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7 Costly Facilities Management Activities You Won’t Find in the Budget

Todd Moore| August 23, 2018

Attempting to take control of your personal spending? Experts suggest recording daily purchases in a spending journal. Is it time to lose some weight? Studies have shown that people trying to lose weight are twice as successful when they keep a food journal.

Even managers can leverage the power of measuring and reporting their behavior – to make noticeable improvements.

But what can be done when recording performance is impractical or impossible?

Unfortunately—whether you know it or not—as a facility manager, this is a problem you’re facing. Even bulletproof budgets fall victim to hidden, untrackable costs. And when your team is rushing to fix problems, or just trying to keep up with the daily workload, tracking costly activities falls near the bottom of the priority list.

Yet, conservative estimates show that these hidden costs can easily climb into the tens, even hundreds of thousands. In an effort to uncover those costs, and set you on a path towards improvement, this article will review 7 FM activities that are increasing costs but not showing up in the budget.

Driving to and From the Plan Room

If you’re like most facilities teams, you’re not tracking how often technicians are making unnecessary trips to and from the plan room. Yet these trips happen all the time.

For example, a technician receives a service order, they head for the plan room to pick up whatever documents they think are necessary, then drive across town. Upon reaching the site of the problem, they realize the plan they brought is outdated. At that point, the choice is either being forced to improvise or drive back to the plan room for the correct documents.

Depending on traffic conditions, that one service call might last half the day or more. That’s not showing up on the budget, but it’s an extremely inefficient allocation of resources and it’s costing your organization.

Overtime Costs

Of course, overtime costs do technically show up on the budget, but what about the overtime costs that really shouldn’t be overtime? In other words, how can you tell what percentage of overtime costs were caused by inefficiencies during normal work hours, such as unnecessary trips to the plan room?

Unless you’re diligently tracking team members’ activities, there’s no way of knowing if an entire month’s worth of overtime might have been avoided. It’s easy to blame exorbitant overtime costs on monthly aberrations, but consider again the technician faced with the dilemma we mentioned earlier.

They may make an educated guess about a repair to avoid an unnecessary trip back to the plan room, which, at a later date, could cause some catastrophic failure that could result in several dozen hours of overtime. That’s a potentially catastrophic cost that most budgets will show as a regular, unavoidable operating cost rather than a cost incurred because of preventable operational inefficiencies.

Onboarding Costs

There may be a line item available for reference in your budget that indicates onboarding costs. But that lump sum of “onboarding costs” probably won’t show you the cost attributable to paying two employees to do the same job as the new hire shadows his or her trainer. And that’s no small cost as studies have shown that a facility team member’s onboarding process can easily take up to 6 months.

The cost of paying two employees for one employee’s work for 6 months only shows up as a regular part of onboarding expenses, rather than an indication of inefficiency. As a result, no one is going to have any reason to improve the status quo.

Unnecessary Warrantied Repairs

Data on warranty management shows that facilities teams spend, on average, $81,000 in annual repair costs on equipment that’s under warranty. However, that number is based on what facilities teams know.

Here’s why that’s problematic.

Hopefully, we can safely assume a facility team that decides to repair warrantied equipment doesn’t know that the warranty is still valid. If they already don’t know that the warranty is valid, it’s more than likely that plenty of repairs are made on equipment without anyone ever realizing the repair would have been covered by warranty.

Again, that’s never going to show on the budget. As a result, it’s never going to be something anyone tries to gain control of.

Customer Dissatisfaction

The cost of customer dissatisfaction, like the cost of employee morale, is difficult to precisely quantify. Still, we all know subjective things such as morale drag budgets down. A tenuous—maybe even strained—relationship between facility teams and their customers can seriously impact productivity, both for the customers and the facility teams.

In fact, according to Gallup, “A recent study found that workgroups with positive to negative interaction ratios greater than 3 to 1 are significantly more productive than teams that do not reach this ratio.”

Reworks

How often do repair jobs get redone at your organization? Unless you’re separating out work orders on repeat problems versus work orders on new problems, there’s no way to know.

But this is no small cost because, as we pointed out earlier, even beyond the unnecessary cost of the rework itself, there’s a ripple effect of lost productivity that may turn into overtime, customer dissatisfaction, or both.

Time Spent on Low-Value Activities

Chances are, the duties of most facility team members don’t officially include “searching for documents.” Yet research shows that the average facility team member is spending 47 minutes per day doing just that. They’re not getting paid less during that time, so the organization eats the cost of time spent on low-value activities like searching through a disorganized plan room.

What might your budget look like if technicians weren’t wasting time searching for documents or grabbing the wrong versions before they go out on service calls?

Conclusion

Pearson’s Law states: “When performance is measured, performance improves. When performance is measured and reported back, the rate of improvement accelerates.”

Still, the problem in FM is that there are hidden costs caused by something as simple as searching for documents. But there’s no way of knowing this without the taking the time to implement a tracking and reporting system to root out these hidden costs.

Fortunately, other leaders in facility management have found a way to eliminate or significantly reduce many of these costs. To learn how the facility team that manages Orange County in Florida used a mobile dashboard to cut down on their operational costs, watch this video.

About the author

Todd Moore National Director – Facilities Solutions, ARC

Todd Moore has presented at numerous industry-related events with a focus on helping organizations better manage their facility information. Todd shares Facility best practices in Healthcare, Municipalities, K-12 School Districts, Universities, Federal Agencies, Manufacturing, Retail and Private Owner Groups while providing key takeaways that can be put into practice in your industry vertical.

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