Although smaller floor plates lower construction costs, they can inhibit productivity and lead to long-term losses. We better bring in a business consultant to analyze it!. Hidden maintenance cost is a term to describe cost-inducing events that are either fully acceptable and/or are produced because people are unaware of them. There are two or more choices, and the cost difference between them could be an opportunity. Below are some examples. This reactive cycle can act like quicksand for many teams, where no matter how hard you fight, you keep falling further and further behind. They also tend to age well. This choice is often called opportunity cost in financial terms. Cut the amount of maintenance work by deferring it. While these costs should be a prime consideration during the design process, they remain significantly lower than personnel costs. We have no idea! Part of the delay effect is the physical nature of mechanical failure. The breakdown of the production line was avoided (1. Beyond simply becoming less reliable because of system changes over the years, older equipment may not be able to safely protect personnel and other equipment as it was designed., Modern electrical equipment also offers features to ensure workers are operating in safer conditions, including space-age materials, compact formats, and digital trip units, the publication adds. Many plants are regulated by union agreements and may have to lay off the most recently employed maintenance craftspeople. Often the maintenance cost can be lowered and should be lower; however, it seldom works to cut it fast. Conversely, if the plant is well maintained, there is less maintenance to do in the future. Building maintenance is a large part of any facility management professionals daily operations, which means that there is significant room to put cost-reducing strategies in place to helping bring down your overall expenses. There is software that competes for milliseconds in speed to get better trades. Another option to reduce maintenance costs while increasing productivity is to bring in an outside service. Financial performance often impacts how maintenance cost is defined for example, classifying a cost as capital investment costs versus expense changes if a company is making a profit or a loss any given year. So, if the production is down, it will be down 3-9 times longer, and the total production volume of the plant will go down. Some have even claimed that 2% is considered to be best practice or world-class. The 2% is often used regardless of what industry is being benchmarked. The recently laid-off people will be needed at some point, and the company has induced a future cost of re-hiring and re-training these people by the sudden lay-off. At the time, the cost to repair it at the upcoming shutdown was CAN $50,000. Even when funds are set aside to construct new buildings, FacilitiesNet.com adds, they rarely extend to the ongoing operational costs vital to maintaining the facility and slowing the decline of building utility and performance., To keep buildingmaintenance costs in check as buildings age, Stanford suggests the life cycle cost analysis (LCCA) approach, which is the process of evaluating the economic performance of a building over its entire life. Keywords. Preventive maintenance), and the bearing can be changed safer, faster and better because VA gave us lead time to plan and schedule the job. Energy-efficiency retrofits can reduce the operational costs, particularly in older buildings, as well as help to attract tenants and gain a market edge. It is important to understand what actions may induce hidden costs and/or produce hidden revenues. Like everything else, it has an expiration date, and it can begin to exhibit signs of wear and tear that require attention, Reliable Plant states. Therefore, the revenues increased a lot more than the total cost even though their maintenance cost was relatively high. 2023 Neumann Monson Architects. At the same time, owners will likely see increased productivity by improving daylighting. And landlords have little incentive to invest in new appliances when they arent responsible for paying unit electric bills. Auditing set points daily through a remote monitoring platform allows you to automatically reset your equipment set points. These highly intelligent systems have API integration options that will truly make your easier as a facility management professional. There is various facility management software out there, but how do you know what to choose? Understanding the Total Cost of Building Ownership, Before discussing how to reduce maintenance and personnel costs, lets put the total cost of building ownership into perspective. Image 4: Modified Guard to do inspections on the run. For your building maintenance plan, you need to consider material costs, labor, asset history and annual maintenance costs. If we do things right, it takes time to see the reduction in cost. We have explored these three ways in this article, but lets make the three choices crystal clear. But as equipment becomes more reliable, the cost will come down as a consequence of the reliability improvement. Keep a sharp eye on expenses. How about an old classic? Materials like wood and stone can remind occupants of nature and even improve air quality, since natural materials are less likely to produce chemical off-gassing than synthetic options. for $436,800 in Q1 2023 so the median homeowner is going to want to set aside between $4,368 to $17,472 per year for The same team could never have taken that decision without approval; if it were a capital investment of $250,000, it would have required several approvals. A fire department's work is primarily to prevent fires through regulations, education, and inspection. Make a repair job be completed with higher quality. Maintenance costsincluding the cost of maintaining and replacing systems and materialsmake up 6%. By regularly servicing your vehicles, youll prevent small problems from turning into costly repairs and prolong the life of your fleet. If the motor is replaced before the breakdown, it may cost 1. This list contains strategies for reducing maintenance costs, increasing your facility management energy efficiency, and reducing operating costs as a whole! Introduction Maintaining a building can be a costly endeavor. Maintenance cost is an important indicator of a plants performance. Consider this: You have 10 pieces of production equipment, each running 15 hours per day. Often, it is very damaging to the company to cut the cost too fast. The expenses dont end when you buy a house. The process requires investment, training and good management, but typically costs very little to implement compared to the uptime they deliver. When kicking off a new preventive maintenance plan for an aging building, plan to spend between two and six percent of your companys annual operating budget on the initiative. Other instigators to maintenance cost reduction initiatives are business consultants that compare a plants maintenance cost with similar plants. Occupants are likely to feel more free, creative, and productive when the ceiling does not inhibit their field of view. In most cases, the stock market pressures a company to improve stock prices by making more profit. When equipment is inspected better (step 1 in the chain), problems are found, and those problems need to be repaired (step 2-4 in the chain). Part of the problem is that when things get hectic, preventive maintenance tasks are almost always the ones to get pushed. 04. If you buy a new car and never change the oil, the car may run for five years (wild guess, I have not tried) before the engine seizes. In summary, if jobs are deferred, they will become more expensive to fix in the future. We wrote a case study about ithere. Typically performed by a third-party energy consultant, the analysis determines the cost of acquiring, owning, maintaining, and disposing of a system. But, as mentioned in the intro, many maintenance organizations are completely focused on reducing maintenance costs and/or keeping within the maintenance budget. Some maintenance work will have to be cut out or deferred in order to reduce the maintenance cost, but the question is: what work the maintenance manager will cut out? Get more great content like this sent to your inbox. Improve Your Team Training Reducing maintenance and operations costs starts with your MO teams knowing what to do. If your team is using a facility management software, especially a software that has asset mapping and digitized floor plans, your new employees can quickly learn the ins and outs and routes of your facilities with ease. Understanding how to reduce building maintenance costs can lead to significant facility management costs savings. Phone: +1 919 525 4445 These costs, making up 92% of an owners spending, include employees salaries and benefits. Those factors are not explored in this article since the focus is on maintenance costs. This strategy includes doing maintenance as well as possible for as long as it is cost-effective over the life of the equipment (looking at total life cycle profit). Lets look at the maintenance cost from one more angle. Your MO teams need technical training so they can Hybrid and electric models produce lower or no tailpipe emissions while in use, and theyre cheaper to operate and maintain. Prevention not only saves money, but it helps facilities avoid replacement, FacilitiesNet.com adds, which requires capital assets and often an extensive process from evaluation and design to funding and implementation.. More and more If you are using a building system to report changes after implementing energy savings initiatives, then your equipment needs to be audited regularly to make sure that the equipment is not overworking itself. If we misalign a bearing to 10 thousandths instead of precision align it to 2 thousandths, the life may go from 15 years to three years (an estimate), again, it will take three years for the misalignment to cause a problem. They may say, This maintenance cost increase must be something completely new! How to Reduce Building Maintenance Costs in your Organization But it is Over 50 percent of managers and business leaders in mid-to large-sized commercial facilities view energy efficiency as a proven operating and investment strategy, according to dnvgl.com. There isnt an angry occupant on the other end or a boss who is hearing it from executive leadership to get that broken equipment fixed. Better management of unpredictable unplanned or breakdown In some cases, the connection isnt made because management has changed, and the new management may not know the history. At the end of the day, all maintenance activities should lead to: 1. This process can be simplified by splitting up your activities into smaller tasks and projects. That analysis is often absolutely correct, but again, changing the behavior in a plant around work screening and prioritization is not done over a coffee break or in a couple of weeks; it would take time to do. Sealing and insulating your air ducts can reduce up to 20% of a cooling systems energy consumption. Read more about Maintenance Cost Compared to Estimated Replacement Value. Image 3: Cost initially goes down but will go back up as reliability declines. 