Soaring inflation turns up the heat on building costs

The Bank of England’s decision to raise interest rates to five per cent (their highest level since 2008) in a bid to tackle soaring inflation will pile even more pressure onto building owners and managers to get their operating costs under control, according to analysts. The team behind the industry’s maintenance standard SFG20 have found that driving down the costs associated with operating and refurbishing buildings is a top priority for facilities managers and is putting maintenance budgets under increasing strain.

Pressures are coming from all directions with inflation driving up equipment and material costs, a shortage of skilled people pushing up wages, and energy prices almost double where they were two years ago.

Many FMs report that this is tempting some owners to take a chance with their maintenance programmes and reduce the frequency of key tasks. This means they are caught up in a damaging and potentially expensive cycle of equipment failures and reduced operating efficiencies that drive up energy and repair costs. It also increases their chances of falling foul of safety legislation.

SFG20 Product Director Paul Bullard said: “Ironically, the problem is exacerbated by the fact that many organisations work on a 100 per cent maintenance approach when budgeting i.e., they calculate their costs based on maintaining all of their assets. However, by taking a more targeted approach using digital modelling tools, they can focus their precious resources on those systems that are critical to safety and the efficient operation of the building – and redirect funds away from less important assets, some of which could even be run to failure.

“Avoiding over or under-maintaining systems is the key to getting best value for money from a building maintenance programme while remain legally compliant,” added Bullard. “It is equally important to avoid the temptation to only do the bare minimum to save costs as this can lead to operationally critical assets being undermaintained. That increases the risk of failure, drives up energy costs and reduces their remaining useful life – it’s a vicious cycle.”

SFG20 says that many of its users find adopting this kind of ‘risk-based approach’ to maintenance supported by accurate, up-to-date digital asset registers can cut their overall costs by as much as 20 per cent without compromising legal compliance or operating efficiency. SFG20 Resource Modeller was developed for just this task and is designed to price the specific requirements of any building so FMs can find the most cost-efficient strategy.

Bullard continued: “The complexity of estimating maintenance, particularly in large commercial new builds or refurb projects, has defeated many project teams. However, the financial and environmental impact can be colossal particularly as around 80 per cent of the total cost of a building is accounted for during its operational life.”

He said that key factors to consider include the quality of the building design, its location, the materials used, services installed, and size, but in many cases the specific characteristics of the building are ignored, and the maintenance strategy is simply based on the total floor area.

A new webinar developed by SFG20 offers 10 top tips for driving down operating costs in line with the risk-based philosophy. It outlines the areas where costs are rising, and the problems caused by ‘sub-optimal’ maintenance regimes before setting out a strategy that helps to reduce maintenance costs while still ensuring the building remains fit for purpose. It also includes tactics for maximising internal resources, making more cost-effective choices in the use of external expertise and mitigating risk.

Bullard concluded: “Targeted maintenance already had a clear financial payback by keeping systems operating at peak efficiency and reducing expensive breakdowns. With costs rising all around us, that approach can now deliver even better value for money as it keeps FMs on top of areas of real financial concern, like energy consumption and equipment downtime, and prevents teams from carrying out unnecessary work.”