Does benchmarking save money?
In the real-world examples below, participants used the FM BENCHMARKING database for buildings representing over 750,000 square feet.
On average, participants reduced their space requirements by 6% the first year and 11% (cumulative) by the end of the third year.
A financial services organization reduced its headquarters space requirements from 385,000 to 312,000 square feet after benchmarking. The organization was in an owned facility with total operating and fixed costs of $14.80 per square foot. By consolidating space and subleasing the 73,000 square feet that was vacated, it saved more than $1 million annually. A utility used the benchmarking data to consolidate its space in an operating center. It implemented standardized workstations, reducing its requirements from 730,000 to 626,000 square feet. Because the leased space was near the end of the term, the utility was able to negotiate the return of the 104,000 square feet at an annual rate of $17 per square foot — saving $1,768,000. Your results will vary, but one of the most significant cost-saving measures you can implement is to reduce total space requirements and eliminate the full cost from your budget.
Utilities usually represent the largest component of annual operating costs. On average, our benchmarking participants reduced their utilities costs by 4% the first year and 13% (cumulative) by the end of the third year.
After benchmarking, a 684,000-square-foot research facility realized that significant improvements were possible. As a result benchmarking, it focused on building management controls, fume hood operations, lighting, and reheat options. In the first year, it reduced its costs from $3.21 to $2.46 per square foot with no impact on the quality of the research programs. This yielded a savings of $513,000. After a travel services organization benchmarked one of its larger call centers, it implemented a new building management system. The facility was in a cold climate and required significant energy to warm the outside air makeup. It installed CO2 monitoring to control outside air makeup, saving $1.22 per square foot in energy costs — more than $1 million annually.
Maintenance costs usually represent the next largest component of operating costs after utilities. On average, our participants reduced their maintenance costs by 4% the first year and 10% (cumulative) by the end of the third year.
After benchmarking, an aerospace corporation developed a multiyear plan to reduce its maintenance costs and improve service. It installed a computerized maintenance management system, reviewed its preventive maintenance program, and implemented handhelds for all maintenance technicians. Maintenance costs dropped from $1.77 to $1.51 per square foot in the first year — a savings of $239,000 for this 920,000-square-foot facility. The same organization then implemented the benchmarked improvements at all of its 11 facilities. A total of 14.2 million square feet was affected, saving about $3.6 million.
Janitorial costs usually represent the next largest component of operating costs after maintenance. On average, our benchmarking participants reduced these costs by 2% the first year and 5% (cumulative) by the end of the third year.
A consumer products corporation benchmarked its janitorial costs and developed a plan to implement daytime skip cleaning and an equipment maintenance program. Janitorial costs dropped from $1.12 to $.97 per square foot in the first year, saving $46,000 for this 311,000-square-foot facility. After benchmarking its janitorial costs, a financial services organization realized that its current services provider was not competitive with the marketplace. It rebid the janitorial contract, saving $.33 per square foot or $160,000 annually.
Security costs usually represent the next largest component of operating costs. On average, our benchmarking participants reduced these costs by 3% the first year and 6% (cumulative) by the end of the third year.
An insurance corporate headquarters benchmarked its security services costs and developed a plan to install additional cameras, close some access points during certain times of the day, and consolidate its visitor reception services. This reduced security costs from $1.66 to $1.29 per square foot — a savings of $204,000 the first year. A consumer products organization reviewed its benchmarked costs and realized it needed to rebid its security contract, saving $375,000 with no change in service levels.