The annual budgeting process is a critical step in managing your facilities and strategic planning. Here are the questions that should be answered before finalizing your annual and 20-year budgets.
- Are you planning changes in services that may affect building systems or equipment needs?
- Are any critical warranties provided by a developer, contractor, or major equipment or systems manufacturer set to expire during the next year?
- Are any of your contracts with service contractors or vendors set to expire?
- Do you have any significant issues with any of your service contractors or vendors?
- Have any significant environmental or geological events occurred on or near the property that may have a negative impact?
- Have any new mandated changes been made to the building codes? Are there any new regulations that could affect CapEx?
- Have you received any citations from building officials, fire marshals, or licensing agencies?
- Have any significant building system components been added, overhauled, or replaced?
- Have any major systems or equipment become obsolete?
- Has there been any extreme wear or damage to major building systems or equipment?
- Are there any technological changes or product developments that may point to replacement of a functionally obsolete system?
- Has any maintenance been deferred to building systems or equipment?
- Has pricing/inflation been significantly impacted?
- Did reserve funding and expenses occur as planned?
- How many days cash-on-hand do you have? Has this deviated from previous periods? Could this change affect your ability to absorb surprise capital spending?
- Have there been any changes in demographics or competition that prompt a response?
- Have there been changes in the board or senior levels of management?
- Have there been any legal challenges that may affect the budget?
- Is there a plan to refinance, complete a major renovation or expansion, apply for accreditation, or attempt a sale or merger? Is there a need to pursue affiliation?
- Have three or more years passed since an independent consultant updated your building systems and equipment assessment and funding plan?
By taking the time to gather data before you begin the budgeting process, both for your annual and for your long-term budgets, you will end up with a significantly better result based on facts.
About the Author:
Rob Milam is the CEO of zumBrunnen, Inc. He has more than 25 years of diverse experience in the construction industry. Rob has worked in multiple market sectors and in all phases of construction management. During his career, Rob has worked on a broad range of facilities including senior living, residential, multi-family, industrial, office, and healthcare.
Rob Milam
Project Manager and CEO
