What's in This Episode?
In this Facility Management Coffee Talk, our experts walk through creating a program to track assets and how to create a program to decommission assets within your CMMS accurately.
Trey: Welcome back to the continuation of the second series in our facilities management coffee talks. Our listeners continue to focus on best practices and today is looking at managing invoices and the best practices associated with those, as well as best practices for determining break/fix or asset replacement type decisions. Our returning guest is Bruce Paulson, the head of the Accruent [inaudible 00:00:26] Professional Services Group. He's a 16-year veteran in the facilities management space and has worked with dozens of clients. Good Morning Bruce. Welcome to the podcast.
Bruce: Good Morning Trey. Glad to be here.
Trey: So we truly enjoyed our last conversation and wanted to invite you back to really dig in on two different subjects, the first of which is best practices for managing invoices. A lot of our listeners are operators, they're facilities managers and they're working with a list of hundreds if not thousands of service providers. Can you talk a little bit on how you can work with a computerized maintenance management system to better manage invoices with those service providers?
Bruce: You bet, Trey. This is a big issue and it's a big pain point for a lot of our customers. It's a complex issue. Like you said, they're dealing with hundreds and thousands of different service providers and thousands, tens of thousands, hundreds of thousands of invoices that they've got to manage with lots of different challenges to each. What we think as CMMS should be able to do is to to help manage that, automate that, to give you a lot of control and power but also flexibility as needed when working with that. We know there's all kinds of different organizations and philosophies in facilities maintenance. We strive to have a system that gives you enough control that you need, but enough flexibility that you can deal with those one offs as needed.
Bruce: One of those ways that we manage that invoicing process is that we can be very strict and auto calculate labor based on time clocked in and out of a work order on site and if needed, not allow extra editing of that. Just those are the labor charges that we're going gonna apply based on that time. Same with any trip or travel charges. Those can be auto applied to that work order based on the location and that service provider.
Trey: That's perfect. That's great. I'm sorry, I didn't mean to interrupt you. Go ahead.
Bruce: The other things that we can do is as work orders or those invoices on the work orders are being created and then submitted for review, those can be evaluated based on automatic criteria and then flagged when maybe nonstandard or certain rules are not met. So that gives those invoice reviewers just an additional clue to go look into that further. Likewise, we can also automatically approve invoices that maybe are below a certain cost threshold and have certain criteria, like they met all the other rules that were defined for that type of work.
Trey: So I like this concept, Bruce, of rules surrounding invoices. Right or wrong, we know that some of our service providers will round up their time on site. How are you using this system to make sure you get an accurate view of how much time they spend on a repair, versus when they may just round up or fudge just a little bit?
Bruce: Great question. That is another very felt pain that we've heard from our customers. And one of the ways that we track that is we track time on site using ... When a technician is doing service onsite, when they start the work they clock in using our application. We track the geolocation, the GPS coordinates of that technician when they started that work and make sure that that is within what we call the Geofence of that location of that site. Same when they update that work order, and then finally when they complete the work, we're tracking that time. We're tracking that really down to the minute, down to the second even. And we're calculating that based off the labor rate. So if a customer is using that, then there's no reason for the service provider to round up. However, if the service provider uses and the customer allows them to use what we call our Labor Adjustments Functionality, which they can then apply sometimes credits, sometimes additional labor hours and then cost to a work order. We flagged that during the invoice process.
Bruce: So you can choose not to allow those labor adjustments and then you wouldn't ever even have this issue of rounding up. But if you allow it for some exceptional circumstances, it will be flagged so that those invoice reviewers can see that labor adjustments were applied and make sure that no rounding up has taken place.
Trey: That's great. Each time we talk to you, there is this overarching concept of the CMMS, the computerized maintenance management system becoming kind of a system of record. I know that our listeners are constantly worried about their service providers adopting this new process and ensuring that they invoice in a timely manner, Bruce, is a big deal. How can you ensure, how do you monitor across these hundreds or even thousands of services providers that they are invoicing you in a timely manner and not constantly floating these costs on the books?
Bruce: That's a great question. One thing just to ensure the compliance, a great best practice to use by many of our customers is to put into their master services agreement with those service providers the commitment to using the CMMS system to having their technicians clock in and clock out on their work orders on site. But another ... And we manage the performance of that. We manage that they're accepting the dispatch of that work on time. That they're showing up and starting that work within the required timeframe and completing that. Another way that you manage performance or another performance metric that our customers manage is the timeliness to invoice. Again, that can be put into the MSA that the service providers must invoice within a certain timeframe after the work has been completed so that the customers don't have to accrue and keep extra large lines of credit open for outstanding invoices that should have been invoiced much earlier.
