Getting the Most Out of Your Capital Budget

Senior living operators have historically allocated smaller amounts from their annual budgets for capital expenditures. However, in today's competitive environment, it is crucial to consider increasing capital expenditure allocations to maintain top-quality properties and recoup investments when properties change hands. The average allocation for buyers remains between $300 and $500 per unit per year, depending on factors such as building age and market strength. Allocating appropriate funds for capital projects is essential to avoid compromising property quality and functionality.

When embarking on construction projects, senior living communities often face the choice between self-performed projects and hiring professional service providers. Self-performed projects can save money, but they carry the risk of lacking specialized expertise. On the other hand, hiring external service providers guarantees expertise but may pose budget risks. Balancing budget constraints and desired results is a critical decision in these cases.

In the process of budget preparation for senior living communities, it is beneficial to leverage purchasing partnerships that offer various benefits. Sodexo, for instance, provides partnerships that maximize capital funds by offering discounted prices on essential equipment and materials such as kitchen appliances, dining room supplies, facilities management equipment, beds, carts, floor and wall materials, renovations and equipment replacements. By utilizing such partnerships, communities can allocate their capital funds more efficiently and ensure long-term financial sustainability.
Sodexo's partnership with various vendors can also provide significant advantages for senior living communities. For instance, when unexpected elevator repairs arise, leveraging the Sodexo partnership with the current elevator contractor can lead to immediate savings. Similarly, Sodexo can help identify approved vendors for major purchases like beds, resulting in cost savings, longer warranties, and improved repair and maintenance processes. These strategic partnerships help communities make better financial decisions and free up capital funds for future needs.

To avoid cost overruns and ensure a realistic budget, it is essential to create two lists: one for "must-haves" and another for "would-likes." The "must-haves" represent features and elements crucial for the intended function and ambiance of the space, while the "would-likes" can be considered if the budget permits. By clearly defining these lists, the temptation to exceed the budget with unnecessary upgrades can be minimized. Maximizing capital funds through strategic partnerships and collaborating with trusted partners like Sodexo can provide valuable cost-saving opportunities and empower communities to allocate their capital funds efficiently. This can only serve to benefit the residents and ensure the overall success of the senior living community.