Impact of inflation on Facilities Management in 2023
Inflation burdens Facility Management
Facility managers are accountable for the upkeep of the physical infrastructure of an organization. Inflation rises the tool costs, energy expenses, and services in general. It will have a significant impact on facilities management this year.
Facility management is a multi-faceted discipline with four major cost inputs:
2. Materials & Supplies
4. Government Policies and Taxes
Facility Management 2023 Budget
Facility managers need to have a forethought of the implications of inflation on facility management discipline. They need to foresee the increase in prices of utility operations, labor, spares, etc., and factor them into the annual budget to maintain the same quality of services as before. But will this go well with facility owners?
As the world economy continues to recover from the aftermath effects of the pandemic, the negative impact of the long war between Russia and Ukraine, widespread economic dullness, etc., business owners do not wish to stretch maintenance funds. Hence facility managers need to accomplish more within a limited budget. Many facility managers have overcome this challenge by resorting to the digital transformation of the facility management sphere.
Rising input costs
Given the multi-faceted nature of Facility Management and as budget planning for the calendar year is already underway, senior management needs to consider the rising cost of labor for both Hard services(e.g., electrical, plumbing, and HVAC) and Soft services (e.g., security, waste management, cleaning, catering, etc.)
Prices of diesel used for Genset have gone up in many countries. Commercial gas cylinder prices have also increased to record-high rates. The uptick in fuel prices has triggered a rise in the transportation cost of goods and raw materials.
Governments have revised electricity tariff and commercial taxes, citing the deficit in financial position of the Centre & states. All these factors hurt the bottom lines of many businesses. The burden is passed on to facility managers as well.
Trending Digitization of Facility Management
Business leaders have realized Digitalisation is the unavoidable future of the Facility Management industry. The inflation has pronounced it more. A sizeable percentage of large and mid-size enterprises have already linked buildings, assets, sensors, and workforce with a cloud-based Facility Management software for tapping into new avenues of cost savings and flawless rolling of facility functions with no interruption to core businesses.
Facility Management services have evolved significantly over the years to connect people and assets attached to scattered businesses and locations using intelligent analytical platforms. The team can smartly and centrally manage the system via web or mobile utilizing the Internet of Things (IoT), Cloud, and Artificial Intelligence (AI)-based technologies.
Facility Management Expert opinion
Ralf Zerenner, managing director at Berkeley Services, an organization with a headcount of 7000+ employees, opines that these solutions will undoubtedly step up operational efficiencies, preserve staff welfare, sustainability, and will present opportunities for progressive Facility Management companies. He adds that cost and margins have become a huge concern for all FM companies and emphasizes that FM companies have to adopt out-of-the-box strategies to win contracts.
C-level executives view on the Facility Management market
Dilip Khatwani, the CEO of Reliance Facility Management, says: “FM managers are well aware of international inflationary pressures and hence need to understand how those factors will impact facilities management costs in 2023 and further. Successful management of these costs will be the key challenge over the next year without passing it to the clients.”
Oliver Sawle, general manager of Khansaheb Facilities Management, wants to demonstrate to customers that FM is considered a value-added service rather than an undervalued commodity. He is optimistic and expects the market to continue to be growth-oriented as the economy and customers are still recovering from the undesirable effects of the pandemic.
How FSM software helps combat inflation?
It is essential to procure high-quality products on time from a trusted vendor at the best prices. A FMS/EAM eases purchase via an online portal by providing easier comparison of quotes or sale orders. Such a software can help optimize workflows and enable technicians to complete more jobs within the same duration they did using manual approaches, reducing the need for labor. This is one among multiple ways facility managers can mitigate the effects of inflation on their bottom line using a digital solution for maintenance management.
Competent Facility Management Software provides a means to suppress electricity expenses-the highest utility costs of any business. Using InnoMaint, you can view instant insights into the current consumption pattern of individual tenants in a building or entire facility. With this proactive approach, you can initiate remedial measures and not be shocked by electricity bills. It is high time to think about going green by reducing carbon emissions to successfully ride the waves of inflation and settle back to a pre-pandemic norm until early 2024.