Preventive maintenance is an important part of any commercial real estate investment plan.
To ensure that you have a solid preventive maintenance program is not as exciting as vetting deals or locking down lenders. But it’s an essential part of ensuring that your commercial investment property will maintain profitability. Poorly maintained buildings lead to frequent equipment failures, decrease an asset’s life cycle, and lower the value of a property.
On the other hand, a well-thought-out preventive maintenance program can save 10 percent in energy costs and give a 545% savings over time (Jones Lang LeSalle).
It’s easy to assume that your property manager has already implemented a preventive maintenance program. However, the likelihood of that being the case is slim.
This may be due to several reasons.
Myth #1: Lack Of Time
First, many facilities managers struggle to find the time to plan and implement a comprehensive PM plan.
Ironically, this is generally due to another fact. Facility managers are dealing with unscheduled maintenance emergencies so often, that they aren’t able to take a step back to examine why they are experiencing so many equipment failures.
Myth #2: Lack Of Money
Often property managers complain that creating a proper PM costs money. It does cost money to create a PM, but not having a PM costs more. Money is definitely being lost due to building inefficiencies, and with the size of most commercial properties, this can lead to a healthy dent in your cash flow.
Putting a PM into place ensures that not only building efficiency will be tracked, but it’s comparable to industry standards. It will make taking a simple step to create maximum efficiency goals.
Myth #3: Lack Of Labor To Get The Job Done
If your property manager is forced to respond to urgent maintenance tasks on the fly, then this is most certainly true. However, if a master plan was created, then the estimated work for the following year is relatively simple.
There are numerous online resources both from the manufacturer and from other professionals. They allow your property manager to estimate when equipment is likely to break down, what repair parts will be needed, as well as the tools that will be required to complete the job.
Furthermore, a yearly plan allows you plenty of time to hire or train more labor or rearrange your staff so repair jobs can get done.
When property managers do consider PM programs, they often focus on non-specific, word-of-mouth, single item ideas or strategies.
Instead, you need to ensure your property manager looks at real, tactical data pulled from a current PM program. They need to analyze all maintenance tasks, equipment, materials against usage, performance, and cost over a 12-month period.
The 3 Components Of A Solid Preventive Maintenance Program
1. A Comprehensive Job Plan or Task List for Each Asset
This should be more than a checklist. It should be a list or a group of tasks that indicate optimal numbers and measure the condition of the equipment against it. This is a strategic component that helps managers determine how well the equipment is working.
2. An Annual Master Plan with Estimated Labor and Material Components
Including estimated labor and material components is essential and not just because you’ll be able to set aside the correct sum of money. It’s important because your property manager will have a plan for measuring how much time and staff you will need to maintain the facility.
3. An Inventory of Emergency Spare Parts
Make sure your property manager keeps an inventory of emergency spare parts because it’s essential for keeping the property running. This inventory should also include the tools and equipment needed to accomplish each task, ensuring a technician can do the work correctly.
Regarding qualified labor, you can authorize your property manager to search for professionals. Or you can implement a training program (on-site or off-site) for employees already employed as maintenance staff.
How To Get Started
As an investor, your property manager needs to spend time examining the property’s expense records and determining what portion of expenses are due to maintenance issues. After that, he should compare the results to industry standards.
This will help you know where you are in terms of industry standards. Once they have an idea of what’s going on, they will need your input to set goals for the next year or several years. It depends on how much the issues and the ROI cost, to ensure they meet or exceed those industry standards.