Industrial profile

When the extremes of performance are considered by taking the highest absolute cost for each service, and introducing procurement and productivity variance, then an even broader spread of cost is achieved. These show that, at its most expensive, the model facility would cost £2,916,630 a year, which compares to £910,110 at its cheapest.

This degree of variance can have a tangible impact on the bottom-line performance of the business. Assuming that there is no productivity impact to core business activity (which may not be the case) through such a service grade change, based on the proportions set out in the introduction a cost reduction achieved by reducing service grades from 1 to 3 decrease overall property costs by 10 per cent. This dropwill ultimately affect business profitability.

More typically a sustainable shift from grade 1 throughout to grade 2 achieves an overall cost reduction of 9 per cent.

The pie chart over the page shows cost proportions by service at grade 3 excluding catering due to its overriding cost significance if subsidies are excluded.

General commentary Maintenance Includes HVAC, electrical systems, water and sanitary systems, fire alarm and extinguishing systems, standby generator, general fabric repairs, lifts, and catering equipment. It excludes production systems’ maintenance, capital expenditures, external landscaping and security system maintenance.

The grades of service reflect increasing facility reliability. As service standards rise, therefore, occupiers need to assess the most appropriate balance between decreasing risk to business operation continuity and affordability. It should also be noted that at the lower service grades, especially five, the cost performance reflects the short-term impact of reduced maintenance activity, and not the longer term cost penalty of maintenance backlogs and increased equipment replacement costs through shorter operational life. The critical nature of the manufacturing facility would most probably see a full time maintenance presence working on a shift rota basis, which would be reflected in a grade 1 or 2 service level arrangement.

Utilities Include energy consumption (electricity and gas) and water. Here the grades of service reflect changing management competence and practice. This results in increasing consumption levels and costs as management expertise and control diminishes. The management of utilities and ensuring availability to allow continuity of the manufacturing process is critical.

Cleaning Includes the general cleaning of all office, internal areas, periodic ‘deep’ cleans, external window cleaning, general non-toxic waste removal, kitchen deep cleans and pest control. Manufacturing walkways and general waste removal within these areas are included. It excludes specialist manufacturing process related waste removal and cleaning of production machinery and immediate surrounding area. Increasing the grade of service is generally achieved by increasing the frequency with which tasks are carried out. Significantly, between grades 1 and 3 service costs reduce by 40 per cent.

Security Comprises general guarding, control room operation, and all maintenance to security systems (e.g. CCTV and access control and barrier systems). As with cleaning, increasing service standards are generally achieved by increasing the amount of resource deployed in providing the service. There is also a similarity with maintenance, in that occupiers need to determine the most appropriate compromise between affordability and risk. The biggest jump in costs occurs between grades 1 and 3, when the sophistication of the systems in use increases considerably. Security cost performance also displays limited variability in procurement and productivity performance.

Internal planting The maintenance of internal planting is a minor cost, which only arises at the higher service grades. Its significance is related to the visual impact of the plants, especially if they are not maintained. However, most manufacturing facilities tend to be devoid of planters other than in the reception areas.

Reception services and switchboard Reception service cost performance increases relative to the number of full and part-time receptionists needed. As the first point of contact, this area is important in terms of visitor/customer perceptions, however many manufacturing facilities have low key reception services. Switchboard services costs, as with reception services, tend to vary relative to the number of full and part-time operatives needed. This in turn is influenced by the call answering response times required and the volume of calls going through the switchboard as opposed to direct-dial. It should be noted that no call charge costs have been included. It is usual within a manufacturing environment for the reception and switchboard to be combined.

Reprographics This service includes equipment leasing, consumables and paper. The grades of service reflect the varying sophistication of equipment and its degree of convenience and availability. The reprographics costs will be relatively low in a manufacturing environment in comparison to pure office based facilities. However, if lower levels of service grade are being considered the impact on user time should be assessed.

Stationery This includes all of the typical consumables of office work, such as paper, pens, envelopes, folders, dividers, computer disks, flip pads, overhead projector film etc. The service grades relate to varying management practice, which as it improves reduces the unit rate cost of purchases and controls unnecessary demand, leading to lower overall costs. Again as with reprographics this will be a relatively low cost being driven by only office based personnel within the manufacturing facility.

Post room services All grades of service assume a constant volume of mail being dispatched and received. Costs include the postage charge, courier charges, and the post room resource. Equipment depreciation is not included. Aside from the postage charge, a major cost driver within this function, is the frequency of deliveries and collections, together with the number of drop-points. This has a significant impact upon the number of post room operatives required. Due to the working nature of manufacturing facilities, post room service grades are often at the lower end of the scale, with the role being combined with other general administrative duties.

Catering Includes all food preparation, serving and vending. The costs are gross, i.e. they do not take account of any cost recovery from consumers, which will vary by organisation depending upon its charging policy. Costs increase as the service improves.

Key influences

The combining of reception and switchboard services help to reduce the cost base while providing staff the opportunity to multitask enhancing their own skill base and job interest.

Two-shift manufacturing operations often require washroom facilities to be cleaned more frequently to meet the usage and staff expectations with regard to hygiene. This then affects the service requirements and the cleaning cost base.

The facilities’ age can also have an impact on costs, particularly with respect to maintenance and utilities where cyclical equipment replacements, decreasing service intervals and inefficient energy consumption (compared to latest standards) can increase cost levels. Legacy issues such as persistent neglect can also be significant.