How can you prepare for unexpected expenses in property management budgeting for FM?

For me a learning culture prevents unexpected cost. Most man made risks are avoided with this approach. The risk register does assist in known unknown risks and preparing a budget if it does occur. I found implementing a preventative strategy would minimize the increased spending for unforeseen risk.

Identifying risks is a key concern. The challenge however is to dig a little deeper - a large expensive HVAC failure does not come without some warning - increased power or gas usage, or vibration / heat / noise. The risk is not the failure, but if the equipment is bespoke, with limited spares, long lead times or lack of experienced tradespeople - meaning extended downtime. However, the small $20 component failure could be worst, especially where you have hundreds/thousands of them, they were all installed at the same time, and failure occurs within a narrow window of time or hours of use. A Facility Manager needs to be like a child and keep asking questions - Why does this matter? What are the consequences? Who could get hurt?

Large organizations have finance departments and accounting rules for budgeting, expenses, overruns, and contingencies. Don't be a stranger to the finance team or the accountants. Let then know early about problems and let them do their part in ensuring the success of the organization. In large FM projects, ensure you have a finance voice at the table. Understand some of the finance world and terms - especially "Net Present Value" and "Whole of life" costs. Modern organizations look at more than profit/loss with sustainability and social responsibility adding significant weight to funding and decision making processes.

There are some things that can not be predicted, prepared for, budgeted, hedged against. In project management situations they are called "Black Swans" - don't beat yourself up as a FM manager about these events. Our job as FM managers are to pick up the pieces and get the workplace back working as soon as possible. Yelling at contractors / suppliers / workers / employees will not make the problem go away. Collaboration and cooperation will.

Negotiations and contingency plans should be in place. Budgets should be re-evaluated on a regular basis, and a contingency deadline target should be set to activate them when necessary. Have some cost-effective measures in place to ensure a better outcome. In addition, the cost of waste materials should offset the incremental cost of operation as well as the proper distribution and planning of COS, CAPEX, and contingency plans, including comparison evaluations with the previous budgeting figure/stats.

Preparing for unexpected expenses in property management budgeting for facility management (FM) is vital to ensure the smooth operation and maintenance of a building. One way to prepare for unexpected expenses is to create a contingency fund in the budget. This fund should be allocated specifically for unforeseen costs that may arise throughout the year. Another strategy is to conduct regular inspections and maintenance of the property to catch any potential issues before they become major problems. It is also important to stay updated on industry trends and regulations to anticipate any changes that may impact the budget. Additionally, having open communication and a good relationship with vendors can help negotiate better prices.