By the Numbers

Globally, the value of buildings and infrastructure is more than all the stock and bond markets combined. As the global population rises and migration flows from rural to metropolitan areas, the planet is experiencing one of the largest building booms in urban areas ever known. This is creating a ballooning facilities footprint that continues to age inexorably. Case in point: the average age of a U.S. commercial building was 53 years at the end of 2021 — up from approximately 50 years in 2017.

The increasing age of the building stock is critical for several reasons, not the least of which is that it has proven that indoor environmental quality significantly impacts cognitive ability, or how one learns, thinks, reasons, remembers, solves problems, makes decisions and maintains attention. In their book “Healthy Buildings,” Joseph Allen and John Macomber describe indoor air quality’s substantial impact on cognitive function. Since much of human productivity is directly impacted by how well the brain is working, it makes sense that FM professionals should be focusing their attention on indoor environmental quality.

The increasing age of the building stock accompanied by insufficient renewal budgets also increases deferred maintenance backlogs. In conjunction with APPA (American Physical Plant Administrators), the Gordian State of Facilities in Higher Education report estimates that deferred maintenance backlogs now average US$106 per square foot in the sector, up 35 percent since 2007. While these trends and patterns have been clear to FM professionals for some time, it is often difficult to secure adequate funding for facilities renewal when inevitable budget trade-offs are made.

When the budget discussion involves replacing the HVAC system in the firehouse or purchasing new firefighting equipment, the HVAC investment often gets deferred. Likewise, when a university must either repair the roof on a facility or enhance the athletic center to drive ticket sales, the profit center often carries the day and the deferred maintenance backlog increases again.

FMs struggle to defend funding requests for various reasons. Among the more critical challenges are the:

• Lack of clear, consistent data about facilities’ value and condition at the asset- or building-critical-system level.

• Absence of precise, data-driven analytics that describe the impacts of different funding scenarios.

• Reliance upon inadequate criticality rubrics to provide transparency and consistency to priority decisions related to capital funding.

• Inability to automate asset conditions and deferred maintenance from the organization’s work management system to ensure budget forecasts are based on real-time data.

These underlying challenges have existed for some time, but the COVID-19 public health emergency has made this situation untenable. Today, executive teams expect FMs to quickly iterate on facilities planning scenarios and update forecasts for building capacity and operating costs. The global pandemic has forced FM professionals to rethink building capacity assumptions, reassess if office work must always be performed in the office, and reexamine how well-aligned a current facilities portfolio truly is to the needs of an organization.

On top of the underlying FM information systems challenges, this evolution has many facility managers feeling overwhelmed and unprepared. The initial gratification of suddenly finding themselves on the executive team’s speed dial is replaced by a deep unease about their inability to provide data-driven analysis to justify their plans and funding requests.

Managers are now looking for a path toward increased reliability and flexibility related to their facilities information systems. Luckily, many successful FMs have already trodden this path, and they have described the following milestones and best practices for others to follow.

Start with a reliable inventory

One of the first things to remember is that overcoming any management challenge starts with a good inventory. FMs must have a clear understanding of available resources before planning their way forward.

In the case of FM, one of the best ways to establish an accurate inventory is through a facility condition assessment (FCA). A good FCA will include a moderately detailed accounting of all buildings and their primary systems. The more time an organization can spend on the FCA, the more detail they will get.

A baseline FCA should include all the core building elements that drive facilities renewal investments over the next five to 10 years. Many excellent engineering and consulting firms specialize in facility condition assessments. They have engineering expertise, experience in this work and the scale to deliver projects quickly.

Using industry-standard data structures is essential when collecting FCA data to ensure data consistency throughout a portfolio, over time and across vendors if using different partners for portions of your portfolio.

The de facto FCA classification system in North America is UniFormat, published by the Construction Specifications Institute (CSI) and the Construction Specifications Canada (CSC). At the same time, the U.K. standard is often Uniclass by the Construction Project Information Committee (CPIc) and NBS. These hierarchical data classification standards allow FM professionals to work with vendors to design a data collection project appropriate to the organization’s needs, portfolio and budget.

