Energy management is a key area where property management has the opportunity save costs and increase profit margins. In most properties, invoices for electricity, water, fuel oil, gas, storm drainage, sewer, and refuse costs are major items and have to be managed effectively.
However, for measuring and reducing these costs, property management should know about KPIs (Key Performance Indicators). In order to use KPIs effectively, there should be a process to obtain high-level view and manage energy data. Property management should be able to measure, benchmark, compare, and analyze KPIs.
On most properties, managers usually struggle with excel spreadsheets, whereas some take the help of invoice processing software or vendors. Some even employ experts to customize the system according to the requirements of the property. Ultimately, a system has to be in place that is highly capable of measurement and verification.
Property management can then define factors, which are critical to the management of energy spending. For such a process to work, it is critical to compare KPIs, since each property and its management is different, and the importance of KPIs may vary. However, the following KPIs should be always considered for forming a strategy for energy management.
Costs of Energy
Cost is one of the KPIs that will always top the list on any property. Some prefer to compare cost between sites, while some like to categorize items and compare between them. However, energy management and savings is much easier when you line up energy spends by cost. The best place to find where most money can be saved is the place where it is being spent the most.
Then strategies can be developed to reduce the percentage of spend gradually. However, other important areas should not be ignored, such as discrepancies in invoices and possible leaks. Nevertheless, cost should be your benchmark and must be give top priority.
Property management can have direct control in certain situations by exercising the best energy rates. Current rates will have to be reviewed and potential rates will have to be investigated. Wherever this is possible, savings can be made even before implementing strategies for reducing cost through usage.
Therefore, property management should have very acute knowledge about the current rates, which will make comparisons possible. For instance, when comparing three properties in the same area, if even one is paying a different rate, then something could be wrong. After investigation, property management might have to make changes to lower cost of one or two of the sites.
Rates can be controlled through energy procurement. Most states are now allowing deregulation of gas or electricity. It is possible to get an outcome where the rate structure could be lower, and the benefits can be procured over a long term basis. It is best to open the door towards a service provider that understands the multifamily industry and has experience in providing services to this segment.
This is the key area where strategies can be formed for reducing costs. It is quite simple since usage equals cost. Therefore measuring, managing, and reducing usage will ultimately reduce costs.