Anyone who has ever purchased a physical asset knows that the upfront cost to buy that item is just the “tip of the iceberg.” Maintaining that asset to ensure that you use it optimally throughout its expected lifespan is where the true cost of owning it becomes apparent.
Let’s take a simple example that we can all relate to such as buying a car. The money you will pay before driving it out of the dealership is just an initial expense. After some months (depending on the age and the initial condition of the vehicle), you should expect to start paying for oil changes, new tires, and so on. If anything goes seriously wrong with the car, you’ll need to pay yourself or rely on insurance to get it fixed. These recurring expenses after purchase are a basic example of what is called “total cost of ownership.”
As you already know, finances and accounting are a major concern for real estate and facility management professionals. Thus, TCO is a fundamental concept that needs to be well-understood. In fact, gaining insight into TCO will make the job of a facility manager easier by empowering them to quickly make informed decisions. Better yet when the process is supported by a multifunctional and automated platform such as an integrated workplace management system (IWMS).
The following is a look at a few ways by which FMs can use an IWMS to manage TCO.
TCO in Facilities Management: Identifying, Managing and Minimizing It
As a building owner or facility manager, keeping TCO at the minimum is a necessity for business continuity especially for expensive and critical systems like elevators or HVAC. You’ll often ask yourself: Should we repair or replace? It can be tough to make the right call every time, these tips will help:
1. Gain Insights
Instead of wasting time agonizing whenever you need to make a major expense, get the facts at your fingertips, and make better data-driven decisions through the powerful analytical, tracking, and reporting capabilities of an IWMS.
By quickly viewing service and repair history, you may find that an asset is failing consistently. This will place you in a better position to make the best repair/replace decision since the item has apparently outlived its usefulness. This scenario is quite common with outdated HVAC systems.
2. Eliminate Unnecessary Repairs
Did you know that you could save substantial sums through repairs and servicing under warranty? If you are managing a very large portfolio, does your organization have access to information about the location, age, condition, and warranty information for every asset?
If the answer is no, you may have already paid for repairs that you didn’t have to.
Especially for larger companies, interdepartmental transparency and information sharing can be a challenge. So, you have situations where the procurement unit (responsible for purchases) does not have a platform to share data with the operations/maintenance unit. Fortunately, since an IWMS collates data across multiple locations and cost centers, you can easily spot which items are still eligible for maintenance under warranty and reduce the TCO. Multiply that by hundreds or even thousands of items and you’ll see how much of a difference this can make.
Don’t make the mistake of trying to manage TCO manually or with spreadsheets. That’s a recipe for chaos. It just leaves too much room for errors, inefficiencies, and wasted funds.
With all the functionalities that Axxerion’s IWMS offers you, most of the work is already done for you. Just input the required data and leverage the best tool available today for calculating and managing TCO.
If you there’s more that you still want to know, do not hesitate to contact us. Or would you like to see our IWMS in action? Our team is available to guide you. Schedule a demo today!Free DemoFree Demo