ROI: Facility Services’ Holy Grail

roi_facility_services1Return on Investment (ROI) is the holy grail for facility services.

For managers of in-house departments or contract facility services, showing an ROI would help justify your spend upstairs. Getting budget approval would then be gravity fed. Include the expected ROI with your budget and its all downhill. What senior exec would not invest some to make even more?

For facility service salespeople, ROI would be the frosting on your pitch and presentation. In addition to all the non-financial benefits and fuzzy soft cost savings, an ROI would be a quantifiable differentiator.  The contractor with the greatest ROI would more often win the bid, rather than the lowest price alone.

However, ROI for facility services, like the holy grail, may not exist.

It may just be semantics defining ROI as quantitative, financial return on investment, but producing it is not a straightforward case. Here are several considerations.

Operating Expenses – Not True Investments

Facility services are not intended to produce a financial return. They’re operating expenses.

The purpose of facility services are to enable customers, visitors, employees, even other contractors to perform their business function within company facilities. As a result, company facilities serve the business purpose. This is seen in:

  • A clean mall encouraging shoppers to buy more
  • A secure distribution center minimizing shrinkage
  • A well maintained production line producing higher yields & throughput

Investments in facility services keep businesses operating, but they don’t generate revenue, they don’t drive a company’s success. Facility services have the same limited impact as other support services, as other operating expenses.

An Ounce of Prevention

A major benefit of facility services is their prevention or mitigation of a costly event from occurring. For example:

  • Security services protecting life safety against injury or death
  • HVAC services maintaining equipment to minimize breakdowns & extend its lifecycle
  • Janitorial cleaning for health that helps reduce the spread of virulent diseases

Redefining ROI

For facility services it might be more helpful to redefine ROI differently from the financial definition. In this alternative facility service ROI terms and their product are repurposed.

While the term “investment” remains the spend on facility services, “return” might include additional value received above compliance to contract specifications.

A facility service ROI may include:

  • Cost savings from reducing budgeted expenses
  • Cost avoidance of un-budgeted expenses
  • Soft cost savings from non-productive customer time spent on service
  • Non-financial benefits:
  • Customer satisfaction
  • Customer loyalty as measured by net promoter score
  • Customer freedom from distractions, free to focus on self-selected priorities
  • Minimal time needed for oversight/governance
  • Customer confidence in service delivery & quality

Facility Service ROI Where Are You?

The search for a practical and usable facility service ROI continues. If anyone knows its whereabouts, please let me know. There are a few other, hard to find valuables I’d like you to look into.

How are you calculating facility service ROI?

~~~~~~

Chris Arlen
President, Service Performance

Technorati: ROI, customer satisfaction, customer loyalty, net promoter score

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