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Accounting for Long-Term Personnel Costs on a Building Project

January 28th, 2022 | 5 min. read

Accounting for Long-Term Personnel Costs on a Building Project

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When starting a commercial building project, construction and project costs may be at the top of your mind. While these costs are important, it’s also necessary to consider the long-term costs of building and business operations—including the cost of your employees.

At Neumann Monson, we take a balanced approach to building costs. Along with maintenance and equipment costs, we believe you should consider the costs of your personnel. The design decisions you make with your architect can have a major impact on your employees’ wellness and your company’s ability to attract and retain talent—impacting your bottom line. 

In this article, you will learn three tips for balancing long-term personnel expenses: 

  1.  Promote occupant wellness 
  2.  Involve employees in the design process 
  3.  Consider talent attraction and retention 

After reading, you will better understand how personnel expenses can impact your business and how you can leverage your team’s experience to achieve a long-term return on your investment. 

Breaking Down Long-Term Personnel Costs 

On a building project, initial construction and project costs are only the tip of the iceberg. Over years of building ownership, you are likely to encounter a variety of maintenance and replacement costs. 

These long-term costs are referred to as “life cycle costs.” Often, life cycle costs are associated with materials or equipment systems. For example, a durable flooring material like polished concrete has a lower life cycle cost than a high-maintenance material like Vinyl Composite Tile (VCT). 

Life cycle costs can also apply to your personnel. Studies show personnel costs are a commercial building owner’s greatest long-term expense. A federal government study found that design and construction only made up 2% of the total cost of building ownership over a 30-year-period. 

6% of the cost went toward maintenance, and the remaining 92% went to personnel costs—emphasizing the importance of your employees in the design process. 

Graph of personnel expenses

Personnel costs are a commercial building owner’s greatest long-term expense.

3 Tips for Balancing Long-Term Personnel Costs 

Employees may be your greatest long-term expense, but they are also your greatest asset. Thinking about their wellness and involving your team in the design process can help reduce long-term expenses associated with sick days, loss of productivity, and turnover. 

At the same time, a building project offers the opportunity to promote a positive, productive company culture. Your building—and the culture it cultivates—is a powerful talent attraction and retention tool. 

1. Promote Occupant Wellness 

Investing in employee wellness offers long-term benefits. According to the Integrated Benefits Institute, a nonprofit research group, productivity losses due to sick days cost US employers approximately $530 billion in 2018. Along with short-term illnesses, chronic conditions like stress, fatigue, and depression lead to absenteeism. 

The workplace plays a crucial role in maintaining a healthy workforce. After all, the workplace is where we spend most of our time.   

Building rating systems like WELL, LEED, and Living Building Challenge offer frameworks for improving occupant wellbeing, but simple design solutions are also effective. 

Utilizing natural daylighting and creating a visual connection to the outdoors can boost occupants’ mood, improve their productivity, and regulate their circadian rhythms. Additionally, setting healthy air quality standards, utilizing non-toxic materials, and implementing non-toxic cleaning protocols can protect occupants against chronic illnesses. 

These measures create a more pleasant occupant experience—leading to improved productivity, reduced absenteeism, and a tangible return on your investment. 

2. Involve Employees in the Design Process 

Your team is one of your greatest resources in the design process. Their insights can help your architect better understand how they work and how they will be using the space. 

We recommend including your employees throughout pre-design. In visioning workshops and benchmarking tours, they can provide an on-the-ground perspective of your organization. 

Smaller organizations can include their entire team, but larger organizations might want to select employees from different areas or departments. For example, we recommended that a manufacturing company include both office and production staff in early design discussions. You can also use pre-design surveys to get a broader perspective from your entire team. 

Simply put, you want to develop a space that serves its occupants and cultivates a positive company culture. The most successful projects occur when everyone feels like their voice is heard. 

Employees involved in the design process

Involving your employees in the design process will help you better understand how they will use the space.

3. Consider Talent Attraction and Retention 

Lastly, you should consider the importance of talent attraction and retention in the design process. Although several factors impact retention, an employee’s physical workspace plays an important role in their job satisfaction. A building project offers the opportunity to foster a more productive, positive culture and improve retention rates. 

Improved retention rates offer a sizable return on investment. On average, US companies spend $4000 on recruitment per employee. Training employees can be as expensive. 

The ideal work environment will look different for every company and industry. Including your team in the design process can help your architect find solutions that fit their needs and improve their day-to-day satisfaction. 

A positive work environment also serves as a powerful marketing tool for new hires. Your building project is an opportunity to showcase your values and mission. Creating a space where employees want to spend their time can help your company attract top talent and keep up with your competitors. 

Ready to Learn More?

When starting a building project, it’s important to consider the long-term expenses of building operations. These expenses include your personnel costs. By promoting occupant wellness and including your team in the design process, you can reduce absenteeism, improve retention rates, and attract talent. 

In the long run, these investments can offer a financial return on your investment. 

The long-term expenses of building operations must be balanced with your initial budget. A quality architect will work to align your goals with your budget and find unique solutions to fit your needs. To learn how an architect can help you get the most out of your budget, read our case study of Lone Tree Wellness Center

To learn how we can help with your building project, contact us, and start a conversation with an architect.