The Road Map to Successful Facility Management: Part 3

January 12, 2014

Jimmy Francis
Director, Student Recreation Center
CSU, Northridge

Editors note: This article is the first of a 3-part series. Part 1: Human Resource Management, Part 2: Building and Equipment Management, Part 3: Budget Management.

Part 3: Budget Management
It would be challenging to accomplish all the strategies discussed throughout this series of articles without the proper funding. Whether you are dedicating staff to research questions that were asked in this article or replacing a malfunctioning piece of equipment on your fitness floor, those things cost money. In this last major stop on our road map to successful facility management, four aspects of budgeting for a facility will be discussed. There are many different ways to approach the planning and management of a facility budget and there a few important core values of a successful budgeter.

A successful budget manager should be organized and analytical. You must spend time both organizing your budget and thinking about it. Don’t forget that, ultimately, your boss pays you to not only do things, but to think!

Lastly, in the midst of these tough economic times, entrepreneurial thinking can be one of the best qualities a professional can have. Those that specialize in doing more with less and figuring out additional ways to generate revenue from their facility are the ones moving up the ladder. Now that a few core values have been introduced, four areas of facility management budgeting will be discussed.
1.    Wage Budget
As discussed earlier, people are what is going to make your facility a success or failure. In order to have a staff on hand there needs to be money to pay them. Determining your staffing level and budget for wages can be done a number of ways. Staffing levels tend to differ from region to region, so it is difficult for professionals to agree on an industry standard. To help guide your decision about the number of people you have on staff and work at various times, consider these two things:

• Design and layout of the facility: Do you have a large facility with open areas? Is your facility partitioned off with several rooms on multiple levels? Does your staff have good sight lines from their workstations? By answering questions like these you will begin to formulate a plan for how many people are needed to safely operate your facility.
• Anticipated participation numbers: When are your users visiting the facility and what are the peak times that you need more staff present to serve and react to facility needs? By researching questions such as these, you can begin to establish when you can save money by having less staff on duty and when you need to have more hands on deck. This is extremely important to find out because you don’t want the appearance of being overstaffed and certainly don’t want staff standing around idle and draining the budget.

If you have not already done so, establish a way to track your payroll in a manner that allows for easy assessment. The simplest way to do this is to set up a spreadsheet that has the pay period, amount paid, and the annual total. You can add to this document every pay period and then, eventually as the years go on, you can calculate averages and then better predict your wage budget.

2.    Supplies and Services Budget
As a facility operations’ professional, you know as well as anyone that you need to have the necessary supplies on hand to effectively operate.  If there is one thing to stress in regards to budget management, it is the importance of tracking what you are buying, when you buy it, and how much you are paying.  Whether you are working in a system that uses a zero-based or incremental budgeting approach, you will still benefit significantly from having a purchase log detailing the goods and services that you have procured.
To successfully manage the overall budget, talk to your staff! They are the “boots on the ground” that will provide valuable information and feedback about the supplies that are needed, what needs fixing, and what your current inventory of expendables is.

3.    Capital Improvements Budget
Often professionals in facility management don’t spend the time necessary to adequately prepare a capital improvement budget. This happens for a number of different reasons and in many cases it is because of a lack of time to conduct the research necessary for large scale renovation or replacement projects. An additional reason is that very often the financial resources simply aren’t there. However, to be successful you must plan for the future of your facility and realize that systems are going to need to be replaced. Additionally, in order to keep up with the trends in the field, renovations should be planned to accommodate new programs or future equipment.

There is no easy way to create and propose a capital improvement budget; it takes time and effort. To get started you should begin by creating a replacement schedule for all the equipment and systems in your facility. If you develop this tool you will at least be able to visualize and anticipate when you might be spending significant dollars. A replacement schedule does not, however, help you prepare for the possibility that a new trend, a change in your campus enrollment, or some other unknown variable will dictate the need to change your space in some way.

The only real way to plan for that situation is to work with your budget department to start accumulating reserves that might be available should you need them. Another tip is to frequently solicit feedback from your users on what they are thinking and desiring. If you are able to accumulate some extra money, you will be one step closer to being able to react to an unforeseen challenge or an opportunity that could be advantageous.

4.    Rentals and Income
Income generation has become a part of our jobs as facility managers during these recent economic times. Not only do you have to do more with less, but now you also have to create new ways to generate revenue to support your programs and facility. One tool that has proven effective for many campuses is renting their facility out to other campus departments or even external groups.
There are three important questions to ask if you are going to consider renting out your facility:

• Who? — Make a list of your stakeholders and prioritize them. Before you open up any spaces for rental you need to make sure that you are serving your primary target audience before you start reserving rooms. This is especially crucial if you are on a campus where students pay a mandatory fee. You will have a very difficult time explaining to students why a non-campus entity is taking time away from them in a space for which they have paid. That is not an easy conversation.
• What? — This question is pretty simple; know your spaces. Your facility is designed for recreation and therefore you should stick to hosting events that complement your space. You will create more work for yourself and subject your facility to more wear and tear than necessary if you try to do things for which your space is not designed.
• When? — The who and when questions actually closely relate. Answering the when question is also crucial to keeping your stakeholders happy. If you’re not already doing so, start tracking your participation numbers in your activity areas. Many institutions keep statistics on when users are accessing the facility, but do you have it drilled down to what areas of the building they are using and when? If not, start collecting this information so you know when you might be able to rent out a space during a non-peak time that will not affect your primary audiences’ experience.

If you work your way through the questions above, the next step is to benchmark facility rental prices in your market. What is everyone else charging? If you are going to rent your facility, you should at least make sure your prices are competitive. It is also recommended that you utilize a tiered approach to your rates with your primary stakeholders receiving the most discounted rate and the public paying a premium. This will pay huge dividends with your primary stakeholders and help you justify renting out parts of the facility.
At the beginning of this section entrepreneurial thinking was listed as a core value. Renting out your facility is by no means a unique concept and only one of many that you may want to consider as a revenue generator. You may find success in other initiatives, such as retail, food service, summer camps, community programming, etc. The fact of the matter is if you can find a way to generate income and not take away from your stakeholders you are being a successful facility manager.

You Have Arrived at Your Destination!
You have completed your journey and arrived at your destination. You have now been equipped with a few of the many tools that can and will lead you to being successful in facility management. Ultimately your goal should be create a clean, safe, and welcoming environment for your users. That is not an easy goal to achieve and one that almost seems out of reach at times. Keep the faith and stay the course and you’ll eventually get there.