You can’t turn anywhere without hearing something about data, and its growing importance to companies in every sector. For many functional areas, data capture, analysis and FM reporting has long been an inherent part of the job. But for others, moving to more of a data-centric mindset is somewhat new.
Whether the push has come from the top, via the CFO, or from the field, facilities management is one of those functions that’s been moving aggressively to use data to improve business decisions, cut costs and improve performance. There are a number of operational metrics that facilities managers use to improve the quality of services they deliver. But more FMs are now working closely with their CFO to track, analyze and make decisions based on a number of key financial measures from their facilities management program.
One metric that increases financial visibility for both FMs and CFOs is Actual Facilities Costs vs Budgets. While not as widely used as it should be, this metric is cited by more and more of our customers as one that’s had a positive impact on their businesses.
What Does This Financial Metric Highlight About Facilities Management?
This type of data shows how the repair & maintenance costs you’ve incurred compare to what’s been budgeted. Best practices make this data available on a monthly basis, as well as sorted by trade, region, category, location, etc. The more granular you can be with you costs, the more actionable the data will be in your analysis.
Here’s an example detailing, per market, what’s been incurred, what’s been invoiced and what’s been budgeted, for a given time period.
How CFOs and Facilities Managers Make Smarter Decisions
This is one of the most crucial metrics with respect to your financial controls and planning. With this information, both you and your CFO can stay on top of facilities costs and know exactly where you stand. It will let you know if your department’s spending as planned or under/over budget.
Importantly, only with this type of data can you be in a position to proactively alert management and your finance colleagues that there may be a need for additional funds (e.g due to unforeseen equipment damages) or that due to operational efficiencies, there are unused funds that become available and can be shifted to other priorities.
“We used to set budgets once a year, and then wait months after the year’s close to see how our expenses matched up at any level of detail. After we started tracking costs across our different trades and locations to our budget, we could quickly see where the problems were before things got out of control. Tracking this data and getting ahead of what was happening really eliminated a lot of painful year-end discussions!”
– Area Facilities Operation Manager, National Consumer Electronics Company
With ready access to this Cost vs. Budget metric, you can also determine what geographies or trades are under/over budget, identify potential problems and address them accordingly. Only with this type of data and analytics can you properly discuss with your CFO how best to plan and budget for the next period at the requisite level of detail.
This is one of a number of key metrics for facilities management and finance professionals. To learn more about the numbers you should be tracking for your CFO, download our free ebook, 8 Financial Reports Every Facilities Manager Needs (and Every CFO Loves), today!