Cost cutting

Cost cutting? Let the pros do it.

Brevard county public schools has taken a unique approach to cost cutting. They let the professionals do the cutting. This elite group did research, ran experiments, completed tests, and reported their successes and failures to management. They presented both written and oral reports. This group designed 28 cost cutting projects. Estimates of total savings range from $200,000 to $1,000,000 over the next few years.

Was this group a team from one of the big accounting firms? Were they from one of the big consulating companies? Perhaps they were from one of the best engineering firms. No, no, and no, none of the above! These cost cutting teams were made up of county public school employees; tradespeople, janitors, painters, grounds people, team leaders and supervisors.

This is a story about cost cutting by the people who maintain your buildings, clean your floors, and keep your grounds neat. You can follow their example and involve your workers in cost cutting.

The first step is to decide to cut costs using your tradespeople. As you can imagine high level people have to sign off on a project of this type. At Brevard Stephen Muzzy, Director of Plant Operations and Maintenance had to get the support of Ed Curry, Assistant Superintendent of Facility Services to embark on the cost reduction effort (called CARE, cost analysis and reduction effort).

See if the logic for this program is as obvious to you as it was to them. Their workers were in every building every day. They saw the waste such as the water leaks, cleaning up the same messes of paper towels, and replacing the same doors over and over. This program was designed to empower them with training, resources, time to solve a problem, and real say so, to fix something that has bugged them (maybe for years).

Brevard's Mr. Muzzy hired Joel Levitt, President of Springfield Resources to design and facilitate the effort. Mr. Levitt is a long time maintenance consultant and trainer. Previously, Mr. Levitt trained the entire Brevard County Public School's maintenance leadership in management of maintenance.

How they got started

Mr. Levitt met with the entire maintenance work force in groups of about 30. On the first meeting Mr. Levitt taught the concepts of cost avoidance, life cycle costing, and calculating return on investment. The workers formed teams (they chose the people that they wanted to work with). Each team was assigned a management coach. The coach helped the team with logistics and resources.

What happened next

Each team brainstormed a list of possible projects then choose a cost reduction project that appealed to them. The project was written up by the team and approved by the team's coach. The criteria for approval of the project was: they had to be able to show results in 3 weeks, they had to be inexpensive (require less than $500) and the project had to give a positive return on investment, improve safety or improve the ability of the teachers to teach.

The teams worked on their own for three weeks. In a subsequent meeting Mr. Levitt taught the teams about both written and oral presentation skills. In the finale each of the 28 teams presented a written and an oral report about their project.

The results

The presentations were given over 2 days. Each of the teams came up with a project. Many projects were successes in that they saved money, improved safety or improved the teaching environment. Some projects were successes in that they failed! The failures improved the knowledge of the department about materials or techniques that don't work..

And the winner is...

The management team with the consultant chose the three best projects and gave them a gold, silver or bronze star. The winners had low investment, quick return of invested money, high return on investment, and were easy to complete. No monetary rewards were given out. The only incentive was the ability to work on a project and solve a real problem and the management recognition for the quality of the effort.

How much it cost

Consulting costs:

Presentation of sessions including all travel expenses, development of customized training materials, duplication costs, follow-up consultation to help define and prioritize projects, write-ups, other support

$20,000

Time in class 150 people * 8 hours @$25/ hour

$30,000

Time on project outside of class estimated average of 2 hours per person.

Total 300 hrs @ $25/ hour

$ 7500

Materials for projects average estimate $90./group

$ 2500

Management time to set-up, coach groups, rewrite projects, review outcomes, meetings estimate 200 hours @$50/ hour

$10,000

Total cost for project

$70,000

Pitfalls

Not every organization should undertake an effort of this type. Some of the attitudes needed for success are:

1. Commitment to follow through on at least 50% or more of the projects if the engineering and economics work (the benefit to morale when a project is put in place cannot be over emphasized).

2. Can commit the minimum resources to the effort including time off from regular duties to work on projects, money to purchase experimental materials, management/staff coaching time.

3. Can allow flexibility in purchasing non-standard items from new vendors on a rush basis.

4. Can allow people to cross functional and trade lines and can encourage workers to talk directly to the appropriate experts in the accounting, purchasing, legal, and engineering departments .

Cost cutting is everyone's job. Many of us are too busy to spend the kind of time on the details required for cost reduction even if we had the expertise. The tradespeople, painters, grounds keepers, janitors know our facility better then anyone. Many of them are frustrated by the waste but have given-up on trying to improve it. Considering this avenue of reducing costs because the cost reduction will improve your competiveness and the program will improve your morale.

SIDEBAR (pick as many as you want)

Sample projects

The 28 projects were presented by the teams Oct 1,2 1996. When implemented, these projects represent savings to the district of over $300,000 to $1,000,000 over the next few years.

Gold µ Effect on electric consumption of increasing the set point of a school from 75.5° to 77° F. The school wide set point in the Jupiter school was raised from 75.5° to 77°. No complaints about temperature were registered. The electricity usage dropped by 10% resulting in a $7000 year savings per school with an immediate total approaching $315,000 (45 schools on DDC controls) for the district. Additional recommendations for savings from new thermostats in modular units. Gold star because there is little investment, large potential (real-measurable) savings, and immediate returns.

Silver « Impact of the use of stabilizer on the consumption of chlorine in the pools. The team added $225 of stabilizer to a pool. They charted chlorine usage for 1 week before and 1 week after stabilizer was added. Chlorine usage in the test pool dropped by $80 per week. Potential savings is $4000 per year per pool. Silver star is awarded because investment is small, payback is large, immediate and real. This technique can easily be applied to all district pools where stabilizer is not being used.

Bronze ¶ Impact of Ever-pure filter system to prevent corrosion failure in kitchen boilers. The manufacturer increases the warrantee from 1 to 7 years if an Ever-pure filter is installed. Installation parts and labor are about $550. Current failure rates of 1 liner every 2 years will result in a savings of about $2684 in 7 years for each unit. 14 proposed Viking units would yield $37,500 in avoided maintenance costs over the 7 year warrantee. In addition there are over 50 boilers of other makes and models with equally high failure rates. The filter might help generate an additional savings of $134,200. This project was chosen because of the ease of the savings (from a warrantee), the real reduction in labor and the high cost of parts. If the technology proves to be effective the project can also be expanded to all the boilers in the district.

Compare circulating pumps. Project compares an existing cast Iron circulating pump to a smaller and lighter stainless steel pump. The smaller pump has been in use in the district for 7 years. Analysis of replacement cost, reliability, energy usage, complexity of installation shows that the smaller stainless pump is clearly superior. It costs $150 less to purchase, is more reliable, uses about $7/yr less electricity. Recommendation: replace all circulating pumps with the stainless one as they fail.

Impact of relamping and cleaning fixtures on light output and electric usage. In a classroom where there were lighting complaints (room 12, Croton) the team replaced the tubes (with efficient ones), ballasts (with magnetic ones) and cleaned the fixtures. The candle power at desk level increased from 12.5 to 56.8 (standard is 60). The amp consumption at the breaker went from 14 to 8. Total cost was $305 including labor at $25/hr. Electric savings $220/year. Several ballasts were leaking and were hazardous. Recommendation: create an annual campaign where each school choose its worst 2-3 rooms for lighting. Teams will then re-lamp, re-ballast, clean fixtures. Based on the other relamping project high efficiency ballasts and utility rebates should be looked into.