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What is the true cost of in-house FM?

Building owners often think that having in-house facility management will save them money. But, what about the hidden direct and indirect costs that we often don’t think about? From turnover to insurance costs to materials, the cost of having an in-house team can quickly get out of hand. In this guide, we will dive into the costs of having an in-house facility management team. While on the surface, it may seem more efficient to have an in-house team, you will see hidden costs to this structure.

Author: The Encompass Team

Building owners often think that having in-house facility management will save them money. But, what about the hidden direct and indirect costs that we often don’t think about? From turnover to insurance costs to materials, the cost of having an in-house team can quickly get out of hand.

In this guide, we will dive into the costs of having an in-house facility management team.

While on the surface, it may seem more efficient to have an in-house team, you will see hidden costs to this structure.


Legal 

An outsourced FM vendor covers liability, workman’s compensation, taxes, health insurance, and any potential lawsuits, while an in-house facility management team needs to cover these costs themselves.

Worker’s compensation: For a plumber making about $50K a year, expect to pay just over $800 a year. To estimate the cost of worker’s compensation with your department, take the payroll, divide it by $100, and then multiply by the rate for that employee’s NCCI code. Find the correct NCCI code for your employee here.

Taxes: Employers are required to match FICA taxes and cover FUTA tax (unemployment insurance).

Health Insurance: In 2019, the average cost for employee health insurance was $14,800 per employee.


Meanwhile, the cost of liability insurance, OSHA fees, and any potential lawsuits can vary widely.

Materials and Equipment

With COVID-19, materials costs have exponentially increased. N-list cleaning materials, more frequent cleanings, and personal protective equipment (PPE) have added an unexpected cost burden on business owners. 
The New York Stock exchange spends hundreds of thousands of dollars a month to sanitize the building weekly (New York Times).
Materials are expensive, but specialty equipment is even more so. When you work with an FM vendor, not only is the equipment included with the price but so is the skill-set. A generalist facility manager can figure out how to solve the problem or use the new tool, but how long will it take? A guessing game is not the most efficient way to manage a project. Instead, use a vendor who can supply a specialist who can get it done right the first time.
While the costs for materials, equipment, and specialists can become overwhelming, it is included with the price of an FM vendor. You can easily budget how much all facility costs will be with a single vendor managing it.

Human Resources 

What happens if your team:
  • Goes on vacation
  • Takes a personal day
  • Tests positive for COVID-19
  • Quits
  • Gets fired


Are you prepared for an event in which your team is down a person?
An in-house facilities department can prove to be a liability. You have a small but efficient in-house team that may have gotten you by in the past. But, in today’s COVID-19 world, it won’t do the job. The facilities department has more pressure than ever to keep occupants safe and healthy. What if someone on your small team gets hurt or sick? Countless occupants are now at risk because everything that fell on their shoulders is now up in the air.
When turnover occurs for any reason, the time and cost of replacing a facility manager can eat up valuable time and resources. The price could get out of control if the team member was in charge of housekeeping, HVAC, plumbing, and everything in between. If those items don’t get addressed when they need to, the problem grows.
With an outsourced facility management team, there is always back up and access to specialists.


Inefficiencies 

An in-house facility management team can be great at what they do, but lack systems that let them be as streamlined as possible.
When you’re taking care of so many aspects of a building, it is crucial to systemize and optimize time.
With a proper work ticket and workflow technology, FMs can get more done with less time. Plus, they can look at the building data and optimize utilities and resources. If your team has this technology, is it being used correctly?
  • Who pays for the technology?
  • Who establishes standards?
  • Who provides checks and balances?
  • Who is responsible for managing data and determining action steps?
At Encompass, our technology is included with a contract and managed by our team. We manage: 
  • work tickets and automate them. 
  • quality assurance.
  • track KPIs.
  • use field insights to drive cost reduction, cost avoidance, and improve occupant satisfaction.

In addition to optimizing through technology, a facility management vendor can ensure you have specialists when you need them. It costs more in time and money to hire one-off solutions to your problems. You need to research vendors, interview them, make decisions, manage them, and pay more because it is a one-time project. Meanwhile, a single FM vendor has long-term relationships with specialists who can get your projects done when you need them. 
In-house facility management teams seem like the right choice on paper. They’re always onsite and focus on your property alone. However, the downside is that it is more expensive to have additional employees; materials and equipment are expensive; you rely on them to be there, and if they can’t, there is no back-up.
How much money can you save by outsourcing your facility management needs?


Encompass
Encompass is a full-service facility management company that supports businesses by proactively maintaining their building portfolio. They balance infrastructure and service needs with regulatory and operational requirements to fulfill the needs of time-strapped facility departments. Their state-of-the-art, Global Biorisk Advisory Council (GBAC)-certified COVID-19 disinfection program is built for rapid deployment to assist your facility when you need it. No waiting weeks for assistance in containing an outbreak, Encompass can be there within 24 hours.

