While 2022 was characterized by inflation, 2023 has largely been defined by economic uncertainty, as businesses still cope with many of the same financial pressures and challenges.
Due to persistent pandemic backlogs and supply chain issues, these challenges and elevated costs for raw materials and equipment continue to linger. Adding to the burden of unstable procurement costs is the rapid price increase of commodities like oil. WTI Crude skyrocketed nearly 50% from $41 USD a barrel in 2020 to around $76 USD today – making saving operationally challenging. Further, businesses and organizations lagging in their efforts to decarbonize their operations will experience greater political and economic pressures through carbon emissions taxation and penalties.
Additionally, businesses are also struggling with sourcing skilled trades and labour (compounded by a low national unemployment rate), where intense competition for workers and elevated wages continue to impede traditional avenues of cost containment.
Considering the tone of the current landscape, it’s no surprise that there is a steady upward trend in the annual spend of hard and soft facilities operations, as well as maintenance, capital, and energy costs.
However, despite overwhelming contemporary challenges, there are still strategies available to reduce these rising costs to your business and facilities.
The first step involves exploring your total cost of operations to identify areas where you can drive value to your organization and business, today and in the future.
Some effective FM strategies include:
1. For long-lasting and efficient facilities, employ Predictive and Proactive FM strategies.
The value created by a business’s facilities is directly impacted by asset longevity.
Ensuring that equipment is properly utilized and proactively maintained allows you to create the conditions necessary to maximize assets’ lifecycle, uptime, and operational efficiency. Proactive and predictive maintenance techniques are not only effective in ensuring your equipment lasts, but they also ensure your business runs smoothly by creating a streamlined process that gets your products to market quicker while maintaining a consistent spending level.
A proactive and integrated facilities management strategy doesn’t wait to address poorly working equipment, equipment breakdowns, or any other facility issues inflating your business’ operations costs. Real-time equipment conditions, cost of operations, and repairs are constantly monitored and routinely managed. This ensures that items such as clogged filters, corrosion, leaks, and energy inefficiency do not compound and create recurring major repairs and early equipment replacement which can typically cost businesses up to five times more when addressed later.
As facilities and real estate continue to be one of the largest cost centers and investments for businesses, an integrated facilities management provider delivers a competitive edge by ensuring that the facilities continually provide business value.
2. Outline capital planning outcomes and operational expenditures – early and often.
If a business waits until it is dissatisfied with a vendor or service provider to replace them, or until capital replacements completely halt operations to start planning for improvements – it’s already too late. The costs of change are not only higher when delayed but it can also impact valuable present-day revenue generation.
Therefore, regularly performing robust capital planning and operational budgeting can ensure you have a strategy in place that creates long-term profitability, optimizes future returns, and ensures the health of your business’s vital facilities and fixed assets.
Furthermore, fully understanding and evaluating your current service level agreements (SLAs), from both your hard and soft service providers, can be an effective step in understanding how they align with your current and future critical needs. Then, you can pursue a deeper exploration to evaluate and identify value, and areas of synergies to better meet your desired outcomes. The added benefit will illuminate areas to contain costs and provide a foundation to plan for expenditures well in advance that ensure your bottom line is not inconveniently impacted.
With a dedicated single point of contact, an integrated facilities management provider can ensure your services are managed properly. They can also correct excessive spend in unnecessary areas, creating greater capacity to spend in valuable areas.
3. Avoid the costs of delaying decarbonization and energy waste.
When businesses pollute and neglect decarbonization strategies, they are ignoring an excellent opportunity to save money.
The national carbon pollution price is $65/tonne C02E and is set to nearly triple by 2030, as businesses will see their utility bills increase exponentially. Therefore, a coherent decarbonization strategy is necessary for businesses to remain competitive.
Your facilities have an opportunity to implement energy monitoring, utility budgeting and forecasting, and a variety of other tactics to reduce non-renewable energy source usage. Dropping a facility’s dependence on fossil fuels that are subject to volatile prices and market conditions begins with enlisting energy and sustainability professionals to assess key data and formulate customized solutions. These professionals can help improve energy efficiency, reduce long-term facility costs, and drive decarbonization.
These strategies often include identifying the potential to upgrade to more efficient equipment to reduce operating expenses over time with realistic investment payback periods for your business.
|Minimum Carbon Pollution Price ($ CAD/tonne CO2E)
While the rest of 2023 is unpredictable, tangible opportunities to lessen the economic impact on your business are not only possible but within your business’s control.
To take advantage of Black & McDonald’s integrated Facilities Management services, contact firstname.lastname@example.org.