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Operational Costs: Where to Save

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Virtually every facility manager has been faced with a similar dilemma at some point in their career: how to cut costs without injecting discomfort or inconvenience to tenants’ lives. But, in order to cut costs, one must first understand the root of building expenses and where potential exists for change.

A Breakdown of Expenses

 

A great study completed by BOMA (and shared by the Rocky Mountain Institute) provides an in-depth breakdown of building expenses, as categorized by different types of facilities. From most expensive to least, these costs fall under:

 

  • Fixed Costs
  • Utilities
  • Repair/Maintenance
  • Cleaning
  • Administrative
  • Security
  • Roads/Grounds

 

So, Where to Start?

 

Fixed costs are, as you’d expect, a difficult place to look for savings (unless you’re willing to change your company’s physical location). But, there is considerable opportunity in the efficiency of utilities (number two on their list), which have been shown to constitute somewhere between 20-30% of most organization’s total annual building expense.

 

In fact, according to Madison Gas & Electric, lighting contributes to the biggest piece of your electric bill each year (39%). And, for natural gas bills, expect 86% of all costs to go toward space heating. Given the potential for misallocation of these systems, a bit more efficiency can go a long way.

 

Says Energy Star:

 

“On average, 30 percent of the energy consumed in commercial buildings is wasted…Focusing on your building’s energy efficiency will pay dividends throughout your business. You’ll reduce energy bills without sacrificing performance or comfort. Lower bills mean more money to spend on your organization’s goals and mission, while helping customers and clients recognize your environmental leadership.”

 

Repair costs can be cut through preventative maintenance, of course, and by ensuring that major systems are used efficiently (so as to prevent overexposure to wear and tear). In some cases, investing a bit more for newer options—be it water heaters, furnaces, or cooling systems—can ultimately lower these costs while also combating energy usage. Of course, the potential for such savings can only be evaluated by an individual basis; a local energy consultant can help crunch these numbers for you.

 

Finally, “building administration” offers potential for savings too. By implementing a more organized system for reporting and responding to building issues, facility managers can save time and reallocate their energy towards maintenance (helping save on both fronts).

 

Outside of these areas, options tend to be a bit more limited; most buildings are unwilling to sacrifice security, cleanliness, or the quality of their parking lots/grounds. And, since these typically represent smaller chunks of a budget, potential changes need to be far more extensive to break even with similar efforts in—for instance—utility efficiency.

 

Has your building seen dramatic savings in building costs through these (or other) routes? Let us know on Twitter and Facebook!

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