Bruce: So how do we track that? One way, we have a lot of reporting and dashboards that can look in and highlight those things. They can even send out alerts whether to the customer or to those service providers, letting them know that their invoices are overdue or coming close to overdue and they need to get those submitted. And then finally we have an automated solution that will auto close outstanding work orders so that you can't invoice them after a certain period. So that is really an effective way that a lot of our customers have closed out these really old outstanding invoices and then also really encouraged and enforced their service providers to invoice in a timely manner.
Trey: So that's interesting because it becomes, like you said, an enforcement issue and you're now looking to roll it into service level agreements. Is this an iterative process, Bruce, or do you enforce it out of the gates when you launched the system and onboard these service providers?
Bruce: Well, it's both. We recommend that as if a new customer is coming on board on our CMMS system, that they will set those standards and boundaries up front right away so that everyone knows, "Hey you, you need to invoice within 90 days, or whatever that timeframe is, of the work being completed." Now we've also seen a lot of success with our customers doing this [inaudible 00:09:27] especially as they're rolling it out maybe after the go live of the CMMS. And so we've seen them work down. Maybe they initially say it's going to be 180 days is the cutoff before we auto close these work orders, and then you can't invoice without probably an uncomfortable phone call to say, "Please reopen that work order so I can invoice because I couldn't do my job in a timely manner." And then we've seen them walk that down from say 180 and then in a few months down to 150 and then down to 120, maybe 90 maybe eventually 60 depending on what each customer's threshold was going to be.
Trey: I think one of the sexiest things that you said there Bruce was get paid in a more timely manner and take some of those invoices and those costs off the books. So that will be exciting for our listeners.
Bruce: [inaudible 00:10:27] Right? The vendors, hey, you know, they're usually not running charities, they want to get paid. So this helps them stay on track and and get paid for the work that they've done as well. So it's good for both.
Trey: Thank you. That's fantastic. All right, next let's jump to the second area of focus that we had from our listeners. Bruce, we had our listeners submit questions, submit emails and honestly recommend some of the subjects they'd like to talk about. The other one is kind of a more advanced area of focus in the area of work order automation. Our listeners are now asking us how to make better break/fix decisions and how to make more strategic asset replacement decisions.
Trey: So in your experience, you've worked with a lot of clients from different industry verticals. How do you know the expected life of an asset and what that should be so that you can make an informed decision?
Bruce: Number one, that means that you have gathered your asset data and you have a good catalog of your assets or equipment at your sites. Once you have that, there's critical information that you want to have on about each of those assets. Things like, when was it put into service? What is the warranty details about that asset? When does it go off of warranty? Or when did it, if it's older than that. Of course make and model is critical information to have in that regard. And then, back to your question, how do you determine what the lifecycle of that asset should be? There's a lot of different ways to go about that. You can look at what does the manufacturers say about the expected life of that particular make and model.
Bruce: You can look at your own history in your system, if you have enough of a history to see what is the average length of service of assets of the particular make and model. And then we can apply that into the application and that calculates based off the inservice date, calculated by the expected life of that asset and we know an expected end of life of that asset. Then based on that we can do a lot of reporting to do planning around a potential replacement of those assets as they age.
Trey: So that is really interesting. There's a lot there, Bruce. Do you do workshops or anything to enable clients and coach them since you've done this before?
Bruce: We do. We'll sit down and do consulting and planning workshops with customers to help them figure out the right strategy because again, it's not a one size fits all. There might be even a particular make and model of equipment, in some environments it might run 50% longer than an other based on the type of use and the environment that it runs in. So we will work with our customers and sit down and consult with them on different strategies that they can employ.
Trey: You know, Bruce, I liked your discussion on the dependency of making sure you have insights into those assets, whether those are asset tags or a cataloging number on those assets. Once those are there, what is your process for defining asset thresholds for break/fix decisions specifically?
Bruce: So we work with our customers to understand what they really are looking for. Now we'll come in with some best practices, but we look at a percentage generally of a purchase price is one of the, one of the best practices that we bring in and we recommend for our customers when they're determining ad maintenance threshold. And the maintenance threshold is basically the maintenance expenditure on an asset, a piece of equipment, over its life before you choose to replace that asset. Generally it's going to be less than 100% of the replacement cost of that asset. A lot of times it's 75-80%. Once you hit that threshold, then we look at replacing that asset. Now that asset might ... It might be on a case by case basis that we run an asset because it's been very effective and continues to be pretty efficient that we won't replace it until it's over that threshold significantly. But at least it gives us a baseline to start looking at those things and making some decisions.
