Cost Overrun

Proactive vs. reactive management equates to large cost savings, yet most corporations find it difficult or impossible to move from a reactive to a proactive state. A simple illustration exemplifies the cost overrun associated between the two management styles…

“If you buy an airline ticket a few days prior to your trip verses a month earlier, you will see a cost overrun of 200% or more.”

Facility departments are constantly faced with cost overrun due to:

• Reactive management
• Imperfect forecasting techniques
• Inadequate data
• Oversight of many forms of day-to-day operations
• Limited resources

Cost overrun results in the following:

• Reactive repairs costing 2 to 3 times more than a proactive approach
• 11% of yearly repair budgets are spent on wrong issues
• 10% of yearly repair budgets are spent on warranty issues
• Upwards of 20% higher capital improvement costs resulting from work being completed during contractor’s busy season
• Varied workload leads to understaffed or overstaffed situations

(Roof Solutions, 2005 by RSI and NRCA; Solus Industries, 2006 data on file)