Managers Discuss Strategies for Savvy Specification
By Chris Matt, Managing Editor - Print & E-Media - May 2010 - Maintenance Solutions Roundtables
*Tim Woodley, Director of Operations, West Linn-Wilsonville School District, West Linn, Ore.
*Holly Mussatti, Assistant Director of Facilities Operations, American University, Washington, D.C.
*Vassie Hollamon, Associate Director, Operations and Maintenance, University of Maryland, Baltimore
Making smart buying decisions is a goal for every maintenance and engineering manager, and that objective will not change. But the strategies facility professionals use to achieve that goal when specifying maintenance, repair, and operations products for commercial and institutional facilities vary significantly. Three managers discuss their approaches for ensuring buying decisions align with their organizations' operational objectives and financial health.
Question: How do you ensure product information is credible, reliable and accurate?
WOODLEY: I'm a director for a public school. One of the things we always say is, "We never practice anything on our facilities or our kids." We want tried-and-true products that have a track record and are safe and high-quality, as well as those things that fit with our previous purchasing strategies. We want to see something that has a track record or a recommendation from someone else. Suppliers can give us all kinds of product data and advertisements, but if we get supporting evidence from users or even third-party assessments, it carries a whole lot more weight.
MUSSATTI: It behooves us to do additional research on the (manufacturer or service provider), and if there is a new product or service, to check with our peers or other resources we have to make sure (the manufacturers) are valid and they do have a good product.
HOLLAMON: On many occasions, we have to look for other individuals or organizations that have used the product. We look for independent certifications. Has there been a third-party validation? Oftentimes, we will put it to the test ourselves. Before we make a long-term, large-scale commitment, we want to bring a product in and test-drive it.
Question: How has the recent economic turmoil affected your buying decisions?
HOLLAMON: Like every other state government, our budget has been challenged, and there have been reductions. However, being in the operations and maintenance business and recognizing that our campus is largely a medical research campus, we don't have the option of not doing maintenance work or making the repairs happen. To a great extent, we have continued buying materials, services and supplies. What (the turmoil) has caused us to do is make sure that we are buying the right products and that we are acquiring the right technology that can take us down the road as far as it possibly can. While the business of my campus is experimentation and research, that's not my job. My job is to enable that research through rock-solid, reliable maintenance and operations. We do that by making sure we purchase the right materials to get the job done right the first time so we don't have to go back on it. Our focus has not been reducing purchasing, per se, but rather reducing the likelihood that we're going to make an error in that judgment.
WOODLEY: We passed a school bond a year ago for $100 million. We've got that money, and, of course, what you want to do with it is buy stuff. The sooner the better because the need is great. I can't say that we've been affected in terms of putting off buying decisions — we've accelerated that. But there's more scrutiny at the public level about what we are buying. There's some expectation — I don't know if this is fair or even accurate — that pricing should have gone down (as the economy faltered). Therefore, (some officials) think you should get $110 worth of stuff for $90. But that's not the case.
MUSSATTI: We've been fortunate in that we have a two-year budget cycle. We've weathered this fairly well because our budget was OK. What we have done is try to look for value using our material-supply department and various contracts. We do a lot more bid work so that we are getting a good value. We've found that people are pretty competitive out there, and things that were expensive a few years ago are less expensive now.
Question: How much do you consider life-cycle costs during product specification?
MUSSATTI: Whenever we're using a new product or new service, we try to look beyond the initial outlay because we know there are hidden costs. One of the things we ask the designers, builders, or suppliers is to give us (a description of) those fees so that we can take a look and make a decision based upon that.
WOODLEY: I think (life-cycle costs) outrank the initial cost. Like most public agencies, we're strapped for enough people and the hours to get work done. First cost is important, but quality of product is more important than how much it costs to start with. Life cycle is critical. We'll take something that will last longer.
HOLLAMON: They're definitely considered. They're sometimes trumped by cash, or a lack thereof. But we always sit down and try to understand what is going to deliver the lowest cost consistent with the quality that's required over the life of the initiative.
Question: What methods do you use to determine life-cycle costs?
HOLLAMON: The level and depth of analysis really depends on the dollar value we're looking at and the impact on campus operations. Clearly, as the dollar signs get bigger, the depth of the analysis increases. It is not uncommon to use a simple return-on-investment (analysis). We use net-present value as another tool to understand the life-cycle cost.
WOODLEY: For systems, we rely a lot on our engineers. Whether it's a boiler system, an air-handling system, and even lighting, there's some weak link in the whole thing. We want to have some technical expertise to help us. We work with our engineers, our architects and others to determine what works best for us.
