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As an economist with a BS in Economics from Cal Poly Pomona, I’m presenting the following topics for review and consideration to our facility and property management community. My focus is on the economic analysis of reopening facilities in the near future presently closed due to the impact and measures from the Coronavirus.
More specifically, my approach centers on utilizing a cost-benefit approach and analysis on reopening your business sooner than later.
What this means in humanistic terms is we must somehow factor out of the analysis a bleeding heart approach where shutting down the economy indefinitely is an acceptable outcome if it prevents more deaths vs. taking a reckless Mad Max approach like a “reopening” road warrior where the number of deaths doesn’t matter as long as the business is profitable.
Corporate Social Responsibility and the Triple Bottom Line
Here it would be safe to say, a company’s corporate social responsibility (CSR) which is the commitment to contribute to economic development while improving the quality of life of the workforce and their families as well as of the community and society at large—and their Triple Bottom Line (TBL or 3BL) which is an accounting framework with three parts: social, environmental (or health related) and financial considerations that come into play in the decision making process—are very important.
By considering all options and the potential risks and missed opportunities, the cost-benefit analysis of reopening a facility is more thorough and allows for better decision-making concerning the potential and/or actual Coronavirus impacts on returning employees and their immediate health. However, the organization’s immediate financial and long-term health must be taken into consideration as well.
Opportunity Cost and the Decision-Making Process
For many decision making models, a cost-benefit analysis will also factor the opportunity cost into the decision-making process.
Opportunity costs are alternative benefits that could have been realized when choosing one alternative over another. In other words, the opportunity cost is the forgone or missed opportunity or risk management as a result of a choice or decision. Factoring in opportunity costs allows project and facility managers to weigh the benefits from alternative courses of action and not merely the current path or choice being considered in the cost-benefit analysis.
By considering all options, potential risks, and missed opportunities, the cost-benefit analysis is more thorough and allows for better decision-making outcomes than other approaches.
Reopening Considerations to Think About
As states begin setting timelines for lifting their COVID-19 stay-at-home orders, businesses across America are contemplating what that might mean for their operations. Many brick-and-mortar establishments with on-site operations have had to shift their operations remotely or shut down entirely and the road back to normalcy is set to be a long and potentially difficult one.
Depending on the type of business you run and where you're located, your strategy for reopening post-Coronavirus may look very different from other businesses across the same state and similar industries. However, one thing is common to all businesses: You must be prepared to proceed with caution, empathy and understanding.
But before you do, the next big concern to tackle is risk management. This critical topic will be covered in next week’s article, so I hope you’ll stay safe and sound and stick around for that post.
For the latest reopening updates, check out the California Coronavirus (COVID-19) Response webpage at: https://covid19.ca.gov/.