Factors Impacting Facilities Management Cost Trends

Macroeconomic factors significantly impact facilities management cost trends and makes budget allocations challenging for those involved

Businesses and the economy across the globe were gradually recovering from the pandemic and lockdown pitfall. That was followed by inflation and skilled labour shortage. The dynamics of facility management were significantly affected by such macroeconomic factors as the industry is intricately connected to them. Even the minutest disruption in these factors poses challenges for budget makers in creating an annual cost of building operations and services. This article will explore all factors that impact facility management budget planning

Labour shortage

Employers have been facing a significant gap between demand and supply for blue-collar jobs. India is seeing strong demand as industries bounce back post the pandemic and hence the need for manpower has significantly gone up in all sectors from manufacturing to logistics to even corporates coming back to office after years of work from home. Many blue-collar workers are preferring not to come back to the metro cities as there are opportunities for them in closer towns. This has led to a 20-25% labour shortage across all industries. Pandemic-induced labour shortages have affected the wages that need to be paid to keep operations running.

Materials and inflation

Due to global inflation, the prices of materials and components required for facility maintenance and repair services are spiking rapidly. The significant rise in the input costs of facility management services is leading to an increase in final service pricing for facility services.

Energy cost

The cost of electricity, fuel and natural gas has significantly risen in recent months. This has put immense pressure on facility managers to create a strategy for optimising energy to reduce business costs. To optimise energy, it becomes crucial to incorporate advanced technologies like sensors, IoT, etc in facility management budgets. Managers also need skilled labourers to operate these technologies, which requires robust training, adding up facilities management cost and time.

Facility management budget planning remains challenging, considering labour cost increases and inflation, but increasing apprenticeship and practical skills workshops by the government will potentially change the game of the facility management industry.