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FM Cost Savings It’s Crucial Sanjay C


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An insight to effective Facility management and Cost control.

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FM Cost Savings It’s Crucial Sanjay C

  1. 1. Confidential and Proprietary COST SAVINGS IT’S CRUCIAL STRATEGIC FACILITY MANAGEMENT Sanjay Chaudhuri Associate Vice President Administration, Facility Management, Infrastructure & Procurement
  2. 2. Confidential and Proprietary THIS…IS NOT A MAGICAL TRANSFORMATION
  3. 3. Confidential and Proprietary 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. <ul><ul><li>Large cost centers constantly under scrutiny </li></ul></ul><ul><ul><li>An in-depth knowledge of business costs </li></ul></ul><ul><ul><li>Organized tracking, surveillance & storing </li></ul></ul><ul><ul><li>FM system compatible to finance managers </li></ul></ul><ul><ul><li>Savings through planning and forecasting </li></ul></ul>
  4. 4. Confidential and Proprietary <ul><li>The Basics of Cost </li></ul><ul><li>Establish ownership on FM Operating Cost </li></ul><ul><li>Business Process Re- engineering </li></ul><ul><li>Predictive budgeting in business </li></ul><ul><li>Lower production cost </li></ul><ul><li>Facility Planning </li></ul><ul><li>FM are the best in Business </li></ul><ul><li>Case Studies </li></ul>Make your Facility Generate Revenues Scope of this presentation
  5. 5. Confidential and Proprietary 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
  6. 6. Confidential and Proprietary 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
  7. 7. Confidential and Proprietary <ul><ul><li>Educating, Coaching & Mentoring </li></ul></ul><ul><ul><li>Tracking & Analytics </li></ul></ul><ul><ul><li>Innovation </li></ul></ul><ul><ul><li>Focus on Cost, Quality & Delivery </li></ul></ul><ul><ul><li>Lower production cost </li></ul></ul><ul><ul><li>Restructure Rates and Contracts </li></ul></ul><ul><ul><li>Re-engineer work space area </li></ul></ul><ul><ul><li>Reduce repetitive tasks </li></ul></ul>Business Process Re-engineering
  8. 8. Confidential and Proprietary <ul><li>Concept of Budget </li></ul><ul><li>Types of budget – short or long </li></ul><ul><li>Predictive budgeting </li></ul><ul><li>Monitoring & controlling Budget </li></ul><ul><li>Variance Analysis </li></ul>Budget & Planning Budget Sheet
  9. 9. Confidential and Proprietary <ul><li>Understand the importance of budget management and the ways in which it impacts the profitability and spends </li></ul><ul><li>Understanding the concept of managing the various components like inventory, debtors and creditors </li></ul><ul><li>Periodic validation of Assets & inventory which should tally with the Financials </li></ul>Budget & Inventory Management
  10. 10. Confidential and Proprietary <ul><li>Analyze performance </li></ul><ul><li>Helps improve decision making </li></ul><ul><li>Cost Concepts </li></ul><ul><li>Activity Based Costing </li></ul>Cost Analysis for Decision making
  11. 11. Confidential and Proprietary Facility Planning OPEX is Higher than CAPEX <ul><ul><li>Determining Production Capacity due to changing Business demands. </li></ul></ul><ul><ul><li>Improve measurement matrices on </li></ul></ul><ul><ul><li>1. cost per person </li></ul></ul><ul><ul><li>2. cost per seat </li></ul></ul><ul><ul><li>3. area per person </li></ul></ul><ul><ul><li>Success parameters to Competencies </li></ul></ul><ul><ul><li>1. ability to anticipate risks </li></ul></ul><ul><ul><li>2. effective Risk mitigation plan </li></ul></ul><ul><ul><li>Workplace is a Strategic Selling Tool </li></ul></ul>
  12. 12. Confidential and Proprietary Lower Production Cost <ul><li>Planning and Customization </li></ul><ul><li>Understanding Customers need </li></ul><ul><li>Resize work space occupancy area </li></ul><ul><li>Capacity Planning </li></ul><ul><li>Increase System efficiency </li></ul><ul><li>Reduce Inventory holding </li></ul><ul><li>Renegotiate Rates & Contracts </li></ul><ul><li>Earning Revenue </li></ul>Low Facility Cost = Low Production Cost
  13. 13. Increase Revenue Increase potential savings Reduce unwarranted spend Increase Competitive Advantage in Business Aids in canalizing funds in priority sectors Savings Increase financial stability Confidential and Proprietary FM = Planners Set Standards Best Policies & Costs & Drive Practices Procedures Controls Business FM is the Best in Business
  14. 14. Confidential and Proprietary 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%
  15. 15. Confidential and Proprietary 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.
  16. 16. 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
  17. 17. Case study 4 <ul><li>National Audubon Center, New York </li></ul>100 year old, 80 storied building Completely 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
  18. 18. Confidential and Proprietary Thank you