AN EFFECTIVE COST-CUTTING APPROACH TO MANAGING PARKING IN RETAIL OUTLETS IN AFRICA

In a tight economy such as those experienced in most African countries, parking garages in retail shopping malls like "Shoprite" are getting more creative when it comes to cost-saving measures. They’re utilizing efficient lighting and cost-effective access security measures such as parking access revenue control system (PARCS) to deter illegal parkers. They’re also reducing the cost of managing their car parks with the use of parking attendants from a professional parking firm rather than security companies whose labor costs are usually greater and might lack the appropriate parking skills required to manage and control activities in their parking garages. For example, in Lagos Nigeria at Ikeja Shopping Mall popularly known as “Shoprite”, managed by the South Africa/Nigeria property managing company called Broll Nigeria Limited, the property agents outsourced their security management to Pavillion Security company at a cost of N100K per month per manpower while the malls parking garage is been managed by Servest Parking company at a cost of about N70K per month per manpower. With this estimation an average of N7.2M is been saved by the property agents yearly for an average of 20 manpower employed aside the benefits of using a professional company to handle its parking. This cost saving won’t have been so if both job functions were managed by the security company. Similar cost-saving effect is currently experienced in South Africa and Ghana.

One effective, yet often overlooked, cost-saving measure involves a thorough evaluation of parking operating expenses and implementing measures to reduce these expenses. A recent survey sheds light on what it cost to operate a typical parking facility. Data was taken from operating statements from 22 different parking structures located in Africa, including profit and loss statements filed between 2009 and 20011. Operating costs were converted to a per-space basis by dividing the annual cost by the number of parking spaces to provide a per unit cost comparison between structures. This article provides detailed expense line items typically associated with parking and what Shopping Malls & Hotels can do to decrease them. One of most common cost leaders is labor. Staff costs are unique to each parking structure and vary based on a number of factors, including geographic location, the level of service provided, and if the facility utilizes parking access and revenue control systems (PARCS).

Labor costs
One of most common cost leaders is labor. Staff costs are unique to each parking structure and vary based on a number of factors, including geographic location, the level of service provided, and if the facility utilizes parking access and revenue control systems (PARCS). For many parking owners, technology can provide an effective cost-saving solution. Pay-on-foot technology, or example, gives parkers the ability to pay at stations prior to returning to their vehicles. This technology can help reduce, or even eliminate, the need for revenue control staff at exits. Some parking structures have even gone cash-free in recent years, further reducing the need for staff. These structures have parkers to pay by credit card either at pay-on-foot kiosks or in exit lanes.

Equipment costs
Security equipment & their installations can also account for significant expenses. The use of such equipment for security purposes installed by professionals is more likely to be provided in areas that demand a higher level of service. For example the use of CCTV controls, LPR, automated cashiering, etc, located in areas subject to crime can be very much effective. While security equipment is often a high-cost item, it’s not necessarily advisable to cut back on this expense. Parking garage owners must evaluate their own unique security needs before deciding whether to cut back and, if so, by how much. Reducing overall security in parking environment can lead to a number of unanticipated consequences, including higher legal costs due to increased liability and lost business if patrons perceive that the structure isn’t safe.

Maintenance costs
Maintenance is another high-cost, yet essential expense. Improperly maintained structures often suffer from equipment failure and concrete degradation, and need to be replaced or repaired much sooner than they otherwise wood. In the case of cutting back on maintenance, it’s easy to be penny wise but pound foolish.
Maintenance costs typically cover routine cleaning and upkeep, structural repairs, and PARCS equipment care. Routine or daily maintenance includes sweeping and washing surfaces, light painting, replacing light bulbs, cleaning offices and public areas, repainting line stripes, and maintaining landscaping and plants. Some parking structures hire a professional cleaning firm to provide routine maintenance; most provide and supervise the staff directly. Equipment maintenance is not always reported on profit and loss statements. With new PARCS installations there is typically a one-year warranty or extended service contract. Depending on the age and complexities of the PARC system, the owner may or may not opt for the service contract. Other equipment that requires regular maintenance includes elevators, escalators, and moving walkways. Structural maintenance is another item that is not always reported on profit and loss statements. These costs may be paid directly by the owner or coded as capital costs due to the high expense. It’s recommended that owners establish a “sinking fund” of N5K ($30) to N12K ($75) per space annually to cover structural maintenance.

Despite all this, there are ways to cut maintenance costs. For example, parking owners can upgrade existing lighting fixtures to high efficient florescent, induction, or LED lighting fixtures, which can provide improved visibility at a significantly lower operating cost. The savings are potentially substantial enough that it may be possible to have a new lighting system installed with little or no upfront costs in exchange for a payment made from the monthly utility savings. Lighting typically represents the largest utility cost in a parking structure, especially for below-grade or enclosed structures. Parking administrators can also lower costs for utilities such as phone services, internet access, and water and sewer services. Electricity costs are influenced by the geographic area, as well as the type of lighting system. For example, in 2011 the average commercial retail price of electricity per kilowatt-hour in Nigeria ranged from N1K – N5K per kilowatt-hour. The highest costs were found in the Lagos and Rivers states. These two areas represents the most viable commercial areas in Nigeria aside the Federal Capital Territory Abuja.

Accounting and banking costs
Accounting and banking costs include any fees associated with banking, accounting, auditing, and credit card fees. Over the years, a parking structure’s banking fees have increased as credit card usage has increased. When credit cards are used, there is a charge from a credit card clearing house, as well as a direct charge from the credit card company. These credit card processing fees vary widely and should be audited to ensure the lowest fees are charged in this highly competitive market. This is especially true since the Durbin Amendment went into effect in October of 2011. The new rules reduce the fees charged to process debit cards, but don’t require the savings to be passed on directly to the merchant. Because the fees are typically established by an agreement, unless that agreement has been updated, the merchant is likely to be on the higher fee schedule and not benefiting from the lower costs. Across the country and most cities in Africa, shopping malls and hotels are being imaginative when it comes to cost-cutting methods. Reducing the price of parking expense items may not be as attractive as arranging competitions to see which dorm can reduce its heating costs the most, but such an approach has proven to be just as effective.

Credit

Author: Mr. W.A Seriki is the current Managing Director (V-Park Management Solution Limited) and he is the foremost Nigeria Parking Consultant trained overseas and highly recognized in the parking industry. The company V-Park provides expertise and professional services in total parking management solutions which also covers the hospitality industry. He can be reached via phone contact (+234) 8132480941 or via email wasiu@v-parkms.com

Note: All Shoprite photos are copyright product from Nigeria, South Africa and Ghana. Please seek consent before re-use.