4 Common Software Issues. Welcome everyone to Microsoft Build, our annual flagship event for developers. Work smarter, not harder. Utilizing a variable frequency drive (VFD) is a good way to realize significant savings by operating equipment motors more efficiently. 1.Try to cut maintenance costs within a few weeks or months by focusing on the maintenance cost itself. Aside from the lease itself, facility upkeep requires no small budget and Someone else decided to move a 2-day shutdown a few days before the start. With easily accessible documentation, you see things, like how your team replaced the same motor in your HVAC system three times over the span of a couple months because it kept catching fire (yes this happened!). Many organizations often have the goal of reducing maintenance costs. Although polished concrete costs more upfront, it saves the owner in the long run. A survey published in the Harvard Business Review shows that access to natural light is the top attribute workers want in an office environment. Improved financial performance is not immediate; the correct procedures have to be in place for some time in order to see the financial results because of the delay effect in maintenance. There has to be an understanding of the future costs of maintenance actions and/or doing nothing. Company, local state/province and international tax laws differ and change over time, which adds another level of variability to the definition of maintenance cost. Here are some real-world examples of the hidden maintenance cost: Bricks were falling out of a lime kiln in a chemical plant in Canada. According to the 2008 McGraw-Hill Construction SmartMarket Report: Key Trends in the European and U.S. Construction Marketplace, operating costs for green buildings are on average 8 to 9% lower, building values are 7.5% higher, buildings have a 3.5% greater occupancy ratio, and green buildings provide a 6.6% total return on A well-tightened bolt will never, ever come loose, while a poorly-tightened bolt may come loose after a couple of years. The future annual maintenance cost will be higher in the poorly maintained plant since the equipment has more maintenance to be done than the well-maintained plant. In some cases, even grease routes are cut out. The motor has to be replaced! They also offer high-fault current withstand capability without the use of limiting fuses. Reducing maintenance costs and downtime is often associated with decreasing safety or service. The second choice is to pay $50,000 + risk of break down (%) X Cost of break down. Tor Idhammar President & CEO, IDCON, INC. selected equipment with good maintainability, inspectability and reliability, Maintenance cost / Estimated Replacement Value (MC/ ERV), Maintenance Cost Compared to Estimated Replacement Value, Check out IDCONs Reducing Maintenance Costs the Right Way, IDCONs Practical Prioritizing for Leadership in Maintenance, Currency Exchange rate variations (If comparing internationally), Difference in equipment selection and engineering before plant start-up. The age, past maintenance performed, the initial investment quality (Life Cycle Costing) and all other factors have to be analyzed. We buy things with 20% interest on a credit card instead of saving to buy them later for a much better deal than paying 20% interest. Lets try to illustrate what may happen in a typical plant when cost-cutting is the focus. The initial maintenance cost increase has several components, but the main cost is the cost of improving the equipment condition. Well, here is some news: Cutting the number of people in an inefficient organization will not increase the tool time; often it does the opposite. Keeping these costs to a minimum is ideal but is necessary to While these costs should be a prime consideration during the design process, they remain significantly lower than personnel costs. So, for example, if someone wanted to start up the production line early and pull a crew from an ongoing alignment job, they had to sign a form saying they thought the additional production time was worth sub-standard pump life. Many consultants have promoted this as a great number to compare between plants. This ensures your HVAC is running at the correct temperature. What was their return on investment? These are just a few examples, but I hope the point is made. Implementing a regular maintenance plan will ensure your fleet runs at peak performance while decreasing your carbon footprint. Clearly, cost-effective measures are good lubrication practices, precision alignment of shafts, balancing of rotating equipment, good operating practices and quality installations by maintenance. A building material with high maintenance and replacement costs will cost an owner more than a more durable option with a higher upfront price. Maintenance improvement means dealing with people. Many are obsessed with measuring the speed of a pitch or slap shot, but is it relevant? When the equipment is down, it costs you $100 per hour (cost of the downtime per hour). To provide some useful information for the coming months, our team compiled a list of our top 20 cost saving