Facility Management Budget: 5 Tips For Facilities Managers

Facility Management Budget: Tips to Become a Better Budgeter

Not planning ahead, not thinking about asset maintenance, and not analyzing past expenses for possible cost-saving measures can lead to emergency spending. A facility management budget is essential. What would the steps to a healthy, well-thought-out budget look like? Read these 5 tips to find out.

1. Act Like a Business Owner

To be a smarter spender, consider acting like a salesman. "Investment-based budgeting" involves treating facilities like a company that offers services at certain prices. Each of your "customers" (i.e., each department, including facilities) has a certain portion of your budget that they may use, with the specific number decided between you and each department.

This approach prevents situations where you’re pulled in several different directions at once and spend more than intended.

Despite careful planning, unexpected events can happen at any moment. It's important to have an emergency budget as insurance for the facility, in case deferred maintenance snowballs into a larger problem. Also, consider your contractor budget: clarify what work needs to be outsourced, weigh contractor bids, and hold negotiations that clearly define the work, payment terms, and inspection process to assure compliance.

2. Research, Research, Research

Successful budget planning requires considerable research. For example, if you treat facilities as a business, figuring out how to price your services involves gathering information about what services you’ll offer and predicting how often they’ll be needed by individual departments.

It's not unusual for facility managers to factor in a lot of time for budget planning. One facility manager interviewed by FacilitiesNet starts planning next fiscal year’s budget about 10 months before the current fiscal year ends.

3. Sell Your Department Wisely

When explaining your overall budget to the C-suite, effective communication is key.

Tim Woodley, Director of Operations for West Linn-Wilsonville School District in Portland, Oregon, recommends leading budget presentations with how the proposal responds to a real problem. There must be a compelling reason based on the organization's mission for submitting budgets for anything.

By presenting specific information on how and why you’ve chosen your budget numbers, you can help the C-suite see that your budget is well within reason.

4. Start a Dialogue

Another tip for interacting with executives is to meet with company leaders to discuss how facilities can support the organization’s overall goals. This back-and-forth can help both parties meet halfway and may lead to new ideas on how your department can cut expenses.

Consulting with coworkers on the floor can also reveal beneficial information. There are eyes and ears all over the building that notice things you may not catch on your own. Review satisfaction surveys to see what main issues are discussed. Talk to the maintenance team about common challenges. Once you have this qualitative data, collect quantitative data by talking with the finance department to find out the exact cost of inefficiencies in the facility. This can help you make a stronger case when talking to a C-level executive, showing that a purchase addressing the problem will be worth the money.

5. Keep Your Maintenance On-Schedule

Facilities managers may sometimes feel pressured to save money by neglecting maintenance on equipment. As long as it functions, it may seem good enough for the time being. However, this can have a snowball effect, leading to major damage or the need to replace the asset, which is much more expensive than repairing minor damage early on.

Preventive maintenance is important. When considering the cost of an asset—such as through a life cycle cost analysis—it’s important to include the cost of maintenance. This helps you budget for an asset’s upkeep and protects the business from expensive breakdowns. Maintenance costs should include basic repairs, required skills, and the time needed to complete repairs. If you lack details, consult the equipment’s original manufacturers and your contractors for estimates.

Balancing your actual inventory is also key. Purchasing too much inventory is an unnecessary drain on finances, while too little can disrupt operations. Deciding how much inventory you’ll need for asset repairs can be guided by consulting the life cycle cost analysis for each piece of equipment.

A facility management budget requires research and negotiation. The extra time spent on the front end is minor compared to the potential disaster of neglecting your homework. Crunch numbers, make phone calls, and analyze asset costs. When your budget remains intact and no minor catastrophes occur, you can congratulate yourself on a job well done.