“Here’s the list of the supplies we need.”

Maintenance Expenses is often the expense area where there always seems to be more days in a month than dollars in the budget.

Every week a stock of supplies is ordered.  All too often it results in overrunning the budget.  Workorders have to be completed.  Apartment turnovers have to be completed.

There are a variety of explanations for the budget variance report. It includes excessive amounts of resident service orders, scheduled unit inspections and a move out with a high volume of damages.  But this is what we face every month at our communities.  I think its possible to create some structure behind maintenance purchasing.  Not only will this assist in managing expenses against a budget.  It will also provide detailed explanations when future budgets are presented for review.

Generally explanations to increase the maintenance budget start with an average of what has been spent.  We justify  an increase because surely supplies will cost more in the future.  Neither are not very effective arguments to defend expense increases.

Creating a plan starts with an overview of the schedule for the property for the upcoming month.

Turnover Expenses

How many apartment homes will be prepared for move in?

Generally there are ten to fifteen items that are purchased for every  apartment being prepped.

• replace the sanitary items in the bathroom.
• caulk for the countertops in the kitchen, vanity top and shower area in the bath.
• drip pans for the cook top.

The list of items with pricing information is going to outline the anticipated expense for apartment turns.  This amount applied to the number of apartments currently vacant will provide an estimate of potential expense for apartment turns. (This assumes items such as floor covering and appliance replacement are expensed to a capital improvement account code.)  The same process is used to anticipate the paint needed for these turns.  With future move outs identified based on the notices received, supplies can be ordered in advance of the actual start date for the turnover process.

Preventive Maintenance

Next on the workflow agenda is preventive maintenance.  If this the month to check smoke detectors or change furnace filters, how many apartments are scheduled and what is the cost of the supplies?
For example: HVAC filters for 100 apartments, $300.

Service Requests

Lastly, the never-ending flow of service requests. Again, the property record keeping will help determine an average number of work orders that are received each week/month.  Consider a property with 50 service orders per month (which is actually 2.5 work orders for the 20 work days in a month.); 20% of these requests generally require no supplies or replacement parts. These are requests to adjust doors, windows or appliances, or provide resident education.

Sixty percent of the service requests will probably involve replacement parts that cost $20 or less. The remaining 20% will require more costly supplies averaging $50 per request.

To summarize the service requests,

• 20% no expense
• 60% (30 requests) will average $20 or less. Total $600.
• 20% (10 service requests) will average $50 or more. Anticipated expense $500.

Potential Expense for Service Requests. $1100

Budget Planning

With the list identified for turnover expenses, a property might have $75 as required expenses for each turnover. If there are four vacant apartments, $300 of the monthly budget will need to be allocated toward the turnover expense.

Totally each task

• Turnover $300
• Preventive Maintenance $300
• Service Requests $1100.

Total $1700.

If the property budget does not support this expense, and this is a typical month, the property is always going to be at the end of the funds allocated for maintenance before the actual end of the month.

To develop a monthly plan, or prepare the annual budget,  the evaluation of  historical data will provide the foundation. Track and trend move outs will also assist in developing this expense area.

Data needed to build and support a budget:

• Preventive Maintenance-Cost for supplies and apartments serviced
• Turnover- Average Expense for Turnover
• Move Outs-Average Number of Move outs
• Service Requests-Average Expense and Average Number per month for Service Request

Working from a plan will allow a manager or maintenance supervisor to identify potential shortfalls in the monthly budget. This might allow for spending adjustments, to assist in expense management. Working from a maintenance plan can provide structure to maintenance spending.

Have you found other ideas to maintain a structure with maintenance spending?  Share your ideas in the comments below!