With the world struggling to right itself in the wake of a pandemic, maintaining a healthy operating budget is harder than ever. With occupancy and energy consumption fluctuating due to COVID-19 and the ever-changing policies surrounding the pandemic, a seemingly sound budget could be set adrift at a moment’s notice. We understand how difficult it is to keep a firm grasp on expenditures during these troubled times. So, here are a few tips to help you get back on track.
Understand the Next 6-12 Months
Before anything else, make sure you have a good understanding of the future of your budget in response to COVID-19. Many budget setbacks result from simple oversights and lack of forethought. To combat this, forecast how revenues and operational expenditures will be affected by the pandemic-induced economic downturn. Make sure your property management team is equipped with the tools they need to accurately predict spend and create a cost-effective utility budget strategy.
You may want to develop a range of possible scenarios and contingency plans. For example, in the cases of both a recession or an economic upturn, forecast the magnitude and duration of losses by source and by fiscal year, as well as the pre-recession growth rates by revenue source. Similarly, determine how soon general fund resources might be depleted. Use the data available to you to understand the possible scenarios and their impacts to revenues in order to make fiscally responsible decisions. Having clear ideas of where your budget could go will aid in its recovery.
The hallmark of any budgeting tactic is the delicate balance of income and output. Ideally, reducing spending habits may help halt the outward flow of resources, allowing for savings and the allocations necessary to recalibrate a budget. A major line item in any commercial building’s budget is utility costs; energy use typically accounts for one-third of total operating costs for commercial office buildings. Whether you have low or no occupancy during the pandemic, adjusting your building operations to reduce energy usage is an excellent way to curtail costs. Small changes in operating costs that will reliably decrease expenses over the long term will improve your bottom line.
After assessing possible risks and scenarios, work toward reducing capital asset investments and improving the management of capital projects. You may also want to strategically defer some building purchases, focusing only on emergency repairs and expenditures, while reexamining maintenance and replacement standards to determine how your money is being spent and how to curtail that spending.
Find New Resources
Another method of reducing your spending lies in the allocation of internal funds. Reassess said funds and the formulas for allocation to decide which facilities may best benefit from continued funding and which may be able to function with less. You may consider redesignating budget line items. Strategically determine which expenditures are opportunities for cost-reduction or deferral. Such assessments could allow you to implement new or revised fees, thus providing a buffer for the budget and perhaps giving it room to build.
Reduce Material or Contractor Costs
Once internal and external expenditures have been applicably recalibrated, you’ll want to assess costs rendered unnecessary by the social climate. A few ways to do so may include the closure of facilities where social distancing isn’t possible and eliminating lower-value or no-use programs. If feasible, use this transitional period to review contractor costs, renegotiate, or even identify new contractors. Implementing these simple changes could drastically reduce your spending.
Communicate and Engage
Communication, especially regarding building operations, is critical to finding the best management solutions. Property teams should proactively reach out to their tenants to understand their plans for the coming months. Armed with information about which tenants are still planning to use their space full time, on modified hours, or not at all, operators have the opportunity to save energy by running floors or potentially entire buildings as if they were vacant. Be aware of and execute contingency plans for as many likely events as possible by actively engaging with your property team and tenants as a whole and using all available resources to stay abreast of the dynamic environment of business during and after COVID-19.
As businesses are slowly reopening—often at lowered capacities and with certain restrictions—unexpected expenses and a lack of profits may have thrown a wrench in your system. If your budget is overwrought trying to cope with the pandemic, paying close attention to the situation around you and finding ways to save money can go a long way. Understand the impacts to your revenue and use them to create possible scenarios and make data-driven decisions. Following the steps outlined above will lead you down the path of a forward-thinking budget ready to face a post-pandemic world.
Looking for ways to track COVID-19’s impact on your budget? Aquicore has special features that can help you navigate the pandemic.