Controlling costs at every turn

Controlling costs in these uncertain times requires a Scrooge-like grasp on the purse strings.

That was apparent here this week as I scoured the internet for parts to repair some fairly dated office technology, whereas a few years ago I would have splurged on a replacement without a second thought.

I’ve become almost evangelical about frugality of late, which is why dealing with costs that are out of my direct control evokes a palpable sensation of impotence.

For example, until recently we traded in a mall where the landlords charged us for electricity based on what they paid their supplier, which, counter-intuitively, was far in excess of what we’d negotiated ourselves elsewhere. Plainly this large corporation hadn’t looked at the market as carefully as we had.

Many landlords now contract out facilities management. Understandable for just a few isolated stores, but for a large development this adds unnecessary cost and a greater disconnect with the tenants than an in-house team would have.

I know the arguments for total facilities management, but in my experience the deciding factor is usually simple expediency. As our new Government is discovering though, outsourcing simply passes the buck (or in our case the quid). It introduces a whole new set of problems and doesn’t necessarily guarantee any reduction in final cost.

But however our money is spent, once a year we get to scrutinise the annual service charge document - not that this tells you much. Except if you have to wait five months for clarification on the terms of specific contracts, as I once did. That made it abundantly clear the people who negotiated them in the first place hadn’t paid too much attention at the time.

I’m not suggesting that there is always such a lack of diligence, or that in many cases services aren’t provided on a cost-effective basis. But unless tenants are allowed input in the tendering and monitoring processes, it is difficult to believe that the blank cheque we sign every year will guarantee us the best deal.

As everyone knows, it is always easier to spend someone else’s money.

Ian Middleton is managing director and co-founder, Argenteus