Tips From The Pros
BENEFITS OF A WELL-RESEARCHED AND DOCUMENTED FACILITY LIFECYCLE PLAN
My name is Bob Quigley and I appreciate you taking the time to read my fourth Tips From the Pros COVERMASTER®blog. My topics center around the operation of multi-purpose facilities. If you read my first installment, we discussed the valuable tool of using percentage allocation analysis in determining the true cost of each revenue stream in a multi-purpose facility. By using this analysis, a fairly accurate determination can be made of break-even price points on each of the products you sell. This creates a baseline to determine your net return per sale, commonly called, your "profit margin".
What you are selling is your inventory. The type of inventory sold in facilities is what I like to call "realtime inventory". This can be compared to airplane seats or hotel rooms. If the inventory is not sold, the opportunity has been lost forever, because it is time sensitive; as opposed to t-shirts on a store rack, that can be sold the next day. Real-time inventory is here today, gone tomorrow! If you missed the third blog, we explored the effect product merchandising techniques can have on increasing your sales of real-time inventory
In this, the fourth blog, we will continue the financial theme by discussing the benefits of a well-researched and documented Facility Lifecycle Plan. A good Facility Lifecycle Plan is a comprehensive, component-by-component analysis regarding all aspects of a facility’s infrastructure, designed to project its life expectancy. This analysis is usually completed as part of the building process, or shortly thereafter, and often performed by a multi-disciplinary engineering firm, preferably experienced in athletic facilities. Based on the results of the study, a replacement projection schedule is developed and costs are determined allowing for inflation.
In general terms, the components analysed are grounds and services, building structure, building envelope, mechanical systems, electrical, HVAC, energy savings, and barrier free access etc. These components are often projected out for up to 25 years.
If we were to use the example of an ice arena within a multi-purpose facility, the floor would have a life expectancy as would the headers, compressors, condenser, boards, DH system etc. Always include major equipment such as an ice resurfacer, as they are essential to the operation. Each component’s life expectancy would be analysed each year and when the time comes for it be replaced, it would be put into a five-year facility work plan. This work plan would be budgeted and capital money would be allocated for the replacements. As year one of the work plan is completed, then year two’s work plan would be moved to year one and so forth. As well, the lifecycle plan would be updated. Remember that things get bumped when there are major breakdowns and emergencies arise.
Most often, the capital budget in an organization has to be planned at least ten years in advance and is coordinated by a capital budget coordinator. It is always a good idea to involve the required personnel in the lifecycle plan including the facility’s General Manager and Chief Engineer. Be sure to include the subsequent work plans so good communication is maintained, to avoid problems with shutdowns and program interruptions.
Using your Plan:
- Involve staff in the decision-making process
- Keep the plan updated and record all monies spent
- Record staff labor costs of the work you do in-house
- Record peripheral costs such as pool water and ice paint needed to complete projects
- Keep projects all-inclusive such as new pumps, if you get new pool filters
- Don’t be afraid to change the plan if priorities change.
All in all, a good lifecycle plan that is well maintained through the addition of a well-planned and well-funded work plan, will keep the facility in good working order, minimize emergency breakdowns thus reducing facility downtime, minimizing revenue loss and maximizing your profit margin.
Sounds Like A Plan!
Posted July 12, 2022