Tricks Of The Trade: Multiple Site MRO
Sanjeev Saini Senior Vice President, Facilities Religare Gurgaon, Haryana, India
AI have to preface my guidance with: facilities management is an extremely complex industry that requires numerous factors to determine the most effective approaches. Similarly, in the financial investment world they say that, “just diversify your investments” is the most common theme, but in no way does it provide holistic effective investment advice. However, I’ll attempt to provide you with a general idea within this theme.Your facilities are just like an investment portfolio that has replacement values moving all the time as construction costs go up (mostly) and down; repair and maintenance costs follow this same curve. This means that basing repair and maintenance costs on today’s construction cost value is key. The primary metrics I like to use for initial rough estimates are: Gross Square Feet (GSF), Current [new construction cost] Replacement Value (CRV), and Deferred Maintenance (DM). The GSF is the facility’s gross square feet measured from outside of the building. CRV varies for each locale, but it refers to the cost to build the same facility today. A general contractor can help with this. DM is a little more complicated because it requires an experienced facility management assessment. Essentially, it is a list of all the major components (roof, HVAC, envelope, flooring, fire alarm, etc.) that are past the proverbial 100,000 mile mark [as with a car] and the cost to replace those entire systems. This has a bearing on the maintenance/repair cost because breakdowns happen more often. How these numbers are used is as follows: Let’s say construction cost to replace a current facility is $125/square foot and that the facility has 50,000 GSF. This equals $6,250,000 (CRV). Annual repair and maintenance cost ranges are 0.75% ($46,875) to 1.5% ($93,750) of the CRV. This includes all materials, contractors, and staff costs. High levels of DM will require 1.5%, and a new facility may get by with 0.75%. Since space is limited here, I’m challenged with including more information. If you would like to see an expanded description, follow this link to another article I wrote on this matter: http://renewal.facilityportfolios.com.
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