Budgeting: Cost control vs quality maintenance

In today’s dynamic environment, working with minuscule funds is pivotal for most of the organizations. Therefore, priorities and trade-offs become part of the budgeting process, especially when facility managers are working out their funding allocations. The priorities that govern decisions are not related to the facility management (FM) division, but are formulated keeping in mind the company as a whole. Appropriate budgeting has a direct and tangible impact on the survival of the FM division as compared to other activities. Cost control is equally imperative and a systematic process should be defined to monitor cost and the overall budget. Superior management of time, cost, and maintenance can not only keep operational costs lean, but also provide opportunities to increase profitability. Perhaps, this is the most crucial evidence when we look at the evolving role of a facilities manager.

1. Better Pricing

  • Negotiation strategies: The FM manager should develop a strategy to explore the feasibility of long-term pricing commitments with multi-company or regional cooperative efforts to obtain better rates
  • Monitor rates: Monitor and periodically report on rates, peak rates, tax credits, rebate programs, accelerated-depreciation benefits, and other financial programs in the market. The rates should be benchmarked against others in order to identify potential opportunities such as cost reduction

2. Resource optimization and control

  • Technology tools: Advanced technology tools such as IoT, which allows products to be monitored or controlled remotely across existing networks. The FM manager should monitor the machine and equipment in real-time to make informed data-driven decisions, thus reducing operational cost
  • ROI projects: Identify projects and evaluate the feasibility of implementing projects such as energy rates, etc.
  • Talent management and development: Identify facility division and corporate experts to participate in teams, focused on a single key area of energy use, such as HVAC, compressors, motors, energy star program, etc.
  • Annual energy management review: The FM manager should hold an annual management performance review to control energy costs (usage and rates), including measuring performance against the facility, annual cost reduction, company-wide energy usage reduction, performance against strategies, and actions planned for the year

3. Maintenance and cost control

  • Minimize breakdowns: The facility manager should follow specific maintenance practices i.e. predictive, preventive, etc., which helps in minimizing failures/breakdowns, thereby enhancing cost-effectiveness
  • Minimize waste: The recycling process should be adopted from the inception of operations at the workplace
  • Prioritization: Work prioritization is crucial to control cost. The facility managers should put the work as per their priority i.e. obligatory, essential, desirable, and avoidable
  • Cost: A surge in cost may indicate a need for replacement or renewal. Conversely reduced costs over time indicate improved efficiency. Hence, keeping records for analyzing the periodical performance of the facility and benchmarking with others on cost/m2, cost per employee is necessary for facilities managers

  Overall, quality control is very much possible through effective site supervision, well-trained operatives, and specialist sub-contractors.


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