Tips to eliminate stress for maintenance budgeting
As the fourth quarter approaches, facility managers are ready to face their maintenance budgets for the coming year. Communicating with property owners about the importance of ongoing maintenance and capital expense planning can be challenging and downright stressful.
Educating the property owner about the importance of your priority projects gets missed the most during budget season. Requesting a sit-down meeting with ownership to go over large projects to ensure that ownership has a solid understanding of the pros, cons and cost implications of not placing a particular project in the coming year’s plans will go a long way.
Keep in mind that the maintenance item that most often gets missed in budgeting is facade restoration. Most buildings already will have a heating, ventilation and air-conditioning, elevator, roof and parking garage capital plan in place, but they rarely have a capital budget for maintaining the building’s facade.
The facade of a building has a useful life and when it comes to the end of that life, it can be a big expense to repair. Facade issues such as cracking, efflorescence, spalling, control joint failure and sealer or caulk failure should be identified and a repair and prevention plan put in place.
Failure to address facade issues in a timely manner can expose the building and tenant spaces to leaks and water damage, which can cause extensive damage and more expensive repairs down the line. Proper facade maintenance will aid in reducing the likelihood of unexpected costs and repairs, plus help to maintain the property’s value and appearance. An anticipatory capital budget can keep ownership aware of the big picture for upcoming facade repairs.
When it comes to buildings that also have a parking garage, the maintenance considerations greatly increase. Maintaining multimillion-dollar parking garages can be a daunting task for building owners and their facility managers. All types of parking structures – the three most common types being double tee precast, conventional and post-tensioned – are subject to deterioration from environmental stressors, wear-and-tear and de-icers tracked in during the winter months.
An ineffective maintenance routine on a parking structure can quickly lead to costly repairs and restorations that can be disruptive to tenants and cause unexpected costs and safety concerns. A concrete maintenance and restoration specialist is recommended to confirm problem areas and hazards within the garage and recommend a repair plan and maintenance schedule that will delay or avoid costly restoration, decrease liabilities, retain ideal parking volume and rates, adhere to local permitting guidelines and maintain the property’s value.
By following the simple budgeting guidelines outlined in this article, the job of creating a maintenance budget for the upcoming year, or in the future, can be a whole lot easier.
Collect data all year long. Keep a running list or folder of information throughout the year. Any maintenance needs that come up during the year that weren’t in the budget for 2020 goes into a folder for consideration for 2021.
Get contractor assessments. Reach out to contractors when starting the budgeting process and ask them to do an assessment of the building’s components such as the HVAC systems, building facade, parking garage and other areas.
Set priorities. Contractor reports can help a building manager decide what needs immediate attention in the next budget and what projects are forecast for the next five years and can be included in future capital budgets.
Start with income. Begin the budget process with the income that will come in from the property’s tenants. Add fixed expenses such as taxes, janitorial, regular maintenance contracts and then add the projects needed for the year. This will provide a clear picture of cash flow for the building so managers and owners can decide how much will go back into the building’s maintenance projects and capital improvements.
Create a separate capital budget. If projects exceed cash flow expectations, put them into a capital budget and prioritize with building ownership. Capital projects usually are larger activities that will extend the life of a particular component of a building.
Provide owners with a project wish list. Give building owners a reasonably sized list of projects for the building. Prioritize the list by importance so owners can understand the needs for the most critical items first.
Rely on a contractor. A good contractor can walk the property manager through the details of a project so they can communicate more effectively with ownership about the importance of including necessary repairs and replacements in the budget.
Prepare a contingency budget. Property managers don’t always know what’s going to happen to their building in the budget year. Put funds away for those items that come up unexpectedly. The amount set aside can be determined based on the history of repairs in previous years.
Know the condition of building components. Understanding the current state of the building envelope means knowing the useful life of each area and when it originally was installed. This will help a manager explain the cost of proactive maintenance versus reactive maintenance to owners.
All matter breaks down over time. The structures that surround us today are no exception to that law of physics. Some building materials are more durable than others, like stone and steel, but unfortunately the days of structures surviving thousands of years, like the Egyptian pyramids and Roman cathedrals, is over. Most of the structures erected today have a life expectancy of less than 100 years. Therefore, preventive maintenance of building exteriors has become more important than ever.
Featured in CREJ’s October 2020 issue of Property Management Quarterly