How do you budget for maintenance?

Knowing the condition of the assets against the minimum condition standard is essential to forecasting the budget across the 5 year plan. Separate the routine preventative and corrective from the extraordinary restorative actives- the bigger one off jobs need to be risk ranked against each other Taking a life cycle approach will also guide what needs to be fixed early to keep net overall costs down, and opens up opportunities for life extension For this, effective budgeting requires good awareness of current condition and cost history.

Proactive maintenance requires advance planning. Develop an equipment list and document age, life cycle and condition. All major systems will require a preventative maintenance schedule. To create efficiencies, this equipment can be barcoded and scanned for work order and status updates. Once you have a plan for major systems, you can move to more day to day maintenance. Put a program in place for window washing, power washing and smaller regular maintenance. These actions then inform your budget. Through a process of continuous improvement, cost savings can be identified. Keep everything on a program to keep operations smooth and staff engaged.

Develop a discrete asset register by section , MEP , Civil , Structural , the more details the better, a property case history is very important, establish cause and effect on reoccurring problems.

Yes, the key factors in planning/proritize your maintenance budget is to know your property conditions. For properties/projects I manage, I begin with the complete inspection as if it was going on the market. Roof, termite, property are the 3 common inspections that do discover potential issues. I often find great information in conversing w/ the tenants. They often tell you all the goods & bads that you will help you plan. A review of the rent rolls should reveal any repair histories. It is like getting a carfax report for your property, when was the property last serviced. As a Mediator in the Unlawful Detainer court, I have seen many cases, where property conditions, lack of maintenance prevent landlord from evicting the tenants.

In determining our budgets for maintenance on a portfolio, we start with knowing our product, its age, position in the lifecycle of the building, and making quarterly visits to inspect the buildings in our portfolio. Based on those visits combined with annual assessments on the mechanical and electrical systems as well as building envelope, the weekly reports from our property managers, we create an update to our rolling five year plan for maintenance and improvements Combined all this information is key to understanding the ageing and health of our portfolios and ensuring we maintain our properties to a high standard.

The importance of reserve funds simply can not be overstated. For a primary residence I recommend keeping a minimum of 2% of the property value on hand at the time of purchase and adding 1% annually. Emergencies happen when you least expect them. Sometimes right after closing. For tenant occupied properties, I recommend 1% of the value to start while adding 10% of collected rents to the reserve for maintenance, vacancy loss, and turn costs. In both cases, regularly audit and adjust for upcoming renovations and appliance replacements.

Periodically complete a reserve fund analysis that calculates useful life and remaining life of all major building components to schedule replacement items rather than defer replacements. Pay attention to landscaping components.

Reserve funding isn't to be taken lightly and good leaders know when to step aside and call in a SME. While many property management professionals, from hotel, to lease/rental, to common interest development, may have developed the skillset to estimate for reserves over the years, it's important to use a professional Reserve Study Analyst to conduct a thorough study. This both protects you and your employer, and provides you with the best objective look at the property and what needs to be done.

Based on age, condition, usage and historical data of facility maintenance, reserve fund can be between 20-30% of budget allocation.

We are seeing clients are finding it harder to build reserve funds for repairs given the shortage of available cash in today's economic climate. We are seeing a move towards short term financing that enables clients to carry out urgent repairs and be able to pay back the required funds at a later date. This gives Landlords, Agents and then Tenants what we all need which is ensuring urgent repairs are carried out when required.

Track your maintenance expenses: Keep a record of all the money you spend on maintenance, including repairs, replacements, preventative maintenance services, and materials. You can use a spreadsheet, budgeting app, or even a simple notebook. Categorize your expenses to gain insights into specific areas that might be costing you more than expected. For instance, you might discover that appliance repairs are draining your budget, prompting you to research more reliable brands or extended warranties in the future.

Using Power BI to tracking expenses, spares used is useful to identify most used spares, so that can create action plan to mitigate.

En este punto, es importante tener claro que no es suficiente con cumplir un indicador de presupuesto anual, el seguimiento mensual o semanal es de vital importancia para evitar alteraciones en el costo del producto. En el caso de las industrias, la curva de presupuestos se extrae del OPEX y es la linea base de costos para realizar la comparación y seguimiento en un periodo previamente definido. (gastos reales vs gastos planificados).

Comparing actual expenses against projected costs is the cornerstone of effective budget management. Scrutinize variances to understand the factors contributing to overages or savings. If routine maintenance costs are consistently higher than anticipated, it may indicate a need for process optimization. Conversely, if corrective maintenance expenses spike unexpectedly, it could underscore the importance of preventive measures. Regularly conducting this analysis ensures your budget remains a dynamic tool, adapting to the evolving needs of your property.

Over expenditure is a major concern in property management, low pricing contractual agreement can lead to sub contractors drain your coffers of the reserve fund and repeat complaints unaccounted for.

