Professional Development: Maintenance In A Tough Economy

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By Rick Stathis
Published in the May 2009 issue of
Today’s Facility Manager

When the economy is slow and revenues are down, some facilities professionals have a tendency to postpone maintenance in anticipation of more positive cash flow. This tendency, although completely understandable, is a mistake.

Some professionals will evaluate their sites and apply first aid by essentially putting a band-aid on the problem, repairing just enough to get by with a minimum of expense. The long- and short-term ramifications of this practice justify exploration.

The band-aid fix does just that; it repairs a symptom temporarily while everyone hopes it will hold together until it can be fixed properly at another time off in the distant (or not so distant) future. This approach works quickly to address the issue, with minimal resources expended.

However, repair services and material costs do not decline over time; in fact, they increase. Businesses increase their margins to offset inflation, higher fuel costs, wage hikes, or some other cost suppliers will incorporate into their cost structures.

Facility managers (fms) should consider this example of a parking lot that requires resurfacing. Over time, temporary patch repairs have been installed. However, the facility is located in the Northeast (complete with all the freeze and thaw cycles), and the surface has degraded where it needs to be completely resurfaced. The paving contractors provide an estimate of $1.00 per square foot, and the parking lot is 200,000 square feet. The repair will require removal of the old surface, new surface installation, and re-striping of the parking lot. The low estimate is $200,000.

The scope of work and analysis break down the project accordingly:

  1. The parking lot will be divided into sections, so as not to inhibit traffic flow.
  2. The time estimate for the work is four weeks.
  3. All permits will be the responsibility of the contractor.
  4. The contractor will be paid as each section is completed. The last payment will be made 30 days after the completion of the job in case any areas need to be repaved.
  5. A five year warranty will be included in the cost.

Now that the parking lot is brand new, it is realistic to expect it will not need to be replaced again for another 10 years, given established weather conditions and use. Furthermore, there is also a five year warranty that promises repairs will be made if need be at no cost to the client.

Now here is another example of what happens when the work in the same parking lot is deferred, due to an economic slowdown. In the interim, the cost for the same effort has increased 30% based on higher fuel, labor, materials, permit costs, and profit margins. The time frame remains the same.

Analysis for the second option examines the project in the following way:

  1. The parking lot will be divided into sections, so as not to inhibit traffic flow.
  2. The estimate for the work to be completed is four weeks.
  3. All permits will be the responsibility of the contractor.
  4. The contractor will be paid as each section is completed, presenting an invoice for $57,500. The last draw will be paid 30 days after the completion of the job in case any areas need to be repaved.
  5. A five year warranty is included in the cost.

It is immediately evident that delaying the resurfacing of the parking lot will cost $60,000 more for the same task. Therefore, fms can conclude that money is saved in the long run by doing the work in the year it is required, instead of delaying.

There are also examples where a critical piece of equipment fails due to lack of scheduled maintenance. Instead, the decision is made to delay timely maintenance to the point where it becomes critical. In the end, the same work could require additional expediting fees for the parts, emergency service call costs, and an hourly overtime rate to fix the problem.

This strategy may be justified in the short-term, but over time, it will leave the facilities department with a Capital Recovery Budget of increased magnitude. It also raises the question regarding timely repairs and issues of maintenance. Naturally, it is much smarter to be proactive with major maintenance projects rather than wait until after something reaches complete failure status that can have an impact on business operations.

While it can be argued that the fm has the responsibility of communicating the problems to management, management must be responsible to complete the required tasks, in whole or in part, and authorize the necessary funding.

There are a number of ways to allocate costs in different quarters or fund a facility account to be managed by the fm. It then falls to the fm to provide accurate work scopes and institute an effective bid process to ensure the lowest cost impact to the company.

But the bottom line remains the same; multiple band-aids only make the problem worse over time. And when things get worse, they become more expensive to fix in the long run.

Stathis is based in Dallas, TX and has worked in facility management for 15 years. His most recent position was that of director of facilities for a national entertainment venue. Stathis also offers independent facility consulting.

To discuss some of your experiences in real time, come to FacilityBlog; to comment on this article, send an e-mail to [email protected]; for past Professional Development columns, visit this link.

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