Facilities Department Not a Profit Center – But Can It Be???

Money Tree-fm360-facility-university-facility-managementIf you have been in the facility industry long enough, you have likely heard on numerous occasions “the Facilities Department is not a profit center”, “facilities is a necessary evil”, “you are just overhead”, and many other doozies. While the facilities department does not necessarily manufacture the widgets or process the transactions of our respective organizations, it does have a direct impact on how well and how fast those revenue generating functions occur. Unfortunately, management and even facility staff label the department as a cost center and not an enabler of profit.

What if you went to management with an idea that would increase worker productivity by 8% – would they listen? Let’s run the numbers. Assume you have 300 employees in your facility at a burdened rate of $100,000 per year; that equates to $30M per year in cost. An 8% production increase would equate to $2.4 million dollars. Now do you have their attention??? When you look at it from that perspective, it is easy to see why large corporations invest in professional cafeterias, on-site daycare, exercise rooms, at-work automotive services, etc. – anything to keep the employees, their largest investment, working and productive.

Sadly, facility organizations are more driven by reducing costs than by increasing production – this is both self-induced and thrust upon by upper management; largely because neither understand nor attempt to quantify the impact the performance of facilities and its teams have on production. Thankfully there have been multiple studies conducted that help to quantify that effect. So let’s explore some of those findings and utilize them to show our fellow facility professionals and upper management the larger role facilities plays in driving the bottom line.

Thermal Comfort
Let’s start with hot/cold calls – yes, the bane of many FMs… But, seriously, there is a much larger issue than just the hot/cold call. First, we have to consider how much productivity is lost after the affected employee spends time consulting with neighbors – “Hey, are you hot?”, “What about you?”, etc.; then once they are irritated enough, they lodge a complaint with the facility service desk or grab you as you are hurrying down the hallway to put out another fire… Next, you have to respond, troubleshoot, and work with the occupant to hopefully resolve the issue. How much time did that take? How much productivity and money was lost? Unfortunately, the studies I reviewed did not quantify the above scenario; however, they did find that a simple 2 degree-Fahrenheit increase in temperature reduced worker performance by 8% – each degree increase resulted in a 4% productivity loss. What kind of temperature swing do your occupants experience in a day? Additionally, they found that subjects whom felt warm generated 56% more errors than when they were comfortable. Conversely, being too cold has its effects as well. For example, at 18C/64F, a study tabulated that worker errors increased by 28% and reading speed declined by 7%. Another analyzed the effect of low relative humidity on worker productivity. They found that a low RH (below 25%) slowed typing by 3%, proofreading by 7%, and simple addition by 5%. So the hot/cold calls do matter – they affect the bottom line.

While some causes of hot/cold calls are out of a FM’s control, there are things that can and should be done better manage thermal comfort; such as establishing and maintaining consistent setpoints (typically 68F to 72F winter and 70F to 74F summer). However, quite often, setpoints are not the problem, it is airflow. Thus, having your building re-balanced and possibly controllers calibrated may be necessary. This is one of the reasons I am a large proponent for retro-commissioning as it can be quite helpful in identifying and resolving many of the creature comfort issues. Furthermore, the aforementioned potential productivity gains may give you the fodder you need to justify the controls and HVAC system upgrades that you have been begging for the last few years.

Indoor Air Quality
With the advancement of LEED and Green Globes building certifications, much attention has been given to indoor air quality (IAQ), including the products that are installed in a facility and the amount of fresh air needed to provide a healthy environment. Whether you are a proponent for “green” or not, multiple studies have shown a clear link between IAQ and worker productivity. Independent studies found similar results of 6% to 9% reduced worker performance due to poor IAQ. For example, one experiment reported a 6.5% reduction in performance, 8% increase in typing errors, and more complaints of headaches simply by having carpet next to a partition where the test subjects were sitting. They were able to significantly reduce the negative affect by increasing the amount of outside air (OSA) provided to the space. Another study determined that a one CFM per square foot increase in air flow raised productivity by 4%. A third found that higher ventilation rates increased worker performance by 3% to 10%; the variance in that gain is directly attributed to the controllability each subject had via the adjustable vents for the underfloor air distribution system. Those that had their vents fully open experienced the highest productivity gain. Another case realized considerably lower sick-leave for employees when the outside air was double the minimum requirements. Lastly, an experiment calculated a 9% productivity gain in replacing a dirty supply air filter with a clean one – 9%, simply by changing a filter!

As the last example clearly highlights, simple facility maintenance practices, such as air filter replacements, can have a significant impact on the bottom line and worker health. This, of course, requires a robust O&M program so that facility organizations can realize high completion rates on preventive maintenance work orders. I strongly recommend a computerized maintenance management system (CMMS) as a key tool for measuring and managing the efficiency and effectiveness of a facility O&M program.
Again, I will reiterate the value of RCx as it can be used to measure and verify that the amount of outside air allowed into the facility is correct and make sure that the OSA dampers are calibrated and working properly.

Lastly, strong consideration must be given to the materials installed in a facility, including how they are cleaned (method, frequency, and chemicals), when to replace them, and what to replace them with (solid surfaces are sounding better, or should I say “smelling” better…) A capital replacement program would be quite helpful in assisting with the planning and budgeting for such replacements, as the condition and type of materials has a significant impact on the bottom line and the health of employees.

Is the Facilities Department a profit center? No, but as identified above, facilities and how they are operated and maintained drastically affect the overall revenue and success of an organization. It is incumbent upon facility managers to clearly understand how they and their teams provide value to the overall organization and champion that recognition to their fellow employees, department managers, and the C-suite.

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Studies referenced include The effects of indoor air quality on performance and productivity – Indoor Air 2004 and Windows and Offices: A Study of Office Worker Performance the Indoor Environment – California Energy Commission.