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THESIS
Defining a few steps for Strategic Facilities Capital Planning and Management
Munteanu Constantin
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1. Motivation/ Preface
This report is called Defining a few steps for Strategic Facilities Capital Planning and Management. The reason for the name of this project was to let people know that there is an upcoming development. We as facility managers need to focus on this.
Hopefully, this project helps todays Facility Managers to deal with perception management, expectation management, and staging experiences in the future. Thanks for reading this document, if there are any questions about the project please do not hesitate to contact me. I will be more than happy to answer all of your questions.
Munteanu Constantin
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This type of robust and strategic Facilities Capital Planning and Management process should incorporate the following seven steps: Step 1: Define the Process Step 2: Gather Data Step 3: Analyze Benchmarks Step 4: Prioritize Capital Projects Step 5: Demonstrate Impact of Funding Step 6: Create Defensible Budgets Step 7: Develop Process for Continuous Update
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Gather Data
A critical aspect in developing credible capital plans is the validity of the underlying data. Accurate cost and detailed condition information forms the basis of the strategic Facilities Capital Planning and Management process and is paramount to developing defensible budgets and obtaining funding. It's crucial for organizations to be proactive in determining required facility investments by understanding: The composition of their facility portfolio The existing physical condition of their facilities The required remediations and their costs
For organizations with numerous facilities, it's important to categorize buildings based on organizational mission. Those essential to operations and should be managed as longer-term investments. With a prioritized building list established, an organization needs to determine the best objective method for building data collection. A Facility Conditions Assessment (FCA) is the process of collecting detailed data on facility condition and deficiencies, generally with walk-through inspections by qualified professionals (mechanical, electrical and architectural engineers) to collect this baseline data. These teams survey the buildings', systems and infrastructure assets in detail using consistent best practice methodologies. Another option for data collection is facility self-assessment that employs a consistent, repeatable process for internal staff. Leveraging existing facility resources, organizations can improve the management of geographically dispersed facilities. The self-assessment process should be rapid and cost-effective, identifying "hot spots" within the portfolio that require a more detailed professional condition assessment, and developing quick budgetary estimates.
Employing industry cost standards to estimate spending requirements for individual improvements, organizations can associate specific dollar amounts with each project. A detailed understanding of lifecycle renewal timelines and costs also is important to effectively prioritize systems requirements and avoid unanticipated spikes in required funding over time.
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Analyze Benchmarks
Accurate facility data also results in a benchmark to analyze the effect of investing in facility improvements. Developed by industry associations, this benchmark is known as the Facility Condition Index or FCI. The FCI is the ratio of deferred maintenance dollars to replacement dollars and provides a straightforward comparison of an organization's key facility assets. To calculate the FCI for a building, divide the total estimated cost to complete deferred maintenance projects for the building by its estimated replacement value. The lower the FCI, the lower the need for remedial or renewal funding relative to the facility's value.
The FCI gives the facilities team the ability to compare similar buildings to each other and establish target condition ratings. Comparing buildings analytically highlights buildings with the greatest need.
Condition standards for various asset classes are determined by facility management. Certain types of buildings, such as data centers in the example above, are crucial to the organizational mission and call for an improved target FCI. FCI analysis provides the true cause and effect of investment decisions. When gathered in a software database, this data provides a complete view of necessary and recommended maintenance items, their cost, and expected replacement dates and costs for major building systems. This can then serve as the basis of an organization's strategic facilities capital plan.
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Scenario 1 maintaining the current condition over the twenty-year life. The dark blue
horizontal line shows a constant FCI of 40% over a twenty-year period. The dark blue horizontal bars demonstrate the funding required each year in order to maintain the FCI of 40%.
Scenario 2 improving the condition over the first ten years, then maintaining at that level for
the remaining ten. The red horizontal line highlights the improvement in the FCI from 40% down to 20% over the first ten years, then maintaining at 20% for the remaining ten years. The vertical red bars show the funding profile for this strategy, with the surprising results that a moderate increase in funding over Scenario 1 improves and maintains the building's condition at a much higher level.
Scenario 3 only a fixed budget is available and the only increase is inflation. The light blue
vertical bars show this static level of funding, while the variance in the light blue horizontal line shows the FCI increasing to around 80% over the twenty-year period. With an FCI of 80%, the condition of the building is likely to have deteriorated to the point that safety is an issue and building replacement, rather than repair, would be a consideration.
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For any type of organization, funding scenarios can be used to provide accurate budget forecasts and demonstrate the impact on condition for any time frame while pinpointing specific risks and the consequences for life safety or business continuity.
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Executive Management
Financial Planning
Facility Management
Condition Management Project Planning Needs Priorization Workload Projection
Divisional Management
Cost Accounting Cost Recovery Target Attainment
3. Conclusion:
With the right Facilities Capital Planning and Management process in place, an organization is able to: Develop a long-term view of capital planning with accurate multi-year forecasting Have a consistent approach to evaluating the property portfolio across campuses, regions and geographies Make investment decisions based on objective, analytical and transparent information Reduce financial, operational and legal risks
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Deliver substantial cost savings and efficiency gains Ensure that facilities are meeting the organization's evolving needs
When facilities capital planning efforts align with an organization's mission and objectives, capital investments are optimized to deliver value. Strategic facilities capital planning and management leads organizations to far superior and more defensible results.
4. List of references:
Abbreviations:
Term
FCA FCI FM
Explanation
A Facility Conditions Assessment (FCA) is the process of collecting detailed data on facility condition and deficiencies. The FCI (Facility Conditions Index) is the ratio of deferred maintenance dollars to replacement dollars and provides a straightforward comparison of an organization's key facility assets. Short for: Facility Management
Management Summary:
As shown in this thesis, when facilities capital planning efforts align with an organization's mission and objectives, capital investments are optimized to deliver value. Strategic facilities capital planning and management leads organizations to far superior and more defensible results. In other words, maintain and improve existing facilities is that key to ensure that they efficiently support people and services in concert with organizational goals.
Munteanu Constantin