Understanding Total Cost of Ownership in Facility Services: Unlocking Long-Term Value
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Why Total Cost of Ownership Should Be Your Top Priority
Spoiler alert: If you’re focused on the lowest upfront costs in facility services, you’re likely leaving money on the table—and potentially compromising long-term efficiency and community impact. The concept of Total Cost of Ownership (TCO) challenges this mindset by shifting the focus to the entire lifecycle of a facility, from acquisition to maintenance and eventual replacement or decommissioning.
Read on as we break down the components of TCO, explain how adopting a TCO framework can transform how your organization approaches facility maintenance, and show how partnering with a Minority Business Enterprise (MBE) like Diversified Facility Solutions (DFS) aligns with long-term, cost-saving goals while uplifting the communities in which your employees live.
We hope you’ll gain a better understanding of how focusing on TCO helps you make smarter, data-driven decisions that maximize the value of your facilities’ assets.
What Is Total Cost of Ownership (TCO) and Why Does It Matter?
TCO is the comprehensive assessment of all costs associated with acquiring, operating, maintaining, and eventually disposing of a facility. Unlike traditional cost evaluations, which prioritize upfront expenses, TCO accounts for both direct and indirect expenses over the facility’s entire lifecycle.
Key Components of TCO
Initial Capital Expenditures: Costs incurred during the acquisition or construction of a facility, including design, build, and installation.
Operational Costs: Daily costs such as cleaning, security, utilities, and administrative expenses.
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