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Blog: MRO Budgeting—An Exercise in Astronomy

As a maintenance supervisor, I heard many different philosophies on how to create and utilize an annual budget for my department. Advice ranged from spending multiple days entering numbers and information into an Excel spreadsheet created by management software accountants to, “Let’s put the numbers on the dartboard and throw a few…”

Regardless of which method is used, and how the dollar amounts are generated, staying in budget can be a challenge. Here are a few tips that can help you be more on target:

•    Be consistent: If possible, purchase the same product for every apartment, regardless of any sale price. Let’s look at a vanity faucet, for example. If the same one is used in every apartment, there will be only one set of repair parts that has to be stocked at the property, and a technician can often get parts to make a repair before going to the apartment. This saves time and increases accuracy. If the property purchases the cheapest one possible at that time, the technician has to go to the apartment and then find the specific component that works for that faucet. In addition to decreasing repair time, being consistent lowers the amount of money tied up in parts. 

•    Be honest: Often times, the budget available for the year is generated by reviewing last year’s numbers. If the property doesn’t report or code the invoices properly each month (for example, placing an invoice for water extraction in the carpet cleaning category because there is money left in that category and none in water extraction), then at the end of the year the budget is an inaccurate picture of what happened. Maybe the property should place more money in the extraction budget. Without an accurate picture, the numbers for next year will be skewed.

•    Be flexible: Just because we did a task one way last year doesn’t necessarily mean we have to do it the same way this year. If we cleaned the dryer vents in-house last year, what was the total cost? (Be sure to include time away from service requests in this consideration.) Compare this amount to the final invoice cost of hiring a vendor to perform the same task. What do the numbers say? This comparison is a good exercise even if the numbers show in-house is more frugal, because it can be a networking opportunity with vendors or contractors.

•    Be cross-trained: As a team leader (property manager or maintenance supervisor), it is a good idea to have the members of your team aware of what happens on the other teams. Have your maintenance technician shadow a leasing professional for a day, and vice versa. When the shadowing occurs, be open to ideas and questions from the other team; sometimes a fresh set of eyes can find new ways to save money.

Some of the most interesting advice I ever received about budgeting was, “Budgeting is an exercise in astronomy. You ask for the amount of money needed to go to the stars; when accountants look at it they will pare it down to what will get you to the moon. When all is said and done after the review process occurs, the numbers left will be useful on planet Earth.”

I make no comment on the accuracy or practicality of that quotation. Happy budgeting!

——

Paul Rhodes is the National Maintenance and Safety Instructor for NAAEI. He travels the country teaching Apartment Maintenance Technicians skills required to complete that task as a part of the Certificate for Apartment Maintenance Technician (CAMT) program, and can be reached at prhodes@naahq.org.

Be sure to join the Lowe’s ProServices LinkedIn Group to read additional content and interact with other Construction/Trade and MRO professionals.

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