Show Bang, Earn Bucks

By Edward Sullivan, Editor  

One frustration of being a facility executive is the need to explain the obvious. Isn’t it evident that energy upgrades save money, or that a roof can’t be patched forever? Worse, facility executives in many organizations find that these arguments seem to have no effect at budget time.

When some top executives look at facilities during budget time, they see enormous cost and few bottom-line benefits. “We can seem to be a black hole,” says Joe Nugent, director of maintenance and operations for Cabrillo College. “It looks like money’s just pouring into it and no good results are coming back.” No wonder facilities rarely get a fair slice of the funding pie.

Increasingly, facility executives are relying on metrics to quantify the bang an organization gets for its buck.

USAA Realty Co. invested about $100,000 in a lighting retrofit that included occupancy sensors and more energy-efficient exit signs. Those measures, along with a money-saving energy procurement contract, boosted the value of the building by $1.5 million when it was sold, says Brenna Walraven, executive director, national property management.

Numbers like those make it clear that money spent on energy improvements adds significant value to a building. But too often facility executives don’t have the data to tell the story.

Facility Condition Index

When Ronald Nayler arrived at Northwestern University, the school’s deferred maintenance backlog was growing every year.

“The escalation on the backlog was more than we were spending,” says Nayler, associate vice president for facilities management. One problem was that the university had no metric to show the size of the backlog.

Nayler used a detailed assessment of all campus buildings to develop a facility condition index. The assessment quantified the deferred maintenance backlog; that number was divided by the replacement cost of the buildings to calculate the facility condition index.

The software used to produce the index is dynamic, says Nayler. It not only shows how large the backlog is, but also lets Nayler look into the future to demonstrate to the board of trustees how different levels of funding will affect the physical environment.

Armed with his new metrics, Nayler convinced the school’s administration to approve a significant increase in funding. “Without the facility condition index, it’s just talk. You need a dynamic metric to make a compelling case for spending scarce resources.”

When organizations are making financial decisions, cost-related measures aren’t the only metrics that have relevance. Employee satisfaction surveys, for example, can help facility executives respond to pressure to cut facility services by identifying areas where cuts can be made or by demonstrating why the budget should not be trimmed.

Some organizations are trying to show the bottom-line value of facilities in other ways. Microsoft wants to show the impact of facilities on revenue. The question, says Randy Radke, senior IT manager, real estate and facilities, Microsoft, is whether the characteristics of a facility or the facility services provided to occupants can boost revenue. “We’re trying to get revenue down to a site level and then compare facilities.”

The health care industry has gone furthest in acknowledging the economic contribution of facilities in areas other than cost control.

The most ambitious attempt to link facilities to the mission of health care organizations is evidence-based design. The strategy is based on research showing that specific designs can produce measurable results.

Lakeland Health and Healing is using evidence-based design in the construction of a new patient pavilion, says Mike Kastner, director of building services and construction management. Among the results: larger windows for patient rooms, shorter travel distances for nurses and larger patient rooms. The next step is to measure the impact of the design on specific outcomes — things like infection rates, length of stay, patient falls and market share, says Russell Furst, manager of biomedical engineering, who is driving the effort.

The Big Picture

As important as metrics are, they don’t tell the whole story. With only 13 inches of rainfall a year, water is a big issue for Santa Clara University. Still, Joe Sugg, assistant vice president, university operations, faced a tough decision about installing urinals that don’t use water.

The change would save 6 million gallons of water each year for the campus. That’s an impressive number, but it wasn’t the real criteria for making the change.

As a percentage of water used on campus, Sugg says, “It was literally a drop in the bucket.”

In fact, metrics from Sugg’s work-order tracking system showed that the real savings for the urinals would come from reduced maintenance. Hard water in the area made flush valves expensive to maintain, and the new urinals would eliminate overflow cleanups.

In the end, Sugg decided to proceed with the upgrade but his decision was not based strictly on savings. Rather, the project was approved because it provided social and environmental benefits as well as economic gains — the three criteria by which the university judges all sustainable initiatives.


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  posted on 4/1/2006   Article Use Policy

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