Comment: Adding Value Through Cost Saving
Naiju Anselam, general manager, Awtad FM, writes how using minimum resources with maximum effort can save costs in buildings
Facilities management companies are now faced with more challenges than ever before. Buildings are getting bigger and more complex, while customers and tenants are increasingly demanding better services with a limited budget. Even though organisations increasingly are using 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 still remains on the top of the agenda. Cost savings continue to be the most important reason behind outsourcing decisions. Companies need innovative tools and solutions that would help them make operational decisions and ultimately show savings for their clients.
Facility management is a model of property asset management from their introduction into operational use and during their productive life, whose purpose is the maintenance management and control of buildings with the aim of minimising operating costs in connection with the established quality standards and maximising buildings value. Therefore, the facility management service provider must have technical abilities and entrepreneurial approach so that all managing responsibilities can be integrated, while the facility management service provider takes the purposes of the Property Assets as his own and works as being the customer partner.
There was a time when facilities 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. And showcasing savings to clients has become a prime focus for any FM company.
However, most businesses tend to focus on the bottom line, with no consideration about what’s going to happen further on down the road. This rush to the bottom line of price, can pose to be a huge challenge as it not only prevents both parties from ever being able to understand the needs. And their ability to create a partnership that produces the value for the retailer and a lasting relationship for all involved.
No matter how tight the maintenance budget gets, facilities maintenance managers are responsible for completing a host of essential tasks. Well-planned maintenance is the cornerstone of a cost-effective facilities management and maintenance program.
So how do we tackle this ongoing challenge? Our approach to cost savings at Awtad FM is very simple – Use of minimum resources with maximum effort.
Awtad FM has developed a strategy based on the client purposes and needs, which allows having the highest achievement from property assets, taking always the philosophy of Full Quality and Constant Improvement as a starting point.
In AWTAD FM we are totally focused on client’s needs, who entrust us with the strategy design of their Facilities Management, so that they have the appropriate features according to their use, an optimum cost in connection with quality standards and always fulfilling regulations and keeping quality.
Here are few strategies that can help in achieving savings for clients:
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 reduce a third of costs as FM frameworks work in coordination to improve efficiencies and bring in cost transparency, which is critical for stakeholders searching for cost rationalisation.
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 only requires two inputs: (1) cost per time unit to supply resources to this activity and (2) how much time each activity takes.
Preventive maintenance is an essential component of successful facilities 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 optimisation and benefitting 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 use reduction projects. Furthermore, installing energy effective equipment in the building for smooth functioning is highly recommended.
However, it is equally important to take further steps to ensure that these equipments are not increasing the energy cost. Minor things such as unnecessary use of fans, air conditioners or lights should be discouraged. Motion-detecting technology can also be installed to automatically turn off fans, air conditioners, lights and vending machines at night.
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. It is envisaged that Building Information Modelling (BIM) would fill the gap by acting as a visual model and a database throughout the building lifecycle. A case study of using BIM to design facility managers’ travelling path in the maintenance process is presented. The results show that early adoption of FM in design stage with BIM 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.