Engineering from the Accounting Point of View: How Engineer’s Roles Impact the Bottom Line

June 7, 2021 | By: Alec Burchett

The bottom line is a term used in accounting that is simply used to refer to net income. Net income is listed at the bottom of an income statement hence the term, the bottom line. To calculate the numerical value for net income is fairly simple. You simply have to subtract any expenses from total or gross income.

Sure, there tends to be a fair bit of information that is needed for each of those variables before net income can be determined, but that is what accountants are for. Building engineers however serve in a much different role than calculating revenues or expenses. Their roles in a day-to-day fashion, directly impact these factors and therefore, the bottom line.

Defining Expenses

Through everyday work, engineers can work up or generate many kinds of expenses. There is of course their salary. Depending on the work they may do, their specific positions, how many positions there are, and various other factors, engineering salaries can become quite substantial. Building engineers are responsible for repair and maintenance on all the mechanical operations of a building. This includes systems such as heating, HVAC, water treatment, electrical, plumbing and many more.

Detailed preventative programs are designed by building operators to make sure these systems run efficiently, correctly, and can quickly be fixed in case of error. Building engineers are also responsible for providing estimates of where capital will be needed both currently, and in the future. Large repairs or replacements are scheduled by the building engineers often years in advance, in response to the provided estimates on a system’s life span.

Generating Revenue

Fortunately, through these expenses, building engineers are also able to generate revenues for their company. By both getting the best prices on equipment, and ensuring that everything is as efficient as possible, money is saved. The overall expenses on utilities will be much less which helps the property managers, and in turn also helps the tenants by allowing them to pay less. Overall tenant satisfaction will in turn increase which can lead to further gains in capital.

Another way engineers generate revenue is through the general repair and maintenance of a building. This ensures that the building is always fit for customers or tenants whenever they may be there. A tenant should be focused on their business that they are running, not if they are going to have issues with any systems that the building provides. Laurie Harper, the director of operations at Cousins Properties, says that the goal is to renew our customers which is done by building strong relationships with them.

These relationships are cultivated through the services that operations and maintenance professionals provide, because without them, buildings would constantly experience failures and tenants would not renew their leases. However, when good relationships are developed due to the actions of building engineers, tenants are more likely to refer their building and its service to others, which can then generate revenue.

The Balance

With all the work that building operators do, you may think that they are too expensive or result in expense after expense. However, this is far from the truth. Building engineers end up saving buildings money and help to generate more revenue through the services they provide. Without engineers, buildings simply would not be able to generate enough revenue to cover all their expenses, and that is the bottom line.





To stay up to date on news and resources such as this and other topics of importance to the real estate industry, subscribe to the free CRE Insight Journal Newsletter using this link.