Facilities cost allocation : a review

Pao Yue-kong Library Electronic Theses Database

Facilities cost allocation : a review


Author: Cheng, Wing-wo
Title: Facilities cost allocation : a review
Degree: M.Sc.
Year: 2002
Subject: Hong Kong Polytechnic University -- Dissertations
Building -- Estimates
Department: Multi-disciplinary Studies
Dept. of Building Services Engineering
Pages: iv, 118, v, [40] leaves : col. ill. ; 30 cm
Language: English
InnoPac Record: http://library.polyu.edu.hk/record=b1656015
URI: http://theses.lib.polyu.edu.hk/handle/200/2448
Abstract: This dissertation is about different methods of facilities cost allocation and their impact on company departments. Space usage, occupancy charges is a particularly political and volatile issue within an organization. Therefore, clear (fair) methods need to be developed to distribute such costs. The basic premise of space charging is that free assets are less likely to be effectively managed than those that have cost implications. Many organizations believe that an effective space charging system provides users of space with an incentive to minimize their demand for accommodation and make best use of that which they have. It is important to distinguish between space charging and space costing. The primary goal of the research is to investigate and apply the various methods companies use to allocate facilities cost for office premises use and illustrate the different results. Analysis may highlight the impact on company departments which have to bear chargeback costs by different methods. In order to develop a better understanding of the facilities cost allocation used in different companies, a survey was conducted to collect information about current and future methods of allocation. This information may assist us to assess cost allocation percentages, find out what methods are most appropriate and see how and why chargeback systems are used. The dissertation focuses on seven main issues, i.e. 1. What are the components of space charging? 2. How rent, costs and expenses are calculated? 3. What are the property issues? 4. How to review land market and office location 5. What are running and occupancy costs? 6. What are the elements of occupancy costs? Are there any occupant cost data model? 7. Existing Facility Management practice The method of investigation for this research was based primarily on detailed interviews with a variety of professionals who represent a cross section of business disciplines who determine facilities cost allocation in company departments. Information provided during the interviews was then supplemented by a questionnaire survey. It was important to establish criteria for a suitable sample group because the research focused on the issue of facilities cost allocation. A decision was made to restrict the data collection within Facility Management groupings that were involved in such allocation. Forty out of three hundred members of IFMA (Hong Kong Chapter) responded, which represented a 13 % response rate. Based on the survey data, six methods of facilities cost allocation were identified, i.e., 1. Employee Headcount (By Building) 2. Employee Headcount (By Floor Area) 3. Area Occupied (By Building) 4. Area Occupied (By Floor Area) 5. Desk Number (By Building) 6. Desk Number (By Floor Area) Each method has produced different results to individual business units. The inconsistency produced by the different methods of calculating facilities cost allocation suggest that existing methods not result in an equitable basis of cost distribution between contributing departments. Therefore, a further study is recommended to find out an appropriate fair method.

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