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Achieving balance via zero-based budgets.

Property management is a balancing act in today's recessionary environment: the manager must control costs while satisfying the needs of tenants.

At Cushman & Wakefield, we have found an effective way to achieve this balance: zero-based budgets. Rather than starting your budget with what you spent last year, review the value of every item you will need to manage the building in a cost-effective manner, keeping in mind tenant and owner needs.

Review or rebid every contract: for example, cleaning, security staff, utility repairs and maintenance and purchasing costs.

Although this can be a time consuming task, it can be very cost-effective. For example, for a major bank property in New York, Cushman & Wakefield reduced cleaning costs by $1 million in one year, by bringing the cleaning contract to competitive bidding, and awarding the work to the highest quality, lowest cost bidder.

An another building, a major international firm, which is seeking to reduce costs, will save approximately $250,000 this year by more efficient scheduling of cleaning staff time. Scheduling has been reworked such that the company does not need as many full-time porters.

Creativity can also be used to reduced security costs in a way that meets the needs of tenants and ownership. For example, in one office building, Cushman & Wakefield installed electronic security devices (much as the ones used in department stores) on all computer and electronic equipment. The devices helped to eliminate theft and reduced the number of security guards required to watch certain areas.

The efficient management of utility costs can help reduce expenses. Rebates are available for upgrading and replacing inefficient electrical equipment. Also, the bulk purchase of products on a national basis, such as HVAC supplies, paint, paper products and light bulbs, results in significant savings.

Every landlord will tell you that tenant retention is crucial in today's economic climate. At Cushman & Wakefield, our goal is to respond to tenant's needs, while controlling costs and meeting the owner's goals. Quality property management at an affordable cost is always our objective.
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Copyright 1992, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:Building Management, Section I
Author:Santora, John C.
Publication:Real Estate Weekly
Date:Mar 25, 1992
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