If I were to guess, budgeting for your next fiscal year is the last thing you want to do right now. And if you’re anything like me, you may be procrastinating a bit because you know the headaches and frustrations that are lingering.
After all, budgeting is fraught with what seems like endless paperwork and binders, hunting down last year’s expenses, guesswork as you estimate what you’ll need next year, all while competing for limited budget dollars from your organizations.
But unfortunately, budgeting season is upon us yet again…
Before you start the process, ask yourself the following questions. If you answer ‘yes’ to all of them, you are in a good place to make a great business case for next year’s budget, backed by data.
1. Do you track work orders to understand current (and future) staffing levels?
To justify staffing levels, it’s critical that you have visibility into work order and preventive maintenance data. For example, can you track the amount of time your team spends on certain work orders? Tracking time spent on work orders well will show you whether the volume of them warrants an additional maintenance professional on staff.
2. Do you review historic material consumption to predict future ordering volumes?
Whether on a monthly, or quarterly basis, it’s important to know how much materials your engineers are using. Understanding how much stock they are using this year will help you predict what they will use next year. Using the data, you collect here will allow you to make more educated decisions instead of just guessing. After all, guessing could mean your engineers don’t have what they need to fix HVAC units.
3. Do you use capital planning to identify date – and cost – of future equipment updates?
Property operations systems like Building Engines can help you understand the expected life of the pieces of mechanical equipment at your properties. Using the data, you collect about your equipment can help you identify both the expected replacement date, as well as the expected replacement cost of significant pieces of equipment so you can budget accordingly.
4. Do you track historical repair trends to plan for future repairs?
For example, how many elevator entrapments did you have last year, and what was the cost to resolve the issue? Can you identify a trend of work orders related to a particular issue? If you notice reoccurring problems or trends in a piece of equipment over time, based on the work orders you track, chances are something needs to be replaced. The ability to track the work spent on a certain piece of equipment, indicating the decline of the piece of equipment, will back up your decision to budget in a new piece of equipment for next year.
5. Do you report historically on profit?
As an asset manager, you need to understand the profitability of your properties. Building Engines’ profit report is one way to understand historical profit generated off tenant billable service requests. It’s critical to have clarity and control over your tenant billbacks, so you can report what’s coming in compared to what’s being spent.
6. Do you benchmark expenses externally?
Benchmarking against the industry is important to understanding where your expenses are falling. It can tell you if you are spending too much or too little.
Three benefits of external benchmarking:
- Benchmarking places budget performance in its proper context.
- Having a solid point of comparison helps managers control costs.
- A market-based benchmark can help justify needed expenditure to maintain competitiveness.
The bottom line here is to focus on efficiency when it comes to crafting your budget. Building managers have a fiduciary responsibility to investors, and that means being diligent about controlling costs. If you track property operations data, you can get a clear picture, backed by numbers, of where you need to spend. Using the right technology to track this data will help you win approval and make the best business case for budget requests.
