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Make Sure Money Saving Projects Actually Save Money
facility management, budgeting, financial analysis, top management April 9, 2008
I’m Ed Sullivan, editor of Building Operating Management magazine. Today’s topic is the importance of ensuring that real estate initiatives designed to save money don’t have the opposite effect.
Most facility executives are aware of the need to take a hard look at the financial implications of any facility investment. But it’s important to remember to approach real estate cost cutting measures in the same frame of mind. Even though cost control is an important way that facility executives can add value, the supposed benefits of cost reduction require financial scrutiny just as facility investments do. A misunderstanding about facility costs can lead corporations to fall prey to false economics. For example, a lower rental rate that requires a longer lease term may eventually cost the company more if the company vacates the space well before the end of the lease. And consolidating call centers may have a much smaller impact on expenses that anticipated if management doesn’t understand that the facility accounts for only a small percentage of overall call center costs.