View all blog posts

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What is the true cost of in-house FM?

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Author: The Encompass Team

Building owners often think that having in-house facility management will save them money. But, what about the hidden direct and indirect costs that we often don’t think about? From turnover to insurance costs to materials, the cost of having an in-house team can quickly get out of hand.

In this guide, we will dive into the costs of having an in-house facility management team.

While on the surface, it may seem more efficient to have an in-house team, you will see hidden costs to this structure.


Legal 

An outsourced FM vendor covers liability, workman’s compensation, taxes, health insurance, and any potential lawsuits, while an in-house facility management team needs to cover these costs themselves.

Worker’s compensation: For a plumber making about $50K a year, expect to pay just over $800 a year. To estimate the cost of worker’s compensation with your department, take the payroll, divide it by $100, and then multiply by the rate for that employee’s NCCI code. Find the correct NCCI code for your employee here.

Taxes: Employers are required to match FICA taxes and cover FUTA tax (unemployment insurance).

Health Insurance: In 2019, the average cost for employee health insurance was $14,800 per employee.


Meanwhile, the cost of liability insurance, OSHA fees, and any potential lawsuits can vary widely.

Materials and Equipment

With COVID-19, materials costs have exponentially increased. N-list cleaning materials, more frequent cleanings, and personal protective equipment (PPE) have added an unexpected cost burden on business owners. 
The New York Stock exchange spends hundreds of thousands of dollars a month to sanitize the building weekly (New York Times).
Materials are expensive, but specialty equipment is even more so. When you work with an FM vendor, not only is the equipment included with the price but so is the skill-set. A generalist facility manager can figure out how to solve the problem or use the new tool, but how long will it take? A guessing game is not the most efficient way to manage a project. Instead, use a vendor who can supply a specialist who can get it done right the first time.
While the costs for materials, equipment, and specialists can become overwhelming, it is included with the price of an FM vendor. You can easily budget how much all facility costs will be with a single vendor managing it.

Human Resources 

What happens if your team:
  • Goes on vacation
  • Takes a personal day
  • Tests positive for COVID-19
  • Quits
  • Gets fired


Are you prepared for an event in which your team is down a person?
An in-house facilities department can prove to be a liability. You have a small but efficient in-house team that may have gotten you by in the past. But, in today’s COVID-19 world, it won’t do the job. The facilities department has more pressure than ever to keep occupants safe and healthy. What if someone on your small team gets hurt or sick? Countless occupants are now at risk because everything that fell on their shoulders is now up in the air.
When turnover occurs for any reason, the time and cost of replacing a facility manager can eat up valuable time and resources. The price could get out of control if the team member was in charge of housekeeping, HVAC, plumbing, and everything in between. If those items don’t get addressed when they need to, the problem grows.
With an outsourced facility management team, there is always back up and access to specialists.


Inefficiencies 

An in-house facility management team can be great at what they do, but lack systems that let them be as streamlined as possible.
When you’re taking care of so many aspects of a building, it is crucial to systemize and optimize time.
With a proper work ticket and workflow technology, FMs can get more done with less time. Plus, they can look at the building data and optimize utilities and resources. If your team has this technology, is it being used correctly?
  • Who pays for the technology?
  • Who establishes standards?
  • Who provides checks and balances?
  • Who is responsible for managing data and determining action steps?
At Encompass, our technology is included with a contract and managed by our team. We manage: 
  • work tickets and automate them. 
  • quality assurance.
  • track KPIs.
  • use field insights to drive cost reduction, cost avoidance, and improve occupant satisfaction.

In addition to optimizing through technology, a facility management vendor can ensure you have specialists when you need them. It costs more in time and money to hire one-off solutions to your problems. You need to research vendors, interview them, make decisions, manage them, and pay more because it is a one-time project. Meanwhile, a single FM vendor has long-term relationships with specialists who can get your projects done when you need them. 
In-house facility management teams seem like the right choice on paper. They’re always onsite and focus on your property alone. However, the downside is that it is more expensive to have additional employees; materials and equipment are expensive; you rely on them to be there, and if they can’t, there is no back-up.
How much money can you save by outsourcing your facility management needs?


Encompass
Encompass is a full-service facility management company that supports businesses by proactively maintaining their building portfolio. They balance infrastructure and service needs with regulatory and operational requirements to fulfill the needs of time-strapped facility departments. Their state-of-the-art, Global Biorisk Advisory Council (GBAC)-certified COVID-19 disinfection program is built for rapid deployment to assist your facility when you need it. No waiting weeks for assistance in containing an outbreak, Encompass can be there within 24 hours.

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