ideas for facility management. Learn more by reading about the. If you have control over which energy provider your facility uses, make sure to do your due diligence when researching potential options. Low profit immediately transfers into cost-cutting measures, but the other half of the equation is disregarded. Security vulnerabilities. The reduction of work executed will become the consequence of the people's layoffs, even if that isnt the intention. Two plants that are producing the same products are seldom alike. The chain of Inspecting, Planning, Scheduling and finally Executing Work. Difference in plant assets and production flow & products produced, 3. Why do companies disregard revenue and focus on cost? WebThe answer is yes. In some companies, this goes on for 3-4 cycles with 2-3 years apart until the plant is financially dead. Often, another business consultant looks at the business and compares the maintenance cost with similar plants in the industry and draws the conclusion that the maintenance cost is too high, and the same circus starts over again. Common examples of this include air filters, oil filters for hydraulic units, refiner plates and chipper knives. Grainger Editorial Staff. Knowing when and what work has been done on different assets can provide insights into whether an asset should be replaced, identify changes to preventive maintenance schedules, or indicate when to bring in an outside consultant. These materials are more durable and low maintenance than synthetic options. It would be more or less impossible to make an analysis that encompasses all the important factors that include maintenance cost. But if we wait with the job till after the breakdown, it will cost 1 + downtime of production (assuming it affects production) + additional damages to equipment (in some cases). This will ensure the efficiency of your heating, cooling, and air conditioning efforts throughout your facilities. To enforce this standard, they had a sign-off form for accepting a sub-standard alignment. Above all, we recommend engaging occupants in the early stages of the design process. Implementing a regular maintenance plan will ensure your fleet runs at peak performance while decreasing your carbon footprint. After 12-18 months, the maintenance cost will rise again because the preventive maintenance wasnt performed. If you could cut your downtime daily to 3.75 percent, the cost savings would be $63,438 per year.1. For example, a material like Vinyl Composite Tile needs frequent waxing and restriping and should be replaced every ten years. That requires accurate, detailed and up-to-the-minute records. Historically your equipment is down 5 percent. A lime kiln is a 300-foot steel tube that is lined with brick. We want our candy, soda, and desserts now; we dont care if we gain weight later. Our first facility management strategy for reducing operating costs requires long-term thinking. A life-cycle cost analysis can also help with material selection. This means that they have to get rid of their future talent. At IDCON, we understand the pressure you face trying to build a reliable plant. Wood naturally grays, and Corten Steel develops a patina. Our focus remains the same to make it as easy as possible for you to navigate the latest news and offer critical details The good news is that the two go hand-in-hand you just have to start at the right end. Hidden costs such as the inefficient use of labor, materials, poor planning and poor preventive maintenance are widely accepted, and the effects are poorly understood in industry. Tokyo-based Gitai just closed a 4 Grha Prodia is also able to demonstrate lower operating costs than a regular building, with 63 percent less water usage and 53 percent less electricity usage. Whats the bottom-line in cutting maintenance costs? The information contained in this article is intended for general information purposes only and is based on information available as of the initial date of publication. Qlair easily connects to your Building Automation System to track and monitor your indoor environment and HVAC performance. Jan 10, 2023 | 2 min read Shaping Energy Efficiency: Nemetschek Group Brand Spacewell Helps Tackle the Energy Crisis Munich, December 1, 2022 The Nemetschek Group, a leading global provider of software for the digital transformation in the construction and media industries, is driving a Read more Dec 2, 2022 | 5 min read Implementing a preventive maintenance plan has been proven to: You can use a predictive analytics platform like qlair to analyze and monitor the data associated with your HVAC system. Contact our team to take control of your indoor spaces. Why? our innate desire to be in and around nature. According to the study, initial costsincluding the cost of design and constructiononly account for 2% of an owners total spending over 30 years. Likewise, a pump that pumps room temperature water wears differently than one that pumps bitumen in the oil sands. How much does it cost for a plant to have 500 misaligned pumps? Insurance is often the single largest Your design team should have a thorough understanding of their needs and provide a customized solution. For example, condition monitoring using vibration analysis (VA) is useless unless the problems found are planned, then scheduled, then the bearing is changed. Strategically investing in energy-efficient systems, durable materials, and strategies that improve occupant well-being leads to measurable returns.