As experienced facilities engineers retire and take their knowledge of managing building facilities with them, building owners face a growing risk of building performance deterioration and increased deferred maintenance costs. Efforts to hire talented new people only meet with limited success as talent wars drive up the costs of the small pool of available skilled experts. Unfortunately, US Bureau of Labor Statistics tell us that these skill shortages will potentially increase over the next five years.
The current building facility staff are in no position to take on the additional tasks required to fill the void of departing retirees. New skills are needed as modern building management becomes much more connected and digitized. For most building owners, the answer seems to lie in a combination of redistribution of human resources and the integration of new smart building technologies. This is where the concept of co-sourcing comes in to help address the skills gap.
Business benefits of the co-sourcing approach for building management
Unlike traditional outsourcing, where a mandate is handed down from senior management to accommodate outsourcer requests, co-sourcing is much more collaborative. The outside resource provider sits at the same table with the existing facility staff to identify which competencies are already in-house, and to supplement any voids with new competencies. This joint planning can either center around resource needs for a tactical project or can be leveraged as a methodology for developing a longer-term strategy surrounding the future mission of the facility.
Co-sourcing discussions revolve around ways to reduce building operating expenses.
Areas of focus include:
- Reduction in deferred maintenance – The longer building maintenance is deferred, the higher the cost of the eventual fixes and the higher the risk of a catastrophic failure. Over the years, management may develop a pattern of underfunding needed maintenance and facilities departments may become uncomfortable in requesting additional funds, especially if older equipment continues to function. However, when a third-party co-sourcer comes in, it becomes easier for management to accept advice from an organization that acts as an advocate for the facilities department, and that can introduce less costly ways of maintaining building infrastructure. This opens the door to fixing problems that have been long neglected.
For example, a northeast US banking institution, as a result of a series of quick acquisitions, experienced double-digit growth in the number of facilities they needed to manage. As they integrated the new building assets into their real estate portfolio, their energy costs, emergency HVAC replacement capital expenditures, and HVAC repair costs began to rapidly escalate, due, in part, to inherited deferred maintenance. Our company Stark Tech Group was brought in to assess the situation for what the client thought would be a straight outsourcing deal. Instead, as we became more familiar with the scale of the program and the internal structure and capabilities of the client’s facility management employees, we concluded that a co-sourcing arrangement would work out better for the client.
Combining forces with the client’s Facility Management team, we were able to complete the initial phase of energy and infrastructure master plan, which involved upgrading 300 individual facilities across a seven-state region, within 18 months. Whereas the client had set a goal of saving $1 million in annual energy costs, actual savings exceeded $4.7 million.
Additional benefits included centrally controlled HVAC performance monitoring, modern lighting retrofits, and an emergency HVAC budget that was cut by 95% due to reduced risk of downtime. The program is now being expanded to include a total of 850 facilities over a 5-year period and should yield an additional $30 million in savings through enhanced energy efficiency and further reductions in deferred maintenance.
- Facility modernization – A common thread we find across building owners is an acknowledgement that a new, smarter approach is needed regarding how facility networks are run. They are often eager to find ways to use analytics as data-driven stepping stones for achieving better building performance. In many cases it makes sense for them to selectively upgrade some of their infrastructure equipment along with the networking to promote the data gathering that drives analytics. With proper strategic planning, these tactical changes can easily tie into the long-term vision of the facility, cutting energy costs while improving regulatory compliance.
- Energy Management / Sustainability Functions – It is becoming much more common for large facility owners / operators to have energy and sustainability objectives, either through their commitment to corporate citizenship, customer driven demands, regulatory, or more often a combination thereof. As such, most organizations need to look to outside providers to help establish the program objectives, identify where the opportunities lie within their facility network, and create a road map and business case to implement programs that meet their corporate objectives. Many organizations have been leaning in the direction of using outsourced FTE’s to accomplish some of these objectives. At Stark, we find this is the perfect example where co-sourcing has significant advantages for most organizations.
- Establishment of a data-driven decision culture – New digitized building architectures make it much easier to gather more data surrounding equipment operations at a reasonable cost. When monitoring building controls and the network, power consumption and energy spend is more quantifiable and energy consumers can be made more accountable. Energy performance data can also make clear the opportunity cost for not fixing a particular area. In each case, the systems data and the analysis of that data helps building owners make more informed (and ultimately more cost-effective) decisions. Now, facility staff members and executives can have strategic, data-driven conversations rather than engaging in traditional “this HVAC unit sounds bad” or “this switchboard is old, maybe we should replace it” investment justification approaches. Using data whenever possible is the new goal.
The essence of co-sourcing is to spend less money to achieve building performance goals. As a Master-level certified Schneider Electric EcoXpert, our company Stark Tech Group, has helped building stakeholders to generate up to 20% in operational savings through the deployment of Schneider Electric EcoStruxure architected solutions. However, our projects aren’t always measured in immediate savings. Co-sourcing approaches accrue longer-term savings as time evolves and as the technology modernization gradually expands.
To learn more about how digitized building automation solutions can improve building performance, visit the Schneider Electric EcoStruxure for Buildings web site.