030917 - What Indirect Operational Costs Affect Your P&L-Hero Image Size - 1200 x 317.jpg

What Indirect Operational Costs Affect Your P&L

Indirect costs are often overlooked and are not applied back to direct ticket costs because they are less tangible than hourly rates and trip charges. This makes them harder to calculate for the total cost of ownership. However, without evaluating these indirect costs, you lose transparency to accurately calculate the financial impact on your business.

Below we’ve outlined a few of the indirect operational costs for facilities and explained how they impact your bottom line. To read to full list, download our whitepaper: How to Calculate the True Cost of Facilities Maintenance.

Indirect Facilities Maintenance Cost: Running an RFP

How it Affects Your Bottom Line: When it comes to facility maintenance services such as snow removal or HVAC preventative maintenance programs, many companies utilize RFPs to find a facilities maintenance provider. Whether you use the RFP process for your facilities every year, or every five years, it is important to include the cost of running an RFP into your bottom line. RFPs usually involve a team dedicated to reviewing submissions, oftentimes involving several rounds of applications. When considering the cost of each individual’s time, and the number of weeks it requires to run an RFP, the cost for a company can be upwards of hundreds of thousands of dollars.

Indirect Facilities Maintenance Cost: Store Management Involvement

How it Affects Your Bottom Line: If a store manager is highly involved in each of their stores’ work orders, it takes away from the time that they could be focusing on increasing revenue and customer satisfaction at that location. Their involvement can vary from calling contractors, confirming that a work order is necessary or completed, and filling out invoices. If a store manager spends multiple hours a week managing work orders, this needs to be factored into lost sales or lost production for a business. A store will have better ROI when the store manager does not have to be frequently involved in work orders.

Indirect Facilities Maintenance Cost: Operational Disruption

How it Affects Your Bottom Line: Most retail environments have critical assets or components of their day-to-day operations that impact their ability to generate revenue. Should this asset or component of their building not be operational, it will result in potential lost sales or even damage the brand image. The down time of the asset or component of their building should be accounted for within the cost to repair.

For example, should the outlets at a hair salon stop working, this will potentially limit or even stop a service altogether. This will directly result in a negative customer experience as well as impact total sales revenue. The estimated lost sales per hour should be applied back to the cost of the repair. Applying lost sales to the total ticket cost will not only enable an organization to more accurately measure the total cost of a service, but also the effectiveness of the current program.

Understanding the True Cost of Facilities Maintenance

Total cost of ownership analysis provides facility maintenance teams and executives with a more accurate picture when measuring the effectiveness of their program. When looking at the total cost of ownership from a facilities maintenance perspective, it is essential to know and understand the indirect operational costs that affect your business.

To read about other indirect operational costs, download our white paper: How to Calculate the True Cost of Facilities Maintenance.

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