Know what you are negotiating. It sounds simple but 9 times out of 10 I request more information from contractors on quotes when a standard proposal or itemized work order is not communicated in advance. If you know the cost will be above your not to exceed, preemptively get three quotes. This will give you leverage because you will learn more about what costs each contractor is stating and hone in on negotiations with the preferred contractor.

I try to avoid change order costs as much as possible, as this can get costly while making repairs. Using a knowledgeable Contractor with a full understanding of the repair or project is key from both ends. There will always be the unforeseen items, as long you both agree. The problem lies in the Contractor bidding low and killing you with change orders that can over take the original price for the project.

Don’t wait until maintenance is needed to fund it. Start a reserve when the property is new, then used those funds to maintain rather than repair.

In my opinion it is one of the most important bases, in Maintenance you need to build strong relationships with contractors, because you don't know when you will be need an extra help A good negotiation in a win-win perspective, let you develop bussines partners and long relationships

In my experience vetting of suitable tradespeople is critical and conducting history checks of any previous insolvency or bankruptcy. Negotiating pricing but not necessarily looking for the cheapest option which may lead to other quality issues etc down the line so finding a fair and reasonable middle ground usually gets the best results. Having quality tradespeople on hand that you can trust is a valuable asset. Negotiating their payment terms also helps manage cash flow as not all require 30 days payment and then we can adjust our budgeting to either mid month or end of month payments also helps with accounting.

Placing tenants on a maintenance reminder campaign in your CRM is an easy way to ensure any schedule agreed upon at signing doesn't end up at the bottom of their to-do list.

Nowadays we can use mobile application that tenant and landlord can access. This will help to connect easily to the landlord to raise request for maintenance, emergency and other related request. This app is very useful as this will make record for all the request and track the total cost of the repair. On this app you can send reminders, announcements and all documents related to the tenancy contract will also easily access.

I honestly believe that this is part & parcel of knowing your property inside & out, and at the very least is should be an ongoing effort throughout the process, instead of a single step toward the end.

Timely share the preventive maintenance program and previous an intervention give detail information to the work scope (schedule, impact, requirements for tenants,...) to avoid misunderstands and false expectations

To budget for maintenance, firstly, make sure your as-built drawings are up to date. The next step would be to identify the areas where there could be large maintenance and minimal maintenance. Accordingly you shortlist the most preferred areas and the less preferred areas and make the estimates to suit your budget. However, do not neglect and maintenance issues at cost whatsoever.

Budgeting for maintenance is essential to performing maintenance. Performing maintenance is essential to zero downtime and complete tenant/client satisfaction. However, the accountability and verification of actual maintenance performance is rarely a part of an operation. Many times, remote or uninvolved managers are too concerned about CMMS KPI's and simply having glowing reports. It is easy to fake maintenance and inspections when most times the person managing the repair was also "performing" the maintenance or inspection. Whether vendor or in-house, routine and consistent audits of services must be done to protect all stakeholders.

Budgeting for maintenance involves careful planning and consideration. The steps to help you budget effectively for maintenance: 1. Assess Maintenance Needs 2. Collect Data 3. Prioritize Maintenance Tasks 4. Estimate Costs 5. Create a Maintenance Schedule 6. Emergency Fund 7. Lifecycle Cost Consideration 8. Vendor Contracts 9. Budget Monitoring 10. Invest in Technology 11. Continuous Improvement Each step plays a vital role in ensuring that maintenance activities are well-planned, resources are allocated efficiently, and unexpected costs are managed. If you have any specific questions about any of these steps, feel free to ask!

Points to be considered maintenance budget 1. Asset classification critical/non- critical if non critical is it acceptable for run to fail 2. Critical - life cycle analysis and maintenance plan as per OEM 3. Cost of spares and consumables 4. Testing and certification expenses 5. Specialist engineer cost 6. Backup or contingency expenses 7. Unplanned breakdown expenses based on previous history and experience 8. Disposal or recycling expense 9. Human resource or manpower cost and other overheads

You might also want to consider the age of equipment and systems, historical data, inflation for cost adjustments like what’s happening nowadays, regulatory requirements, potential vendor contracts, and any upcoming renovations or upgrades. These factors can help ensure a well-rounded and accurate maintenance budget.

Too often property management is reactive. A proactive approach can reduce the number of repairs which need urgent attention and can limit unnecessary expenditure. Look at the property history, when was it last decorated, kitchen and bathroom renewed, boiler replaced, etc. Talk to your landlord about retaining a maintenance fund of between 6% and 10% of the monthly rent (obviously balance what the landlord can afford and be realistic depending upon the monthly rental). Look at factors which will maintain the rental value and could reduce voids between lets and plan when to replace kitchens, bathrooms, carpets and so forth. Keep abreast of legislative changes which may require works.