When it comes to your building and facility maintenance budget, planning is essential so you can anticipate maintenance operations ahead of time. But budget planning is not an easy job for any facilities manager. While historical data can give you a basis for your budget, predicting maintenance costs is certainly not an exact science.
So what’s the solution? We’re going to cover everything from how to create a facilities budget to why it’s so important to help you tackle this issue head-on.
How to develop a facilities budget?
Getting approval for any budget is a challenge in most businesses, but particularly where there’s lots of competition for funding. That’s why you need clear justification for the figure that you reach in case you need to fight your corner. Here are our tips to help you create a facilities budget that you can stand by.
1. Look at the costs from previous years
Looking at your past financial records will show you what each of the different services involved in maintaining your facility has cost. If your previous costs have remained steady or gradually increased over the years, then that will be a relatively accurate predictor of the costs for the year ahead.
If your costs have fluctuated over the previous years, that may indicate that there are services that you’ve been paying for that you may not need or not paying for services that you do need. Find out where those cost discrepancies lie and decide whether you need those services over the coming year.
Think carefully about your cost base
Once you have a rough estimate of your facilities budget based on previous years, the next step is to think about your costs for the year ahead. To do this, break your costs down into those that are fixed, variable, and seasonal.
- Fixed costs – Your fixed costs for the year should already be known to you. If they’re not, then speak to your vendors now for an estimate of the costs over the next cycle. Your fixed costs will include things like landscaping, window cleaning, and HVAC maintenance. They’re not likely to change and can form the basis of your budget.
- Variable costs – Your variable or unknown costs are more difficult to account for. They include one-off repair and routine maintenance costs. Although they will fluctuate from year to year, there are steps that you can take to make them more predictable. Looking at the variable costs you’ve incurred over the past few years and matching those to the expenses that you foresee over the next year will help you hone in on a likely figure.
- Seasonal costs – Breaking down the facility costs for previous years on a monthly and quarterly basis will help you to identify any seasonal rises or falls. You can then work these into your budget for the upcoming year. As an example, landscaping costs may rise in the summer and utilities costs increase in the winter. Understanding the impact of seasonality will help you justify your budget to the executives.
3. Talk to your team
There are lots of elements involved in maintaining every part of your facility. That’s why it’s always wise to canvass the people who manage each department’s daily consumption. Their insight will help you understand the priorities in each department and highlight costs that you may not have accounted for.
4. Make savings where you can
There will usually be some quick wins that will help to bring the cost of building maintenance down. For example, switching to energy-efficient lighting, improving the insulation, and exploring other ways to reduce your energy consumption will all trim some of the fat off your budget.
However, there are also areas that you don’t want to skimp on. You may think that cutting back on regular maintenance programs will make your facility budget more palatable to executives, but it’ll only lead to more costs further down the line. Instead, you invest in ways to increase your proactive maintenance, such as with preventive maintenance (PM) software. PM software helps you to stay on top of smaller repairs and extend the lifespan of your systems while reducing the likelihood of costly replacements.
5. Use technology to reduce manual work
There are a lot of man-hours that go into building and facility maintenance that account for a large proportion of the costs. However, there is technology out there that can help. With ManagerPlus® EAM software, you can automate scheduled maintenance and create a centralized resource where weekly, monthly, and quarterly inspection checklists can be stored.
It also helps you to organize team and work schedules more efficiently, manage part lists and inventory counts, and make sure that every part of your facility budget is accounted for.
What to include in a maintenance and operations budget
There are lots of different elements to factor into your facility maintenance and operations budget. They include:
- The age and location of your building – The maintenance needs of different building types differ drastically. As an example, the compliance requirements for manufacturing plants are far greater than they are for churches, but every dollar still counts. The location also impacts your budget, so research the average cost in your area for the work that needs to be done.
- A buffer for unforeseen expenses – There always needs to be some wiggle room built into your budget for expenses you haven’t accounted for. This can be an amount added to the top of your overall budget or built into your sub-budgets for each area.
- Construction costs – Everything outside of the normal costs of facilities management should also be factored into your budget. Think about whether you’ll be making any changes to the physical workplace this year or whether new equipment will be installed.
- Labor, materials, and inventory – There’s a standard ratio that applies to the distribution of labor, materials, and inventory costs in most industries. By taking a look at your budgets over the last few years, you can see how those ratios have applied to your costs and make adjustments to your budget accordingly.
- Unscheduled events – Wouldn’t it be great if your buildings ran like clockwork and nothing unexpected happened all year? Unfortunately, that’s rarely the case. You should budget for around 10 hours a year to be committed to each asset in the event of an unexpected fault or outage. You’ll also have to estimate the cost of materials for repairing those assets.
Why is a building maintenance budget important?
Poor budgeting may not seem like a major problem, after all, the worst outcome will usually be deferred maintenance. However, deferred maintenance can be a serious issue that has major financial repercussions. As an example, if you do not have the budget to make a $1,000 repair now, then that could easily become a $10,000 repair in the future. That’s why it’s so important to do your research and budget accurately in the first instance.
Failing to budget properly can also lead to executives asking for a higher standard of justification for funding in the future. That can make the facilities manager’s job even harder and make it more difficult to obtain funding. Over time, that will increase the total cost of ownership for the business.
How a proper facilities budget helps with general office upkeep
Creating a well-managed budget will enable facilities managers to anticipate the point at which office equipment needs to be serviced and maintained. That will help to increase uptime and reduce the cost of repairs further down the line.
Budgeting effectively for office cleaning, security, landscaping, window washing, trash hauling, and other costs also helps to create a happy and healthy working environment for employees and ensures that visiting clients get a good impression of your business.
According to the Building Owners and Managers Association (BOMA), facilities managers can expect their office operations budget to break down as follows:
- Fixed expenses (property and real estate insurance and taxes) – 41%
- Repair and maintenance costs – 17%
- Regular and specialty cleaning – 13%
- Administrative costs – 13%
- Security – 6%
- Utilities, roads, grounds, and telecoms – 6%
How EAM software can help
Understanding how your teams use time and money can help you make smarter building and facility budgeting decisions. Advanced EAM software like ManagerPlus helps you keep track of where all your money is going and discover areas in your maintenance operations where you can cut costs and improve efficiency. You can add full cost details when work orders are completed and monitor all of your costs in one place. You can also manage part lists and inventory costs, and because everything is connected, you know how much is in stock so you’ll never over-order.
Take a live, personalized demo with one of our experts to see how ManagerPlus can help you create a facilities budget that you’re comfortable with.
Executive summary
With competition for funding fierce in most businesses, creating a building and facility budget that facilities managers can justify to executives is a challenging process. That’s why it’s so important to budget properly. Follow our tips to create an accurate facilities budget, discover the different elements to include, and find out how ManagerPlus EAM software helps to simplify the whole process.
