Executives are looking 'up' to find savings for their bottom lines.

In this clay of troubled economies, corporate downsizing, and drive for bottom-line profitability, corporate executives are looking anywhere they can to find synergies, efficiencies, and areas where they can reduce expenses. And that search now includes the roof, where money can be found through proactive roof maintenance programs.

An often-overlooked opportunity to significantly save money (or to contribute to corporate profits) is in the area of corporate facilities maintenance and management. Taking proper care of the company's assets is the business of skilled and savvy middle management, often known as FM's or Facility Managers. They can also be known as Facility Engineers, Corporate Maintenance Managers, Construction & Maintenance Managers, Property Managers and a number of other specialty titles. Different as their titles may be, they all share common problems.

The perception of their superiors (who may not have first-hand experience with all the specific areas of responsibility for FM) is that they are always firefighting and asking for more money, more staff, and more programs. Often, there is a division placed between these two groups of corporate managers (Executives and FM's), and the groups are categorized as, MoneyMakers (Corporate Executives), and Profit-Spenders (FM's). What these groups fail to realize is that facility management and maintenance does not have to fall into the Profit-Spender category as a necessary evil.

The fact is that buildings do not get better with age. We have all learned that in order to get the maximum service life and utilization out of our hard assets within our companies, we need to perform regular and routine maintenance on them.

We have learned these lessons well in our personal lives with our homes, cars, appliances, lawnmowers, etc. These items last longer and perform better with routine maintenance and care.

We have also learned the economic benefits of spending money to make money. Think of the comparison between the $19.95 oil changes in our cars versus the $1,995.00 upper engine block replacement because we did not do the routine oil changes. just as the famed TQM expert Deming preached that "Quality is Free," experienced and disciplined Facility Managers have learned that it is always cheaper to repair and maintain almost anything in a building than it is to rebuild or replace it.

The fifth wall

On industrial, commercial, and institutional buildings the roof serves as the fifth wall of the building. These roofs on large profile buildings are typically flat (low-sloped) roofing systems that are exposed to the harshest elements. Extreme heat and cold, extreme UV, heavy rains and winds, chemical spillages, and rooftop traffic are the most common attacks that a roof must withstand on a regular basis. These roofing systems must be 100% effective in order keep water out of buildings.

Dollars Invested

On a 100,000 square foot roof, 99.999% perfection would still leave the potential for one square foot of total roof area to be defective.

Let's imagine that one square foot of defective roofing is divided up in 144 square inches, and each of these square inches was spread out over the entire roof. The result is 144 leaks, with a one- inch square hole or split at each leak location. This scenario could create a catastrophic condition in most buildings, and in a heavy rain, could result in significant damage to the building interior and contents. This damage can result in many types of consequential damages, such as:

* Roof insulation and deck damage

* Interior ceiling tile, walls and floors

* Interior furnishings and fixtures

* Interior office equipment

* Interior production equipment

* Finished goods and inventory

* Electrical systems

* Air quality

The Hidden Costs of a Roof Leak

Interior roof leaking can also result in other expenses and legal exposures to your company that can be at least as costly (if not more) than any of the areas previously mentioned.

* Downtime of production areas-lost revenues

* Lost use of space-lost revenues

* Tenant complaints, lost use of income, lawsuits

* Slip and fall accidents and legal claims

* Mold and mildew problems resulting in air quality issues and clean-up expenses

* Employee moral and productivity issues

* Regular and overtime labor expenses for clean-up and repair work resulting from roof leaks

The problem in most companies is that they do not track these consequential damage items as being roofing related expenses. However, close examination of the origin of these costs is likely to reveal that they were incurred as a direct result of a faulty roofing system.

In the typical roofing portfolio of most companies, the costs of these consequential damages can represent a significantly larger dollar amount than the annualized budgeted roof maintenance work that was originally needed, but not performed. To sum it up, companies are reactive, not proactive when it comes to roofing needs.

Deferred maintenance

Most American businesses have adopted a strategy of deferred building maintenance rather than a proactive maintenance approach. While this approach can definitely reduce short-term maintenance budgets, it almost always translates into increased maintenance and capital expense budgets for roofing failures due to neglect. In essence, companies can "pay now or pay later" when it comes to their roofs.

The interesting comparison is that with deferred roof maintenance, companies will always pay more than they would if they scheduled regular roof maintenance into their facility maintenance/ management budgets. This represents a paradigm shift away from Band- Aid fixes toward long-term care and maintenance to maximize the sustainable life of the roof.

Consider Figure 1, which helps to demonstrate and differentiate the two optional approaches to be considered: Should we have a PROACTIVE roof maintenance and management approach? Or should we continue with our DEFERRED maintenance approach?

Clearly, without considering any of the costs associated with the consequential damages or legal liabilities issues presented ear lier, adopting a proactive roof maintenance and management program will allow most companies to save significant bottomline dollars on an annual basis. And executives used to think that roofs couldn't make their companies any money.

Key Terms

Life-cycle Cost Method, n- a technique of economic evaluation that sums over a given period the costs of initial investment (less resale value), replacements, operations (including energy use), and maintenance and repair of an investment decision expressed in annual or value terms.

Present Value, n- the value of a benefit or cost found by discounting future cash flows to the basic time. The Present Value Factor is used to convert future values (benefits and costs) to present values. The Future Value is the benefit or cost at some point in the future, considering the time value of money.

Annual Value, n- a uniform annual amount equivalent to the project costs or benefits, taking into account the time value of money throughout the study period.

Investment Cost, n- first cost and later expenditures, which have a substantial and enduring value (generally more than one year) for upgrading, expanding or changing the functional use of a building or sub-system like a roof.

Capital Asset, n- a piece of equipment, machinery (or roof) that must be depreciated and meets the following requirements: used in business or held to produce income; expected to last more than one year; something that wears out.

Recovery Period, n- the number of years over which the basis (cost) of an item or property is retired.

Class Life, n- the number of years that establishes that property class and recovery period.

BY ROBERT W. LYONS, FRCI

Bob Lyons is principal of Lyons / Waldron Consulting Group, LLC, and has served in the roofing industry for almost 30 years. He is the cofounder and 1st Two-Term President of the Roof Consultants Institute (RCI). Bob is the recipient of the distinguished first Fellow of the Institute award. He has been a faculty member of the Roofing Industry Educational Institute (RIEI) for more than 15 years. Copyright Stamats Communications, Inc. May 2004

Source: Buildings
Publish Date: 2004-05-01

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