Facility Budgeting

Fall is often considered the start of budget season. Many commercial facility property managers wish they could peer into the future around this time. Sometimes budgeting can seem like a wild guess. Property and facility managers want to avoid significant variances in the budget as much as possible. There is nothing worse than starting the new year with a surprise financial hit. A solid understanding of your facility and its mechanical assets is fundamental when budgeting for a new year. Wise facility managers set aside capital for unexpected events, but today the world has fundamentally changed.

The pandemic seems never-ending, and the ongoing ramifications of COVID-19 on facility management will continue for the near future. That list of much-needed repairs and improvements need earmarking now to ensure smooth operations next year.

The first step is to prioritize the budget. Ask, what needs investment first?

Here is where having that facility knowledge and data is of the utmost importance. Here is also where we have found many facility owners and managers have missing pieces of that data. Data that would be instrumental in formulating a budget that avoids significant variances and might even maximize savings.

Know your mechanical assets.

The first step to putting together next year’s budget is to dig deep into the current year’s financials.

  • How much are you spending on your mechanical assets?
  • What are your mechanical assets worth?
  • Is there an asset replacement plan?

It may surprise you to hear that a commercial building’s HVAC assets can be worth as much as several luxury cars. It may also surprise you to hear that these assets have a useful life of fifteen years. These assets also need to be regularly maintained and eventually replaced at the end of their useful life. Just like an automobile requires oil changes, brake replacements, and transmission flushes, mechanical assets have maintenance schedules. Budgeters should always factor Commercial HVAC equipment and lighting maintenance into the annual budget.

You’ll soon find that having the money set aside for your commercial mechanical assets will reduce any downtime caused by HVAC equipment and extend the life of your HVAC units. A little planning will go a long way.