Reduce Risk in Commercial Buildings

The Foolproof Way to Reduce Risk in Commercial Buildings

One of the most critical responsibilities of a facility or property manager is handling compliance and risk mitigation. Risks arise from various sources, including financial uncertainties, legal liabilities, equipment malfunctions, health and safety issues, etc. 

The challenge is identifying, assessing and controlling threats spanning numerous decentralized sources, such as vendor management systems, property management software, internal spreadsheets, building management systems, and IoT devices. 

These siloed and disparate systems need to be integrated and communicate with each other to make it easier to efficiently and effectively manage risks across your property portfolio. Integrating systems also lays the foundation for data automation allowing facility managers to automate tedious tasks. Facility managers that integrate and automate their solution stack not only mitigate risk but also improve operational efficiency and reduce costs.

Here are five ways integration and automation reduce risk in facilities management.

1. Lease Administration Risks

Lease administration is fraught with financial and compliance risks. The more your property portfolio grows, the more leases you manage, making remembering critical dates and spotting mistakes in payments or lease terms challenging. Over time, these mistakes can cause harm to your company’s bottom line.

One of the significant risks of managing hundreds of leases is the administrative burden of pulling financial information. This can mean your team spends weeks trying to get visibility of your company’s financial health. However, at the pace business decisions are made today, real-time access to your leases is essential to operational growth.

Data integration and automation enables facility administrators and finance professionals to efficiently manage the lease lifecycle, avoid overcharges, maintain compliance with the latest lease accounting standards, and perform lease activities from a central source. 

For example, with GroundFloor, you can integrate your leasing data with mission-critical systems like ERPs, accounting, HR and financial systems. This gives you a centralized view of all your data to better analyze your financial obligations and quickly and easily generate comprehensive reports to meet financial reporting and compliance requirements and regulations. You can also set up automated alerts across stakeholders to ensure you never miss a critical date or task like rent increases, renewal options, security deposit returns etc.

2. Space Utilization Risk

A significant financial risk for facility managers is poor space management. 

Workspace is the second-largest overall expense and the single-largest fixed cost over time. Every square foot of office space also comes with additional operating expenses such as heating, cooling, cleaning, lighting, insurance, etc. According to an Accenture report, the average organization has 30-50 percent more real estate than it needs. And, for every $100 million spent on real estate, most companies are paying an additional $40 million in operating costs. That adds up to a lot of wasted spending.

Occupancy and space management data are foundational to identifying inefficient use of spaces, measuring space demand and determining space allocation. Even more powerful is integrating this data with other systems to drive efficiencies and cost savings in lease amendments and renewals, energy use and cleaning services. 

For example, by marrying occupancy data with energy usage, you can effectively detect wasted resources throughout your building facilities to streamline consumption and maximize efficiency. Likewise, knowing the utilization patterns of different office zones enable facility managers to schedule demand-based cleaning activities.

3. Compliance Risk

From maintenance of fire extinguishers and safe handling of hazardous waste to certificates of insurance and vendor management, CRE companies must comply with numerous operational, regulatory, contractual and ethical regulations. The stakes are high because non-compliance can have severe financial and legal consequences.

Unfortunately, managing and maintaining compliance is complex and time-consuming, involving ever-changing regulations, many internal and external stakeholders and sprawling data. 

Integrating and centralizing all critical building data provides an all-encompassing view of your organization’s compliance so you can effectively monitor regulatory changes, automate compliance processes, and ensure the use of accurate data for reporting and audit support.

4. Asset Risks

When it comes to mission-critical assets like plumbing, HVAC, elevators and escalators, numerous financial, legal and reputational risks arise when equipment and systems break down. For example, the average commercial claim for water damage due to a leak is $150,000, and the average cost of a new HVAC system can cost anywhere between $6,000 and $12,000 for a 1,000 sq ft. 

According to the EU Community Research and Development Information Service (CORDIS), maintenance costs far exceed the construction costs of a building throughout its lifecycle. Leveraging IoT technologies enable you to simplify the management and service life of facility assets such as elevators, escalators and HVAC equipment and monitor and manage resources such as water usage in real-time to track waste, reduce consumption and detect leaks at the source.

Layering this data with all your other critical building systems is even more powerful. For example, with Groundfloor, you can integrate your leak detection and building automation systems to set up automatic responses like shutting off the supply valve or HVAC equipment to prevent widespread and costly damage. You can also marry this data with your vendor management, cleaning, and tenant communication systems to create and track work order requests and send automated alerts to cleaning staff and tenants. 

5. Health And Safety Risk

From the maintenance of fire extinguishers and the safe handling of hazardous waste to real-time incidents like slips and falls and elevator entrapments, health and safety are a top priority and a prominent area of compliance risk and legal liability. 

Data integration and automation enable property managers to efficiently and effectively manage safety inspection programs and incident responses to mitigate risk and ensure the health and safety of occupants.

For example, with Groundfloor, you can digitize safety inspections, standardize maintenance processes, automate escalations, and verify resolution instantly through a central hub. Likewise, you can streamline every step of the incidents management process, from real-time alerting of a situation to resolution tracking, COI management and creating comprehensive incident reports.  

Wrapping Up

Various risk factors are inherent in every company, impacting organizations and their property and facility management teams. By integrating and consolidating building systems and applications into a central platform, CRE teams can get a 360-degree view of their critical data to identify and minimize risk and drive more efficient compliance processes.