13th January 2013

How Can CAFM Save Money?

One of the great benefits of a CAFM system its ability to save money. Many CAFM vendors will tell you that their CAFM system will save you money, but the question is...how?

Understandably CAFM Systems do require a considerable initial investment. There are also on going licences and support fees to take into consideration. But investment in a CAFM system can prove to pay for its self. In this article, we will be exploring and providing examples on how CAFM systems can save money. The examples used within this article reflect that of a live service provider and focus on the cost savings achievable through using CAFM software to support their maintenance duties.

Pre-CAFM, many service providers and internal facilities managers often relied upon manual and paper-based processes to control information flow between clients, engineers and back office staff for Reactive Maintenance or Planned Preventative Maintenance (PPM) tasks. Such processes are labour intensive and prone to manual error. Converting processes to electronic format can dramatically enhance efficiency making instant cost savings.

One of the first places to look at cost saving through CAFM software is the use of WEBbased portals as the starting point for any Reactive Maintenance call. From a client’s perspective, a WEBbased CAFM portal offers the ability submit Reactive Maintenance calls and review updates 24/7, without the intervention of back office teams. Depending on the quantity of calls, there are instant cost savings to be made by deploying a self-service WEBbased portal as a customer service tool.

Example 1
On average:

• 115 reactive request are reported via phone, fax or email per day
• It takes an operator approximately 4 minutes to record and allocate the call

Using these assumptions, approximately 7.6hrs per day are spent logging calls, which equates to just over 38 hours per week. Therefore, 1 full time operator is required to log new reactive calls. By deploying a WEBbased self-service interface, instant cost savings can be made by reducing the amount of administration required. By migrating clients over to the WEBbased portal and promoting self-service access, this would either free up time to allow administration teams to focus on managing jobs to improve operational performance, or reduce the number of administrators required offering potential wage savings of around £15,000

Estimated Cost Saving: £15,000

Example 2
On average:

• 2000 jobs (Reactive Maintenance or Planned Preventative Maintenance (PPM)) are issued every month.
• 2 sheets of paper are printed per job
• Printing costs are around £340 for hardware, ink and power

Approximately 4000 sheets of paper are required per month for the printing of job sheets. This would require 8x500 reams of paper at about £5 each, plus the printing cost. Roughly it would cost £380 per month, £4560 per year to print the number of job sheets. This cost could be replaced by using MOBILE CAFM solutions to deliver job details to engineers.

Estimated Cost Saving: £4,560

Example 3
MOBILE CAFM systems help improve response times, by avoiding the need for engineers to return to base to collect or deliver jobs sheets.

On average:

• 30mins per days are consumed by collecting or returning jobs sheets
• Contractor or engineer is on an hourly wage of £25

Over the course of a year, this would cost the company £3,000 per engineer or contractor.

Continuing with the live example, the client currently has 47 engineers which when multiplied by the annual cost would equate to £144,000 per annum in labour to complete this process.

However, due to the geographical location of the engineers, it is not feasible for them to attend the office to collect daily work schedules. Instead, the client in these examples employs a slightly different approach. Jobs would be emailed to engineers. After attending the site the engineer would complete a job/trip sheet form and return any relevant documentation via post.  So, assuming….

• 2000 jobs are issued per month
• Price of a first class stamp is 60 pence
• 4 boxes of 500 envelopes are required at £25 per box
• Approximately 40 trip pads are required per month at £5 each

Per year, it costs the company £18,000 to return job responses. Deployment of the MOBILE CAFM system will instantly replace expenditure for both these examples.

Estimated Cost Saving: £18,000

The following example illustrates the workflow process of a reactive call logging usingboth WEB and MOBILE technology to improve response times and reduce adminitations.

Example 4
When the job sheets are received by the office, the back office administration teams manually record the information back on to the system. This process requires analysis of each job, adding the correct responses and costs (schedule of rates) and timesheet entries. This information would then be passed to accounts to review, invoice and transfer information into the accounting package (i.e. SAGE). It’s estimated that each job takes approximately 8 minutes to complete this process smoothly. So….

• 2000 jobs returned per month
• 8 minutes per job required to process

Per month, approximately 267 hours are required to complete this process per month, equating to 3204 hours per year (i.e. 2 full time roles). Assuming a full time administrator costs the company £15,000, this process costs £30,000 per year. A combination of the MOBILE solution, configuration of pre-defined schedule of rate and CAFM to accounts data migration processes can offer instant cost savings through automation.

Estimated Cost Saving: £30,000

Example 4
SLA performance monitoring is a key requirement for service providers and facilities managers. Whilst SLA's can be monitored to improve operational performance against client agreements, there are heavy financial implications including hefty fines for non-compliance.

CAFM systems can provide the tools to warn of items nearing or outside their SLA in an attempt to hopefully prevent fines.

Should fines occur, CAFM systems also provide a centralised tool to analyse data quickly and efficiently to help provide evidence dispute fines. Over the course of a year, CAFM has saved the company approximately £35,000 by providing evidence to dispute fines.

Estimated Cost Saving: £35,000

One final stream of cost savings for maintenance is asset management, i.e. through prevention of mechanical failure through planned maintenance. PPM’s can dramatically reduce mechanical breakdown through regular service schedules. Mechanical break downs can have a massive effect on buildings and operations, by effectively shutting everything down which has a direct impact on the bottom line. Regular PPMs can hopefully prevent mechanical failure through servicing/inspections. CAFM systems can also notify engineers/administrators where PPM and Reactive tasks may overlap, thus further time and cost savings can be achieve through efficient scheduling of jobs.

Using the examples provided above, the total costs savings achievable through CAFM can be in excess of £102,560.

Further Savings

This is just the tip of the iceberg when it comes to cost savings capable through CAFM. Cost saving initiatives run far below the surface and can extend across many areas of the business, including:

• Prevention of over booked meeting rooms and resources that can force people to secure facilities elsewhere at a cost to the business
• Prevention of accidents/incidents insurance claims or fines through health and safety audits
• Performance and trend analysis through advanced dashboard reporting
• Holding optimum stock levels thus preventing over-stocking
• Efficient location or work type based resource planning
• Accurate space management/utilisation
• Quick profit/loss cost analysis

Summary

It's important to remember that deployment of CAFM does offer overnight cost savings. It's possible that year one, little or no cost savings are made. This is for a number of reasons including the cost purchase the system, time spent deploying, hardware purchases, internal testing, internal and client training, user resistance and other extenuating circumstances etc. However, over the course of CAFM systems lifetime, the return on investment will certainly prove its worth. By migrating over to a centralised electronic system, you can begin to realise the benefits CAFM software can offer in regards to labour and resource saving, not to mention prompting Green Credentials. Data captured will help you to analysis performance and monitor trends, thus helping you to make informed decisions based on facts to further reduce costs.

A parting thought...In a recent survey by i-FM.net and the FMA, sponsored by Service Works Group, 80% of the 450 respondents said that CAFM saved them money. CAFM software must be doing something right then.