VoluMe 7, ISSue 1 2013
Who are the Movers & Shakers and Where Are They Now? BAY AReA BuIldINg MANAgeMeNT guIde
Reminisce with us as we take a look back through the decade
The Boom is Back
An in-depth look at some of the Bay Area’s most prestigious projects
A-Z
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Third Party Asset / Facility Condition Assessments
in Support of your Facilities Mission
Second only to employee salaries and benefits, the cost of owning, operating and maintaining a property portfolio is usually a company’s largest yearly expenditure. Companies must operate and maintain their facilities smoothly over the short-term while they are also planning for the long-term, and must dedicate available capital to those projects which are most relevant and support the company’s core mission.
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ompanies need to avoid costly emergency repairs that can lead to downtime, a situation in the current economic climate that must be avoided at all costs. In an increasingly competitive business environment, ever more emphasis is being placed upon the effect of facilities costs on the bottom line. More than ever, companies are asking critical questions such as; how much money are we spending to operate and maintain our facilities? Are we operating efficiently? How can we save on utility costs? Do we understand our total operating costs? Do we need all of the space we have, and are we using it efficiently? What is the cost of waste we generate? And most importantly, how can we manage and maximize the use of our facilities, but still maintain our primary focus on our core mission? Taking advantage of facility management technologies now and in the future is critical to company profitability. The current economic climate has produced additional pressures on companies to adapt quickly, including modifying existing facilities and relocating to larger ones to support growth. With all of these complexities, how can companies maintain core focus while ensuring that facilities are operating at the highest efficiency and lowest cost? Companies must incorporate effective facilities planning into their overall strategy to win in today’s market. Facility Management Professionals can play a valuable role in guiding companies through this non-core aspect of their business so that they can focus on their core activities. Development of a strategic Capital Plan is essential in that it allows companies to develop a long-term view of capital planning with accurate multi-year forecasting, make investment decisions based on objective, analytical, and transparent information, reduce financial, operational, and legal risks and deliver substantial cost savings and efficiency gains. A well-developed Capital Plan will allow companies to maintain a complete understanding of the entire facility portfolio, determine what improvements are required, prioritize those improvements to align with the overall goals of the company, and finally, ensure that the budget is spent as planned. The process involved in developing a Capital Plan will allow the company to gather objective facility condition data, then identify exactly where repairs and upgrades
need to be made. The process can also be used in calculating the estimated costs of those requirements; to prioritize the requirements according to company goals; run funding scenarios that demonstrate the impact of different spending levels, identify and address risks to business continuity and develop a capital plan and budget that will sustain the facilities and support their function for many more years. A capital plan is developed by collecting all relevant information on current facilities, determining lifecycles of each facility and its systems, evaluating past preventative maintenance and backlogged deferred maintenance, determining upcoming maintenance and renewal requirements and warranty periods, developing a preventative maintenance plan, determining options for repairs, replacement, upgrades and future projects, prioritizing these options and developing a capital expenditure plan and schedule with a 10 to 20 year time horizon. The first and most critical step in process of developing a Capital Plan is to perform a thorough inventory of the company’s facility portfolio to determine the existing physical condition of the facilities and their systems/components and to decide how facilities investments should be prioritized. The validity of underlying data is a critical ingredient in developing credible capital plans. The best tool to accomplish this is the Facility Condition Assessment (FCA).
The FCA‘s consists of obtaining information and documentation regarding a Buildings past construction, repair and component replacement history as well as gathering pertinent existing information on all building systems and components. Buildings are categorized in accordance with the business mission, determination of those requirements essential to business operations, and those better managed as longer-term investments. The FCA process usually begins with an initial meeting to discuss the expectations for the project, establish/verify the project approach, discuss/verify data availability and obtain a better understanding of the priorities with respect to the company’s immediate and long-term plans. The consultant also requests any pertinent data which would help to determine the past history and current condition of the facilities. This information may typically include a detailed list of the facilities and their systems and components, work order histories, preventative maintenance and repair/replacement records, code and licensing inspection/ compliance records as: built drawings, energy audits, engineering studies, roofing inspections, hazardous material audits, air and water quality studies, deferred maintenance plans, accessibility studies, technology inventory data and plans for any anticipated | continued on page 12 | facility modifications. WINTER 2013 BAY AREA Building MANAGEMENT GUIDE
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Third Party Asset / Facility Condition Assessments | continued from page 11 |
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fter assimilating all existing data, the consultant will conduct a field assessment to evaluate the general condition of the facilities and systems including adequacy relative to current and/ or intended use; remaining useful life expectancies; the need for near term capital repairs, replacements and recommended upgrades; and time frames. Full attention to buildings and building features and options for the return to modern standards is also given. Photographic documentation is made of general conditions as well as any observed deficiencies. The field visit includes evaluation of all major building systems including the building envelope (building structure, roof, exterior walls, windows, entrance doors, and representative exterior finishes), structural integrity of walls and foundation, interior structure (walls, ceilings, flooring and signage), major mechanical systems (mechanical, electrical, plumbing, heating, ventilation and airconditioning, exhaust, lighting, controls and instrumentation, conveyance systems, security, fire and life safety system), site hardscape and utilities (parking lots and sidewalks, lighting, electrical systems, plumbing and storm water drainage systems), handicapped accessibility (ADA) and traffic/pedestrian safety issues, and any evidence suggesting a need for additional lead/ asbestos or seismic testing. The consultant will assign a life-cycle adjustment factor to each system and/or component to provide a more accurate picture of a facility or asset’s condition, accounting for such factors as the particular micro-climate, extent of use, maintenance practices, and first-hand observation of the equipment or feature in service. For example, a manufacturer may indicate that a boiler has a 15-year useful operational life and that it is currently at the end of that project in life, whereas actual field observation and consideration of maintenance records and other information may indicate that
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it exhibits only light use, is well-maintained and that it will likely perform for an additional 8 years beyond the manufacturers projection. This kind of analysis accounts for the unique nature and use patterns of a facility or asset and provides greater accuracy and value to the client. The benefit of obtaining accurate facility data through the FCA cannot be understated. The data obtained from the FCA form the basis for the Capital Plan and is used for prioritizing future work as well as performing life-cycle analyses and developing cost projections and budgets. It provides a clear and accurate benchmark for planning necessary investments in facility improvements, as well as the impact future levels of investment will have on facility condition. Once the FCA has been completed and all data has been loaded into a database, facility conditions can be continuously monitored and Capital Plans can be updated, modified and refined as conditions and company goals change. It forms the very basis of all strategic future decisions. Given the large expenditures required to own, operate and maintain their facilities, a company’s success and profitability are closely tied to the effectiveness of their facility management team and Capital Plan. Companies which are effective in this regard enjoy a strategic advantage by having readily available facility condition information that will enable rapid and decisive action. The Facility Condition Assessment is the most effective tool in creating this valuable source of information. Source: Thomas G. Lighthouse, PE, CFM, is a facilities management professional with over 30 years of engineering and facilities management experience. He is a professional mechanical engineer and Certified Facilities Manager and is a principal of Valley Facilities Management Corporation, in San Jose, California.