Beyond your hunches; smarter ways to control facilities management costs

Dec 21, 2021 12:30:00 PM By Tom Wilcock
Beyond your hunches; smarter ways to control facilities management costs

A good FM may instinctively know how to make cost reductions through effective facilities management. But hunches aren’t enough to systematically and sustainably reduce unnecessary FM spend.  Here are four ways to control facilities management costs by using a CAFM system.

1. Control callout spend

 

Micromanaging contractors is never a good look.  But an FM does still need the ability to monitor and control the amount of money you’re spending on call outs, ideally in real time.

A good CAFM system creates a two way communication channel between contractors and the FM team, so expectations about required work can be clearly set on both sides.

It’s not good for contractor relationships for FM teams to receive unexpected extra invoices once a budget has been agreed on and a job has been done.  Neither is it good for the contractor to have payment denied or their judgement questioned weeks after the event.

The right CAFM will have a contractor portal through which

  • FM can set spend limits on the amount contractors can invoice for a particular job
  • Allow a contractor to request an uplift and get approval for extra work to complete a job

In addition the portal should allow a contractor to record their activities in real time, giving the FM team the evidence they need to approve extra work.  The right CAFM tool will give contractors the ability to add images and videos showing the issues they’re dealing with to help everyone make the right decision about what needs to be done.  No more lengthy phone calls and email exchanges causing hold up and frustration 

With the right CAFM tools we can avoid creating an atmosphere of distrust and suspicion, instead promoting good communication and transparency that increases confidence and trust.

Meanwhile FM teams can control costs in real time and prevent accruals upsetting their budgeting.

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2. Prevent costs for non-services

Are you paying for callouts when SLAs have been missed?  

With a manual facilities management system of invoicing and reporting through email and spreadsheets, it’s hard to understand when contractors are hitting agreed targets around KPIs.  You may have set expectations around service delivery with your contractors but how do you monitor, share and enforce them?

The right facilities management software can help you establish SLAs for service priorities and work order SLA tracking, helping everyone understand when they are meeting expectations - and when they’re not.  

Choosing a contractor portal through which third parties are responding to quotes, recording their time and invoicing will help you incentivise the use of a CAFM, in turn helping you capture service data more accurately.

Once your contractors are using the tools you give them you’ll have a lot more structured data available showing:

  • How much each contractor is billing
  • Time to respond
  • Time to Fix
  • Time to attend
  • First time fix rates

In a good CAFM these stats should be available in tables, graphs and charts that can be generated automatically and sent to you and your contractors, to ensure you always on the same page. 

They can help everyone visualise how they are performing against targets.  They can help you assess and enforce penalties for non-service, or just have the right conversations to ensure performance can improve.

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3. Audit costs

Without data and cost auditing exception rules, auditing the invoices that come in from managing contractors is difficult. And, by the time the invoices have come in, FMs have already committed to pay, anyway. Auditing costs at the exact time they are submitted is the key to maintaining a firm grip on your spending. Ideally, this would happen before the invoices have been sent in the first place.

But doing this manually can take valuable time and energy, and it’s prone to errors.

A good CAFM helps you automate these processes, using AI to prevent and detect billing anomalies so that you can better control your spending.

  • Set spend limits per work order - triggering action when breached
  • Force the contractor to request uplifts to better manage accruals
  • Set your agreed rate cards within the system and auto-bill for callouts and labour in order to give confidence that the billing is accurate
  • Automatically trigger cost audits when the data doesn’t add up e.g. duplicate callout fees, manual rate overrides or when invoiced labour is higher than quoted
  • Ask contractors  to resubmit any costs under query

Industry research claims that it is possible to save between 3–5% of your maintenance cost through automation of this kind.

4. Understand your spend in real time

But if FMs have no centralised system to monitor and manage contractor billing, then you can struggle to effectively analyse spend and implement cost control measures in the way described above. 

And the fact is, too many contractor billing arrangements are ad hoc and disorganised with invoices being sent direct to accounting departments or lying unforwarded and unchecked in busy FM inboxes.

Lack of integration between financial and FM systems can mean double billing, misreporting and overspend.  It can also lead CAFM portals to be underused since contractors have no real financial incentives to use it regularly.  This is turn can lead to a general lack of data with which FM teams can plan and strategise. 

Prioritising integration to allow contractors to submit invoices directly through a contractor portal will be the first step towards a system that can tell you exactly how much you’re spending in real time and with whom.

A good CAFM partner will have off the shelf APIs ready for most accounting packages and they should give you the support you need to set this up quickly and efficiently.

Once this is done you’ll be able to have real time view of spend vs available budget and the means of controlling it:

  • Focus on your CAFM system as a ‘single source of truth’ for you business and contractors
  • Keep contractors engaged with the system by sending notifications when payments are made or billing corrections required
  • Build financial reporting, dashboards, and analysis within your CAFM with confidence
  • Establish consolidated or standalone invoicing processes
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Conclusion 

Relying on gut instinct or micromanagement of FM tasks will only get you so far.  But if you’ve got the right digital tools you won’t need to rely on either. 

An agile solution that allows for simple integration between financial software and your CAFM will bring you all the insight, control and communication tools you need to manage your spending and your partnerships in real time.

win the battle for budget

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