Building owners face a rising risk of building performance decline and increased deferred maintenance costs due to retiring facilities engineers. Hiring new talent is challenging due to limited availability and high costs caused by talent wars. Unfortunately, US Bureau of Labor Statistics tells us that these skill shortages will potentially increase over the next five years.
The current building facility staff cannot take on the additional tasks required to fill the void of departing retirees. New skills are needed as modern building management system becomes much more connected and digitized. For most building owners, the answer seems to lie in the 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.
Benefits of the Co-sourcing Approach for Facilities Management
Unlike traditional outsourcing, where senior management handed down a mandate to accommodate outsourcer requests, co-sourcing is much more collaborative. The outside resource provider collaborates with the existing facility staff to assess their competencies. They identify and fill any gaps in skills through joint planning. This process can focus on tactical project needs or serve as a methodology for long-term strategic planning.
Co-sourcing discussions revolve around ways to reduce building operating expenses.
Reduction in Deferred Maintenance
Delaying building maintenance increases the cost of eventual repairs and the risk of catastrophic failure. Underfunding maintenance over time can lead to discomfort in requesting additional funds, especially if old equipment still functions. However, a third-party co-source can act as an advocate for the facilities department and offer cost-effective ways to maintain building infrastructure. This makes it easier for management to accept their advice. 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 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.
The project provided additional benefits such as centrally controlled HVAC performance monitoring, modern lighting retrofits, and a 95% reduction in emergency HVAC budget due to reduced downtime risks. They are expanding the program to include 850 facilities over a 5-year period to achieve further savings of $30 million through enhanced energy efficiency and deferred maintenance reductions.
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’s logical to upgrade select infrastructure equipment and networking to enable data collection for analytics. With proper strategic planning, these tactical upgrades can align with the facility’s long-term vision, reducing energy costs and improving regulatory compliance.
Energy Management / Sustainability Functions
Large facility owners/operators increasingly have energy and sustainability objectives due to various factors, such as corporate citizenship, customer demands, and regulatory compliance. They typically require outside providers to establish program objectives, identify opportunities within their facility network, and create a road map and business case to 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, energy consumption and spend become more quantifiable, making energy consumers 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 informed 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” investment justification approach. Using data whenever possible is the new goal.
The essence of co-sourcing is to spend less money to achieve building performance goals. Stark Tech is a Master-level certified Schneider Electric EcoXpert. We have helped building stakeholders generate up to 20% in operational savings. The deployment of Schneider Electric EcoStruxure architected solutions results in these savings. However, we don’t always measure our projects in immediate savings. Co-sourcing approaches accrue longer-term savings as time evolves and as the technology modernization gradually expands.
Want to learn more about how digitized building automation solutions? Visit the Schneider Electric EcoStruxure for Buildings web site and discover how to improve building performance.