5 Ways to Save on Property Expenses
A recent study by the Building Owners and Managers Association (BOMA) found that, on average, 15 percent of an owner's property expenses are spent on repairs and maintenance. Of that 15 percent, nearly half is spent on preventative maintenance. The study suggests that owners should take more proactive steps to design and implement preventative maintenance plans. As a result, owners can save costs over the life of the property.
If an owner does not have a preventative maintenance plan, expenses can cost more in the future. An owner should allocate between 4.5% – 7.5% of annual operating costs to preventative maintenance each year. If not heeded, owners are now at risk for an increase in repair expenses later. Preventative maintenance techniques have proven to avoid system failure, downtime, and extend the life of mission-critical, high-cost equipment and systems.
Fact: A preventative maintenance plan will prevent equipment failure before it occurs.
We know that preventive maintenance keeps operations running smoothly and prolongs the life of expensive equipment while reducing overall maintenance costs. With so many obvious benefits to performing preventive maintenance, the real question isn't whether you should do preventive maintenance, but how to implement an effective preventive maintenance plan.
Preventive maintenance plans are similar to property insurance policies. Like insurance policies, a good preventive maintenance plan will minimize the negative effects, and expenses, of any unforeseen circumstances affecting high-cost equipment or systems. Similar to insurance policies, it is up to the owner to implement a plan to stay ahead of emergencies. After all, an insurance policy did not come with your property; you had to figure out the right coverage, shop around, and then organize the best company to implement the plan. The same is true for preventative maintenance plans.
1. Get the right people in place
To organize a worthwhile preventive maintenance plan, you need to have the right people, with the right tools, and the proper strategy. A skilled team will include top management, maintenance managers, maintenance technicians, and those who understand the way your property operates. This could include people from departments not usually associated with maintenance, like data processing, accounting, and craftsmen. You may not need input from each of these people at every step of the process, but it’s important to have them on your management team to receive important feedback.
2. Set goals for your preventative maintenance program
Your property manager should help you set goals for your property. Goals must include regularly met scheduled inspections and cleanings as well as responding quickly to tenant complaints or concerns. Additional goals include keeping detailed records of work performed on systems with dates and part numbers, regular training, and positive relationships with vendors who repair systems beyond your team’s skill set. Having a clear set of goals creates organization and control – two vital variables in successful maintenance plans.
3. Take inventory of your assets
Go through your facility and inventory all equipment you are considering including in the preventive maintenance plan. Tagging equipment as you go will help track records and part numbers if emergencies arise. A good preventive maintenance software program can assist in this task and pay dividends when emergencies suddenly show up.
4. Finalize the details of your plan with an expert
Make early decisions on what will go into your property maintenance plan with the assistance of experts. Determine the health of each piece of equipment with an outside vendor before making decisions on the overall plan. This is vital to cover aging assets, as well as getting a third-party viewpoint and opinion.
5. Schedule long and short-term preventative maintenance
Secure as many of your high-cost, high-priority pieces of equipment on a regular preventive maintenance schedule. Keep in mind you do not have to do it all at once. Your tasks should be directed to how the unit might fail, and your goal should be to prevent as many failures as possible. Start with one piece of equipment and add as you go. Using the first piece of equipment, create a schedule for the year, broken down into daily, weekly, monthly, quarterly, bi-annual, and/or annual tasks. Continue with each piece of equipment until everything has a long-term plan.
Now that you have planned your year, you can easily create weekly plans for your maintenance team.
Good preventive maintenance tasks should be performed during pre-arranged equipment downtime, but remain flexible for work that comes in from inspection or reactive situations. Always remember that your tenants are the true priority, and they will notice your short-term efforts.
Reactive vs. proactive maintenance: which are you using?
There are two types of maintenance strategies employed by owners today; reactive maintenance and proactive maintenance. Reactive maintenance goes by the theory “if it isn’t broke, don’t fix it,” a strategy that can sometimes save money short term, but often ends up costing more in the long run. Proactive maintenance, contrariwise, employs the strategy of using skills, goals, and techniques to ensure that systems never fail. Proactive maintenance is an ongoing activity designed to avoid costly fixes in the future. Ask yourself which strategy you employ.
Repair vs. Replace
One example of proactive maintenance often overlooked is that of repair vs. replace. A team should always weigh the cost of replacing an item - versus just temporarily fixing it. It’s not necessarily the cheapest way to maintain a property, but it is essential for stabilizing long-term cash flow. Budgets can sometimes get in the way of necessary replacement parts or systems and this is where accountants can help in determining the best plan long-term.
The Next Steps to Take
The first task to complete when creating a solid maintenance plan is realizing your assets inventory and value. Log equipment and serial numbers, appraise aging equipment and the cost to replace them near-term, then evaluate repair-cost histories to forecast future budgets. Hire a professional management team skilled in maintenance techniques to consult you on short-term versus long-term strategies. This expert will pay for itself in the long run as costs decrease, tenant satisfaction rises, and less frequent emergencies emerge.