Typical deliverables from a facility condition assessment include a detailed inventory and information regarding each asset’s condition, remaining useful life and replacement value. A set of necessary repair or replacement activities for each asset to maintain its acceptable condition for the assessment forecast period is also standard. Finally, one might receive a capital investment plan describing annual funding required to address deferred maintenance over the term included in the plan. All this data may be delivered in various forms. The structure and format of that data will strongly influence how easy it is to import that data into one’s existing analytical tools and computerized maintenance management system (CMMS).

Of course, an organization can collect their asset inventory and condition inspection information independently if they have qualified staff and resources. Most teams, however, choose an engineering firm partner to complete the FCA to gain access to their objective opinion, engineering credentials and staffing resources.

Food for thought:

Does your organization have a reliable inventory of your buildings and infrastructure? Is that data standardized in UniFormat? Are you able to use that data to keep your FCA up to date?

 

Implement a repeatable analysis process

Budget forecasting is an iterative process. To gain the trust of the executive team, FM analyses of funding requirements must be clear, concise and delivered in a format that is easy to understand. As the variables of funding availability, schedule, asset condition and project costs change, it is crucial for professionals to quickly update forecasts and deliver updates in the same clear and concise formats.

A set of Microsoft Excel templates can serve the overall analytical need for smaller organizations. Larger organizations with more sophisticated information technology teams might lean toward business analytics tools such as Microsoft Power BI, Tableau or ArcGIS Insights. These may be more appropriate solutions to a complex set of analytical requirements.

Ideally, an organization’s asset and work management solution will have the tools FMs need to iterate complex budget forecasts quickly. Managers should confirm that their software’s budget-forecasting tools provide all the capabilities the organization might need. This ensures budget forecasts are prepared with current data that leverages asset condition, performance curve information, work history and inspection details.

Food for thought:

What does your facility budget forecasting process look like today? Are the tools you’re using helpful? Can you efficiently aggregate relevant data to drive objective budgeting decisions?

Create a comprehensive prioritization rubric

Capital investment decisions must consider factors beyond facility condition and deferred maintenance. All things being equal, in a budget-constrained environment, if there is the choice between remodeling the entrance to city hall or repairing the roof on the city salt shed, the constituent-facing building typically takes priority.

Organizations need to ensure that their capital investments reflect their strategic priorities. How do capital investments reflect organizational priorities related to responsible financial stewardship, energy conservation, social equity, affordable housing, racial equity, economic development or other strategic goals? What is the weight of each of these strategic goals compared to others? How do teams evaluate each proposed capital project using consistent criteria? Or share the evaluation process results with stakeholders openly and transparently?

A prioritization rubric can be instrumental when establishing a clear, consistent and defensible decision process. When creating this rubric, the evaluation criteria must be:

• Simple: Easy 1-to-10 ratings for impact against each priority.

• Clear: It should be easy to understand how requirements pertain to each project.

• Consistent: Criteria should apply to all proposed projects.

A prioritization process that is transparent, open and consistently applied goes a long way to building trust in the process and organizational buy-in to the end results of the process.

Food for thought:

How does your organization prioritize facility-related investments today? Do your decisions align with your strategic priorities? Are you able to clearly communicate those plans with stakeholders?

Complete the data cycle

Capital investment planning is another iterative process. With each cycle, underlying data must be refreshed. Repair and replacement work performed in the last cycle will change asset conditions, FCI values and deferred maintenance amounts. All the underlying assumptions of an FM’s budget forecasts should use the best available current data.

An asset and work management system should be tied directly into an organization’s budget forecasting tools to make this process seamless. In this way, as any facility’s work is completed, the cost data, condition data, deferred maintenance values and other information that supports one’s capital investment planning process is continuously updated as each work task is closed. When the data circle is unbroken the iterative capital investment planning process becomes less burdensome and more successful.

Food for thought:

Are your FCI values current? How do you maintain them? Do you trust them to support capital investment planning conversations?

Conclusion

The challenges facing FM teams are growing more pressing each year due to various geopolitical factors. The COVID-19 pandemic has made these challenges more acute and forces strategic conversations about facilities at the executive level. This new focus on facilities presents enterprising FMs with new levels of influence in organizational strategy discussions.

To take the best advantage of this new window of opportunity, FMs must come to the executive table well prepared with solid data, systematic analysis, transparent processes and excellent information management tools. With proper preparation, FMs can significantly impact the stewardship of some of the world’s most important investments: buildings and infrastructure.