Cost Containment Strategies for Facilities Maintenance Professionals
1
Cost Containment Strategies for Facilities Maintenance Professionals
DWM Facilities Maintenance is a leading facilities maintenance company providing break-fix, emergency, and
remodel/rollout services for national portfolio clients. In business since 1997, DWM has learned quite a bit about cost
containment. In the past year, DWM has encouraged clients to adopt their progressive cost-savings strategies,
resulting in 12% savings for such clients.
Facilities maintenance is an extremely challenging and important aspect of business, yet it is often looked at as
a cost-item by portfolio companies. As a result, many facilities maintenance professionals are pressured to
minimizes costs while creating a safe and enjoyable environment.
This whitepaper will discuss cost-containment strategies and how total cost control can improve the customer
experience and encourage brand loyalty for portfolio companies.
2
Cost Containment Strategies for Facilities Maintenance Professionals
Many companies rely on vendors to achieve their strategic goals and provide exceptional products and
services to their customers. In addition to providing a service, the right vendor partner can be an
extremely valuable resource to a company in terms of cost-savings.
Facilities maintenance is a crucial aspect of any business as it can impact the customer experience
immensely. A safe, visually appealing environment boosts productivity and improves the customer experience.
A successful facilities maintenance partner will help a portfolio minimize costs while enhancing the client
experience for their brand.
Over the years, various cost-containment strategies have come into effect to assist in providing top-notch
service without incurring excessive costs.
Strategy One: Hourly Rates
1
Paying for services based on hourly rates is a common strategy used by businesses to minimize
facilities maintenance expenses. Negotiating a low hourly rate with your service provider gives the
illusion of savings. However, setting such rate caps makes businesses vulnerable to being
manipulated. Even though a company may negotiate an hourly rate cap, it has no control over the
time taken by the technician to complete a
maintenance job. In a 2016 study, DWM learned that the top
15% of their technicians were inaccessible to clients utilizing
rate caps, resulting in less efficient service and increased
down-time for clients utilizing this strategy.
To ensure cost-containment when utilizing an hourly rate method, it is important to track the time taken by each
of technicians over a job in addition to hourly rates. A robust Computerized Maintenance Management System
(CMMS) will help a facilities maintenance partner track hourly, rates, time to complete, and additional metrics.
Additional metrics can be captured by requesting feedback on each job performed, to ensure quality service
was delivered. This data could then be used to benchmark the technician’s performance to determine whether
or not they are suited to work on particular work orders.
Managing time on each job can not only drive down the cost of the service, but also reduce the down time
required to perform the service. Consider a restaurant that had to pause operations due to a HVAC problem;
hiring a higher paid technician that would complete the job in half the time would not only save money on the
work order, but also allow them to resume operations sooner, increasing profitability.
Hourly rates are beneficial as a simple cost-control strategy. For example, hourly rates can be utilized as
a quick benchmark to determine whether a technician would be able to complete the work order under the
prescribed Not-To-Exceed (NTE), based on hourly rates and estimated time on site. A successful use of
hourly rates should be used alongside a more comprehensive strategy that measures overall
timeliness and quality of services.
2
Strategy Two: Cost-To-Completion & Not-To-Exceed (NTE)
3
Cost Containment Strategies for Facilities Maintenance Professionals
To avoid the pitfalls of a simple hourly rate strategy and to better control costs, facilities maintenance
companies often utilize the not-to-exceed strategy (NTE). This is a complete cost to completion method.
Facilities maintenance providers put cost restrictions in the form of not-to-exceed over every job. This allows
them to control the cost of each work order by assigning a fixed dollar value to it. The technician is required to
complete the service while not exceeding this
predetermined value. This motivates the
technician to manage their time effectively and
complete work orders while staying within the
cost limit.
Successful facilities maintenance partners meticulously maintain data on each type of maintenance service,
and the quality of service performed by the technician. Over time, this data is utilized to create benchmarks for
NTEs based on various parameters such as trade, service, and region. Such data allows a facilities
maintenance provider to benchmark competitive NTEs, which do not undercut the technician or the client,
while maintaining a superior quality of service to ensure client satisfaction. The NTEs can be set by the client
or the facilities maintenance partner based on benchmarks for that trade, service, and region.
The pressure to provide a safe, engaging environment while minimizing cost makes it challenging for a
business to select a maintenance partner that meets their expectations and in turn provides value-add services
to them.
DWM Facilities Maintenance partners with each client to ensure their needs are met in the most financiallyconscious manner possible. DWM maintains a progressive approach that sees past simple hourly rates,
and instead focuses on total cost control.
Simple Hourly Rate Strategy
- Increased Time To - Completion
- Increased Downtime
- Higher Total Invoiced Costs
Comprehensive Cost to Completion/NTE Strategy
- Quicker Response & Faster Time To Completion
- Decreased Downtime
- Lower Total Invoiced Costs
DWM utilizes their computerized maintenance management system (CMMS), Hera to keep track of their
technicians’ performance, their work orders, the hourly rates of these technicians, and the time taken to
perform job.
This year DWM recorded the performance of their technicians with respect to hourly cost and time taken to
complete over 35,000 work orders. The data revealed that technicians who charged higher than average
hourly rates completed the job in 40% less time than those charging average or below-average hourly rates.
DWM encourages clients to adopt their progressive cost to completion strategy that has helped clients
save up to 12% on their overall maintenance costs by switching from an hourly rate focus to a total
cost to completion model.
4
Cost Containment Strategies for Facilities Maintenance Professionals
5