fm cost savings it’s crucial sanjay c

Confidential and Proprietary

COST SAVINGS

IT’S CRUCIAL

STRATEGIC FACILITY MANAGEMENT

Sanjay ChaudhuriAssociate Vice President

Administration, Facility Management, Infrastructure & Procurement


THIS…IS NOT A MAGICAL

TRANSFORMATION


Overcoming Today’s Challenges of a FM

The FM is under constant scrutiny - juggling between Cost efficiency and Value creation

Uncertainty - the mother of Imbalances and Financial Panic.

Large cost centers constantly under scrutiny

An in-depth knowledge of business costs Organized tracking, surveillance & storing

FM system compatible to finance managers

Savings through planning and forecasting


• The Basics of Cost

• Establish ownership on FM Operating Cost

• Business Process Re- engineering

• Predictive budgeting in business

• Lower production cost

• Facility Planning

• FM are the best in Business

• Case Studies

Make your Facility Generate Revenues

Scope of this presentation


A Cost Center incurs costs (and expenses) directly but does not generate revenues

The Basics of Cost

A division of an organization that provides quantified value in terms of cost savings or increased revenue is a Value Center


FM Ownership Of Costs

Electricity Charges Water Supply

Power Transportation

Communication

DG Hiring Charges Diesel Travel Electrical Materials

Hospitality

Tea/Coffee Consumption

Drinking Water

Manpower - Electrical Maintenance

HK Material

Management Snacks

Manpower - House keeping

Manpower - Security Petty cash expenses

Plants & Miscellaneous

Courier charges

Printed Stationary

Stationery material

Photocopy

Web Printer Equipment Hiring Charges

Repairs & Maintenance

Mobile Phone Charges

Telephone Bills

Space management

Hotel Stay Airfare- Domestic

Airfare- International

Infrastructure Rent

AMC & Contracts


• Educating, Coaching & Mentoring

• Tracking & Analytics

• Innovation

• Focus on Cost, Quality & Delivery

• Lower production cost

• Restructure Rates and Contracts

• Re-engineer work space area

• Reduce repetitive tasks

Business Process Re-engineering


• Concept of Budget

• Types of budget – short or long

• Predictive budgeting

• Monitoring & controlling Budget

• Variance Analysis

Budget & Planning

Budget Sheet


• Understand the importance of budget management and the ways in which it impacts the profitability and spends

• Understanding the concept of managing the various components like inventory, debtors and creditors

• Periodic validation of Assets & inventory which should tally with the Financials

Budget & Inventory Management


• Analyze performance

• Helps improve decision making

• Cost Concepts

• Activity Based Costing

Cost Analysis for Decision making


Facility Planning

OPEX is Higher than CAPEX• Determining Production Capacity due

to changing Business demands.

• Improve measurement matrices on 1. cost per person 2. cost per seat 3. area per person

• Success parameters to Competencies 1. ability to anticipate risks 2. effective Risk mitigation plan • Workplace is a Strategic Selling Tool


Lower Production Cost

• Planning and Customization

• Understanding Customers need

• Resize work space occupancy area

• Capacity Planning

• Increase System efficiency

• Reduce Inventory holding

• Renegotiate Rates & Contracts

• Earning Revenue

Low Facility Cost = Low Production Cost

Increase RevenueIncrease potential savings Reduce unwarranted spend

Increase Competitive Advantage in Business

Aids in canalizing funds in priority sectors

Savings Increase financial stability


FM = Planners

Set Standards Best Policies & Costs & Drive

Practices Procedures Controls Business

FM is the Best in Business


Case Study - 1

Organization A: A leading BPO in the year 2000 :

Operating out of a total super built area – 210,000 sq ft single unit; Original built out capacity – 1200 seats for proposed future business ran in to full capacity production by the year 2003

Renovated its capacity in 2003 - to accommodate 1400 seats in the same space by altering the working conditions.

Strategy: Resizing work space and furniture.

Impact: Increase in Production capacity by 16%


Case Study - 2

Organization B: A mid sized software firm till 2004

Operating out of 32,000 sq ft in 4 separate facilities, comprising of 300 seats

Consolidated in to a single unit of 35, 000 sq ft and enhanced their capacity to 600 seats.

Strategy: Change in Technology and resizing work space.

Impact: Reduce overheads, Logistics & Operational costs. increase in profitability due to volume of delivery.

Case study 3

Snapshot of Monthly Costs vs. Savings

# Parameters Unit 1 Unit 2 Unit 3 Unit 4 Total Single Unit Savings

1 Area in Sft 18760 18090 21380 18360 76590 60,000 16,590

2 Monthly rent /sft 27.00 11.64 62.67 24.37 31.42 45 (13.58)

3 Rent Outflow 506594 210576 1339957 447462 2504589 2,700,000 (195,411)

4 Total no of Seats 250 236 318 232 1036 1,400 364

5 Employee Capacity 320 540 280 275 1415 2,500 1085

6 Transport cost/person/month 4200 3,800 260000

7 AMC Costs 373482.00 0 373482

8 Contractual expenses 822896.00 662,896 160000

9 Admin Operated Costs 3374087.00 2,715,066 659021

Projected Savings 1,275,117

1 Technology investments 28,150,143

2 Projected Savings 1,422,507

3 Breakeven on Investments 19.8 months

GROSS MONTHLY SAVINGS - 18% 2,697,624

Case study 4

National Audubon Center, New York

100 year old, 80 storied buildingCompletely renovated in 1993 Decision to Conserve the building shell and floors

Impacted Savings

Renovation of Multi level Building

300 Tons of Steel 560 Tons of Concrete and 9000 Tons of Masonry $8 million USD in savings

Choose restoration against demolition New construction to be refurbished

Project Decision


Thank you