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What the CFO Needs to Know: Facilities Management

6/24/2014

Customer experience: Poorly maintained stores cost sales and dilute the brand and customer experience. Not giving facilities the funding required to keep stores clean and in good condition will impact the bottom line in that customers will shop elsewhere. Today, more than ever, shoppers have high expectations regarding the look and feel of a store, and they also have many more options from which to choose. Dirty restrooms, stained flooring, burned-out lights, poor air conditioning and the like are proven customer turn-offs.



Preventive maintenance is good for the bottom line: Even though it requires an investment, the payoff is significant: A preventive maintenance program helps protect assets and prolongs the useful life of equipment, improves system reliability, provides a more consistent store environment, reduces equipment downtime and decreases the frequency of reactive repairs, which are often quite costly and can be disruptive to store operations.



Always consider total cost of ownership: The four-wall environment needs to be designed with the lifecycle costs included in the performa, advised Rick Migliorelli AIA, senior VP, PDS, Jones Lang LaSalle, Parsippany, New Jersey.



“The design/construction budget of the store prototype should include material, maintenance and replacement costs,” he said.



Known versus unknown: Certain areas of the facilities budget are known, namely preventive maintenance costs, planned capital improvements, contract monthly costs and other fixed costs that may be regulatory charges or inspections.



Other areas, including emergency repairs, are unknown. Facilities managers forecast off known costs, fixed costs and historical trending, minus one-time hits, planning a budget to cover a “best guess” scenario. But you should expect changes.



Early approval: The earlier in the year planned capital is approved and purchase orders are issued, the quicker a facility manager can clean up the budget.



Expanding scope: The expanding scope of facilities management means that companies should no longer view the function as strictly a cost of doing business. Even small improvements in facilities, particularly with regard to energy consumption, have been shown to have dramatic effects on the bottom line.



Technology is shaping the future of facility management: More and more companies are investing in IT-based facility-management solutions and services designed to optimize assets and resources and reduce operating costs. Integrated facilities management is a term used to describe the total integration of facilities resources at the network level, thereby optimizing the ability to effectively address energy price volatility and other cost-of-operations issues.



In facilities management, data is king: An asset management system is an essential tool for today’s facility manager. It provides line-item detailed information regarding the condition, maintenance record and costs of a retailer’s facilities and equipment across its entire portfolio, resulting in improved capital asset management and budgeting and capital equipment replacement programs. An asset management system also increases reliability and helps ensure regulatory compliance.



Resources: The implementation of an asset management system results in the type of big data that helps a company better manage its business and expenses. But it’s important to make sure resources are allocated to analyze the data.



Aging buildings: For many retail chains, facility management is challenged by problems stemming from an aging building stock. As facilities and mechanical systems reach and exceed their expected operating lives, major issues of “repair or replace” must be addressed.



The more things change, the more ... Vendor management remains a top challenge for facility managers. If anything, it has become more time consuming, as the complexity of building system increases and suppliers continue to expand their range of service offerings.



“Set up RFPs with key performance indicators and have the vendors vested in performance and results,” Migliorelli said

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