Cost Advisory

On the bottom-line of most companies, all attention now turns to required adjustments to survive in 2017.

If many of the expert predictions and outlook on the Nigerian economy in 2016 is anything to go by, businesses do not have much to look up to as a way of relief from the harsh realities that characterized economic activities in 2015. The crash in the price of crude oil and the value of the local currency appear to be here to stay at least for the near future. Government expansionist budgetary spending plans may be insufficient to balance the negatives of stringent forex controls, high lending rates and low ranking in ease of doing business.

Business success depends on its ability to attract more customers that are loyal, sell more goods and services at prices that give it the best margins for ultimate profitability and sustainability. This is not going to be feasible for most organizations at least not as much as they would have loved this new year. On the other hand, the costs of doing business tend to be heading northward putting further strain on the already narrowing profit margins.

The one sure way to survival at a time like this is to reign in on overhead costs while also cutting back on capital investments that do not fit into current realities in terms of cash flow feasibility. The first victim of overhead cost-cutting is human resources followed by facility management. This is certainly not surprising as they represent the two highest cost elements for most businesses and any dummy can see how reducing these costs will drastically reduce overall costs.

The dilemma, however, is how to go about these costs cutting without completely extinguishing the organization. My emphases here will be on the most effective facility cost reduction strategies. Businesses depend largely on the effectiveness of facility management for its survival, especially concerning the provision of critical infrastructure and an enabling productive work environment. Care must be taken not to cut costs and impair the delivery of these business-critical services.

A careful strategy review and re-alignment of cost heads must be carried out together with a value-stream mapping exercise to identify areas that can be cut and areas that must be beefed up for the organization to remain relevant in its core business. A mix of zero based budgeting, transition to value-based contracting models, procurement process reviews and consolidation of purchasing, review of outsourcing vs. insourcing strategies, etc., should be adopted under the guidance of an expert to achieve substantial cost reduction of up to 20% for organizations with large real estates holdings.

Consulting and advisory services firms in the facility management industry can support this process. They know from experience and training what effects can result from the various efforts made towards cost reduction and can work in a performance contract model to guarantee substantial savings while ensuring that quality is not compromised. This is a core area of specialization for Max-Migold Ltd. Currently; qualifying organizations will receive a free cost reduction assessment after which, a decision to engage can be based on actual savings sharing or payment for advisory services at international consulting rates.

Contact us today to see if your organization qualifies for free cost reduction assessment-, 08186455541. Suite 208 HRDC Building, University of Lagos Main Campus, Akoka, Lagos, Nigeria.

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