With the world facing ever more natural and man-made disasters, pandemics, and unpredictable economies, maintaining a healthy operating budget is harder than ever. But accurate budgets are especially important during troubled times. Not only does an accurate budget help maintain predicted property value and keep operational planning on track, it enables you to be good stewards of your tenants, helping them feel confident that billing will be consistent and care has been taken in planning. When occupancy and energy consumption fluctuate due to unforeseen circumstances and the ever-changing policies surrounding them, a seemingly sound budget could be set adrift at a moment’s notice. Here's how to face-off with an atypical budget season like a pro.
Understand the Next 6-12 Months
Before anything else, make sure you have a good understanding of the future of your budget in response to a major disruption. Many budget setbacks result from simple oversights and lack of forethought. To combat this, forecast how revenues and operational expenditures will be affected by an economic downturn. Make sure your property management team is equipped with the tools they need to accurately predict spend and create a cost-effective utility budget strategy.
The hallmark of any budgeting tactic is the delicate balance of income and output. Ideally, reducing spending habits may help halt the outward flow of resources, allowing for savings and the allocations necessary to recalibrate a budget. A major line item in any commercial building’s budget is utility costs; energy use typically accounts for one-third of total operating costs for commercial office buildings. Whether you have low or no occupancy for extended periods of time during an emergency, adjusting your building operations to reduce energy usage is an excellent way to curtail costs. Small changes in operating costs that will reliably decrease expenses over the long term will improve your bottom line.
Find New Resources
Another method of reducing your spending lies in the allocation of internal funds. Reassess said funds and the formulas for allocation to decide which facilities may best benefit from continued funding and which may be able to function with less. You may consider redesignating budget line items. Strategically determine which expenditures are opportunities for cost-reduction or deferral. Such assessments could allow you to implement new or revised fees, thus providing a buffer for the budget and perhaps giving it room to build.
Plan for Operational Changes and Non-Routine Adjustments
When it’s time to reopen your building after a major shake-up, occupant and tenant safety always come first, and it’s important to make sure your budget is prepared to allow you to provide that. Be prepared to follow any new guidelines issued by institutions like ASHRAE, OSHA, FEMA, or the CDC. For example, taking precautions against an airborne pathogen could include increasing outdoor air ventilation, upgrading filtration systems, and additional fixes involving exhaust fan operations. These non-routine adjustments can add up over time, increasing the cost per square foot to operate your building.
Tracking the impact of implementing new guidelines on the energy expended is important to reforecast your budget. In order to best plan for how your budget will be affected, you’ll want to have a thorough understanding of your HVAC system and its operations alongside your building and indoor/outdoor environments. It is also important to be aware of building control sequences, commissioning reports, sensor calibrations, alarms, and many other adjustments. By doing so, you leverage project management for continued success. Staying on top of the changes and their impacts gives you the ability to continue implementing the guidelines, ensuring your tenants remain protected as they return to work.
Account for Changes in Occupancy
Many things can contribute to budget variance even under normal circumstances, but one of the most common is occupancy. Property teams should proactively reach out to their tenants to understand their plans for the coming weeks or months.To get a sense of the daily comings and goings within your building you should regularly poll tenants to determine anticipated occupancy schedules. Armed with information about which tenants are still planning to use their space full time, on modified hours, or not at all, operators have the opportunity to save energy by running floors or potentially entire buildings as if they were vacant. Be sure to obtain tenant approval before modifying the HVAC schedule for their office spaces.
Communicate and Engage
Communication, especially regarding building operations, is critical to finding the best management solutions. Property teams should proactively reach out to their tenants to understand their plans for the months following a disruption. Armed with information about which tenants are still planning to use their space full time, on modified hours, or not at all, operators have the opportunity to save energy by running floors or potentially entire buildings as if they were vacant. Be aware of and execute contingency plans for as many likely events as possible by actively engaging with your property team and tenants as a whole and using all available resources to stay abreast of the dynamic environment.