BICUC

Greetings,

We are deep in the budget season for 2025, and I use the zero-based budget methodology. It's relatively easy to forecast regular expenses, such as the quarterly HVAC PMs; however, the miscellaneous/unknown expenses are more difficult to forecast. How do you forecast the miscellaneous expenses that are difficult to know? We are on a cadence to replace our HVAC package units between years 15-20, so there are fewer large misc. expenses that come from that.

Best regards,

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Micah Arnold
Facilities Asst Manager
Bay Federal Credit Union
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Hello,

I find zero based really hard to work with in facilities/construction without a contingency line item.  When operating under a GMP contract structure, there is a contingency line item to cover for unforeseen items (ie unexpectant failures of faucets or other mechanical components) as a percentage of the overall costs.   

I also run the capital improvement items as a separate budget on a 3 year projection, and have projects approved with each budget cycle.  When presenting to the credit union board, it helps differentiate what NEEDS to be done vs what SHOULD be done and what COULD be done.    If something on next year's priority decides to become this year's priority, then I shuffle a bit of what can be pushed out.  Your group's asset size is over 3 times of what I'm working with, so your situation might be different. 

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Jonathan Decker
Facilities Manager
Intrepid Credit Union
Helena MT
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Original Message:
Sent: 10/9/2024 11:39:00 AM
From: Jonathan Decker
Subject: RE: Budgeting for Miscellaneous

Hello,

I find zero based really hard to work with in facilities/construction without a contingency line item.  When operating under a GMP contract structure, there is a contingency line item to cover for unforeseen items (ie unexpectant failures of faucets or other mechanical components) as a percentage of the overall costs.   

I also run the capital improvement items as a separate budget on a 3 year projection, and have projects approved with each budget cycle.  When presenting to the credit union board, it helps differentiate what NEEDS to be done vs what SHOULD be done and what COULD be done.    If something on next year's priority decides to become this year's priority, then I shuffle a bit of what can be pushed out.  Your group's asset size is over 3 times of what I'm working with, so your situation might be different. 

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Jonathan Decker
Facilities Manager
Intrepid Credit Union
Helena MT
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Hi Micah, 

I use different budgeting processes for capital and ongoing maintenance expenditures. Capital expenditures are budgeted through the zero based process and drilled down to the NEED vs the WANT per location. HVAC is always a need dependent on the status of the system and vendor report of life due to ongoing issues and repairs. I will budget for the unit "just in case" which allows for the expected replacement or funds to be shuffled around for any other unforeseen emergencies that arise if not used. 

The maintenance budget is tracked per location and calculated on the current year expense, forecasted since I start in August, with an added 5% to cover any rate increases or unforeseen issues. The budget covers all utilities and ongoing regular maintenance such as landscaping, pest control, janitorial, HVAC routine maintenance, etc. This is more efficient for us due to the changes that take place through the year and having to justify any variances.

Looks like there are some similarities to the processes Richard and Jonathon shared. :)

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Christi McGonigal
Facilities and Construction Manager
Rogue Credit Union
Medford OR
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Micah - I always add a contingency line to both my Opex and Capex budget.  These dollar amounts covers any unforeseen expenditure during the year.

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Sharon Taylor
VP of Facilities
Centra Credit Union
Bloomington IN
812-340-1485
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Original Message:
Sent: 12-04-2024 13:23
From: Christi McGonigal
Subject: Budgeting for Miscellaneous

Hi Micah, 

I use different budgeting processes for capital and ongoing maintenance expenditures. Capital expenditures are budgeted through the zero based process and drilled down to the NEED vs the WANT per location. HVAC is always a need dependent on the status of the system and vendor report of life due to ongoing issues and repairs. I will budget for the unit "just in case" which allows for the expected replacement or funds to be shuffled around for any other unforeseen emergencies that arise if not used. 

The maintenance budget is tracked per location and calculated on the current year expense, forecasted since I start in August, with an added 5% to cover any rate increases or unforeseen issues. The budget covers all utilities and ongoing regular maintenance such as landscaping, pest control, janitorial, HVAC routine maintenance, etc. This is more efficient for us due to the changes that take place through the year and having to justify any variances.

Looks like there are some similarities to the processes Richard and Jonathon shared. :)

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Christi McGonigal
Facilities and Construction Manager
Rogue Credit Union
Medford OR
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