Facility Source Reviews Proper Budget Management

One of the most complicated things about facilities management (FM) is managing the budget. They have to do far more than look at how funds are allocated and what the annual needs are. In fact, Facility Source reviews that, if the company is large enough, over a dozen people may be needed to manage the budget alone. Additionally, if something goes wrong, the consequences could be catastrophic. Hence, focusing on the basics of budget management is an important starting point.

Facility Source Reviews the Impact of Poor Budgeting

If budgeting is done wrong, then maintenance may be deferred, which could lead to other financial problems. For instance, it could lead to an asset breaking down, which doesn’t just cost money to fix but also the downtime experienced as a result of the faulty equipment. Not just that, but if FM is done wrong, shareholders will hold the managers to account and may even withdraw funding in future, making it even more difficult to make sure that the facility operates properly. The total cost of ownership (TCO) then only gets higher.

It is vital that budget management looks at all the options. There are some characteristics in a good budget, such as that it is outcome driven and based on data. This ensures the budget is used effectively and that shareholders support it because it has value. It should also include all the things that could happen, such as how much preventative maintenance costs and how much it would cost if the equipment were to fail. This is also a proactive approach that highlights the importance of FM itself.

Creating an Excellent FM Budget

A good FM budget is thorough if it is to be successful. A number of important tips to achieve this include:

  • That there is a full understanding of all current and future assets.
  • That both a planned and reactive budget are in place so that unexpected issues can also be dealt with.
  • That the condition of all assets is evaluated so that there is some clarity on how long it still has before it needs repairing or replacing.
  • That deficiencies are prevented when possible and addressed when not.
  • That the cost of procurement and services is included.
  • That a smaller view of TCO is included to create greater insights.
  • That it is created in collaboration with partners, shareholders, and staff.
  • That it is based on insights and data analytics.
  • That backup plans are in place, including emergency service providers.

In order for a FM department to be successful, they must have an appropriate, properly managed budget in place. This also ensures that it becomes more likely stakeholders will continue to agree to funding FM because there is a clear understanding of how this saves costs overall. Unfortunately, because much of the work of a facilities manager is done behind the scenes, and because their role is to prevent things from going wrong in the first place, it is often difficult for others to understand the importance of this work.

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