"Hey Tim...how do we get started with Facility Budgeting?" I hear that a lot from Pastors, XP's, Business Admins, Facility Managers and lay people. It is a universal concern. Let's take a 30,000 foot level view of the most effective means by which we have seen work.
When you are budgeting for your facilities, there are 4 primary buckets that need to be accounted for:
We fully believe that being intentional about all 4 buckets will keep you out of the dog house related to your facilities
- Operational – This includes utilities, janitorial, general maintenance and staffing. Budgeting these area will be critical to get RIGHT. What does that mean? It means that you are not spending too much on utilities and making sure you are spending enough in the other areas to keep up with the natural rate of deterioration. Here are some rules of thumb that we find to represent "best-practices" for churches:
- Utilities - $1.00-1.50/SF annually. If you are over $1.25/SF, you may want to consider an energy audit or a review of your HVAC controls, as 50% or more of your energy consumption is attributed to HVAC and the best way to reduce that is through proper "behavior" which can be assisted with proper controls. We also just released a free eBook on HVAC Solutions...get your free copy HERE.
- Janitorial (labor, material, paper products, major cleaning like carpet extractions, window cleaning, etc.) should be in the $1.50-$2.50 range annually.
- General Maintenance - If you are budgeting below the national average of $2.25 - $3.00/SF this should be re-looked at. We have found that if a lack of general maintenance is present, the likelihood of deferred maintenance increases. In most cases $1 not spent on general maintenance will cost 3-4 times in the future.
- Staff - Based on national surveys by our firm and IFMA, we believe the number of facility staff for a well-run organization is one Full Time Facility Staff Employee for every 25,000 - 35,000 SF.
- Deferred Maintenance – These are the items that should have been addressed prior but for whatever reason, have not been accounted for. We have found that when insufficient general maintenance is budgeted, the likelihood of deferred maintenance increases...same for staffing. As stated above, the cost of deferred maintenance can be 3-4 times the cost of the initial general maintenance. Sounds like good stewardship to avoid deferred maintenance.
- Capital Reserve - We have found that a church needs $1-3/SF annually in order to keep up with the real cost life cycle planning. Capital replacement is not an "IF" consideration but rather a "WHEN" and "HOW MUCH". While the $1-3/SF is a reasonable way to start planning, the best way is to do "line-item" projections for each asset that has a life cycle. If you have not already done so, check out our FREE Life Cycle Calculator to help you get started. We also have a free eBook on this topic.
- Capital Projects – These would be the type projects like adding space or major renovations, expansions and the like. It would be "easy" to see the need for some added space and be tempted to take the money from one of the above buckets. Be VERY careful with that thinking...that is a slippery slope. In addition, small projects like painting, replacing a few light fixtures, etc could...and should...be part of your General Maintenance budget.
We fully believe that being intentional about all 4 buckets will keep you out of the dog house related to your facilities. If you need help evaluating these, do not hesitate to reach out and we will help you get started.