Editor's Letter

11/01/2014 | By Chris Olson

A Budgeting Trick of the Eye

Chris Olson, Chief Content Director

For me – and a lot of other people, if polls can be believed – autumn is the most popular season of the year. Crisp air, fall color, the sense of a new beginning if not a new calendar year. What’s not to like?

Only one thing that I can think of – it’s budgeting season.

For the many FM departments viewed as cost centers by their managements, budgeting is an annual battle against deferred maintenance. Departments are traditionally underfunded. Management takes the short-term view and does not spend time calculating the cost of breakdowns or curtailed productivity.

It’s not easy for FMs to get themselves valued as contributors to bottom lines – especially when one meaning of the word maintenance suggests standing still rather than pushing forward to success – an unfortunate connotation when organizations are sporting rose-colored glasses and indulging in dizzying profit projections.

Another disconnect involves the separation between capital and operations/maintenance expenditures. As pointed out in this month’s article on federal energy targets (page 38), the government does take a long view of its facilities and indeed holds them for longer periods than any other building owners. However, the federal government’s budget process does no better job of accounting for lifecycle costs than the commercial sector’s. Federal budgets focus only on first costs for new construction and major retrofits. Funds for operation and maintenance of existing buildings appear on a different budget line. The disconnect means that lifecycle costs are not easily evident to executive decision makers. It’s as though we can’t process both at the same time.

For FMs the solution to the perennial budgeting problem may lie outside the budget numbers themselves, although they can surely try to come up with historical facility data demonstrating the cost of deferred maintenance and the thumbscrew of unfunded fixes in the middle of a budget year. The communication issue is also critical – can FMs persuade management that productive facilities provide a competitive edge that drives long-term profit?

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