When managing a facility, two key financial areas that facility managers must balance are capital expenditure (CapEx) and operational expenditure (OpEx). These terms refer to the types of costs that businesses incur to keep running smoothly.
CapEx represents large, long-term investments in assets that a business uses over several years. This could include purchasing buildings, machinery, or other equipment that will contribute to the business’s operations over an extended period. These expenses are typically one-off or irregular but have lasting value.
On the other hand, OpEx refers to the daily, ongoing expenses required to keep a facility functioning. These are recurring costs, such as utility bills, maintenance, salaries, and rent. OpEx covers the shorter-term operational costs that keep the facility running from day to day.
Facility managers play a crucial role in overseeing the operational performance of a building, and part of their responsibility involves managing two key financial areas: operational expenditure (OpEx) and capital expenditure (CapEx). Typically, facility managers work closely with the Head of Facilities or Chief Financial Officer (CFO) to ensure that facility operations are cost-effective and don’t become a financial liability.
To do this, they need to be well-informed about the performance of building systems and able to present data-driven insights when discussing budgets.
In this context, building analytics has become an essential tool for facility managers, providing the data they need to optimise operations, lower costs, and plan long-term investments more effectively. Let’s look at how Building Analytics can help FM teams lower OpEx and plan for CapEx.
Lowering OPEX with Building Analytics
1. Improved Energy Efficiency
Energy consumption is one of the largest contributors to a facility’s operational costs. With building analytics, facility managers can monitor and optimise energy use in real-time. Detailed data from HVAC, lighting, and other building systems can highlight inefficiencies—such as heating, cooling, or lighting areas unnecessarily—allowing managers to make quick adjustments.
For example, through occupancy sensors and monitoring patterns, energy usage can be reduced during non-peak times, cutting down electricity bills. This proactive energy management not only lowers costs but also makes the facility more sustainable, which is often a priority for organisations aiming to meet environmental goals.
2. Predictive Maintenance
Building analytics helps facility managers shift from reactive to predictive maintenance, where system performance is monitored continuously to detect early signs of potential failure.
This data-driven approach to maintenance minimises downtime, extends equipment life, and keeps OPEX under control by preventing emergency repair costs.
3. Optimising Space Utilisation
Many organisations unknowingly waste money by inefficiently using their building spaces. Building analytics can track occupancy data to help facility managers identify under utilised spaces and optimise their use. This could lead to shutting off heating, cooling, or lighting in areas that aren’t in regular use, or repurposing spaces for higher efficiency.
In the long run, optimising space use not only lowers operating costs but also helps with long-term facility planning by identifying where more space may be needed—or where it may not.
Planning CAPEX with Building Analytics
1. Data-Driven Investment Decisions
Facility managers often need to justify capital investments to the CFO or Head of Facilities. Building analytics makes this easier by providing clear, actionable data on system performance, wear, and efficiency. If an ageing HVAC system is consuming too much energy or showing repeated signs of failure, the data can justify replacing it as a priority investment.
Instead of relying on guesswork, building analytics allows facility managers to make data-driven investment decisions, ensuring that CapEx is allocated where it will deliver the greatest return.
2. Extending Asset Lifecycles
One of the ways building analytics can support CapEx planning is by extending the lifecycle of critical assets. By continuously monitoring equipment performance, facility managers can optimise maintenance schedules and make small adjustments to maximise performance, delaying the need for large-scale replacements.
Conclusion
For facility managers tasked with ensuring that their operations are not a liability to the company’s budget, building analytics provide the critical data needed to make smarter, more strategic decisions. By embracing this technology, they can work alongside the CFO or Head of Facilities with confidence, armed with the insights needed to reduce costs and plan for the future.
