Facilities and energy managers alike often spend their time thinking about ways to save money and reduce spend on facilities and energy management. Although numerous technologies exist to monitor energy use, which can be used to change energy use behaviors, the best way to reduce spend is to stop unnecessary expenses. Preventing unnecessary costs from occurring, like the cost of replacing an HVAC unit due to poor maintenance, is also known as facilities cost avoidance. Facilities managers need to understand this concept and how to use it properly.
Facilities Management Is Viewed as a Cost Center
As explained by Janelle Penny of Buildings.com, responsiveness, and timeliness of work are essential to reduce facilities spend. Unfortunately, preventative maintenance and proactive management are seen as added expenses. This may lead some companies to utilize a reactive maintenance or “run-to-fail” strategy, focusing on putting out the fires as they occur. However, what if those fires could be stopped before their ignition? That’s where facilities cost avoidance comes into play.
Facilities Cost Avoidance Focuses on Preventing Future Costs & Reducing Risk
Responsiveness and timeliness of maintenance activities are critical to cost avoidance. Instead of trying to reduce current facilities spend, facilities managers need to find a way to prevent unnecessary expenses in the future. In other words, facilities managers must find a way to avoid future costs. This is where cost avoidance can have a significant impact on transforming the department from a cost center to a profit center. In other words, Facilities managers will need to understand portfolio scope, the condition of assets and the building, budgets necessary to meet needs, and prioritization protocols.
As noted by Dan Hounsell of Facilities Net, costs of facilities management are rising, but the increase in technology to manage assets is also affecting the sector. While new technologies, such as IoT-enabled sensors, are considered smart and best-in-class, and the time is coming when the technology is merely a standard. Meanwhile, the cost of implementation will be higher in the future, and potential ROI may decrease. Instead of waiting to invest until some future date, facilities managers should invest in cost-avoidance measures now.
Best Practices in Implementing a Cost-Avoidance Strategy
Implementing a cost-avoidance strategy sounds great on paper, but the path to implementation is not clear. Do you forgo maintenance on minor assets to perform maintenance on high-value assets? No! It would be better if you were performing robust maintenance on all assets, reducing total cost of ownership and preventing unexpected malfunctions. While replacements will eventually be necessary, the key to using cost avoidance is to delay the replacement need as long as possible by keeping current assets in the best condition possible. A few best practices to follow for the use of cost avoidance strategies include:
- Eliminate deferred maintenance.
- Address antiquated facilities assets.
- Increase the efficiency of assets.
- Track asset performance with connected sensors.
- Identify the best-case scenarios for repair versus replacement.
- Only define cost avoidance measures for how not implementing a change will increase spend.
- Consider savings on vendor vetting and personnel management.
- Optimize your labor structure.
- Implement a predictive, preventive maintenance program.
Prevent Added Future Expenses and Risk With Facilities Cost Avoidance Now
The best way to save money is to eliminate the need that requires it. Facilities cost avoidance is the best strategy in facilities management, preventing issues from arising and draining your budget, and the best way to achieve this goal lies in gathering and utilizing a data-based, prioritized and proactive maintenance schedule.