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Budgets are not a pleasant subject to bring up with maintenance and engineering managers these days — or any day, really.
“All I know about funding is that I don’t seem to be able to get enough of it,” says one manager, echoing a sentiment felt throughout the profession.
Even in the best of times, maintenance departments face an uphill battle in trying to convince facility executives to spend anything but the minimum on maintenance — unless a a facility equipment emergency arises that threatens a facility’s operations.
And in especially trying economic times, the task is even tougher. Responding to a series of economic setbacks and the resulting widespread uncertainty, many organizations have reined in spending in the last few years, choosing to focus more on core competencies while leaving other areas to more or less fend for themselves with ever-shrinking resources.
As a result, many managers are rethinking their budget priorities, scaling back their requests, and revisiting the age-old mandate to do more with less.
Just as many managers, though, are pressing ahead with their budget requests, secure in the knowledge that organizations cannot succeed over the long haul with un underfunded maintenance mission. Even these requests, though, are tempered by a better understanding of the financial priorities that many organizations place on maintenance.
“In general, if you have a well-reasoned argument, and can defend your position, and if the stars and the moon align with the company’s finances, then you’re likely to succeed,” says Rich Hertlein, manager of engineering and maintenance at Bethesda North Hospital in Cincinnati.
Even in the best of times, budgeting for maintenance and engineering is rarely an easy task.
“One challenge is getting good benchmarking data and best-practices information from other healthcare facilities to determine how well your facility or department is performing,” says John McKinney, director of facilities management services and safety officer for Middletown (Ohio) Regional Medical Center. “There really is not a well-established national benchmarking or best practices clearinghouse.”
Then there is the challenge of applying outdated budget numbers to new maintenance demands.
“One of the challenges in developing operating and capital budgets is that they are generally outdated and wrong the moment they are implemented,” McKinney says.
The process varies by organization. In some cases, managers receive an accounting projection based on past activity. That approach forces managers to review plans and needs to determine whether the projection even comes close to covering current department operations.
“You can challenge, and with cause, you can change the numbers,” Hertlein says.
In some cases, seasonal considerations drive the changes. For example, Hertlein receives a projection based on the first four to five months of the hospital’s fiscal year, which starts in June.
“But there’s not much snow removal in July and August,” he says. So he has to request an adjustment to cover those costs later in the year.
Perhaps the toughest challenge managers face in budgeting for their departments’ needs over the next year is the economic pressure on organizations to control costs. Even if a manager can gather solid data to cost-justify an expenditure and present a strong case to the right people, organizations with bottom-line struggles still are more likely to invest in areas directly related to generating revenue.
And in cases where managers have been successful in securing funding for a much-needed system upgrade, facility executives are more likely to want to invest in an incremental upgrade, rather than a system overhaul, perceiving that the costs would be lower.
As an example of this thinking, Hertlein offers his hospital’s pneumatic tube system, which carries essential materials — blood samples and prescriptions, among them — throughout the facility. One decision facing the organization is whether to expand the system incrementally as the hospital itself expands, or to overhaul the system completely. Here, the organization must choose between performance and cost.
While the incremental option would cost less, Hertlein says, performance could suffer because the entire system might not adequately support an addition and might be less efficient, forcing hospital personnel to find other options for moving materials around the hospital efficiently.
The overhaul option, while more expensive in the short term, is apt to make the system more efficient for users and therefore might serve the hospital’s needs for a longer period of time.
Rod Leland says he understands both sides of the budget dilemma facing many managers.
As director of facilities services for the Federal Way (Wash.) Public Schools, he is responsible for preparing the $10 million maintenance and operations budget that covers the district’s 34 campuses and 2.5 million square feet of space.
But Leland also is a member of the district’s management team, which is responsible for setting the district’s $140 million annual budget. In effect, Leland has a hand in approving — and cutting — his own department budget. The dual roles gives him a unique perspective on the annual budget dance.
In his department role, Leland says repeated funding shortfalls have led to a short-term approach to maintenance.
“We have become experts at putting Band-Aids on a lot of things,” he says. The department does planned maintenance on critical and some predictive maintenance. But in large part, the limited funds force the department to scale back on building and equipment maintenance.
Each year, Leland says, he dutifully goes through the budgeting process. He gathers data, benchmarks department performance, reviews resources and sets goals. Among the top priorities for the maintenance department is performing proper HVAC maintenance to enhance indoor air quality, as well as lowering energy costs.
But Leland says he understands that, often, such requests must take a back seat to other needs in the district that are more pressing.
More books or cleaner windows? High-tech diagnostic medical equipment or more roof inspections? These are the types of questions that managers increasingly face when the topic turns to budget requests for maintenance and engineering.
Leland boils the issue down to this question: “Am I going to be a team player, or am I going to compete for precious resources?”
While many facility executives might lend an understanding ear to managers’ budget requests, there is little doubt at any level that maintenance more often than not will continue to take a back seat to expenditures related to an organization’s mission.
“We’re competing against spending that generates revenue,” Hertlein says. “Who’s going to win?”
Though no set of data offers everything, managers looking for financial data on key areas of maintenance and engineering in institutional and commercial facilities have a range of resources from which to choose. Here is a sample of the data that is available:
The Association of Higher Education Facilities Officers (APPA) publishes the Comparative Costs and Staffing Report every two years. The survey is a comprehensive collection of facilities-related costs and staffing information for colleges, universities and K-12 schools and districts.
The American Society for Healthcare Engineering (ASHE) offers numerous publications related to hospital engineering and maintenance management.
The Building Owners and Managers Association (BOMA) has published the 2002 Experience Exchange Report. The report compiles financial and operational data gathered from commercial facilities on a range of areas, including repairs, maintenance, utilities and housekeeping.