There are multiple ways to collect statistics and insights in your facilities department. We all know the usual suspects: customer satisfaction rates, maintenance costs, quality KPI's… But we rarely speak about more strategic numbers that provide you with so much insight about your Facility department and also allow you to compare with others. That's why we'll show you 4 essential key figures that help you gain insights in your facilities department costs right away and how this will provide you with important input for next steps to take. Because at the end of the day, if you're not using these insights to take action, they are still essentially useless.
1. Worker productivity
The first one is workers productivity. Over the last few years, we've seen that more and more organizations realize the impact of Facilities Management on the productivity of workers. Let me give you some examples of how every Facility Manager can help productivity to increase. Due to noise reduction, people are better able to concentrate, and this can lead to a productivity increase of 20%. Or how about an overbooking of a meeting room. Sounds like a small example, but if you're working for a large organization, it can have a huge impact.
Let's do the math
Let's do some quick math and see the result of this example. An average of 15 minutes is lost due to conference room overbooking. This time may equate to $5 of revenue lost per employee. If four people can't find a conference room, it costs the business $20. Now, say this happens 10 times per week. That's $200 weekly and as much as $800 a month in lost revenue from stunted productivity. With having a proper meeting room system that is handled by you, as a facility manager, we can have this kind of an impact on the productivity. I'm also telling you this because as Facility Managers, we often don't look at numbers like this and it's important to be aware.
How to quantify productivity?
We always advise organizations that we work with, to be very vocal about how they add value with the work that they do. Even though more and more management teams recognize this added value, we also still see many facility departments that are struggling with the image of being a cost center. To avoid that, we need proof! We need numbers, so that further explanation is no longer necessary. Sounds like music to your ears, right?
It's important to point out that the way in which you can retrieve productivity rates can vary per organization. Because it depends on the core business how you will be able to measure productivity. For example: if you work for a large factory, the productivity of factory workers may be measured by the number of human errors for example. If you work for a bank, the productivity of the financial administrator will be measured by number of invoices processed for example. Even though these processes and therefore productivity rates, will be quite different, there is a proven method that we use in daily practice to measure the impact on worker productivity by your department. It's a three-step process:
- Measure worker productivity with quantitative figures. In an ideal situation: measure the worker productivity of your customer group. For example: the sales agents on the third floor. You may be able to measure their productivity by the number of clients they sign in a week.
- Change 1 element in the workplace. There are many things an FM can do to increase productivity. For example: improve the air quality, which can increase productivity by 15%. Other examples: paint the walls in vibrant colors, create more concentration booths or change the floor-layout.
- Measure worker productivity for this same group again.
Of course this is never 100% bulletproof because of external influences, but this is us getting REALLY close to the facility manager's influence on productivity and from experience we can tell you that it can have a huge impact.
2. Costs per workplace
Then we move on to the second statistic, one that we love: the costs per workplace. For those who haven't heard about this before, there is an international European standard EN-15221-4 that is all about costs per workplace and how you can measure this. The standard consists of 4 categories, which in total can measure the total costs per workplace. The categories are building & infrastructure, people & organization, IT and management. By measuring these data year after year, you can also see the increase or decrease of a certain category. In 2019 the average cost per workplace for Europe was €9.763, that is comparable with $11.500 dollar per year per workplace. And if you then look at the different categories, we see that 66% of these costs, are related to building & infrastructure. Followed by IT with 20% of all costs. People & organization comes in third with 10% of the total costs and last but not least, management with 4% of the total costs.
So, congrats! You now finally know your costs per workplace and a breakdown of the four categories. Now what? Well, this information is highly valuable to perform a benchmark! How else do you know whether you are spending too much or too little on a workplace in general, or for a specific service? In our opinion, having complete insight into both operational and management costs is the secret behind achieving cost savings. It is a missed opportunity not to regularly look into the purchasing contracts for facility services.
3. Costs per square meter
Moving on to the third statistic: this one seems quite the same as number 2, but there is definitely is difference. I'm talking about facility management costs per square meter. Not looking at a desk or an employee but taking a look at the actual costs per square meter. This is also a very valuable statistic that can help you to benchmark your department with others and see how you compare to other facility departments in the field. The costs per square meter is based on Total Cost of ownership. This includes staff, purchased goods and all assets. We distinguish lettable floorspace from gross floorspace. It depends on your real estate portfolio which metric you'd like to use. Gross floorspace refers to all square meters in the building including walls, etc. You probably want to use this metric if you own the building. If you lease the building, you probably want to use the lettable floorspace because this only includes the square meters that you actually rent. To give you a frame of reference, the costs per square meters in The Netherlands in 2019 were at an average of €490 for lettable floor space. This is the same as about $580 dollars per square meter.
4. Lifecycle costs
Okay, so now it's time to take a look at the fourth statistic to gain more insights in your facilities costs: lifecycle costs. Asset management is often also our responsibility as facility managers. And every asset has its own lifespan. However, what we see with many facility managers is that we tend to focus on purchase value alone. Wow, we get a 15% discount on our new asset, cheers to that! But by only focusing on purchase value, you may forget that the costs of this asset may actually be much higher during their entire lifecycle and the discount wasn't really a discount after all. So, if your goal as a facility department is to have an approach that is focused on the long-term, which is usually a more strategic and less ad-hoc approach, it's essential to look at the lifecycle costs in total.
Another benefit of knowing the lifecycle of your assets, no matter if the asset is big or small, is that it will provide you with insights on costs that you will likely face at some point down the line. Whether it is repairs, maintenance or maybe even replacement after year X. And so, you can actually take this into account when setting up your budgets for the next couple of years!
Let's take a look at an example to understand how this plays out in practice. Take a simple example: a copy machine. Buying a new one will cost you $10,000 and may last a decade. Or, you can repair your current 5-year-old model for $2,000 and get another two years out of it. What is the actual cheaper option? Understanding costs, evaluating them and understanding the return on investments based on the right statistics leads to informed decision-making about critical assets. Therefore, you can act more pro-actively instead of reactively.