With rising inflation, possibly confusing but smart technology solutions, and an increase in energy efficiency mandates, facilities managers are increasingly struggling with how to do more with less.
At Facilities Management Advisor’s FM NOW: Smart Buildings virtual summit on November 1, Phil Zito, CEO of the Smart Buildings Academy, was the guest speaker for the keynote session titled “Facilities 2.0: Thriving in an Era of Rising Operational Costs.”
Zito, who is also the host of the Smart Buildings Academy Podcast, has construction, retrofit, and service experience with various projects, including Hudson Yards, Denver International Airport, and the Centers for Disease Control and Prevention (CDC) Level 4 Lab in Atlanta. Additionally, he has dual master’s degrees in information systems and cybersecurity.
Combating Inflation
While inflation is impacting everyone, it’s especially felt by facilities departments. Zito talked to facilities managers from K–12 schools, higher education institutions, and local, state, and federal governmental facilities to understand how they’re most impacted by inflation.
These pressures are ranked from what they consider most to least expensive, with possible ways to save money:
1. Labor costs. With about one to two key staff members nearing retirement in the next year, facilities managers can bring in retired workers as part-time consultants, find full-time replacements, or have a mentorship program. The latter option would be the cheapest.
2. Cost of cash. Interest rates for capital plans for upcoming projects such as expansion, mandated carbon and energy use intensity goals, and retro-commissioning are usually locked in and planned for, so savings are hard to achieve.
3. Cost of goods. The cost of materials includes disposable (like toilet paper and paper towels) and permanent goods. Audit these expenses, and shop around for potential savings.
4. Utility costs. Achieve savings by determining if your facility has a ratchet clause, which means savings could be achieved by lowering peak energy demand. Also, review potential utility rate structures such as flat fees, as well as demand and supplier charges. Finally, determine if your facility is affected by time-of-day use charges, which would make energy cheaper during off-peak hours.
5. Shrinkflation. Shrinkflation, or paying the same price for less quantity, affects those who perform janitorial services and basic facilities services like filters. Purchasing a higher quantity can reduce savings per unit. Additionally, technology can reduce waste in restrooms.
Technological Solutions
Consider technological solutions that could optimize operations and reduce costs, such as a computerized maintenance management system (CMMS), which helps maintenance workers do their jobs more effectively, and physical information security management (PISM) software, which integrates security applications.
“Technology should enable you to monitor, report, and manage your KPIs (key performance indicators) and metrics,” Zito explained, adding that solutions should be based not only on how costly they are to implement but also on how the system will be held accountable to meet the goals you’re looking to achieve, the processes the system supports, and analytics.
However, it’s important that facilities managers only purchase technology that will be embraced by the organization.
“If you can’t get your folks to reliably change filters and your coils on your HVAC (Heating, Ventilation, and Air Conditioning) units are in great disrepair, plugged up, and haven’t been maintained in years, you’re not going to get them to use technological solutions like analytics. Let’s be real, so don’t dump your money on something that culturally your organization is not going to adapt,” Zito noted.
Financing
Organizations looking for financial assistance to meet increasingly higher energy efficiency standards, which could include technological solutions, should consider several options.
Zito explained that nonprofit organizations can benefit from Inflation Reduction Act (IRA) 179 D funds based on energy use intensity, while all types of organizations can benefit from a variety of local, state, and federal grants.
Additionally, utility funding mechanisms provide funds to help organizations install equipment and systems that improve energy efficiency, and Energy Savings Contracting Organizations (ESCO) will do official audits of your site and make recommendations to help you hit a lowered energy use intensity.
Learn More
Also, Zito talked about the importance of staff, system, and process audits, as well as how organizations can implement new processes and technologies. To watch this session in its entirety, click here. For more industry predictions, read “What’s Ahead for FM Costs in 2024?“