Budgeting in FM
Facility management budgeting is a complex and challenging endeavour. It requires a great deal of day-to-day attention. In particular, when a facilities manager presents a case for funding, he is usually held to a higher standard of justification than in the case of core business funding.
Since budgeting in today’s economy always involves working with less than ideal funding, priorities and trade- offs become part of the budgeting process. For example, critical repair and maintenance jobs should be completed to make up for deteriorating conditions in a built environment. To do this may leave other necessary but less critical items to remain outstanding.
To establish a detailed and accurate proposed budget, it helps to start the process by evaluating collected data from previous years. Doing this provides a helpful reference point in determining costs that may no longer be relevant as management is constantly examining operating expenses to find ways to reduce cost, increase efficiencies and optimize resources.
Such important information that may be considered when processing budgetary needs include comparing actual versus budgeted cost for the last few years, comparing material costs for previous years to identify high cost and high volume items, and reviewing data on staff requirements.
Other vital information will be listing of current major installed equipment, the condition of the equipment and record of maintenance and repair, the current categories of expense by type i.e. plumbing, electrical and painting.
Budgeting is a disciplined exercise and it works as a guide that may merit adjustment due to unique conditions or unplanned events that necessitate such changes. Sometimes, the focused efforts of facilities managers are not sufficient to prevent failure of equipment and systems therefore, creating a need for contingency budget. Anticipating and procuring the means to deal with the unexpected situations requires careful planning in advance. Such planning will have to address all types of natural and man-made disasters relevant to the facility and its location. Weather emergencies are commonly addressed in planning for contingencies.
One key factor that can affect budget is cost control. Cutting costs can bring immediate savings but cost control needs to be carefully managed. Whilst it clearly helps to eliminate wasteful spending, careless cost cutting can lead to falling quality in the performance and delivery of maintenance work. It can also lead to poor morale within the maintenance team. However, it is not unexpected of facilities managers to make effort to control costs as part of their responsibilities. This indicates that expenses have not been allowed to go beyond a reasonable level than what the expenses are intended to accomplish.
Tunde Obileye
Obileye is a UK-trained lawyer and CEO, Great Heights Property and Facilities Management Limited
Email: Tundeobileye@greatheightslimited.com