propagating cycle that increases the total cost of ownership (TCO).
Successful Facility Budget Management Is Detailed and Considers All Possibilities
A thorough budget has certain characteristics, like data-based and outcome-driven traits. These traits increase the effective use of the budget and ensure shareholder support. To achieve this feat, the budget must be detail-oriented, as noted in a previous QSI whitepaper. Further, the budget must consider all possibilities, like the projected costs of preventative maintenance versus run to failure maintenance. Of course, this includes labor, parts, and energy costs associated with runtime of facility assets regardless of condition. Thus, proactive maintenance is an integral step to successful budgeting practices.
How to Create a Successful, Thorough Facility Management Budget
A thorough budget is easier to achieve than it sounds. Of course, it helps to follow a few tips laid out within another QSI whitepaper.
- Understand current and future portfolio assets since visibility is tantamount to budget clarity and accuracy.
- Separate planned versus reactive budget needs to create a “reserve” funding pool for unexpected issues.
- Evaluate asset condition to gain insights into when an asset may need to be repaired or replaced before its planned fund allocation.
- Address deficiencies as they occur and prevent them when possible.
- Remember to include procurement costs and services.
- Implement a “smaller TCO view,” such as moving from a TCO for facilities management to a TCO per-square-foot model to present to stakeholders.
- Collaborate with other team members, stakeholders and facilities management partners.
- Implement a CMMS, and use data analytics to unlock insights.
- Develop backup plans for maintaining assets, like selecting an emergency services provider before emergencies occur, can help reduce the impact on the budget.
Fast-Track Budget Accuracy Through Preparation Today
Facility budget management is the beating heart of successful facilities management. Funding for equipment maintenance and labor is essential to building positive guest experiences, and lackluster funding will result in lackluster facilities. It is not always possible to anticipate facilities management costs, but Facilities Managers that take the time to follow these steps and implement new systems and technologies, like a CMMS, can improve budget accuracy and get faster approval from stakeholders.