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Justify Funding By Showing Risks Of Delay On Facility Projects

October 18, 2013 - Facilities Management

Today's tip from Building Operating Management: Facility managers can justify funding by showing the risks of delay on facility projects.

For an out-of-budget-cycle project funding proposal, presenting a feasible risk/reward — or put another way, benefit of the project versus cost of doing nothing — is the key to success. There are as many ways to show risk/reward as there are project proposals. So facility managers, based on the relationship they've established with their executives, must determine what resonates the most. But some general rules do apply, ranging from making the case from the risks of doing nothing to the black-and-white financial figures.

For one, poor infrastructure can have a negative effect on how the public perceives an organization. Tim Pennigar, project manager, engineering and operations, Duke University Health Systems, says that because Duke University Health Systems get a lot of funding for research, a major component of his proposals is showing how catastrophic it would be to have a failure in, say, a roof over a research facility. Donors may not be so willing to contribute in the future, and Duke University Health Systems loses some of its prestige as a research institution.

"Our job is to keep buildings out of the way," says Pennigar. "If we are out there problem-solving, we're not useful. Our job needs to be problem-avoiders. It's one thing to lose a roof on a warehouse, it's another to lose one over a research facility."

Still, showing the risk to losing inventory in a warehouse is another way to calculate risk. "Point out how much the inventory in the warehouse is worth," says Alan Whitson, president, Corporate Realty, Design & Management Institute. "Then point out how much the inventory in the warehouse is worth if it gets wet." Along those lines, Bob Holesko, vice president of facilities for HEI Hotels and Resorts, says a key component of his proposals is showing that the buildings themselves are valuable assets. "We need to protect the building as an investment," he says.

Other risks of doing nothing, like increased insurance premiums — say, for not installing sprinklers, says Jim Cooke, national facilities operations manager for Toyota Motor Sales, USA — and the cost of business disruption are also a hugely important pieces of the risk calculation. "We can demonstrate the cost to the organization if we lose business," says John Balzer, vice president, facility planning and development for Froedtert Hospital and Community Health. "If we're out of service, people will seek other options and you may have lost a customer for good."

Be careful not to use the risks of doing nothing as scare tactics, say experts. It's important that these risks are rooted in reality. "You don't want to be the boy who cries wolf," says Holesko.


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