Trey: That's interesting. How do you manage that from a workflow process and ensure that you're not overspending on replacing that asset?
Bruce: There's probably a couple of ways that are mainly used. One is we can put it automatically into the workflow. So when a work order is opened on that asset we can set a dispatch exception rule to say if a work order is over a certain percentage of it's maintenance threshold ... Again, if that threshold is 75% we might say don't do anything until we hit that 75%. Then don't dispatch this work order until someone else triages it and looks at it because we might want to replace it instead of continuing to spend money on that old asset.
Bruce: Or it could be a percentage or less than that 75% that you might want to start having that conversation. And we also then have dashboards and reports that you can do a little bit more proactively than just in the real time that we can say, "Hey, what assets are above or getting close to their maintenance threshold. We want to start doing some capital planning to replace those assets."
Trey: So that also very interesting because when you think of facilities management, that's more about repair type spent. On the other hand, asset replacement is more capital planning. How do you make sure that both teams are on the same page and can agree to which budget these expenses go into?
Bruce: Really I think that's based on the reporting that we offer. So we have capital planning reporting options that look at both the expected end of life of an asset as well as the maintenance threshold. So we can take all the assets that, again in a certain timeframe, look like they're potentially going to need to be replaced either based on that expected end of life or they're getting close or they're already over their maintenance threshold. So with that data the FM and the capital teams can really work together to decide what the budgets are going to look like and where those dollars are going to come from, whose budget.
Trey: That's helpful because this is again kind of an advanced approach to how you're managing some of your expenditures. So understanding the requirement to involve this additional stakeholders is a big deal.
Trey: Bruce, let me end on a note, which kind of brings your wisdom to the table. What are some of the challenges and pitfalls around asset management/asset replacement that you would recommend to our listeners? And what should they avoid?
Bruce: When you say wisdom, I'm looking over my shoulder to see if someone else's [inaudible 00:19:00]. From the experience of our wise customers, what I'll say is that a key is really keeping your asset data up to date. Of course, without the data being complete and accurate, it's hard to make wise and accurate database decisions. So that is really important. We really stress that with our customers that they have a defined process of really strong communication and ownership of who's going to take care of making sure that the asset data in the system is correct and that all the assets in the site have asset tags on them so they're clearly identifiable. Then that date of course gets loaded in the system. That also means when assets get transferred from site to site, that those transfers are logged and that data is updated and accurate in the system. So that to me is one of the pitfalls. As soon as that asset data is loaded in the system, you've got to be diligent to make sure that it stays up to date.
Trey: there's a lot of moving parts to this type of program, as I'm listening to you. Thank you very much, Bruce, for all your coaching on best practices here. Clearly it sounds like there needs to be a lot of communication and a plan to capture all that information before you get started. Our listeners and certainly I, myself, Bruce and enjoyed having you on the call and your expertise. Thanks for making time.
Bruce: You're welcome. Thanks Trey. Enjoyed it.
Trey: And to our listeners, we're going to continue to take your input. Please submit emails or reach out to us. We'll invite industry experts to the call and keep our focus on best practices for Facilities Management and work order automation. Thanks to everyone for your time.
Alley: That was great. The one thing I need is we didn't have a transition really between the first session and the second. I just need Trey to do a sign off for the first one and then I'll have Ashley edited back into the clip.
Trey: Got It. I'll do that. And Alley. There was one ... I can't remember if it was in the first or second one I interrupted Bruce. Maybe you can just cut me out on that one.
Alley: Yeah and I'll go through it cause I'm going to listen to both of these back and give Ashley editing notes so it's easier for her to do post [inaudible].
Trey: All right. Let me do the intro for sure.
Alley: The exit out of the first one. So it's best practices for managing invoices.
Trey: Got It.
Trey: So Bruce, thanks for all the insights into managing invoices. I mean like we said, facilities managers or operators that are listeners on this call, have big challenges to do more with less and we truly appreciate your insight on best practices for managing the invoicing process and working with large groups of suppliers.
Trey: To our listeners, thanks again for tuning in. We look forward to your additional feedback and any requests you have on subjects you would like us to cover with industry experts on these podcasts. Thank you again for your time and we look forward to you joining in the future.