QSI Facilities Blog

Facilities Management Accounting: How to Plan a Capital Budget Without Pulling Your Hair Out

Posted by QSI Facilities on April 25 , 2018

Capital planning, or budgeting, is a key aspect of facilities management accounting. As explained by FM Link, capital planning in facilities management typically falls into one of two categories, capital budgets, and operating budgets. Capital spending budgets reflect one-time purchases, like replacing an HVAC compressor or the initial purchase of big-ticket items. Operating budgets are the recurring costs associated with maintenance and general upkeep. Facilities Managers play a vital role in planning a capital budget, so having a few tricks to enhance the process can mean the difference between approval and denial.

Why Does Facilities Management Accounting Seem So Terrifying?

Part of the onus in facilities management accounting derives from the fear factor of facilities spend. If something breaks without funds allocated for replacement or repair, it detracts from capital earmarked for capital expenses, not operating expenses. However, Facilities Managers can overcome this issue by creating business rules to dictate how to spend both capital and operating funds, developing a rule-based asset management playbook.  

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How to Improve Facilities Management Accounting

Developing a plan for manage capital spend must not be a fly-by-night process; it takes time and dedication to understanding the big picture and the millions of small details that affect facilities spend.  In addition to developing a playbook, a well-crafted budget, as explained by Buildings.com, should be developed through the following series of steps.

  • Collaborate!
  • Define Your Facilities Management Accounting Needs Over a Three-Year Period.
  • Separate Operational and Capital Expenses.
  • Prioritize Capital Projects by Value Added to the Company and Perceived Value.
  • Define the Next Year’s Capital Planning Process.
  • Select the Best-Quality Solution, Not the Lowest-Cost Solution.
  • Never Plan to Spend Every Dollar.
  • Re-Evaluate the Capital and Operational Budgets.
  • Consider Outsourcing of Facilities Management Accounting.

What Benefits Does Outsourcing Provide?

Due to the complexity of facilities management accounting, especially for multisite portfolios and national companies, more organizations are opting to outsource facilities management services. Outsourcing begets significant benefits, including:

  • Outside facilities service providers pre-qualify contractors and vendors.
  • Facilities services management providers offer 24/7 support.
  • They often use automated systems and have dedicated IT infrastructure.
  • Combined services can reduce facilities spend.
  • Access to cloud-based systems reduces risk and takes advantage of analytics.
  • Experienced facilities management professionals, amassing decades of experience, augment your team.

QSI Facilities Can Help You Gain Visibility and Control Over Facilities Management Accounting

Facilities management accounting is a complex process, but taking the time to create a capital budget based on data-driven decisions will enhance adherence and improve the stakeholder-facilities management team relationship. Learn more about how work order management and dedicated service through QSI Facilities can benefit your budget by submitting your query online or calling 1-888-328-2454 today.