5 Quick Building O&M Budget Tips
When we say quick, we mean quick.
There’s endless line items that you can include in your Building Operations & Maintenance budget and we’re here today to simplify this yearly task with 5 quick tips.
1. Use Historical Data.
Look back at your past year maintenance spend by month and by vendor or trade. If you need one reason to start tracking work order data, this is it. Year over year, this data will make it easier to build a more accurate budget and help you make more informed maintenance spend decisions.
Identify ordinary on-demand and planned maintenance spend then pull out any out-of-the-ordinary expenses like a clean-up from a 100-year storm.
Use all of this information to build a list of line items for your budget and benchmark for the current year.
FM Pro Tip
The more data you collect over time, the more accurately you’ll be able to project and budget your maintenance spend.
2. Identify, Analyze, and Adjust Reactive Spend.
Identify and analyze your areas of highest spend to come up with solutions to increase performance and decrease costs. This might include a repair or replace analysis for aging equipment.
Alternatively, there may be preventative service plans available that cover your scope of services that you completed on an “on-call” or “on-demand” basis. For example, let’s say you called an electrician X times over the year and paid Y. You might be able to contract a service provider on a monthly basis for a fixed amount that is the same or less annually then what you spent on reactive service calls.
In this scenario, you have greater budget assurance and guaranteed service.
3. Review and Re-Bid Service Contracts.
If you have service contracts in place, now’s the time to review and renegotiate.
This is important.
Exercise your right to negotiate with your current service provider and get additional quotes from other service providers to make sure you’re getting the most out of your contract for your money.
Review your current service contracts and know their expiration dates throughout the year and be sure to renegotiate and solicit bids from new vendors well before the contracts expire.
4. Prioritize Deferred Maintenance.
Do you have a back log of deferred maintenance waiting to be completed in the new budget cycle? Make a list, get multiple quotes for each job, and prioritize the work to be done. Schedule the work throughout the new year based on the priority and cost of the job. It may make sense to spread the costs evenly throughout the year if possible so there’s not a heavy impact on your cash flow cycle.
5. Consider the Life Cycle of your Assets.
Consider assets in your building like your HVAC units or roof. They have a long life of say 15 or more years before they need replacement. Later in the life cycle, you’re analyzing whether or not it’s cost effective to repair or replace the asset.
Here’s where there’s a fine line between operating and capital expenses.
We would say that if you’re replacing an asset or making a one-time major repair that extends the normal life of an asset over many years, consider it a capital expense. If the repair is routine or minor to maintain the normal life of the asset, consider it an operating expense. You’ll have to make decisions on a case by case basis.
Let’s Wrap It Up.
We told you this would be quick!
Here’s the summary:
Additional Resources:
We like to share articles from around the web to help you make informed decisions and get another perspective. Also, as much as we experience the maintenance world on a day-to-day basis, we like to keep our eyes and ears open to other people’s experiences and perspective.
Enjoy!
