Commit to Serious Savings: CAFM Systems Achieve Cost Control through Improved Lease Management and Heightened Expense Analysis

By Walsh, John | Journal of Property Management, March-April 2005 | Go to article overview

Commit to Serious Savings: CAFM Systems Achieve Cost Control through Improved Lease Management and Heightened Expense Analysis


Walsh, John, Journal of Property Management


How can managers harness costs across a portfolio? Developing and launching a computer-assisted facilities management (CAFM) system is a monumental task that requires commitment and cooperation from all levels of an organization. But when executed properly, this process will generate results that range from short-term organizational relief to long-term management forecasting and increased profits.

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The building and fine tuning of such a system will engage key people in many disciplines and be very time-consuming. The final system must be fully in tune with organizational needs, objectives and processes in order for this arduous process to be worth the effort. Although an off-the-shelf software package may seem like an easy solution, it will not be able to meet the unique requirements of any given group. Only a customized system, based on a comprehensive needs analysis, can hope to satisfy all stakeholders and be worth the considerable organizational effort required to achieve it.

Information = Cost-Effective Lease Management

Once a fully articulated CAFM system is operational, the new wealth of information at one's fingertips is invaluable. With a complete detailed inventory of assets in hand, the commercial property manager has the ability to instantly locate for clients all vacant property within a corporate real estate portfolio. This allows the manager to quickly and accurately identify space that most closely matches a client's specific needs, which eventually translates into higher occupancy rates and revenues.

Simple "tickler" functions built into lease abstracts can prompt when leases are due to expire, giving managers ample time to prepare new ones. In situations where an increase in the lease rate will take effect at a certain date, the system automatically updates information to ensure the higher rate is enforced at the appropriate time. Managers also gain the ability to negotiate new contracts using cost-history reports based on actual maintenance and management expenses.

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Another good example of how a CAFM system can help a real estate manager maximize income is by providing accurate square-footage figures for all leased space. By taking the square-footage numbers directly off the original CAD plans and comparing them to the square footage specified on the lease documents, discrepancies can be detected and adjustments made. There have been instances where, with this information, property management firms have been justified in amending lease figures upward to reflect the more accurate square-footage figure.

Documenting to Control Costs

The first step toward reducing expenses is to accurately monitor and document costs. With a properly implemented CAFM system, all prior costs associated with a property can be accounted for, possibly for the first time. When all costs have been cataloged and combined, no matter how scattered and seemingly trivial, new insights are gained and cost patterns can be subjected to rational analysis and "what if" modeling. New expenditures can be justified or removed based on hard data and projections of their ultimate impact on the bottom line. The analysis of trends on any given property can be used to project future costs and their effect on today's business decisions.

A work order system is another CAFM feature that tracks on-demand work requests, and can establish both maintenance costs and effective preventive maintenance programs. CAFM tracks not only what repairs were completed, but also captures key metrics such as quantity of work requests finished, by whom, the types of tasks, timeframes to accomplish the work and cost. These reports can be formatted and created as needed, which is helpful for budget planning.

Unforeseen repair requirements can "sabotage" the most carefully constructed property management budget. CAFM systems can structure preventive maintenance programs, allowing an orderly and predictable management of property repairs and improvements. …

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