Budgeting is a big part of a facility manager’s job. FMs manage a significant portion of their company’s costs, and the budget is incredibly important to the organization. This is especially true when it comes to figuring out how much you’ve spent over the past year and how much you’re likely to spend next year. Although the annual budget process is often a tedious and time consuming job, there are a few techniques and tools at your disposal to make the task a little easier.
Analyze past financial data.
Knowing what was actually spent at your facility in the last year—and years prior—is necessary to develop future annual budgets. Whether you are doing a budget from scratch or simply adjusting last year’s budget, you’ll need historical details to help you. This type of data includes not only what was spent, but why and when.
Usually, a report from your accounting or finance staff is a good place to start. It’s a good idea to look through this with the person who wrote it to see why they budgeted for certain things and when it was spent. This will give you a better idea of what to expect for the upcoming year.
Assess how this year’s costs may be different from last year’s.
When budgeting for subsequent years, you need an idea of what’s coming up for the company and what changes might have an impact on your facilities Management budget. This is especially relevant with aspects that will fall within your responsibility and will be outside of your jurisdiction. Additionally, if other department’s activities have an impact on your budget, you’ll need their information as well. This ranges from activity within the company that drives costs to annual salary/wage increases you need to build in to your staffing costs.
Before you start your next budget cycle, be sure to make a comprehensive list of what you need to know and start asking other departments for this information. This way you’ll have plenty of time once that end-of-the-year deadline starts looming.
Make educated guesses about potential costs that will impact your budget.
Sometimes you have to make decisions about activities or costs that may impact your facility management budget without being 100% sure they’ll happen. To do this, list those potential items and a range of possibilities for each one. What is the likelihood and what may be the minimum or maximum costs? Are there any risks associated with either outcome?
Once you do this with everything, you can decide what to do with all of the upcoming uncertainties. Sometimes, the combined results give you a budget you can live with since some will come in high and others will come in low. Be sure you document your assumptions.
[ Related: Best Practices for Facility Management in 2019 ]
Ask other staff members about their own department’s budgets.
If you have to make decisions about your facilities budget based on measurements your staff has prepared related to their individual area of responsibilities, take a look at their reports. Ask them about their reasons for compiling previous budgets, and ask them how they went about making those decisions. Make sure the budgets are built on solid information and reasonable assumptions. Because your organization’s departments are all intertwined, doing so will help you make informed decisions about your own facilities management budget.
Once you’ve completed a rough draft of the budget, analyze and fine tune it until you’re satisfied it’s accurate.
Since your facilities budget will have several components, you’ll need to analyze and fine tune every detail. Take a look at each item and see if it can be reduced, refined or otherwise changed to be more accurate. For instance, if you have other revenue—such as paid parking—that offsets expenses, you might be getting a false number when you look at the bottom line. Under-budgeting an item can also cause problems, forcing you to either exceed your budget or cut something you don’t want to cut to bring it back in line.
When it gets down to it, budgeting is a critical part of any facility manager’s job. While it can be stressful, using these techniques—and starting well before the deadline—will make things easier. Utilizing a data management tool like SmartCSM can also be helpful, especially if you’re working for a large organization or global company. For more facility management tips and tools, visit our other blogs.