In past blogs, my colleagues have provided thought-provoking insights into Facility Condition Assessments (FCAs). They’ve addressed, among other topics:
- What an FCA is and why it is important,
- Things to consider to ensure optimal FCA effectiveness, and
- How to adequately calculate replacement costs and current replacement values.
If you have not already reviewed these blogposts, I encourage you to do so and recognize the significance of conducting FCAs. Seasoned facility managers (FMs) likely already understand the need for FCAs and the constant battle for financial resources. Yet, despite the serious consequences of deferred maintenance and unfunded projects, other business investments often seem to have a higher funding priority.
Reframe Your Approach
If the battle for dollars sounds familiar, consider employing a more holistic competitive strategy when soliciting funds. Instead of engaging in the “my needs are greater than Function X’s needs” paradigm, reframe your argument. Think about the institution’s competition for customers, not your departmental competition for dollars. If you’re a university, your battle might be for students, faculty, grants and perhaps athletes. If you’re a corporation, your challenge might be for greater share of the market.
Consider this example in reframing your approach:
A project to upgrade illumination from T8s to LED
Conservatively speaking, you will reduce power usage for lighting by at least 50 percent and incur a payback period of just one to two years. This fixed cost reduction directly impacts the corporate expense sheet, which makes for an attractive capital investment. The project also provides other tangible and intangible benefits that can impact the bottom line, such as:
- perception of recognizing the importance of each employee and/or client and ensuring the best working environment,
- higher employee and client retention levels,
- lower office vacancy rates,
- decrease in negative comments (including social media posts that can have a resounding impact on the bottom line), and
- positive social media comments.
Similar benefits can be presumed by addressing ADA concerns (lower liability risk), HVAC modernization efforts, or almost any facility project you envision. I suggest that the only limitation to such examples is the misconceived perception of the current budgeting process. Most FMs feel the process is based on an interdepartmental budget tug-of-war. What is often overlooked by FMs in making their replacement/modernization decisions is the added value in terms of generating a competitive advantage for the entire organization. The lighting modernization project, when introduced as a strategic level investment, should highlight key financial metric considerations such as payback period and generating a greater-than-zero Net Present Value, or NPV. That satisfies two of the three traditional Return on Investment (ROI) financial measures and can lead to ascension on the funding ladder.
You don’t need an MBA to understand and make these financial validations. The internet provides abundant resources addressing functional department funding shortfalls for operational, maintenance and project expenditures. Resources like FacilitiesNet and Harvard Business Review seek to challenge the status quo funding quandary. These publications point out the importance of functional alignment to the company’s core competencies or competitive advantage.
Michael Porter wrote as early as 1980 about business strategy and competitive advantage. His concepts remain valid. He posited that competitive advantage is achieved through cost advantage and differentiation advantage. In his eyes, cost advantage is when a business provides the same products and services (value) as its competitors, but at a lesser cost. Differentiation advantage is when a business provides better products and services than its competitors. In today’s metric-driven world, both definitions are germane to FMs.
So, how are you able to promote a competitive advantage and increase FM funding? Align functional (that is, your departmental) strategy with corporate or institutional strategy to promote a competitive advantage. And then learn to articulate this functional strategy to the purse holders, because an FM’s funding strategy can allow the institution to increase competitive advantage...and that leads to increased funding.
To get more beans, start thinking like a bean counter.