MUSSATTI: One of the things we do is, we have historic costs that we keep. We have a pretty good idea of what similar technologies (cost) before a change or enhancement. Then we take a look and make sure those costs are real so that we are trying to achieve what we thought the life cycle would be.
Question: What information do you gather to cost-justify purchases?
WOODLEY: I need second- and third-party recommendations. Of course, there are the specifications, and our board and others expect us to write the specs and do the background on them. I will need written or verbal recommendations for those who might use (the product), including our craftsmen that may be engaged in maintaining it in the future or helping to install it. We have a select group of general contractors that we talk with a lot that are willing to give their opinions about stuff.
MUSSATTI: For me to look at whether or not a new type of filter is feasible, I'll have to look at all of the aspects that go into it, whether that's how often it has to be changed and whether or not the life expectancy of it actually works out. But when it comes to a project that is bigger, typically (the cost considerations) would have been worked up during the design by the engineering team. They would have presented that to us so we could make an informed decision.
HOLLAMON: I have to understand what my present costs are and not just superficially. (For example), it is the difference between the acquisition of the air filter and the cost of the air filter installed. I have to add labor into it and look at it more holistically than just the simple cost of the product. We're often challenged to review all of those components. As the number of variables goes up, the complexity of the analysis goes up with it.
Question: What role do vendors play in making buying decisions?
MUSSATTI: We have pretty good, collaborative relationships with our vendors and suppliers. They've been providing information to the front-line staff and can help us with finding solutions to various problems. We do have to be careful, and we have to make sure (products) are comparable from multiple vendors.
HOLLAMON: They play a very strong role. I come to work, and I'm pretty myopic. I have a job that I have to get done, and there always seems to be not enough hours in the day. So I rely on vendors to bring me information and share it with me. Think of a dartboard. If I'm standing in the middle of it, there are tiers or rings of vendors. There are those who I already do business with and I'm already familiar with who are closest to me. Because they understand my operations better than most, they often will bring me thoughts and ideas that fit my organization. Then, as you move toward the outer rings of this dartboard, you get vendors who really don't know my operations and don't know what I'm up against.
WOODLEY: We have partnerships with vendors. Our interest from them — and only they can speak to this — is (looking at) what we can expect from them during and after the sale. Is there a warranty? What is it? How do you view those? How do you honor it? What kind of people do you have that are available that can do warranty-type work. How does your processing work? Your payments? Your invoicing? Can you work with our system?
Question: With whom do you consult when making purchasing decisions?
HOLLAMON: We try to have a broad cross-section of the organization taking a look at things. A mechanic who has to install it or maintain it is the one who is closest to the issue, so I will start with the mechanic. I will move through to the shop supervisor, the assistant director for the particular discipline — electrical, mechanical, structural — myself, and our procurement office. It really depends on the scale of the conversation. If we're talking lots of dollars, more people will be involved.
MUSSATTI: I have a contract coordinator who's very good at specifications, design and drawing reviews, so that's a huge help to me. We also have some design guidelines, and we look to that for products that meet the American University requirements. (Front-line technicians') input for what I do is essential because they are the ones who have to deal with it every day. It doesn't do me any good to put in a product if we take it out of service because nobody knows how it functions.
WOODLEY: (I consult) other operators of public buildings and other school district managers. Our Oregon School Facilities Management Association has a pretty robust chat system, so you can throw out a question, the whole state hears it, and you'll get comments back. That's very powerful. At some point, we'll go talk to the vendor. We'll do our due diligence first, and then we'll engage with them.
Question: What role does sustainability play in buying decisions?
MUSSATTI: We have gone aggressively into the sustainability frontier with a deadline of being carbon-neutral by 2020. It is first and foremost in our decisions right now. If there's a choice of two products and one of them is a sustainable product — even though it costs more — we might choose it.
WOODLEY: Sustainability and green are en vogue. Decision makers, policy makers and public agencies are all about this (idea). They want to get on the bandwagon and satisfy their patrons and constituents that they're doing the right thing. But here's the difficulty: When it comes to products that boast themselves as being green and sustainable, they're often new. Not only new products but new technologies. It's very difficult for us to assess claims and the value of the claim. Finding a track record for a lot of those products is impossible.
HOLLAMON: Sustainability has become a discussed topic, but we have not yet had the occasion where environmental green has trumped cash green. The topic of sustainability and the impact of our decisions on the sustainable position of the university are routinely discussed. As things like the cost of photovoltaic arrays drop, at some point we will reach a threshold where we can take some of these thoughts and ideas off the shelf and implement them.