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Facility Management
Case Study
9 May 2005 :: by John Herbert | Director
Introduction
This a genuine case study, without naming names. During a chance conversation, the topic switched to maintenance, the manager from a fortune 500 multinational expressed concern that yet another quotation crossed his desk for their air conditioning plant, it seemed excessive, and he needed an expert opinion.
professional FM reduces costs, improves profitability
Down to business
A meeting was scheduled, initially to review the plant, and records. Basically establishing the history. As the story unfolded it became increasingly apparent that a detailed investigation was warranted.
Documentation
The plant guy was summoned, however he couldn't actually provide records therefore copies of all work orders, quotations, etc. would be provided later.
Since every business needs to keep financial records for a minimum period of seven years (to satisfy the inland revenue department) I requested all records for the last five years. However, the inability to provide any documentation at the initial meeting was a concern.
Records
A week or so later, the documentation arrived, it was disappointing. A loose unorganised pile of invoices, quotations, direct purchase receipts, service bills, etc. covering approximately three years.
Analysis
Done to work, I analysing the data. I identified and cross-referenced every invoice to the specific item of plant, organising the table by department, building and the system.
Calculating the operating and maintenance costs for each plant item it emerged that different departments were invoiced for O&M costs of the chillers. I complied a cost benefit analysis, and analysed the results. Based on these findings a report with findings and recommendations was prepared. The results were quite remarkable.
Nobody knew
Invoices were randomly divided across different departments, then it stuck me, these were most probably different cost centres!
Management did not know, the accountants did not know and the plant engineer did not know. Nobody knew how much money was being spent on the building services infrastructure and where it was being spent!
Of course the Building Services infrastructure are a vital for business, especially in sub-tropical Hong Kong, with the demand for air conditioning, computer rooms, lighting for offices, etc.
Recommendations
My report, detailing findings and recommendations these was presented.
Analysis revealed that each department should have been responsible for repair and maintenance of their portion of the HVAC plant, well that was the idea.
However, no records as such were maintained, therefore the operating costs and repairs were not monitored. Only the individual invoices distributed in the various departments provided the overall view.
The detailed analysis highlighted the repair costs were out of control, each department paying for a compressor replacement every year.
The costs were re-calculated for each item of plant and each system providing a real world view of the exact position, then compared with possible options including the cost of a brand new machine, refurbishment, etc.
The result of a Cost Benefit Analysis (CBA) indicated the central chiller plant should be replaced without delay, the anticipated payback period of less then 24 months.
Conclusions
The recommendations were accepted, and implemented. The moral of the this case is clear, if one is needed, don't let your bean counters dictate the management of your facility, it could cost you significantly more money you need.
Further Information
For further information regarding Facility management around Asia, planned preventative maintenance, or to discuss your requirements call Mr John Herbert at the Hong Kong office +(852) 2335 9830.