What is The TCO Method™?
The TCO Method™ was created by Andy McQuade for businesses that invest in, own, or operate real estate.
It’s the brand he built around the consulting service he developed for and with his clients starting in April of 2019, and it’s now an informative real estate podcast, an upcoming book, educational courses and more.
It’s all about making decisions based on the highest value to the business and creating the best return on investment over time.
TCO stands for Total Cost of Ownership, and it’s loosely defined as the total cost of a product or service over the cycle of its useful life; it takes into account both direct and indirect costs as well as the cost of disposal, if it applies.
That means it includes purchase price, costs from depreciation, maintenance, operation, repairs, etc,
It’s used frequently in manufacturing and tech, but almost never used in – or applied to – real estate, but it should be.
Real estate, by nature, is long-term. Buildings stand for decades and even centuries in some cases – we know the repairs and maintenance needed to keep them in good condition can be costly, so why aren’t we more focused on avoiding unnecessary, yet highly predictable, costs?
When you reframe the decision making process for capital expenditures, maintenance, and operations through the lens of Total Cost of Ownership, you shift those from a cost center into a value driver when you stop making decisions based on purchase price alone.
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The Benefits Are Clear...
By using the lens of Total Cost of Ownership (TCO) when analyzing real estate operations, we’ve been able to add millions of dollars in additional Net Operating Income (NOI) and tens of millions of dollars in additional asset value through improvements in process, standards and systems.
By shifting the focus away from immediate, short-term gains typical in most operations, we’ve been able to generate more a more transparent and sustainable Return On Investment for our clients that reduces operating costs across multiple lines of their P&L.
It all starts with a strategy at the top to create efficiency and minimize opportunity costs.
Since opening ARM Procurement Advisors LLC, in 2019, Andy has helped his clients add over $5 million dollars in recurring annual NOI and add over $70 million dollars in asset value…all without his clients having to reduce headcount or defer maintenance.
Increasing NOI is possible in more ways than just raising the rent, in fact, if you can reduce expenses, every $1 saved is like $2 in additional rent!
The trouble starts when businesses cut expenses that hurt the quality of their properties, employees or tenants…it always ends up costing them more in the long run.
The TCO Method™ has proven that it can help avoid those pitfalls.