Optimising occupation costs

When revenue and profits are rising, property operations costs are rarely subjected to in-depth scrutiny. But when increasing the bottom line relies more heavily on reducing cost than increasing sales, every cost line receives increased focus.

Looking with fresh eyes at the way you occupy and provide service to your buildings can yield significant benefits, both in terms of service quality and cost.  On average, moving from an in-house to outsourced facilities management solution can deliver costs savings in the region of 25 percent and not be detrimental to the service that is received.

What can I do?
The costs of occupying business properties are many and varied, but there are a number of steps you can take that help to ensure that you have your property and facilities management costs fully optimised. Considering the following areas provides practical steps for reviewing your current position and might indicate areas where expenditure could be challenged.

Do I know exactly how much my properties cost me to occupy?
If you can answer ‘yes’ to this question then you are well on the way to understanding if and how improvements could be made. Look out for property operational costs that can often be hidden within a multitude of budgets and cost centres. Unearthing these establishes a true cost of operation.

Am I using space efficiently?
Space can be a luxury. Every business property needs to provide value – ensuring that space is being used to its optimum is vitally important. The changing economic landscape means that organisations have to be flexible and a review of business processes can identify changes that might produce opportunities to dispose of or sub-let space. Making it work for you.

What services do I need?
The services required within a building are many, and the level of service provision can vary widely depending upon the location and use of the building. Scrutinising the services that are currently being delivered can identify areas that are perhaps not delivered effectively, could be scaled back or are maybe not required at all.

Am I getting a good deal?
Once you have established the services that are actually required, the price that is paid for those services can vary widely. Specifying and purchasing the correct service level is not straightforward, seeking experience in this field is worthwhile for establishing that the right balance of service against cost is being achieved.

Have I optimised my rates payments?
Business rates are calculated on space that ‘adds value’ to a business. There are circumstances whereby rates already paid out can be claimed back – for instance, if full or partial refurbishment work has been undertaken or if a change in requirements has meant that part of the property is now not used.

How do I know I’m getting value from the landlord?
Service charge guidelines require that it covers only the cost of those services that the tenants receive benefit from. Close attention should be given to service charge bills as they sometimes include elements that the landlord is not entitled to charge for and occasionally for items that don’t even exist.

Joined-up thinking?
Depending upon the maturity of the organisation and the skills contained within it, the property and facilities management functions may be departments that act seamlessly as one unit, or they may barely even know of each other’s existence.

By ensuring that your organisation’s requirements for property in the short, medium and longer-terms are shared with the facilities management function, optimum use of resources can be secured.

Gerry Askew is the facilities manager director at SGP Property & Facilities Management