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From controlling labor costs to managing energy use or softening budget cuts, a metrics program gives facility executives a powerful tool to improve performance — provided a metric doesn’t become just another pretty number.
Improving performance means making sure that metrics collected are metrics acted upon, says Robert Gross, principal for facilities management at The Vanguard Group. “You could have everyone in every facility calculating their cost per square foot, but if those costs are not analyzed, then you are collecting meaningless data,” he says. “Part of managing with data means making sure the data is reviewed regularly.”
Vanguard tracks 113 metrics across the departments in its facility management organization, including real estate, design and construction, maintenance and operations, security, food service, transportation and reprographics.
To make the most of the information, Vanguard uses high-level metrics as a starting point. If a number is going in the wrong direction, Gross and his team drill down into data to the smallest level of detail necessary.
When Vanguard measures energy costs, for example, it starts by looking at utility costs in each building. Then it can break the cost into energy-consuming categories, such as lighting. That information can be broken down further, from the type of light fixture to the type of bulb used and where the bulbs are purchased. “It’s a complete drill down from the electric bill to the lowest level of detail you can find,” Gross says. “You manage the detail.”
Facility executives can use the details to think big. Kaiser Permanente is using metrics to address a persistent problem: trying to reduce operating costs by cutting back on maintenance. Because such an approach can reduce the life of equipment, the money saved on maintenance winds up as capital expenditure a few years down the road. “There is so much interplay between the operations and maintenance budget and the capital budget,” says Don King, director of maintenance operations consulting services for Kaiser Permanente. “Unfortunately, they are typically not integrated.”
For each of its facilities, Kaiser has developed metrics for the overall building and for individual building systems. That information is used to create a 10-year capital forecast of what will be needed to maintain the buildings. The assessment also guides ongoing maintenance budgets. The goal is to use the metrics to prevent skimping on maintenance in facilities to save on operational costs.
Metrics can also limit budget cuts, says John Harrod, physical plant director for the University of Wisconsin–Madison. When the university underwent a round of budget cuts several years ago, Harrod had data to show the administration that the department’s projects were good investments for the university. When the budget reductions came, the physical plant department wasn’t hit as hard as it might have been, says Harrod.
When it comes time to cut costs, CFOs need acceptable alternatives, not just worst-case options such as eliminating security guards and receptionists, says Don Sposato, a consultant and retired vice president, project management and engineering services for Becton Dickinson Co. Having financial metrics in place can help a facility executive identify cost-saving tactics that won’t have cause unforeseen headaches down the road. For example, if asked to reduce costs by 5 percent, a facility executive might develop a menu of options that show both the savings and the negative impact each step would have on the facility.
“Presenting viable alternatives when it comes time to cut costs is a challenge,” Sposato says. “Good facility managers find the options.”
How It’s Done: Interpreting High-Level Metrics
Kaiser Permanente’s national facilities services group has developed guidelines for the use of program-wide metrics. The following bullet points highlight some of the recommendations in the guidelines.